Tesmec S.p.A. (TES) Earnings Call Transcript & Summary

Good afternoon, this is the Chorus Call conference operator. Welcome, and thank you for joining the Tesmec results as of December 31, 2021, Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Ambrogio Caccia Dominioni, Chairman and CEO of Tesmec. Please go ahead, sir.

Thank you, everybody. We have a pleasure to make the presentation of our year-end financial figures. And we confirm that last year, the 2021 was a not easy year because the context was characterized by emergencies, especially in the area of COVID emergency and pandemic emergency. No doubt that the year for us was a year much better than the result of a prior year, but with a certain point that we're not really in line with what were our expectations. Due to the fact that nothing is easy in the 2022, global scenario used to be much better, but unfortunately now, we are facing a new -- not stabilized situation, political situation. But as of today, we are following on a daily basis and can have an impact on our future decisions but as of today has not a strong impact on our perspective of the year. Coming back to what is our guideline in the business, I think that I want to transfer the presentation to Mr. Mosconi that in a way is taking the lead of the conference and taking a description of what was going on in 2021 based on our strategy, strategic decision and our global scenario. I -- Mr. Mosconi you can...

Thank you. President. Good afternoon to everybody. I underline very quickly the key facts of the 2021. First of all, I would like to confirm that in our strategic business plan, we introduced the sustainability plan in accordance with SDGs of the European Nation -- of United Nations, and we identified some goals. In accordance with these goals, we moved our strategy in developing products and procedures. Going back on the business, we described very, very quickly business unit by business unit, starting from the main one that are -- the Trencher business unit. We had 2 very important facts, not only for the 2021 but for the -- our future. In line with the sustainability policy, we put in place 2 important POC, one in the field of the renewable energy or -- and cabling of the [ graph on the town ] with fiber optic offer and with energy cable. So it's a completely new solution to minimize the environmental impact. And this prototype system is working since some month in France. The second one is a POC regarding the digitalization of the village in Lombardy. So it's a new system to have a digital map of the underground infrastructures. If we go now on the Energy business unit, here I divide to be more clear between the so-called Stringing division and the Automation division. In the Stringing, we had a good order intake, thanks to the -- our new digital portfolio products. And basically, we have, as we will see in the number after, a good backlog based on the successful action that we had in the Western Europe and in Oceania regions. On the Automation side, we are very, very close to the end of the prototype of the Main Substation Automation projects, one with the impact on the DSO and one probably the biggest with impact with the TSO. So this is crucial and strategic project for the future for our company is the digitalization of the primary substations. And the Automation increased the backlog a lot, thanks to some commercial activities that put us in a position to have several important contract and partnership in this segment. On the rail sector, I can say that we continue also with enlarge our markets outside the Italy. In fact, we confirm our presence in central part of Europe in Czech Republic with an important order with the first contractor operating in the Railway infrastructure, and we opened a new market in the Mediterranean area that is Israel. The second important fact that I would like to underline is that we are now preparing a new offer -- new system for diagnostic starting from the railway technology to move to the civil infrastructure. So we have an integrated system with different vehicles, vans, drones connected with our technology for their [ radar ] inspection and for the platform to purchase the big data that will give us new possibilities, not only in the rail detection but also for other civil infrastructures. Now I will leave the floor to our CFO that will probably give you the numbers on the year.

Thank you, Paolo. Good afternoon, everybody. If we move on to Slide 14, we show the main KPI of the year. We compare the 2021 against the previous year 2020. If you look at the general review all the KPI, we can see that the Tesmec record an improvement in all economic indicators, thanks to the activity in the energy and railway business mainly, that can offset the situation about the Trencher that the increase is turnover comparing the previous year, but not under our expectation. In any case, you have to consider that 2021 was also impacted by the supply chain and logistical criticalities that generated some delayed and postponed some opportunity in the 2022. Instead, the net financial position, as a general review, increased in -- comparing with 2020, mainly due to the tension in the supplying and shipment/freight activities that generate some delay in the Trencher mainly. And to face -- to counterbalance the impact of increase on material, we tried to increase our stock to face the projects that we have to complete in the next month. Starting from the revenues. We recorded EUR 194.3 million against EUR 170.6 million, an important increase, but repeated under our estimation. [indiscernible] in the U.S. and Australian market. But now in 2022, it's in that very good and give us some better opportunity to revamp the situation comparing then with 2021. Obviously, that impacted the EBITDA. But if you look, we achieved the EUR 28.1 million against EUR 21 million of the previous year, around the percentage on the revenue is 14.5%. So it means that, in any case, the EBITDA has been impacted positively by the high value business like the Energy and the Railway that compensate the situation related to the performance that I mentioned before in the U.S. and Australian market. But that compensate partially the situation in the supply chain and the utilities. And you know everybody that now we are facing an important challenge to counterbalance the impact of the cost increase related to utility and raw material. Thanks to business. Thanks -- we try to reverse this increase to the price list we compensate partially that amount. Obviously, in terms of utility, raw materials, we tried -- these costs are reversed in our price list of products and services, but are not already to -- they are not already reversed in our medium-long term contract, but we are under negotiation with our main customers and public administration company to try to have a better impact in the 2022 about these increase of costs. If you look at the EBIT, the EBIT record EUR 5.6 million against a negative of EUR 0.9 million. This obviously impact of our bulk of depreciation amortization mainly related to our fleets. In terms of exchange rate that is going to impact our profit before taxes. We have a positive impact in terms of exchange rate due to the performance of U.S. dollar currencies and the related currency to U.S. dollar, like Australian dollar and New Zealand dollar and ZAR in South Africa that can give us a benefit. Nevertheless, over the period, we'd evaluate some position in our financial account. So as a general review, the profit before tax is achieved EUR 2.7 million against the negative of EUR 9 million of the previous year. After the taxes, the net income, a record EUR 1.2 million against the EUR 6.8 million (sic) [ negative EUR 6.8 million ]. Latest information on this slide is related to a net financial position that, as already mentioned, was impacted by the countermeasure and the delay of the shipment of the [indiscernible]. So we increased our net working capital to impacting our net financial position. If you move on to Slide 15, we try to summarize the main results and main performance for each business unit. Starting from the Energy, for sure, we can see a rebound comparing the previous year, mainly in EBITDA. In terms of revenue, we move from the EUR 43.8 million in the 2022 to EUR 51.1 million in 2021. The driver of this performance, mainly related to the Energy Automation sector. But in any case, so we want to underline also the performance of the Stringing segment due to, in general, the trend of the energy industry that is one of our pillar and one of our main factor also for the outlook 2022. In terms of backlog, we continue to have activity due to the fact that rail operates in the main market in [indiscernible] try to introduce important investment in the infrastructure. We achieved an important backlog of around EUR 99 million, of which around EUR 81 million is related to the Energy Automation. So we see that our investment in the previous year now is in the phase of important payback of these investments. We talk about now the BU, Energy Trencher. The Trencher that is the main BU, business unit of the group achieved EUR 110 million of turnover against the EUR 100 million in the previous year. We talked about in any case of an increase. But the Trencher has been impacted by the situation of 2021 related to different contingencies. We talked about the COVID situation. We talked about the freight, the supply, the price variation, the impact in the lead time. So all these aspects impacted the Trencher division. So we can consider these impacts temporarily, maybe also for the first month of '22. But we are confident -- we are sure that we do have a very important opportunity we have in our industry related to the Trencher. So we talk about energy and cable, FTTH, oil and gas. For sure, we have in the 2022, the aspect rebound of the Trencher division. In terms of EBITDA, this was impacted by the Australian performance and the gap in the lack of sales in the U.S. market. In terms of backlog, we achieved EUR 75 million in end of 2021. In the 2 -- in the first 2 months of the year, we continued the collection of the order of Trencher division. About the Railway business, this one was less impacted by the lockdown in 2020. But in any case, the result that you can see in the slide, show that the revenues growth of 25%, mainly driven by the mix of the product related to the product we value added and related to the diagnostic and the specific product order at energy transition. In terms of EBITDA, the better mix impact. And so we have now the situation that, according to our plan, we achieved a 20% of -- around 21% of EBITDA in our business, Railway business. In the Slide 16, we reiterate the point related to the backlog. In the fourth quarter, we have an important order acquisition in energy division, mainly in Energy Automation sector. But we also increased very important impact in terms of Stringing division. In Railway business, we closed the important deal end of the year that we communicate to a market around EUR 20 million, that allow the company to achieve around EUR 72 million of intake ratio. Moving on in the next, revenues. You see that in Slide 17, we show the different impact for our geographic area. In comparing -- 2020 compared to 2021, we see that an important increase of Italy that grew still 25% of the total revenue. That compensated the performance of America, North America. And we want to underline the result of Middle East, maybe is short because we see just an elevation of 1.3%. But in any case, our -- we see that there is a lot of opportunity for 2022 in the Middle East area. In Slide 18, we want to reiterate another pillar of our consolidation, of our plan, was the increasing of the recurring revenues. In this case, we can see that according to our definition of the recurring revenues, we achieved around 54% of recurring against the nonrecurring revenues. The Slide 19 shows the increase of EBITDA mainly related to the 2 business already mentioned before about Energy and Railway. So now we can move in the data related to the balance sheet and the net financial position. In the balance sheet, the topic was already mentioned before is related to the impact of the net working capital, increase of the net working capital that impacting our net financial debt. In Slide 21, we see evolution of the net working capital that is our topic. So you see that in terms of inventory and the POC project, we have an important impact of around EUR 12 million. And so if you look at the difference of our net financial position, you can understand that we are working [ to further Railway business and in -- further ] work in progress contract. And we are working to counterbalance the criticalities of the supply chain and so we increase the components and the material for Trencher and for the Stringing division. In Slide 22, we look at the evolution of our the net financial position. We have an important value of our free cash flow, operating free cash flow, that is compensated -- has been reduced by the net working capital and CapEx. In terms of CapEx in the 2021, the result has been impacted by -- the total amount of the CapEx has been impacted by the investment in the ERP and the digitalization, we talked about of around EUR 5 million related to these activities of digitalization and our ERP. And meanwhile, we increased our fleet to face the contingency situation of the market. So to avoid to lose opportunity on the market, we increased the fleet to take the opportunity for this customer that didn't want -- that don't want to buy some products. And so we offer this product. Thank you the rental activities. Now I pass the floor over to Mr. Caccia for the outlook.

Thank you, everybody. I hope that we have clearly disclosed what is our company situation, I think that we want now to position basically in the general market. For this reason, I will transfer to Carlo Caccia that is going to make you an outlook of what is the general situation for 2022 and to provide the guideline for our future.

Thank you, [Foreign Language] to everybody. Having a look at the outlook of the company, of course, we have -- we confirm that in terms of market positioning, we are pretty positive in terms of perspective as we are very convinced of the strength of our positioning in the different markets in infrastructures. No doubt that the current situation from an economical and political perspective is very complex and the scenarios are quite uncertain. So we see a couple of points of attention, of course. First of all, as Marco said before, is the inflation that we're looking at and it's still -- let's say, still a common point. And of course, our shortage of materials that is particularly strong with electronic, very much, let's say, differentiated in the different kind of materials. Of course, there are some uncertainty with the scenarios also in Ukraine. But on the other side, we have also some very strong points, such as the recovery plan that is mainly oriented in energy transition and in green technologies, where we are particularly keen on. And let's say, the general strong impact that we see on sustainable projects. In terms of key actions taken by the company in the last few months, let's say, there is this discussion going on, let's say, the inflation point that we are trying to revert on selling prices with private customers and negotiations that we are having currently with the public administration for long-term contracts. Of course, there are some financial actions regarding the exchange rate of the -- in the last few weeks. And we are strongly focusing our markets and our, let's say, also market activities on key strategic involving countries, such as U.S.A., Western Europe and Middle East. Generally, there is also a common trend of our technologies in each business on green innovation and digitalization. Looking into that, I will give a couple of details business by business. Starting from Trencher, we are introducing new technologies for the digitalization of the infrastructure and the projects in general that are making our work even smarter, let's say. And also the introduction of new models for fiber, cable, so let's say with a lot of green new applications that we are developing. Going through that, we pass to Stringing business. We have some important projects going on with relining and cable laying, where we see also as much a couple of minutes ago, an increase -- general increase in backlog, especially in countries such as Australia and U.S. And of course, let's say, as said before, a general focus on electrical machines and green solutions. Going to Energy Automation, we are consolidating our market product portfolio, both for DSO and TSO. And we are -- and also the perspective of 2022 is an evolution -- a general evolution of the value proposition presenting Tesmec as a solution provider, not only device manufacturer. Last but not least, the Railway business. Also in this case, a strong focus on digital technology for the safety of the infrastructure. And as said, also for Stringing and for Trencher, a general commitment in focusing our innovation on green technologies and electrical vehicles. So these are the key points that are very -- let's say, digitalization, sustainability are pretty common for each of our business units. And these are the key points. So looking at the scenario, of course, some key critical issues, that are key points of attention in terms of macroeconomic scenario, but also a strong positive outlook for our technologies and the sectors where we work in. For this reason, I -- okay, just before concluding, I leave the floor to Dr. Caccia to finalize our presentation.

Business plan guidelines. As you clearly understand, we had already developed our budget 2022. But due to the contingency situation, we prefer for the 2022 to making -- following the evolution. And so to give you a better picture, we have communicated when we are going to give a first quarter result, we will update probably our forecast. No doubt that, as we already clarified, our medium-term perspective [ opposite ] are in line with what was our expectation. That means that we think that next year, the situation is going to be more stabilized. And for this reason, we can -- for the 2023 that was -- at least our term for the medium plan budget, to confirm the result we have already anticipated 1 year ago. That means that the range of revenue are going to be between EUR 275 million to EUR 290 million. The profitability, EBITDA that in 2021 was impacted in the last quarter for the increase of cost basically energy and material and was not transferred to pricing is going to come back to a much better situation, basically between 17% to 18% of the volume. And the net financial position will have the improvement that coming back to the normal situation that we are going to work on profitability, cash generation, working capital and control in CapEx. I think that -- we think that we can confirm the trend that was already anticipated 1 year ago. No doubt that this is -- and we can confirm where we are now. No doubt that we are not making any evaluation what can happen in a different way. But we -- based on our point, that our revenue basically out of Europe, we think that we're expecting the current year and next year, very good. Thank you for your audience. We are ready to -- for your question, and we really thank you everybody.

[Operator Instructions] The first question is from Enrico Coco of Intermonte SIM.

I have a few questions. The first question is on quarterly trends. So focusing on the fourth quarter of 2021. If I did the calculation correctly, the -- in the fourth quarter, the energy business was around flat year-on-year, so was in line with the fourth quarter of 2020, EUR 14.6 million in revenues. But the EBITDA was weak, EUR 1.1 million. It means a margin of 7.6%. It was 18% in the 9 months. So the first question is, if there is something strong in the quarter in the Energy business which explains this profitability in the last quarter. And also on the fourth quarter of last year, conversely, the rail business was very strong. You had revenues of around EUR 10 million. And EBITDA margin, again, if my calculation are correct, was above 25%. So the question is what happened in the last quarter of last year in these 2 divisions and if we can extrapolate from this trend for 2022? Then I have another question on the long-term guidance, if you want. If I understood correctly, you confirmed the 2023 targets. So revenues of between EUR 275 million and EUR 290 million and EBITDA between EUR 53 million and EUR 58 million. Is this correct? Or you will update on these targets later in the year in May? And again, on the long-term numbers, if you want, you have a guidance of cumulated CapEx between 2020 and 2023 of EUR 60 million. Now in 2020, CapEx were EUR 13 million, in 2021 were EUR 25 million. So in 2020 -- 2021, you already are up to EUR 38 million of CapEx. So my question is, if you confirm that in the next 2 years, you will have just the EUR 22 million of CapEx.

Let's come back. I will first reply on Energy, Carlo will explain what happened.

So generally speaking, fourth quarter was acquired on the quarter in terms of profitability for Energy. I think the calculation that you gave us was one on Stringing. In -- generally speaking, was not a bad quarter in terms of volumes, both for Stringing and Energy Automation, was quite [indiscernible] in terms of margins because basically there was a mix of effect. Of course, there was an impact on cost increases. And especially for the Energy Automation, there was a matter of difficulties in finding the electronic components where we had to have some extra costs. And this is the reason why later on -- before I just explained that in 2022, we are discussion and dealing with the review of both the prices -- on the price list with private customers, but also negotiating with the public administration for the long-term contract. There was, of course, an impact of the -- especially on Stringing for the increase of utility cost, the energy cost of -- for the company. And there was also a matter of product mix on -- in the, let's say, product and sales mix in the quarter. But generally speaking, the end figures for both Energy Automation and Stringing, we saw on the full year a strong increase in profitability. And we think that also due to the actions that we are doing with the -- and the negotiations that we are doing, we are positive that we will be able to recover and to increase the margins that were -- in fourth quarter were not so positive. I think I leave the floor to Paolo that will explain you about the Railway.

On the Railway, 2 main points. The first one that in the last quarter, we had increasing costs that we were able only partially to post on the long-term contract. But we started a strong negotiation with our counterparts that are public companies, and we will have the benefits the next weeks because we are discussing how to put the extra cost on the price of the contract, and we had an agreement in concept and now we are discussing just the value and what are -- that we will conclude in the next weeks. The second point was that due to the new -- smart work procedures that delay a little bit all the geographic procedure of our -- for the invoice, the goods and for delivery of the goods, due to the fact that the public company delayed a little bit, slowed down a little bit the speed to obtain the documents, so we -- at the end of the year, we didn't deliver 2 vehicles and so this impacted on the inventory and on the EBITDA.

Excuse me, Coco, probably you noticed something that is also connected in our cost allocation. This was the first year we are closing with the new ERP system and the allocation by business unit of common expenses in a way they are marginally different. And for reasons, certainly the profitability within the business unit in a way are not really consistent with what we have done the year before. So there are marginal changes. About the 2023, the figure we provide are made -- based on the hypothesis to stabilize the inflation rate and to stabilize [indiscernible]. No doubt if the current situation is going on, also the figures are going to be updated by volumes and by profitability. What we were expecting 1 year ago was an inflation rate between 3% and 5%. What is going on now, as you have seen, probably, the raw material -- the energy cost, the raw material around 15% to 20%. And energy cost [indiscernible] impact on food cost, no more than [indiscernible] but had an increase of 200%. For this reason, all the figures of next year maybe can be -- can have an impact if the inflation rate in May is going to be confirmed. So going to probably to be improved. But as of today, we were thinking that not to make confusion. We were winning on a volume point of view, we are in line with our expectations. About what is the CapEx allocation, you noticed that, finally, we had an increase of our CapEx this year because we had a delay in making the stocking of our fleet machine. No doubt that we expected that probably on the next 2 years, then the CapEx are going to be marginally more than what was the original budget. But we are expecting also to have the asset allocation. So we're expecting to sell machine. This is in a way easier now because due to long delivery, there is a huge demand also for second hand machine, and we are now making negotiations for that. But we are willing to have a good price and fast delivery. The value chain situation is going to be always difficult because, for specific components, we have -- the components that are available, the delivery have normally increased from 3 to 6 months from the traditional delivery.The backlog is better, but no doubt that we have a problem to produce what -- to transfer our [indiscernible] in production. But for this reason, anyway, we are expecting that the [ CapEx ] are going to be reviewed in [indiscernible] for this reason. I don't know if we have given a reply to everything.

The next question is from Emanuele Negri of Mediobanca.

I have, let's say, 3 questions. I have to do that right now. The first one is about the revenues you have in Russia. We appreciate that they are about 2% of the total. So what do you expect from the Russian market for the next year? The second one is about the NFP, which that you are expecting an improvement of the NFP to 2023. On which points, on which item of the net working capital do you expect to improve at most? And the third one is about the tax rate. We see the tax rate is quite high this year. What do you expect from next year? And can you provide us some more details about the tax rate yet this year?

Let's go to Russia. [indiscernible]. I think that we are not going to do better than 2%, no doubt. But I think that opposite, we are going to be -- we are expecting to stop our business for next 3 months because the real difficult point for us, we have orders, but the collection of the money, the transfer of the money is very, very difficult. And for this reason, we are willing to send them by. Opposite what is our idea as an organization, we took a commitment with our employees, to keep the company [indiscernible] because we think that in a way on the medium term, we are not going to leave this market. I hope that this can have a positive impact on next year. But for this year, we are not expecting to have a real material revenues. About the improvement of net financial position, no doubt we -- as we told, we are willing to work on inventory and on basically the asset allocation. On inventory, we have a chance now within the current situation to utilize our inventory that in a way is putting us in a better profitability situation because we can produce basically with the existing inventory, mainly the production -- our production up to end of July, but we are willing to decrease especially in [indiscernible] in this area. And [indiscernible] we are on the way to decrease our inventory in railway because we are willing year-end to be totally in line with our planning and to deliver the machine that is going to be completed. About tax rate, I will transfer to Mr. Paredi, that can explain what is the situation [ between countries.]

Because if you look at the combined of a result, the consolidation result, and obviously, if you look at the profit before tax and after tax, it seems that the tax rate is very higher. But then we have to consider a fact that we generate the majority of the profit in Italy and in New Zealand. Instead, we have differential losses in U.S. and in Australia. So that has impacted the global result. And so the percentage of our tax rate is not exactly the calculation that we can find in the comparison on the 2 sector, but is around 20%, 22%. Because the benefit that we have in our activities for the credit related to investment and the benefit are over the results are not included in the tax rate. So it's not so easy to explain only showing the consolidated number, the tax rate of the group. But obviously, that is impacted by the result of Italian company, mainly the performance of Railway business and obviously also the New Zealand that impacted positively in this year.

Anyway, what we're expecting this year that all our different companies are going to be profitable because the commitment for the key manager will change also the way to -- for our [ MBO ] and basically all the local managers have to identify where the problem. And our expectation that we are not going to have the problem that -- since certain area of this year [indiscernible].

[Operator Instructions] The next question is from Alessandro Tortora of Mediobanca.

I have 2 questions, if I may. The first one is, sorry, a follow-up on the previous question on the, let's say, the guidelines for the next 2 years. So if I understood well, what you are telling us is that you have a good visibility in terms of volumes, but what, let's say, needs to be done is to understand the cost inflation scenario and, let's say, an updated view on the profitability side. So this is the first question. The second question is on the debt level, considering that compared to your initial forecast, clearly, we are now having higher debt. Can you, let's say, give us any update on, let's say, any negotiations you're having with banks, if this will mean, let's say, a higher average cost of debt we need to think about? And the last question is on the Trencher. Considering that, and I believe you are not, let's say, satisfied with the performance this year of this division, are there any reasoning you are making on the strategicness of this division? Are you considering that both the Energy Automation but also Railway are 2 divisions which probably will represent the bulk of your growth?

Start on the profitability. No doubt that what we are expecting is -- and we were willing not to give figures because, really, the situation is not stabilized. No doubt that due to the shortage of delivery of all our components, we are expecting for 2 reasons that probably our profitability due to the difficult situation can improve. Because no doubt, that all the delivery terms are very long now. We are talking that basically the competitor have 1 year, 1.5 years delivery for Trencher and in the area of Railway the competition has no delivery. Second point, we are under negotiation as we anticipated and we are really very positive. We have not the right figures as of today, but we are expecting that the global scenario in Italy, there is a strong sensibility given by the official rules. And that we are going to recognize for a past year, for the current year for next year, basically the full coverage of our cost increase and probably also we are growing -- the fact that we have a strong inventory to have -- to be in a very good position. About our debt level opposite, the question is coming up from Mr. Paredi, where we are and where we'll end up with our bank negotiation. No doubt that, globally, we are moving. As a strategy the financial line out of, let's say -- a lot of out of Italy and we are going to give -- to find financial lottery. We had made that -- we have announced that we have strong feasibility now to increase our [indiscernible] USA.

Yes, we are working on -- to find a facility on the local domestic countries. But in any case, obviously, we collect different funds over the last 2 years according to a benefit. And our costs now in terms of interest rate is lower than the previous year. So we talk about an average of 3% to 5%. If you look over the next 12 months, for sure, we have a good notion for different institutes, also locally. But the main topic is to find the resources in each country to be in line with the needs of each unit. But in any case, we're still open some opportunities in Italy, but not so big like what we did in July with that famous EUR 20 million with CdP, MCC and Finlombarda.

One important figure that was this year and was due to our good job made by our treasurer, we have a positive impact on our interest rate -- our exchange rate situation. And we are expecting also in the current year that basically we are long in rubles, and we are making losses in rubles, no doubt and that's important. But we have already [ accrued ] loss in our credit in rubles, but we are basically working for very strong currency now. One is U.S. dollar that in a way is much better than -- we're expecting a strong dollar during the year. But we are long in rand, and the rand for this year. We are long in Australian dollar and the Australian is strong. And we are long in New Zealand dollar, but not so strong because they pay out everything. But no doubt that, basically, we are expecting to have also a positive impact on exchange rate situation. About Trencher, as you told now, we are really changing our focus now. No doubt that we are on the way to change our 2 weak points, one was U.S.A. the second one was Australia. We have taken preparation to modify. And in U.S.A., we have a good news. Because basically due to the new oil and gas situation, the market is back booming also in that area. But the U.S. market is really positive. And with the Australian market, we are going to change our organization by taking only profitability project and taking the scope of our supply more dedicated to sell than to turnkey operation. Because last year, our losses were one-off losses connected to COVID situation, that we were obliged to stop a project for 4 months and we were obliged to pay the penalties. For this reason, I think that also for Trencher, the current year is going to be very good. Further that is going to be very good is we will reorganize our Middle East project area. And up to yesterday, we were following of a partner in Qatar. Now we are -- the driving market is Saudi, and Saudi is very well performing. We are going to sign very good, long-term commitment with local company. And also in that area, the fact that we are in the area with machine available is a good point because we were talking today the delivery for new equipment [indiscernible] now are between 18 to 24 months. So we're expecting for the year, very strong in the area.

[Operator Instructions] Mr. Caccia Dominioni, there are no more questions registered at this time.

Thank you, everybody. I hope that we are always available for everybody. I think that this was a good opportunity for us to be here, and I hope that next year we will come back with the expected results and success. Thank you, everybody.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.