WashTec AG (WSU) Earnings Call Transcript & Summary

Thank you. Ladies and gentlemen, on behalf of the WashTec Board, together with my colleague, CFO, Andreas Pabst, I would like to welcome you to the half year and Q2 call. Same procedure as last time we have the presentation. Afterwards, we switch to an interactive Q&A session. Detailed instructions will be given by the operator at the end of this presentation. It is my pleasure to provide you with some updates on WashTec. Andreas will present the financial figures after my presentation. Let me start with a slide that you are partially familiar with. Our mission is sustainable car wash. Attendees of our calls know that with this slide, I usually repeat our business model. A deeper look reveals that the wash process by a smart machine can be tailored and minimizes freshwater consumption in combination with the water treatment system. Cars are washed in the first phases by process water and in the final phases by freshwater. And of course, you might already know that such operations make use of 30 to 40 liters of water. As a comparison, the newest technology of laundry machines uses 40 to 50 liters according to my machine device app on my phone. With our smart dosing system, we have exact data on how much chemicals type and volume in unit milliliters are applied while washing a particular car by using our green car care products, assuring the most sustainable use of car chemicals. We know the chemical load that is brought into the water treatment system at a certain time. All this data can be processed by our My WashTec cloud platform to ensure the most sustainable operation of a car wash. We call it Wirksystem, which means in English that actions performed by our car wash system and effects on the water treatment systems are known and can be controlled by data. Customer satisfaction is our goal, number 1. We can generate additional high customer value by offering product bundles that improves that work system and take advantage of WashTec's largest installed base in the market. This brings us to the next slide, the goals of our strategy and the further specification of achieving our Vision 2030. Last year, we presented our growth plan to achieve EUR 800 million, our vision 2030. In our strategy process, we refined this plan. In the subsequent months to come, we will communicate further details along our implementation of the strategy. In a nutshell, the goals are: We will maintain global car wash market leadership and take responsibility in our market by driving sustainable car wash leadership. We are generating high levels of customer benefits through consistent digital orientation and smart integration of products and digital services. We realized significant market share in the tunnel business, especially in the North American market. We will offer highest customer value based on the combination of machine and service and chemistry and digitalization, thereby achieving a higher share of recurring revenues in the aftermarket business, which is today approximately 35% and will increase to 45% to 50% in 2030. And we want to achieve a double-digit EBIT margin. We at WashTec are committed to integrate sustainability in the business model of our customers by providing sustainable car wash solutions. We have published our sustainability report '22. The report showcases WashTec's ongoing sustainability initiatives, documenting progress towards targets and highlighting future development potential of our sustainability program, which is innovation and leadership in sustainable car wash, dedicated to eco-efficiency and care for people and culture. Furthermore, we have adopted 2 policies. Manifesting, resource conserving and socially responsible corporate management. This is the WashTec Group environmental policy and a sustainability policy, which can also be found in the report. We have reworked our corporate philosophy as planned in the first quarter of this year and decided to already present in the report 2022. This sustainable report, like the last one presents essential nonfinancial figures that are material for our business. We achieved a CO2 emission reduction by 187 tonnes, or 26% year-on-year. Q2 emission reduction per million euro revenue on year was 13.1%. Due to the energy crisis caused by the war in Ukraine, we have accelerated energy saving measures that have already resulted in a notable 18.3% permanent reduction in European plants in 2022. We see this as a tremendous achievement but has also had positive impact on our employee modulation. In the report, we all discuss the economics of water treatment and provide examples for country-specific regulatory agreements. I invite you to download and read the report, including facts and figures about WashTec and our business. We are looking forward for your response. As already stated, we want to take responsibility in our market by driving sustainable car wash leadership. One example is our new sustainable car wash cite-certification program. Customers are calling for sustainable solutions in all areas and link consumption and sustainability. Brand loyalty is related to the visible commitment of companies to have a positive impact on the environment. There's a need for action. Energy transformation is causing demand for fossil fuels to fall. For vehicle washing to become the mainstay of securing sales, it must meet customer -- consumer sustainability standards, especially in the use of water. Therefore, car wash operators need to provide credible, verifiable, sustainable car wash offers. WashTec's car wash cite certification program is the industry's solution for petrol stations and car wash operators. The WashTec's Sustainability Partner program uses a seal to promote sustainable car wash sites. If customers have an active WashTec machine, including a water reclaim system in combination with our Green Car Care chemicals, they receive a seal for customer communication of their sustainable offering. WashTec is represented along with the Green Car Care logo on the seal as the sender and certifying company. The seal is free of charge and checked for renewal each year. We have already certified in a short time, more than 100 sites. We presented a variety of new products as a car wash [indiscernible]. In the U.S., we have launched Aqua Pur Modular, our water treatment for the U.S. market. We've all talked about this in previous presentations, the product is already operating at customer sites. In essence, we launched the next step, the Aqua Pur Modular connected. We have equipped our water treatment system with sensors, the sustainable operation of the water treatment system can be monitored on our cloud platform, by WashTec. The second big product launch is our new jet wash modular. We have completely redesigned our jet wash system and optimized it for superior functionality. The car wash customer is assisted by a digital car wash assistant that leads to every process step in a transparent way. With this new product line up, we are able to drive the consolidation of our value streams and implement the next step production optimization. The new jet wash modular system will be assembled on our new flexible production line for MVT products in our plant in Nýrany in Czech Republic. MVT stands for Modular Supply Technology. This is the equipment which is hidden in the technical room in a cabinet or a container. The products, jet wash, installation towers and water treatment systems will undergo final assembly on 1 production line. The last generation jet wash system is assembled and plant Augsburg and will be shut down in steps. In a similar way, we performed the final assembly of all our rollover systems on 1 flexible, high efficient production line in Augsburg. We aim at the modularization of our automatic car wash equipment based on modular cross construction kits, which we call MQB. Before handing over to Andreas, I want to summarize. We have a clear vision for our company, from which strategic goals are derived. We will grow strengthening our global market, wash market leadership. We will strengthen. We will grow strengthening our global car wash market leadership and drive sustainability in the car wash market. We are also working on the continuous optimization of the company. A good example is the consolidation of our production value streams, which we presented. The order intake has been slowing down, but we will still have a very strong order backlog. We have reacted to the situation by adopting our cost. Andreas will give you some more details in his presentation. Andreas, please.

Yes. Thank you, Ralf. Hello, everybody. Good to speak to you today. Please move now to Page #8. Let me follow up on the last statement from Ralf. Yes, also WashTec's order intake for the first 6 months were down by a double-digit percentage year-on-year due to the significant drop in demand in market as a whole. Nevertheless, our order backlog as of June 30 is still at an over-average high level. Furthermore, we took care on this development and adjusted and strengthened our processes. We reduced our employees from 1,824 as of December 31 to 1,776 end of June. We set up an efficiency program in the U.S., and we are now working on our production value system to optimize the work in Czech and in Augsburg. As Ralf already gave you an idea about this. You see we are doing our homework. And therefore, we are happy to present you good results for the first 6 months, 2023, as you can see on the main KPIs presented on this slide. The WashTec Group generated revenue of EUR 236 million in the first half year, an increase of EUR 16 million or 7.4% compared to prior year, a new record for the first 6 months. At constant exchange rates, the revenue growth was no less than plus 8.8%. This increase was based on price rises, but also on strong growth in the key account business and the contribution of our Chemical business. With higher revenues, the gross profit for the first 6 months increased to EUR 36 million. Prior year, it was only EUR 59 million. The gross profit margin decreased slightly from 27.0% to 26.7% over the same period. With that gross profit, and our ongoing proactive cost management, EBIT climbed by 19.4% to EUR 15.4 million in the first 6 months. The EBIT margin is now at 6.5%, whereas prior year number was 5.9%. But not only in terms of earnings we improved. We also developed of our free cash flow, and this development is impressive. After minus EUR 2.5 million last year, we achieved a positive free cash flow of EUR 6.5 million in the first 6 months 2023. Also, our CapEx spend was EUR 10 million higher than last year. You probably remember that this higher spend is mainly caused by the acquisition of the U.S. production facility, which we did in January this year. Now let's have an eye on the Q2 KPIs. The revenue grew in the second quarter by 6.8% and this was mainly due to the positive development of the chemicals business in Europe and an increase in the key accounts in North America. In the second quarter, both gross profit and gross profit margin increase compared to the prior year quarter. At 27.8%, the gross profit margin in the second quarter were higher than the same period last year by 0.7%, mainly due to the larger share in the chemical business. In the second quarter, the EBIT of EUR 9.9 million and the EBIT margin of 7.8% were significantly higher than the prior year with an EBIT of EUR 8.3 million and an EBIT margin of 7.0%. And of course, our EBIT margin was higher than in our already successful Q1 '23, where we had 5.0%. On this slide, you find the information about our revenues by products. As you see, equipment and service revenue increased significantly compared to the first half year prior year, mainly due to price increases. Impressive is our growth in chemicals. Turnover increased by 16% over the first 6 months and 26% in the second quarter. Despite the weather-related fall in car wash volumes, significant revenue growth was achieved, thanks to some newly acquired customers in Europe. One of the biggest new customers here is, as announced in our press release in July, the customer IMO a car wash operator with -- who runs more than 700 sites IN 13 countries in Europe and Australia. We are able to partner with IMO due to our leading position in sustainability, international service competitiveness and our long-term experience in chemistry. Now let's move on to group revenue by region. In the European region, revenue rose in the first month by 5.5% to EUR 184 million. Revenue grew across all customer and product groups with the chemical business developing especially positively with a double-digit growth compared to prior year. I already explained why. Revenue in North America was significantly higher in the first half year than in prior year, with an increase of around about EUR 5 million to EUR 48.5 million. The key account business was a main contributor to revenue growth in both the first 6 months and the second quarter. With a growth rate of 10.7% in the first 6 months, the revenue share of North America increased now from 19.9% to 20.5%. This is totally in line with our strategy. America is becoming more and more important for the WashTec Group. In Asia Pacific region, revenue rose by 14.1% in the first half year to close to EUR 9 million. Next page, please. Earnings in Europe region over the first half year remained at the level of the prior year, while the second quarter earnings fell by EUR 1.6 million. Overall, majority of EBIT is still created in Europe with an EBIT margin of 7.8% in the first half year and 8.5% in the second quarter. In North America region, we recorded an EBIT of EUR 1.3 million in the first 6 months, whereas in prior year, we had a loss of EUR 1.3 million. This positive development was mainly a result of effects of the efficiency programs launched in the first quarter and on which we are working hard on a day-by-day basis. Following a loss in the first quarter, the Asia Pacific region reached break even in the second quarter. The market in China remains challenging, and the company is reviewing its market approach here. The next slide. Our EBIT bridge shows some more details to explain the EBIT development compared to the prior year. As already explained in our last calls, we are seeing significant material cost increases throughout the whole year 2022. We conquered by own price increases and efficiency improvements. Despite good progress, we are in terms of gross profit margin with 26.7%, still slightly below comparable figure of H1 2022, which was 27.0%. Nevertheless, our higher revenue helped us that gross profit in absolute terms increased by EUR 3.8 million. Mainly higher outbound rates led to higher selling costs whereas our strict cost management led to stable R&D expenses and especially lower administrative costs. We managed to decrease the administrative cost as a ratio of revenues from 4.4% in half year 1, 2022 to 3.8% in half year 1, 2023. All this contributed to an increase of our EBIT by 19.4% to an overall amount of EUR 15.4 million, which is with a respectable EBIT margin of 6.5% for the first half year. Next page, please. Now let's spend a little bit of time on some non-P&L figures. First, net operating working capital. This figure decreased relatively to year-end 2022, falling by EUR 7 million to EUR 98.2 million. Relatively to June 30, 2022, the figure increased by EUR 2.2 million or a small 2.3 percentage mainly due to lower trade payables. The decrease compared to year-end is mainly attributable to the lower level of trade receivables following the record revenue in the fourth quarter 2022. Currently, we are focusing on inventories reduction, and we are sure to present here some progress soon; second, free cash flow. I already spoke about this one at the beginning. No need to repeat that we are happy with the development here. Third, net financial debt. This figure increased mainly through the financing of the acquisition of the U.S. facilities around about EUR 10 million already mentioned. Fourth, the equity ratio. The ratio declined by 1 percent point to 23.7%, which is to our perspective, still a reasonable number. Now coming to our guidance. As you all know, we are facing time of great global economic uncertainty. The International Monetary Fund updated July 23, economic outlook forecast, no significant change in the development of the global economy. But the German economy is expected to enter in a recession with a gross domestic product contracting to minus 0.3%. Ongoing high inflation rates continue to characterize global development. This results in higher interest rates, which has a negative impact on demand, especially for capital goods. The situation is not expected to be changed on short term. These effects of the macroeconomic environment are also having impact on WashTec Group's business development currently reflected above in all -- in a year-on-year decline in incoming orders. Nevertheless, the order backlog in the machinery and plant engineering sector remained at a solidly high level at the end of the first 6 months of 2023. The aftersales business developed very positively, especially in the chemicals business. This is why WashTec Group confirms its guidance for the fiscal year 2023. The revenue performance. The company expects revenue in the range of plus, minus 3% of the prior year and a significant increase of the EBIT, which means an increase of up to or more to 10%. But we also state that this guidance is fundamentally subject to uncertainties. This may result, for example, from possible escalation of the Ukraine war, a significant deterioration of economic conditions in key sales markets or additional burdens from structural adjustments. As a last point on my part of this discussion, let's have a glimpse on our financial and event calendar. Next slide, please. You see our next event is Q3 statement, November 2, followed by the Equity Forum in Frankfurt at the end of November. We, Ralf and I hope to see you there. This was it from the finance side. Now we are happy to answer your questions you may have. Therefore, I hand back to the operator.

[Operator Instructions] And first up is Tore Fangmann from Berenberg.

Maybe looking at the EBIT guidance for '23, could you maybe tell us a little bit more about how you see the impact of the ongoing restructuring initiatives in China and also about the wage inflation, which should hit the P&L now in H2?

I think the question -- maybe first answering the wage inflation. So in our budget planning, we have a 5% increase of the wages included. And that is what we currently see. So therefore, this is included in our forecasting numbers. In terms of, you call it restructuring China so at the current stage, we are really looking at how to approach the Chinese market and how is the best way to serve this market. There are a lot of ideas, which we are discussing internally, which are not finalized currently. But we have really -- we are looking deeply into the market currently.

At the moment, there seem to be no further questions. [Operator Instructions] And the next question comes from Sudhanshoo Maroo from Veddis.

Andreas, my question is on the North American market. The growth potential there, which is mostly in the tunnel express car wash segment. It doesn't reflect in your growth, especially in the first half. The revenues are up but up only single digits and -- when we talk to market participants there, they think Mark VII is not really tapping into the express tunnel towers market. So I just wanted to get your thoughts on the opportunity and how are you attacking it.

Thank you for the question. When you look at the market -- the U.S. market and the competition there. And I've been at Las Vegas at the fair, where you basically see all the things that are offered. For sure, Mark VII is known for superior rollover systems serving big key account customers. Second, we have a tunnel equipment that is also superior to the American equipment. And it's not the European equipment, which we export to the U.S. We have, in the U.S., our own more simpler version of that, as you said, express tunnel equipment. The point is that we grow step by step, and we have to basically put exactly what you said, Mark VII into the scope of the customers, which are big private equity-driven chains or at least multi-sites operators. And we do that with a certain strategy but also offering tunnel segments or tunnel -- partial tunnel equipment that is not available at the competition. And by that, we will start step-by-step and grow on the tunnel business. We have seen growth in the tunnel business, and we will continue that growth. We expect, let's say, a tunnel share of 200 tunnels a year by 2030. But of course, that's a projection on 2030, but we have very concrete measures to also talk to existing customers that have not the Mark VII equipment, but get upgrade a certain part of their equipment by Mark VII and therefore, gain reputation for, let's say, our good equipment. Did this answer your question? Furthermore?

Yes. No, this is helpful. If I can ask another question on the order intake, and you mentioned it is across the board, the order intake is down for second quarter and also down for first half. I just wanted to hear from you what is it -- are the customers as in your customers? Are they delaying their plans? Are they worried about the macroeconomic situation? Just if you could provide some color on what are the discussions like with your customers.

The direct business customers are for sure, worrying in a sense, yes, because as you look at the press and also there's a miracular thing like the bad wash weather that causes to less revenue in their business kind of is accelerating the wish to get the next equipment now. But we can put by new things which we put in the market by bundle offers and so on imposes into that market. The key account market is currently how would I say, there are some big projects that we have actually won in a tender are not yet executed to certain reasons at the key accounts that are not -- that we cannot influence. These are, let's say, contractual reasons between the big key accounts and their partners running the sites. And we expect some upside on that, and we will see how this is going on. So there is really not, let's say, 1 big thing. So it's really different from the group key account are willing. We have the tenders, but they're not yet executed. We're waiting for that. So it's not that pessimistic on the key accounts side.

Sorry, if I can ask a last question. You spoke about the chemicals business growing pretty decently. Just wanted to understand, are these customers with equipment supplied by you or these include customers who have equipment from other companies?

We both supply chemical equipment to our own customers and also to customers that have not our equipment, yes. And if you have more insight, you know a little bit more about IMO, they built their own tunnel system. So they basically take now our chemicals because Green Car Chemicals is important for them to push their sustainability brand and might be further options for business in the future. But in general, we do both.

And follow-up question comes from Tore Fangmann from Berenberg.

The call just broke up for me so I'm not repeating myself. So please forgive me. Maybe looking a bit further into 2024. Are there any further price increases that you still plan on doing? Or is there -- currently, do you envisage like pushback from your customers currently that they say like they see that your input costs are lowering down so they want to basically renegotiate the price increases that we have now over the last 1.5 years?

To my knowledge and to all the speaks with our salespeople, there is no renegotiation about already existing orders in terms of price. But for sure, also the competitors have increased the price, we need to be sensitive to understand where the best price level for WashTec is. So we are looking at the market on a day-by-day basis. With the current prices, and coming in on the new orders, we feel good that the price increases we get from the material and from a salary ratio increase that they are covered with the new orders. So therefore, currently, we do not see that we need to increase prices any further. But this is a statement given as of today, and it's important to understand that we are looking at the market on a very regular basis to see what the best price is for us.

Nothing to add here.

Nothing to add?

Nothing to add.

[Operator Instructions] At the moment, there are no further questions. [Operator Instructions] And we do not have any further questions. So with this, I hand the floor back to Ralf Koeppe. I'm sorry -- another question hands just raising up and it comes from Alexander Galitsa.

I apologize that I only joined later, so I apologize ahead of time if that has been discussed already. I was looking into the order intake that you reported and also comments around order backlog. Could you maybe provide any more color with regards to what exactly this high level overall for order backlog mean in terms of what's the reach of the backlog and how much more of order intake and how soon do you need to generate to get to your full year guidance. I guess what I'm really asking is if you continue to see double-digit declines in order intake, how confident are you to still be able to meet your full year guidance?

What we can say about the order backlog is that it's not on the record level but if we take it and compare it to the last year, we are on the second place of record level. Yes. So we're still on a very high order backlog. And of course, the question is how these tenders are executed, which is certain things. We are close to the key account customers in close contact and discussing to them. And also in the tunnel business, we have to see what the current situation is. There is, of course, a high interest rates, but there's also the availability of construction material and lower prices in construction that could trigger the orders that we have registered, and that are maybe not yet or that are for sure, not yet in our order intake, but are in our order booklet and triggered by, let's say, starting of the building and so on and so on, so that you have the possibility to look for certain incremental for a certain day when this tunnel will be released and can be returned -- can be turned into revenue, yes.

So Alexander, in other words, if I look at the order backlog, I think it is really on a very good and high level. It gives us confidence for more than 1 quarter that we can achieve our planned revenues. And I think that is a good sign. If you -- I know that you know the churn rate of our order revenue. So I think it's -- it's a good situation where we are in, yes. But it is important that we always have an eye on the order intake. And therefore, as I already explained, we did -- we took some first measures. But overall, I think that was the question for the guidance for the year 2023. Standing here, we both really believe that we can manage it.

Understood. And then another question on the U.S. market or U.S. regional profitability. I think Q2 margin was on a very good level. Do you expect this to carry over into the second half of the year, provided that the revenue is coming as planned.

Yes. So what we really did in the U.S., and we also spoke about it, I guess, in the first quarter call. We set up there a very tight efficiency program, which we are monitoring on -- at least on a monthly basis, very closely. There's a lot of exchange now between North America and Europe, how to do the process in a good and a best way. So I think we are on a good path in North America. It looks good. Development is -- goes in the right direction.

And current forecast would tell us, yes. Yes, it will carry over.

Understood. And then maybe if we stay in the North American region, I think you have reasonably optimistic forecast in terms of tunnel business for this year. Do you see that trending positively? Or the recent order intake dynamics would suggest that you might be falling short of the initial targets?

In terms of revenue, in tunnel business in the U.S., the topic is that we need to bring [indiscernible] we need to put them on the road to finalize them. So there are orders for tunnels, I would say, significant more orders than last year for the tunnel business in the U.S. We are working on the civil works and all that stuff, yes so that we can, at the end of the day, also recognize the revenue. That's improving. And also, Ralf mentioned that on the long end, 2030, we want to have 200 tunnels a year in the market. So it's a curve, it's -- last year, it was lower. This year it is already higher and it will climb and accelerate. I think we are on the right track here.

Understood. And then maybe on the European profitability, I think Q2 margin was down 2 percentage points to a relatively modest level for this region of 8.5. Can you just -- I apologize if you already mentioned that, what caused that? And do you expect margin in the European region for the full year to improve year-on-year? That's the question.

That's part of the presentation. Let's go, Yes.

Okay. So if you look at the Q2 compared to Q2 last year, there are some I would say pricing cases are not included in the last year, for example, wages, and we have higher wages this year. There was an ongoing price increase for material cost last year. This is also fully reflected now in this year's figures. On the other side, we did our own price increases. But the churn rate of our order backlog is 4 to 6 months. That means not all revenues we created in the second quarter are already the orders with the higher prices, that is 1 topic. And the other topic is what Ralf already mentioned here that we are working on the efficiencies. We are setting up the plant here in Augsburg and combine it with the plant in the Czech Republic to have MQB and the MVT to optimize here our production. And I think there is already some progress.

Actually, some measures that we have taken that work on the gross margin, in particular and which is installation, it's rates, it's footprint of the production. So we want to improve that. Also since markets become more volatile and unsecure, we hope, let's say, for the best. And of course -- but we act and as I said, we already acted on the operational cost are really ramping down the cost and doing the best efficient moat on the company, executing the company work here and you see the results of this, yes.

Understood. And just last for me. In terms of gross profit margin for the group, you would think that it should improve sequentially in the coming quarters, provided better cost position, probably pricing sitting through the backlog? Is that...

That's our own forecast, but it's a fair assumption, but what do you see.

And the next question comes from Stefan Augustin from Warburg Research.

And also, sorry from my side, I'm a little bit late to the party. So if ask a question that has been asked before, please simply skip it and we will do that off the call. And I have one on the chemicals business, which I see quite nicely up in the second quarter. Is this, let's say, more to weather? Or are there structural elements behind that? Is that sustainable movement? And can I forecast, let's say, a better so-called product mix for total European business into that development?

So I already explained it a little bit in the presentation. The topic is that we have won this IMO contract, which really helps us a lot. It's a huge chemical customer. On the other side, there were some months in this year where the wash counts really went down. So there are 2 different movements in the chemical business, up by this new customer and a little bit down by the overall wash counts due to the weather.

Same in North America, by the way. California when you think about what happened in the end of first quarter, the weather conditions on the West Coast and so on. We saw really bad wash counts in Europe as well as in North America. However, things come back, good weather kicks in later than maybe last year. And the new contracts and also the price increases, of course, bring us in this condition. We have record production rates in our [indiscernible] plant. So we really have to produce a certain amount each day to fulfill the demands. That is a very nice thing. And we have started that right away in January and have been keeping up this since today. And we will have -- we also will see a record production in terms of tonnes by the end of the year.

Okay. Just maybe as a clarification so that I don't get overly excited probably. If I would assume the wash counts down in the second quarter, and we would be up around EUR 3 million quarter-over-quarter in the chemicals business. So I would conclude that I have more than a EUR 12 million contribution from the IMO contract. Is that not a little bit too high?

That's too high.

That's too high for the IMO contract, Yes.

That's too high, well too high. The IMO contract has not been actually a part of our budget. We have taken it as a chance. And it basically adopted the situation for the bad bedroom. So the bad weather did not occur in the plant in [indiscernible]. But so when we talk about 700 locations, those locations are onboarded step by step. And so we have a ramp-up phase, yes. The ramp-up phase has been very, very steep because the customer required to move in earlier as we planned before, but we were successful at doing that. That made us and the customer happy, but the contributions they should move over here. We, therefore, see a good contribution on that and probably have higher growth as in the budget. But as I said, putting it in the quarter and assigning it and modeling it is difficult because I think the bad weather was until May, and the record revenue...

End of Q2.

End of Q2, yes? And also now in Q3, but during vacation, things will go down a little bit and come back in September. So modeling this is a little bit difficult on the side, just by the weather. And the IMO contract somehow putting it into the model and comparing that effect to the weather is rather a difficult prediction.

There more or less, there are 3 different explanation there. One is our own price increases we did in chemistry business overall. The other one is the overall number of wash counts, which was a little bit down. And then the third one is there's really a successful cooperation with a new customer, for example. And those 3 together lead to the result that we overall had a very good chemistry business in the second quarter.

Okay. And then maybe on the European margin development. Is this a transitory one? And when would you think that will be back into the sound double digits, which is, let's say, usual margin expectation for the later part of the year.

Okay. I'll take the question here. So you asked, is it a trend that the gross profit margin in Europe in the machine and service business is going down? The answer is no, it's not a trend. So what we are currently seeing is that we go down a little bit due to some volume topics, but we are counteracting on that one. We do our homework in purchasing. We do our homework in efficiency topics in the production. And if I look at the number on a month-by-month basis, I see that it is going in the right direction month by month. So -- or in other words, here, we took out some temporary workers to have our production efficiency at a very high level. So once again, the answer to your question is it a trend? The answer is no.

Okay. And the last 1 is maybe when we look at the U.S. improvement, which of the measures that you have taken in the efficiency program is the one that, let's say, worked best for the second quarter.

Installation.

I would say 2, yes. I would say which one worked really well was that we have now our own installation teams in the U.S. market. That means we are not depending so much on subcontractors like we did in 2022. This is a huge improvement. And another, from my perspective, really good improvement was challenging all our suppliers that also contributed to lower U.S. production costs.

There are no further questions. And with this, I hand back again to Ralf Koeppe.

So ladies and gentlemen, thank you for attending our half year call. Here in Augsburg, vacation started. I'm not sure if you're up to certain days for holidays. We will close down 2 weeks the production as planned as usually and then ramp up to make the second half year a success. Thank you for attending. And we're looking forward to see you at the Q3 call or maybe on a bilateral box or on the Eigenkapital forum in Frankfurt. Thank you.

Thank you. Bye-bye.