Trifast plc (TRIL.XC) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Trifast plc Interim Results Investor Presentation. [Operator Instructions] Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, Iain Percival. Good afternoon to Iain.

Good afternoon. Thank you, Alex. Good afternoon, everybody, and thanks very much, as always, for taking your time to join this webcast where Kate and myself will be giving you an update on our performance in the first half year for FY '26. As Alex mentioned, and for those who don't know me, my name is Iain Percival. I'm the Chief Executive Officer.

And I'm Kate Ferguson, and I'm the CFO.

Good. So let's go to the next slide, and we can talk through the agenda. I'm going to talk us through the highlights for the first half year and the key results. I'll also give a flavor on the execution progress we're making on strategy. Kate will then talk us through a bit more detail on financial performance, and then I'll come back and do a deeper dive into that strategic execution. And of course, we'll close with an outlook of how we see the full year before opening the floor, as Alex said, to questions. So let's move to the highlights. If we go to the next slide. Thank you, Alex. So look, it's been undoubtedly a very challenged macroeconomic environment that we've been trading in, in this first half year; however, I think we're very pleased and proud with the resilience of our first half year results. And to give a sort of flavor of highlights, I think we're really pleased to see that the gross margin in our business has improved by 150 basis points. Our EBIT margin improved by 20 basis points from 6.0% to 6.2%. And if we strip out the, frankly, one-off or extraordinary effects of FX into the first half year, actually, the underlying EBIT margin we're achieving is 7.2%. So a significant step forward period-on-period. We're really pleased to see that the strategic pivot that we made and focus on to key market sectors and in particular, Smart Infrastructure has delivered for the second year running double-digit growth. And I'm going to come back later and do a little bit of a deeper dive into Smart Infrastructure, very exciting high-growth market sector for us. And then finally, I would say that, look, we've maintained a really strong focus on financial and balance sheet discipline. Kate and the teams have done a good job again in the first half year to make sure that we keep working capital under control and ultimately maintain a very strong and financial balance sheet with our leverage ratio maintained below 1.0x now consistently. So I think in the face of that challenged macro environment, as I said, a resilient and good set of results. We confirm that our expectations for the full year remain unchanged. And importantly, that we're still confident and maintain confidence in our delivery of the medium-term ambition and goal for this business, which, of course, is to deliver the double-digit margins in the medium term. Let's just take a quick look -- next slide, please. If we just take a quick look at the strategic delivery over the period since we launched the strategy last year. On the left-hand side of this chart, what you see is the walk that we set out last year when we delivered the strategy internally and externally to the markets. And clearly, we laid out against each of the 4 strategic initiatives, margin management, focus growth, operational efficiency and organization effectiveness. How we expected to deliver margin improvement over the medium term. On the right-hand side, what you see is the actual results so far since we launched the strategy. And I think 2 key points here. One, you can see that the impact of the challenged macroeconomic environment, which has put pressure on revenue has been, frankly, more significant than we expected when we laid out this strategy. But equally and just as importantly, how much progress we've been able to drive through -- largely through self-help actions in executing that strategy in each one of those 4 strategic levers. So I'll come back and talk in more detail later. But for now, let me hand you over to Kate for a bit more detail on financial performance.

Next slide, please, Alex. Thank you, and good afternoon, everyone. Before presenting the half year results, let's review our revenue performance by region for the first half of HY '26. This review is on a constant currency exchange rate basis. North America continues to be a bright spot for us, leading our growth with particularly strong results in smart infrastructure and medical equipment. In fact, Smart Infrastructure was up 15% compared to the last half year and medical equipment increased by 32%, reflecting our strategic focus in these sectors. However, the U.K. and Ireland faced significant headwinds. Our customers in this region were challenged by a cyberattack on a major OEM, production slowdowns due to U.S. tariffs and ongoing pressures in the EV transition. And policy inconsistencies also undermine demand, making this a particularly challenging environment. In Europe, the decline was mainly driven by softer automotive volumes, the OEM cyberattack and the reduction in white goods volumes. This was partly due to the strategic decision to exit low-margin business and the fact that some customers have transitioned their production to other regions. Asia also saw lower volumes, primarily due to tariff uncertainty and increased competition, especially in China's EV market. In some noncore sectors, our customers' market share has also eroded, driving lower production volumes. Overall, our regional performance reflects both the resilience of our growth markets and the impact of external disruptions, particularly in automotive and in the U.K. Next slide, please. Right. Now let's look at our revenue by end market, which highlights our ongoing efforts to rebalance the portfolio and reduce our reliance on automotive. Automotive volumes were materially impacted by the U.S. tariffs, the slowdown in the EV transition and the cyberattack on a large U.K. OEM. This affected more than 20 of our customers. And as a result, automotive revenue declined by 12.2% to GBP 38.1 million in the half year. On a positive note, Smart Infrastructure continues to be a key growth engine for us with revenue up 11.5% to GBP 19.4 million, and this growth has been driven by the strong demand for data centers. And smart infrastructure now accounts for 18% of our total revenue, up from 16% in the half year last year. Medical equipment is another area of strength with new customer wins in medical robotics and dental equipment and of course, significant growth in North America. Distributors were adversely impacted by the fall in stainless steel market prices and the general economic performance as measured by PMI. Notwithstanding these challenges, we managed this well and with only a marginal decline in revenue to GBP 15.4 million. The other category, which includes white goods and the negotiated exits saw a 14.9% decline to GBP 31.4 million, reflecting the impact of tariffs and our strategic decision to exit low-margin business. It also includes some customers facing increased competition in their own markets. This end market breakdown demonstrates our progress in diversifying the business and focusing on higher end, higher growth, higher-margin sectors. Moving on to the revenue and EBIT bridges. So next slide. This slide here impacts -- highlights the impact of market contraction on both revenue and EBIT with positive outcomes from the work on focused growth and margin management. On the revenue bridge, you can see that the U.S. tariff situation has created some upside for us as we recover the cost of the tariffs through higher pricing and invoicing for the tariff surcharges. This is, however, also dilutive to margin. And what stands out on the right-hand side of this slide is the foreign currency. Following Liberation Day, which was just after our FY '25 year-end, we were hit by some significant weakening of the U.S. dollar affecting the revaluation of USD-denominated assets on our balance sheets in Asia, and this created unrealized FX losses. Historically, we have not adjusted at EBIT for constant currency for unrealized FX movements and to maintain consistency, we have not done that or adjusted for it this year. However, it should be noted that the impact has been unprecedented and somewhat distorts our underlying operational performance. Importantly, if it were not for the market conditions, mainly created by the tariff uncertainty, we would be reporting a much more favorable result. However, we can only control the controllables. And while market uncertainty remains, our focus is on protecting profitability through our self-help actions and positioning the business for recovery as market conditions stabilize. Moving on to the next, bridge, please. Here, you can see the decline in revenue for U.K. and Europe on the left-hand side has resulted in positive contribution to the group EBIT margin improvement on the right-hand side. And this has been through margin management, efficiency improvements and cost savings. Asia, however, is the only adverse component on the EBIT bridge. And this is because almost half of that 1.4% shown on the right-hand side is attributable to the impact of those unprecedented FX movements. As I mentioned before, our underlying group EBIT margin would improve from 6.5% to 7.2%, excluding that impact of the foreign exchange. North America's revenue included the recovery of tariff costs and strong performance in Smart Infrastructure. And like the U.K. and Europe, they worked really hard to improve their margins and manage overheads as reflected in their improved EBIT margin. Central cost savings were also achieved, and I'll come back to that in -- on one of the following slides. These bridges demonstrate the effectiveness of our margin management initiatives, and we remain committed to further strengthening these margins as conditions allow, and we're confident that our disciplined approach will continue to deliver results. And now next slide, taking a closer look at our financial performance for the first half of FY '26. Despite the revenue decline and the dilutive impact of tariff recovery on margin in North America, we achieved significant improvement in our gross margin, which increased 150 basis points to 28.9%, and this was the result of disciplined margin management. We also achieved savings from a strategic project to optimize inbound freight in Europe and continue to benefit from the operational improvement programs that we implemented in FY '25, including the consolidation of the national distribution center and savings in Central driven by headcount reduction and further interventions to reduce overhead. The successful outcomes in overheads were notwithstanding the inflationary pressures and the national insurance and minimum wage increases in the U.K. Our underlying EBIT margin improved rising from 6% to 6.2% and up to 7.5% from 6.5%, excluding the FX, highlighting the effectiveness of our cost control and pricing strategies. Interest reductions of around 11% due to lower rates and also lower separately disclosed items of around GBP 1 million compared to the last half year further contributed to that improvement you see on profit before tax. These results clearly demonstrate that our strategy is resilient, and we can deliver growth even when top line conditions are tough. Moving on to the bridge for the underlying profit before tax. This slide here illustrates the key movements. Here, you can see the impact of lower revenue volumes and the effect of foreign exchange on EBIT, reflecting the challenging environment and currency volatility. And this has been mitigated by margin improvement, demonstrating the strength of our strategic execution. Lower overheads and lower interest also support our bottom line. And overall, you can see that our self-help actions and margin management have protected profitability in a difficult market. Moving on to the cash flow and balance sheet highlights. You can see we continue to tightly manage leverage and liquidity. Our ROCE improved to 7.8%, up from 6.3% last year, reflecting better capital efficiency and profitability. Operating cash flow before changes in working capital improved notwithstanding market conditions, and our net debt position remains well controlled at GBP 17.4 million. Leverage is low at 0.9x, unchanged from last year, and our banking facility headroom remains strong at GBP 73.4 million, giving us significant financial flexibility. Higher HY '25 creditor and provision balances also resulted in a lower cash inflow from working capital than reported last year. Combined with lower revenues, our working capital as a percentage of revenue increased. We view this as temporary, and we are actively addressing through efficiency measures and tighter controls. Impacting this and not surprisingly, we have been hindered from achieving our inventory targets due to lower demand in the automotive sector, resulting in larger holdings of older stock. Also, the cost of tariffs in North America has also created higher inventory on our balance sheet. This should not, however, be interpreted as us having taken our eye off the ball. We continue to focus on improving our inventory turnover through the use of data and initiatives such as the sale of excess and obsolete stock back to customers. Encouragingly, we have significantly improved collections of receivables compared to H1 '25, although progress has been slowed by some automotive customers. This comes with credit to all of our teams and especially to our new shared service center team in Hungary who have picked up new processes quickly and effectively. And finally, on to my last slide, the net debt bridge. You can see here net debt continues to be tightly managed with strong underlying cash flow, which included the payment of the FY '25 bonuses. Last year, we had GBP 1.1 million in CapEx compared to GBP 3.4 million in this half year. And our higher capital expenditure reflects our investment in digitization projects, which are essential for our future growth and efficiency. And I'm pleased to confirm that these projects remain on track and on budget. Lower interest costs have also supported our financial position and tax and dividends are broadly in line and consistent with last year. Overall, despite challenging marketing conditions and external disruptions, the business has demonstrated resilience through disciplined margin management, operational improvements and strategic focus on higher growth sectors. Looking ahead, continued self-help initiatives and a commitment to operational excellence positions us well for recovery and sustained revenue and margin growth when market conditions stabilize. And that's it for me. Back to Iain.

Thanks, Kate. So I said that I would come back and do a bit of a deeper dive into the execution and delivery in each of the 4 strategic initiatives that we spoke about earlier. Starting with margin management. And again, just to familiarize margin management, we mean in simple terms, how we ensure we're getting value-based pricing from customers and how we make sure we're getting competitive costs from the suppliers that we use. And what's great to see is just how much margin management has continued to contribute again this year as it did last year. And therefore, this is becoming really a commercial engine for the business and clearly a significant shift from where the business was historically. We're using the power of the data that we have available through the D365 ERP platforms, the tools that we've spoken about here in the past like true profit to really get down to granular level of which products or which accounts are the key focus areas that we need to go and address and then having professional databased conversations with targeted customers in order to ensure that we deliver the right level of margin that reflects fairly the value of the service that we deliver for our customers each and every day. In terms of focused growth, we're delighted to have announced this week the investment that we're making that's been approved by the Saudi government. So the Ministry of Investment for Saudi Arabia or MISA, approval has been achieved for that investment in the Kingdom, and it's really supporting what we see as significant smart infrastructure opportunity. And that investment is underpinned by a long-term agreement with an existing major smart infrastructure customer. So very excited to see the growth over the medium term as we develop that exciting market and certainly, that project launching today, and we expect to be operational in the Kingdom certainly by the second half of our next financial year. We continue to make investment, of course, in the skills and capabilities, whether that's training and development of our people or whether that's investment in additional resources, particularly in frontline sales and in engineering teams that build on that ability to go to market and sell the value proposition, particularly in smart infrastructure and medical equipment. And finally, the strength of the balance sheet that Kate spoke about and the diligence that we maintain on maintaining that leaves us with the flexibility and the opportunity to consider bolt-on acquisitions. And the team is working in the background on developing long list of opportunities. We will be disciplined. We will be focused on execution to the strategy and make sure that it's going to be accretive in returns, either acceleration or absolute. Lots going on in operational efficiency, some of which Kate already mentioned the shared service administrative improvement in efficiency in terms of the finance, accounts payable, accounts receivable team. They did a great job along with all of our finance teams in making sure that we delivered a healthy working capital return in the half year. So thank you for all of those teams involved. We made a difficult but necessary decision also from a simplification and efficiency basis to move out of our historical home in Uckfield, in Bellbrook Park in Uckfield and move those teams into existing alternative distribution centers, one in East Grinstead and one in Walsall, a good example of driving, again, administrative efficiency. You may recall those of you that dialed in to our session at the end of last year or in July, I should say, we spoke about TR inventory management solution, so a supply chain technology solution. And I'm delighted to say that we've implemented that solution. Now it's live in customers. And importantly, we see that as an opportunity to roll that technology out. It does a couple of things. One, it helps reduce operational costs; two, and just as importantly, it gives us real-time access to demand data, and that helps us drive a much more efficient management of our inventory and working capital. So definitely a step forward, good exciting technology and lots more opportunity to come. And finally, in operational efficiency, I should give a call out to our TR Italian manufacturing facility, who completed the second phase of their solar power investment project. And that, together with the certified green steel qualification that, that manufacturing unit has in Europe positions us as one of the greenest fastener manufacturers here in Europe and certainly sets us up very well for the forthcoming carbon border adjustment mechanism legislation, which is due to impact in January next year. So lots of good stuff in operational efficiency and not to be done in organization effectiveness, as Kate mentioned, look, we continue to drive investment in digitalization and connectivity across our teams and businesses. The importance of data in our business and quality data, fast decision-making, fast, agile connection and communication is vital. So great to see that we rolled out Office 365 into all of our facilities. That means now we are one interconnected TR team, very much in the spirit of one TR culture. And secondly, again, as Kate mentioned, we continue to invest in the ERP D365 project and program, and we're excited to see that our TR Malaysia and TR India facilities will be going live in early December, and that is a significant transformation in terms of data access and process for those 2 businesses. And of course, as I mentioned earlier, on the people side, we continue to invest in talent and development of our teams to ensure that we're doing -- we have the right skills in the right place, not only for now but also for the future. So lots of good stuff in terms of strategic execution. Let's go to the next slide. I said I would do a bit more of a deep dive quickly into smart infrastructure. And here on this slide, what you see is the definition of what we're talking about in that sector. It's really 5 subsectors. Data communication and connectivity, think of data servers and racks that go into data centers is a good example. Lighting, all forms of industrial lighting, heating and air conditioning that is increasingly used, obviously, as sadly the climate -- global climate increases and fluid distribution and power distribution. So 5 key subsectors. If we go to the next slide, and where do all of those subsectors come together because they're each important in their own right, but an interesting example of where they're all utilized is in what we're all reading about and seeing in the news, the boom in data centers as we as consumers have an ever-expanding need to data, AI or just ordinary data. So the need to invest in data centers is there. Our internal assessment is that the market is going to grow by at least 20% CAGR over the coming 5 years. And on the left-hand side, just to give you some stats. Again, our analysis in working with customers who manufacture products and we supply to for all of those subsystems in data centers. We estimate about 200,000 fasteners for each megawatt of power that is going into data centers. Last year alone, 20 gigawatt -- at least 20 gigawatt of power was added. That means 4 billion fasteners were added to the requirements. So it's a significant growth area. And when we go to the next slide. Thank you, Alex. So on this slide, what we show you is just a snapshot because the range is, of course, significant. But just a snapshot of the kinds of products that we're supplying into those customers that ultimately end up in data centers, whether it's our self-clinch range or EPW screws, our patented EPW screws that go into sheet metal cabinetry, whether it's Plas-Tech 30-20 range, our range of injection molded or screws for injection molded applications or indeed, whether it's the new range of sustainable plastic fasteners that are using cable guides and cabling. Our range suits really well into all of these products. And of course, we wrap around that all of the service and value proposition that we provide to our customers in terms of taking complexity out and back to that TRiM solution, the supply chain technology that we're able to deliver to drive efficiency as well as innovate and add value in engineering. So I hope the deep dive or the deeper dive into Smart Infrastructure has helped for those who are a little bit unclear on what we were talking about. If we go to the final slide. And in terms of outlook, really, what I'd leave you with is our 3 key messages. What we've demonstrated over the periods that we've been reporting is we set out our strategy last year, and we are delivering and executing well against that strategy. Each of the 4 strategic initiatives we are making progress in largely self-help, and that's helping to drive the margin improvement. Secondly, we remain in line with market expectations for this financial year. And third, and from our point of view, the most important, we're focused and on track to deliver that double-digit margin in the medium term. Now before I hand over to Alex and Christopher for questions, let me just say because I know a lot of our own TR employees watch this IMC and join this IMC webcast and indeed, many more of our employees watch it at a later date. So I just want to say a heartfelt thank you from Kate, myself, all members of the Board and the executive leadership team for everything that you do. We know how hard you work to deliver great quality and great service, great value for our customers and delivering equally for our shareholders. So a heartfelt thank you. And with that, let me pause and hand back to Alex to coordinate how we're going to manage the Q&A.

Fantastic, Iain and Kate, thank you very much indeed for your presentation. [Operator Instructions] I would like to remind you that recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via investor dashboard. Christopher, at this point, if I may now hand over to you to chair the Q&A, and I'll pick up from you at the end. Thank you.

Thank you, Alex. Kate, I think there's a number of questions that have come in, but I think this first question is perhaps best placed by you. Let me read it to you. Could you break down the GBP 1.149 million charged as restructuring transformation cost in the interim trading results? Charges currently seem to be recurring, are you reaching a conclusion to the restructuring needed as part of the turnaround? And what levels of charges would you guide to be incurred in the second half year?

Okay. In response to that, first of all, I won't break down the H1 number completely. But I will say most of that is effectively redundancy costs and recruitment costs related to restructuring. I think everybody knows that this is a transformation exercise. We are transforming the business, and that means that we do incur those types of restructuring costs than we had last year, and we will continue to incur some more later this year as we continue to do our transformation. What I will say is that will come to an end, but not likely until we get into probably FY '28. We are still in transformation. We are still in that rebuild recover. And it's not until we get to resilience that we're really going to see that tail off. We still have projects to do, so we will still incur those costs, but we do continue to control those costs and make sure that we are taking responsible decisions.

Iain, I think this is picking up on the issue that you talked about efficiencies in office relocations and the like. We've had a question come in about have you realized all the savings across the U.K. from the move to the national distribution center in terms of property costs?

Yes. So those of you that have followed that transformation program in the U.K. will recall that we consolidated 5 of our distribution centers into a purpose-built national distribution center in Walsall, in the Midlands. And so yes, those efficiency savings related to that program have come through and indeed are partly supporting the margin improvement that we're seeing in the U.K. So yes, is the answer.

Thank you. Again, a question for you both, but you have -- we have previously identified a relative weakness in meeting customers' needs in terms of supply chain simplification and the toolkit we use for supply chain simplification. What progress have we actually made here? Could you give us an update?

Yes. Well, first of all, I just -- I would challenge the fundamental hypothesis on we haven't made the progress on supply chain simplification. I think -- so we have -- and the nature of our value proposition and why customers choose to come to TR is typically because they want a partner to take all the complexity out of their supply chain when it comes to fasteners. Remember, fasteners represent a significant chunk of any engineered products bill of materials, but represent a significant low value respective to the total cost. So actually, the cost of ownership is in managing the complexity, and that's why people choose -- customers choose to come to the likes of TR. And again, just let me challenge the hypothesis because actually, we have a reputation, which is built on doing exactly that. And we have many great examples, both here in the U.K. and in all parts of our geography where we're doing just that, supplying all or multiple components in various different solutions, whether it's direct line feed, VMI or indeed consolidated deliveries. So that's the fundamental. I think the root of the question and a fair challenge because we shared that last year on the strategy is when it comes to the technology that is in the market and that some of our competitors had historically were -- and I think we have to say we're ahead in terms of [ SmartBin ] technology that to the TRiM system delivers that kind of smart data-driven real-time management of inventory in particular. That we recognized and we said very openly, that was an area that we knew we needed to close from a technology perspective. And hence, why I said we're delighted that we have closed that gap now with the implementation of the TRiM solution, which is equivalent to what else is out there in the market from the competitors. So actually, I think in terms of supply chain simplification, a, we do a really good job today and our customers come to us for that reason; and b, in terms of technology offering, actually, what we're doing is we're expanding the range of solutions that we can make available to our customers.

Thank you. Thank you, Iain. We have a question relating to margin management now. How do you build pricing power across the business?

Okay. So the first thing to say, and this is a fairly fundamental piece about our business. All of the products we supply are manufactured to an engineering drawing. They're specified into a customer's bill of materials. And that means that a customer can't just go and buy the same product from anywhere. To make a change requires once you've been qualified, and frankly, it doesn't matter whether it's an automotive component supply chain or a smart infrastructure component supply chain. Once you've been specified in and supplied in using that supply chain, in order to change supplier, a customer would have to validate that alternative solution. That can be -- could be as simple at the lowest level of validating the alternative supplier going to evaluate the and audit the supplier, distributor or manufacturer or supply chain. It could, though, and very often is necessary for a customer to requalify that product and run a series of tests to validate that, that engineering change of drawing to a different supplier, even though maybe the design and the tolerances and everything else is the same, you still have to validate that the product change is not going to have any impact on your overall assembly. Now the cost to do that for a customer is exceptionally high relative to the benefit -- potential benefit that they would get from switching. So that provides a degree of stickiness. The second angle back to that earlier question on Supply Chain Solutions is in terms of service and quality, as long as we're servicing and delivering great quality to the customer, actually, from a hassle factor is quite a lot of hassle for a customer to make that change again on the basis of a fastener. So typically, I would say those are degrees that make our business sticky. Now to the pricing point of view, what we've been doing is really saying we've been undervaluing all of that contribution that we're making to a customer's supply chain. And equally, we know historically, if you go back far enough, historically, this business was not effective at passing on and recovering acceptable cost increases that were coming through from the supply chain. So the work that we've been doing and we'll continue to do because it's an engine. It's not a onetime thing. There's no stop to this or no endpoint. It's about building the muscle memory, the process about using the data to ensure that we are always getting value-based pricing from our customers. And I think the evidence last year and this year in the bridges that Kate talks to shows that, that engine is delivering successfully.

Thank you, Iain. And just following on from that, are we seeing any inflationary pressures on raw materials at present? And over the course of -- and do we forecast anything over the course of the next 6 months or something like that changing?

Well, we continue to -- of course, we continue to manage the cost of raw materials. And just to be clear, remember that, yes, raw materials impact all of the supply chain directly for us, about 30% of what we sell, we manufacture. So we have our own -- importantly, we have our own benchmark and access to direct material costs in this particular case, but it could be energy costs, can be labor costs. So that gives us the knowledge of what is happening in the market in any given period. And of course, we can use that to manage and control costs, and that's what we do with our suppliers. So -- and then on the other side, back to that earlier point on margin management, we've done a significant amount of work to ensure that negotiated contracts going forward have cost recovery mechanisms where there is exposure to -- where there's significant exposure to indexes like material. So I think it's -- bluntly, this is about professionalizing the business from a commercial perspective, whether it be on the managing the suppliers and the costs that we see, the input costs or whether it's about how we make sure, as I said earlier, we get value-based pricing.

Thank you. I have a question here on M&A. And perhaps you can say something on M&A. The question is focusing what is the preferred route for an M&A pipeline? Is it geography, so location? Or is it end market sector? And if so, which manufacturing or distribution or immediate impact on ROCE or margins or growth really to achieve time to achieve target return on investment. So if you -- perhaps you could say a few words on thoughts on M&A.

I can pick up on that. We refreshed our capital allocation policy, which I think we presented at the end of the last financial year. And in that, we did discuss what we wanted to do with respect to M&A. We'd quite like to do a bolt-on acquisition. It will be the first acquisition that we as a management team would have done. So something relatively small, so we can prove our success, which would be good. But also, we need to think about where. So we have talked about potentially doing something in North America. And the reason North America is appealing to us is because we've got distribution, but we don't have manufacturing. So it would make sense for us to have manufacturing as well there. In terms of end markets. Obviously, we are very much focused on our core sectors, which are automotive, smart infrastructure and medical equipment. I think what we'd really like to do is to increase our market share, especially in smart infrastructure and medical equipment. And that's likely to be, say, Europe. So they're the key focuses geographically, North America would be great. End markets, smart infrastructure, medical equipment. I think that's a simple answer. And in terms of what we'd expect from an acquisition, we will apply a very strict price discipline to any acquisition that we do. And there would be an absolute requirement that we would expect the acquisition to be accretive to our margins and accretive to our ambition to achieve double-digit EBIT margins in the medium term.

There are no further questions. So if I can hand back over to you, Iain, to wrap up.

Great. Well, first of all, thank you for those of you who submitted questions. I really appreciate you taking the time to do that. Thank you, Christopher, for coordinating that for us. I made our lives in this room easier, especially as we're working off just one laptop. So thank you for that. Look, thank you very much all of you for taking the time to dial in. We appreciate it. We appreciate your interest in TR, in Trifast. I think, again, before I just close out, a sincere thank you to all of the TR team. We know everybody is delivering hard for customers each and every day. And I think the collaboration and teamwork that we see across our teams globally is just wonderful in terms of that change to a One TR culture. So thank you for that. And I'd just go back and leave you with -- as closing, the same 3 statements. We are demonstrating, and of course, we're committed to continue to demonstrate execution, focused execution of the strategy that we laid out. And again, in this period, we've demonstrated that, that strategy is delivering results. We're committed again to delivering on our expectations that we set out for this financial year. And finally, we're on track, and we're equally as committed to make sure that we deliver this business back to where it should be, which is a double-digit EBIT margin business. So with that, thank you very much, everybody, again, and wishing you all a very safe and pleasant rest of your day.

Fantastic. Iain and Kate, thank you very much indeed for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the Board can better understand your views and expectations. This will only take a few moments to complete, and I'm sure it will be greatly valued by the company. On behalf of the management team of Trifast plc, we would like to thank you for attending today's presentation, and good afternoon to you all.