Talgo, S.A. (XTG.DU) Earnings Call Transcript & Summary

Good morning, everyone. Thank you for connecting to this call. The objective of this call is to present the results obtained in the first quarter of 2021. Gonzalo Urquijo, Talgo's CEO; and Alvaro Segura, CFO, will go through the presentation. And as we usually do, at the end, we will open a Q&A session to clarify all questions you may have.

Thank you, Javier. Good morning to all of you. Thank you very much for attending. It's a pleasure being here. It's my first time as CEO. So I'm glad to share his results presentation with you. And as Javier said, we'll be open to questions. If we go to the slide, which is in your book number 2. First of all, our main priority is health and safety at work. Clearly, we're working hard on different safety improvements. If you see our frequency rate has decreased to 7.6 and the severity rate to 0.1. Even though our target is clearly 0 accidents. In terms of COVID, I hope you and all your families are all doing well. We are closely monitoring this in the company. At present, we have registered 9 cases. And none of them are in a severe condition. So we are working well in that sense. I go now to the figures. The backlog is standing at present at the end of March, around EUR 3.3 billion. That's for number one. Number two, we have EUR 900 million in manufacturing. And this clearly ensures the period 2021-2024, and that gives us a good visibility and decreases our risk. Third, in terms of maintenance. Maintenance represents 67% of the company backlog. Clearly, it does provide high visibility, I would say, stability in the long run, even though we have had restrictions during this year until we're all at a normal functioning at a normal situation. Among the main manufacturing projects, I would think it's important to highlight the degree of advance in 2 of them. One of them is the Renfe, very High Speed Train, which is already at dynamic testing. The first trials have been a success, and we are already above 300 kilometers per hour. Additionally to that, we are working hard and moving in Deutsche Bank, the Danish one, Uzbekistan and Egypt. All of them, I have to say, are performing well, and we are meeting customers' expectations. Regarding maintenance activity for the first quarter, it has remained. We are in the middle of the -- in this situation of COVID. But we do expect this activity to pick up and pick up soon. We've already seen some changes. Saudi Arabia, for example, has resumed its operations. And in Spain and Kazakhstan, we remain at 50% activity as examples. Clearly, from a financial perspective, our revenues do reflect a strong manufacturing activity and also that our manufacturing activity has proven to be resilient in this difficult period, especially when you've been impacted, as we've been saying, by the maintenance. We have seen that it has been resilient to the different quarters and cycles. Last but not least, regarding the cash flow, clearly, you know that on this quarter, the quarter 1, quarter 3, we don't give detailed information on the balance sheet. But we continue to work hard in controlling our debt, clearly, and continuing with a sound financial position. Additionally to that, we continue to work in reducing our financial costs and increase our debt maturities. From a commercial perspective, what can I say? In the last -- you remember, we signed with the High Speed train with Renfe first contract in September. In February, we've signed another one. This was for the variable gauge we've signed. It's another 15 trains, so we are improving and that. Additionally to that, we've been -- we do have a pipeline amounting to EUR 7.5 billion. We continue working in internationalization of our pipeline, diversification of the backlog. And above all, I would say, high-quality projects with attractive markets. So Europe is, clearly, our main. Last but not least, in this introduction, I do think it's important that we share, something that we're all reading, and it's in the news every single day. We do believe the activity, due to environment, and I think COVID has been a catalyzer, an accelerator of all ESG and all environment, clearly. So we do believe all these companies the transport will the -- or railways really have an important chance. And we are going to -- we believe that we are going to be one of the industries that's going to benefit from this. And, clearly, Talgo is well positioned for all these recent developments that are showing a growing market going forward. Alvaro the floor is yours.

Thank you very much, Gonzalo. Going to the financial highlights of the period. The strong revenue recognition reflects the intensive industrial activity in the period, even considering the low level of activity in the maintenance business line, as Gonzalo mentioned. The revenues remained stable compared with the previous quarter, and breaking down by business line, the manufacturing activity has progressively recovered productivity at normalized pace. While maintenance activity is still affected, the recovery is still linked to mobility measures of each market. However, the fact that vaccination is successfully going forward in the different markets [ areas ] the client expectations regarding mobility restriction provision being moved and subsequent commercial operations being resumed through the year. The adjusted EBITDA amounted to EUR 13.4 million in the first quarter of the year with a 9.1% margin. The progress -- I think the recovery of margins with a still significant effective maintenance activity, mainly driven by the implementation of measures to mitigate the reductions in the manufacturing chain, the progressive recovery of normalized productivity ratios and the strong cost watching activity resulting in overhead cost reduction. Within the company, we will continue to implement some specific cost watching measures in order to continue investing in efficiency in both operations and financials. Reducing the debt costs and increasing the maturities, as Gonzalo mentioned before. At the bottom line, the financial expenses decreased in the period, mainly due to the positive ForEx variations from international operations and also due to the renegotiation of all the loans and the rate cost of the bonds. As a result, the net profit strongly recovered in the first quarter of the year, growing a new return on sales recovery in 1-year period. And now Gonzalo.

Thank you, Alvaro. If I go to the business outlook for 2021 and Q1 update, the first quarter of the year has been in line with the company expectations and allows us to confirm the guidance as of today for the year-end. In terms of backlog execution, we remain confident that we're between 35%-37% of the backlog execution. From a commercial standpoint of view, we have already achieved the 45% of the book-to-bill objective that was set for 2021. In terms of EBITDA, as Alvaro has been saying, we remain confident. We've already reached 9.1% with the current maintenance activity. That means this should recover going forward and improve our profitability to reach clearly double-digit EBITDA margin. And just once we recover the maintenance, we are fully convinced that we will achieve this double-digit EBITDA margin. In terms of cash flow and cash consumption, in line with time manufacturing cycle, we identify a low-risk. But it is true, we are in peaks in some of our projects that could be in Spain. It's also DB, Deutsch Bank that is clearly -- that is closely monitored and managed. Treasury stock, you see from our share buyback to be canceled in the following week and amortize. I go to our conclusions as we started, it's our #1 priority, health and safety. We'll continue working and trying to improve in that sense. In terms of results, we have seen a good manufacturing performance. Maintenance is where it is. We do believe that by midyear, once we are all the majority vaccine, this will change entirely. Speaking with some of our main customers, they believe that by June-July, the activity should have restarted again as it was, which is clearly positive. In terms of the future, we do believe that our backlog does ensure us a good industrial activity going forward and visibility. Last but not least, well, I think in terms of the sector, clearly, all the news we are all seeing is very positive for our sector and for our company. All this together, we do believe we have the right product offering and leading technology, solid backlog backed by suitable good financial position. I think very encouraging market trends that do provide a reliable outlook for the company potential. In the sense we should be performing in the following years and clearly have a sustainable business performance and growth. Thank you very much for your attention. And clear, we are open to answer your questions. Thank you.

[Operator Instructions] The first question comes from Pablo Cuadrado from Kepler Cheuvreux.

A few questions from my side, please. First one, you can give a little bit more detail on Arabia Saudi. You have explained that activities they have resumed back in April. And I wonder if you can give a bit more detail on how is the usage of the fleet, or which are the plans that you think the local authorities are going to have for the next few months, or probably more looking to the second half of the year, how quick you expect to recover the maintenance revenues there? Second question will be on, you can update a little bit the biddings that you are participating. We all have seen that Renfe has delayed some of the tenders that were on the [indiscernible]. Clearly, you have a quite demanding target for this year in terms of order intake in order to reach the book-to-bill of 1.2 average for 2020 and '21. So you can remind us where do you think you can be getting a positive outcome in the bidding that you have in place? Third question would be on the financial side. Just -- I was wondering if you can tell us what has happened in the other adjustment line at the EBITDA level. Typically, that's a little bit positive impact from the restructuring from the bank guarantees. But I noticed that in Q1 it was marginally negative. So I don't know if that's a one-off or it's something that explained us? And the last question, I'm sorry for being so long, will be a question for the new CEO. Clearly, its early days since you took over. But I would like to know what do you think is the main challenge that you are -- you have in front of you in your new role? And what do you think that you need to change any strategic direction on Talgo in the short term or do you think the company is very well positioned to keep running in the growth?

Pablo, thank you very much for your questions. I think it was 3 or 4, I would say. First of all, for Saudi Arabia, the fleet is now working completely. So from that sense, and it's going well. That is for number one. Maintenance. We've started, as we've just said since beginning on April, so we will be with full maintenance. Perhaps you'll see it in coming quarters coming forward. We'll see an important income going forward and the adequate margin for this, so you will see both things fleet working maintenance coming up, and we will see that has been started since the 1st of April. So you'll see Pablo in the following quarters. As for our bids, and I think you mentioned some of one. We do have -- first of all, what we are expecting going forward in the short term, we have in Renfe with Renfe famous Trenhotel. So that is one that we see that will be coming in the following months. Additionally to that, we have in the North Europe, another one that will be coming forward soon. Then there's another smaller one where Renfe that's repairs. Clearly, we are looking at -- it is true what you said. We were expecting the 2 big ones of Renfe that was the regional and commuter. That has been delayed. It clearly has been delayed for, at least, we believe -- and those are the messages we are getting until July everything. But there will be an important change to that, and that is the hydrogen. So it's a completely different setup. You know, we've been working very hard for that. We want to have our prototype by this autumn or end of the year. So clearly, it does meet our expectations, and we have to see if we get the end or the beginning of that end in July or after the summer, and we hope to be well placed with that. In short term, we also have Uzbekistan with maintenance that will be coming in the short-term coming through. And you will see, of course, there has been some changes to our maintenance contracts to Saudi Arabia in terms of adjustments, but in the north, in a good sense, and you will see that in April. That would be for the second question. For the third question, I believe the adjustments were basically layoffs.

Basically it's a scrap and some provisions and layers, but is a very small amount.

Thank you. And the last thank you -- and Alvaro, for the last question, challenging role, one of good question. I've landed here. I think today is my 55th day or 56th day. I'm very happy. I have to also convey from here an appreciation to all the Board, and all the executives of the company that have given me a full support. And coming back to your challenges one, I think we are in a great sector, in a sector that has enormous opportunities. I do think, up to now, what is the strategy that has been set and going forward is there and it is maintained. I have to tell you, we had a Board yesterday. The Board is permanently reviewing this strategy. We have to see what all these changes mean in terms of the strategy. But as I said, the Board permanently reviews, but we do continue with the strategy that had been set up to now. That has been clearly successful, I would say. So that means we will continue looking -- having a dynamic approach and looking at what our competitors are doing, were are we going. But we do believe we have a good product, and very good at the market. We will continue with our cost efficiency. That is important, and that's basically. But I insist, the Board is permanently reviewing the strategy. So if there's anything going forward. We will communicate with you. Thank you.

The next question comes from Jaime Escribano from Banco Santander.

So a couple of questions from my side. The first one is regarding the High Speed 2 contract -- tender within -- in the U.K. I was reading the other day on the press that Talgo eventually would have been pulled out from the tender in the fifth stage. Maybe you can give us a little bit more color on that you have appealed. My question maybe would be if -- what is the probability that they -- that you pass to a stage V or based on this decision, we should assume that the probability that you is still on the game is very small. The second question would be regarding the 2 hydrogen [indiscernible] of Renfe. How do you see your prototype compared to the solution of Alstom, which they are already rolling in Germany? So I would like to know your views. And just for housekeeping, for maintenance of the modeling at the financials, you were mentioning that are coming low in this Q1, what could we expect for following quarters? And the same for the tax rate, which has been around 20%. Usually, you get a lower tax rate. Maybe you can give us some guidance on this respect.

Gracias, Jaime. Thank you very much. In terms of the High Speed 2 of U.K., do we think we'll be in Stage V? Look, at this point, we are reviewing our legal position, but we are not optimistic, and we feel there is low chances we will be in the Stage V. But I insist we are reviewing the legal position. Hydrogen, we do know some of our competitors, some of them already have a model and it's already working. Other ones are now building it. But we are confident or very confident with our model, and we do believe it will have higher advantages than other models. And let me, at this stage, not reveal what they are, but they will be -- we'll see a different size -- it will differentiated from as we have normally done in Talgo. And let me be prudent in that sense that, that will come out sooner than later. In terms -- I think your third question was maintenance. Look, we do see an important growth in maintenance. Now is it going to be fully reflected in the second quarter? We believe you'll see it. I think we have to be prudent. You will see now Saudi Arabia and other markets that you will see that in the P&L, and that's an increase. But I think for countries like Spain, it may take time. And as we all -- that will -- probably you'll see it more in the third quarter. The end of the second quarter and probably more in the third quarter. And Alvaro, for the tax rate?

Yes. I think the question about the tax rate. This is due to the consolidation of the taxation of the different terms establishment that we have around the world is the main reason.

So we should assume around 20% for 2021, more or less.

No, it depends of the result of each different. Yes. It depends.

Okay. And net financials, because it came very, very low. Should we assume like a lower net financials than last year, for example?

I think there's 2 issues there, foreign exchange on one side, where we've had a positive impact. But I have to tell you, Jaime, we are working hard to decrease our financial expenses. And you will see that along the year because we already have results. We cannot go into detail. You'll see it in the second quarter results that are positive in terms of -- and I have to tell you in terms of cost reduction on one side, and we are extending maturities. So we've been working on hard. But here, you Jaime an impact of the foreign exchange, okay? [Foreign Language].

The next question comes from Alfred Glaser from ODDO.

I had 2 questions actually. One is for Gonzalo. I was wondering now that you come from a very large company, and now you're working at Talgo, which is much smaller. What do you see as a kind of leeway you have at Talgo to change things? What is your freedom to maneuver compared to a very large company you've been working before? And my second question is on maintenance and service activity. So you mentioned, for instance, that Spain is still -- trains are still running at 50% right now. You said things are to improve from the next quarter onwards and in Q3. How do you the percentage of trains running in your most important countries by the end of this year?

Okay. I'll start with your second question. I believe that one is probably -- thank you very much, [ Alfredo ], for your questions. In terms of maintenance, after the -- with information and everything going well. I mean, I don't know if suddenly we'll have some new issue with pandemia with COVID-19, or we'll have something. But if things go and we'll continue with vaccination and speaking with our customers, we do believe by end of the year or let me say by fourth quarter, we should be running there at 100% in terms of maintenance, more or less. That is as for your second question. As for your first question, well, I have to tell you that when I started in steel, I started in a small family company or the Spanish one. And it started growing along the years, and then we became a big consolidator. So that is clear. But I have to tell you, in terms of you -- and as we were saying before, first, I have the full support of the Board, of the executives. So as a CEO I have been given [indiscernible] I've given full powers, and I have to tell you, I've had full support in that sense, which I'm very happy with. Now, clearly, I think this -- we will see changes going forward. We have a new CEO, of course, in terms of people, in terms of that will happen. And in terms -- and I do -- I'm setting myself now on. I only have -- spent my first 100 days, as I was saying 55 or 56, and I've already seen. And I can tell you, challenges I see as of today. I think going forward, in terms of industrial, I think there, we do have issues that we can. As always, we have in projects. At the end, it is cost, it is quality, it is time that is clear. In terms of commercial, we need to continue increasing. We do have -- and getting new contracts that is clearly. In terms of costs, I think we can always review cost reduction in my previous work, I'd always done that. So I think there's great opportunities, but insist a sector that is clearly going to be -- should be marked by growth. And so there is a tremendous opportunity and we do have -- clearly, we have good technicians in order to get the most out of these opportunities. So thank you, Alfred.

The next question comes from Akshay Shah from Kyma Capital.

Gonzalo, nice to speak to you on this first conference call. Welcome to the company. It's a little bit of a continuation of the last question from the ODDO analyst about some of the things that excite you in this role, the challenge in this role, obviously, it's early days. It's only been about 2 months so far. When do you expect layout for the market your medium-term plan, such that investors can then judge you, whether it's 2 years, 3 years, 4 years down the line and say, Gonzalo did a good job on this metric, but did not do as well as we predicted in that metric. When can we expect that little business plan update to the marketplace?

Thank you, and it is true. I have to review everything. As you say, I'm just landed CEO. I need to see and remove every single stone at least to view what is there and get my own opinion. But I do consider that in the next, I don't know, 3 to 6 months, we will have a full review of this. And I will -- my idea is, sending to the Board and reviewing with the Board this plan. I can't tell you now, how different is it going to be from the planned internal plan we have here today. But in the next 3 to 6 months, no later than that or in the next 4 months, I would say, I will review the full plan and give my view on it, Akshay.

I very much look forward to that.

[Foreign Language].

[Operator Instructions] The next question comes from Bosco Ojeda from UBS.

A couple of questions. One on the margin guidance, the 10% to 12%, it is higher than the first quarter, but first quarter, we need no maintenance. Now that maintenance presumably will start picking up, whether you think you could exceed the guidance, particularly on the second half of the year it could be a lot higher, possibly maintenance recover. And second question on your dividend policy or buyback, when do you think you could revise that? And what are the chances of paying something in 2021?

Two questions. [Foreign Language]. Thank you very much. Okay. First, in terms of margin and guidance, we do believe that for the moment, we are there with the 12%. Clearly, we will see more maintenance, so at the end, you will see more margin. I do think the manufacturing should be picking up and that also gives a good margin. So I would like to be prudent at this stage, because I believe. And the end of your question in this one was Bosco, is it going to be more than 12%? For the moment, we are at 12%, and we'll see what the year gives us going forward. And we have, in the first quarter has been difficult in terms of maintenance. Clearly, to your second policy that is shareholder retribution, I think that is key. That is going to be the review -- the strategic review that we are doing now. That is a key element. May it be through dividends, may be to treasury stock or a combination. But that is clearly on the table. And that, clearly, we will present this to the Board in the sense of the new strategic plan going forward, and that is part of the agenda Bosco.

The next question comes from Beltran Palazuelo from SANTALUCÍA.

My question was already asked, but the thing is, what's your plan Gonzalo and Alvaro and then Javier too, because we have seen the worst in the past year, but now we see that the results are strong and should be getting stronger and stronger. So in your plan, what are your plans in order that the stock reflects your -- the intrinsic value of your business? And the second, regarding the question from the analyst of ODDO Securities, is to show full support from SANTALUCÍA to the management team on the implementation of the long to medium-term plan.

Thank you, Beltran. And as always, thank you for your support, and you're a very important shareholder. So we really appreciate it. In terms, I think you mentioned a very good point that is the intrinsic value and our share price, which is clearly. I would give you 3 elements at this stage. One of them, I think we are in a company and the sector that is a key sector going forward, and that has an enormous future and enormous growth potential. That is as for number one. And maybe we are all somewhat wise all traveling between less than 500 kilometers. I think the basic will be traveled in Talgo or equivalent of some of our competitors. So that is just one. We are reviewing Beltran, all the internals, as I was saying before, in terms of project execution, in terms of offers, in terms of cost cutting, in terms also of our balance sheet improving, how can we improve our working capital, reduce the cost of debt, extend our maturities. Third, as we've before the dividends that is or the treasury buyback. Clearly, at the end, we are, and that's a big concern, I would tell you a big part of that are the Board of Directors of this company and the executives. We see that our share is where it is. And we have, at the end, performed worse than many of our competitors. I believe a lot and that is from my old culture as benchmark and what you have to do. If the performance is bad for everybody, you only have to do is perform better than the rest. And if it's been good for everybody, once more, perform better. So I, honestly, really value that very much. And I hope that in the following months, with all this review, we will be able to come up with news and recuperate, as you spoke about intrinsic value return.

My point is I totally agree with you with all the points you said. And of course, it's -- you have a right company not long ago. But the thing is when you see the position of gross cash and where the net debt comes from the working capital investment or you have a very big contract that will require working capital investment or you could start now. It's -- why leave things for later, it's now. As you said, your sector, this is a sector that do very good in the future. And it seems that all the stock doesn't reflect all the good things that will happen. So why not start now? There's not a problem of gross cash position. There's not a problem of maturities. There's not a problem of -- we are seeing it -- without even maintenance this quarter, good, healthy P&L. So why not start now?

Beltran, I think you have a good point, but I do think for a Board of Directors with this COVID situation -- and even though now we all see the light of the tunnel. We have a lot of our relatives that are already been - as a questioner raised now being vaccine, et cetera. And I think you could start now. But as Board members, I think, for the moment, the idea is to be prudent and have, Beltran, somewhat more visibility. And really, we want to see the CapEx up of maintenance, and et cetera, we are looking at different instruments for working capital funding -- and you all know, for the German project, et cetera. So you could do it now, but I think it has been prudent at this stage until we have somewhat more visibility. But that is debatable, Beltran, you could see we're in a good sector. We have a strong balance sheet, and we are starting to see the COVID. But if you would have asked this to me in November, we would have thought that the COVID may have ended in January or in February, and we are here in May. So I would say there's a question of prudence of this Board, and in general, of the Board of Directors, I would tell you in many companies now. And still, we see somewhat more visibility, okay?

Totally agree. The thing is if you -- so let's say, so dividend are not, let's say, possible buyback once you have more visibility, your stock would not be at EUR 4, it would be at EUR 6 or EUR 7. So then maybe the buyback will make less sense. So of course, it's prudency, but also when things are not as clear, is when there's opportunity to add value as this company has done in the past, buying back shares at very under its intrinsic value. But thank you for the comments and all our from SANTALUCÍA.

Gracias.

The next question comes from Jaime Escribano from Banco Santander.

Just a follow-up question. Regarding top line, quarterly sales run rate is around EUR 150 million. Maybe you can give us some visibility on what should we expect in following quarters. Like something flat? Like is this your cruising speed? Or should we assume a slight acceleration of this EUR 150 million quarterly run rate? And in terms of margins, my question would be, maybe you can give us -- if not, it's okay. But maybe it would be useful for us, if in Q1 you are making a margin of around 9% and now you are adding Saudi Arabia, how should we think about the margin in Q2? So what is the -- in other words, what is the contribution that we should assume to the margin of Saudi Arabia? And you can give us a range maybe 9.5%, 10%, 11%. But I think this will help us to model the recovery, which I think it will be very interesting to understand for investors.

Jaime, thank you. And I'll try to give you some light, but not as much as you would like. Now, clearly, for the top line, where you started, it's going to be -- we believe everything goes in clearly above EUR 150 million. There's no doubt for that, because you are, at the end, putting this maintenance in that is starting to catch up, plus you already have the Saudi Arabian one. That is as for number one. And in terms of margins, clearly, double digit. But what does double-digit mean? That's a long call I'm giving you, but it clearly will be double digit. It is -- it will include first the manufacturing does have a margin and an adequate margin. Then we will have the new one coming from the maintenance. So it will be going forward, we expect, as of today, it is clearly double digit, okay? Gracias.

Ladies and gentlemen, there are no further questions in the conference call. I will now give back the floor to our speakers for the webcast questions.

Thank you. That's what we are going to do. There's been some written questions, so we'll just give it a second, and we'll read them, and we'll give the answers for your questions. Javier, go ahead and please read the question, so we can answer.

Yes. Okay. There are some questions in the webcast. The first one comes from Iñigo from GVC. It's regarding the U.K. project. I think this has been already answered. The second one is from Xavier Cebrián also from GVC, asking about the, what's the market in India, if there is any contention opportunity?

Okay. I'll try to answer. Look, India figures I'm not mistaken, it's a tremendous market. What is it more than 63,000 kilometers of infrastructure, more than 5 billion people that are -- I believe, there's all the figures that are moved, and tremendous, various billion of people will moved during the year. So it's a tremendous market. On the other hand, I have to tell you that it's a very difficult one. In terms, you'll have to -- first of all, you have a lot of competition. You have to produce there. Many of their contracts are in rupees. So at the end -- you say at the end, is this at the end [indiscernible] is it an internal promise -- internal promise, is how you say. Well, market is there for us and the offers we've been analyzing, clearly are not easy due to the currency, you have to produce there, and you need local partners. And on the other hand, it's a difficult company in terms of regulation, administration and other issues. But look, if we see the opportunity, we will be. But clearly, it's not an easy place to be. Thank you for your question. Next question?

Okay. The next question also from Xavier is regarding potential overhang of the position from our main shareholders, which is Pegaso Transportation.

So yes. The -- well, the shareholder structure completely [Foreign Language]

Look, we have little to say that. We are -- and the Board or the executives here, I think that's something that you would have to ask Trilantic or Pegaso of what is the position. At the end, we have no news in one sense or the other. So things remain like they are as of today.

And the last question will come from Xavier Cebrián from GVC the question is the following. 53% of the backlog realizing from neutral projects, where we don't have the know-how as the experience of our competitors, which are the main strengths in this segment versus the main competitors in order to start winning some of the contracts. And if we think the margins at this segment is the same as in the case of the High Speed.

Okay. Now in terms of the margins, the margins are different, clearly. Why? The higher you go, the higher the margins. Plus, you only have less competitors. So we are in very high speed, that normally is a better margin, then you would go to a higher speed, then you go towards the end into cities, then we go to the regional and then computers. And then you can come down to metro or to a bus. And the margins work in that sense from the upper part, going down to the lower part. I do think we have -- we are competitive. We are an efficient company in terms of cost. We have technology. We do have many of the technology we have for the very high speed or high speed, we believe, ease of application here in the commuter and the regional segment. So we do believe we have a very, very competitive product and product that is attractive to our customers. Clearly, in general -- and we are competitive in costs because we are clearly smaller than other ones, and that makes us, we believe, more efficient. But, clearly, here, the margins are somewhat different in this commuter or in the region. Okay.

Thank you very much, Gonzalo and -- let me say and Alvaro. There are no more questions. So we will finish the call at this point. However, as you know, there is an IR channel we're always available in order to attend any additional questions you may have. Thank you very much, again, to everyone for joining the call, and see you. Looking forward…

Thank you. Thank you for your attention and for your time you spent and all the questions and your interest.

Thank you very much.

Thank you very much. Take care and safe day.