WashTec AG (WSU) Earnings Call Transcript & Summary

Ladies and gentlemen, we warmly welcome you to the Capital Markets Webcast Part 4 Strategy in North America of the WashTec AG. I'm pleased to welcome WashTec's CEO, Michael Drolshagen; CFO, Andreas Pabst, as well as [indiscernible] CEO and President at Mark 7. These gentlemen will guide us through the presentation in a moment. After the presentation, we will move to a Q&A session. And with that said, I'm handing over to you, Mr. Drolshagen.

Ladies and gentlemen, welcome to our Capital Markets webcast on the WashTec Group's North American strategy. Let me begin with a clear overview. The U.S. is the largest and most dynamic car bash market in the world and thus a key market for WashTec and in particular for MAK7. For us, North America is not just another market. It is the market that will determine whether we can further expand our global leadership position. Against this backdrop, today's focus is on 3 case research. First, service is the backbone of our business. Service secures our installed base, fosters customer loyalty, and act as a firewall for our market share. Second, digitalization and data are our key drivers of efficiency. They enable higher availability better control for the customer and us structurally higher profitability. And Verano a stronger focus Consumables and green are key growth drivers. Chemicals are not just an additional business -- they are a highly profitable recurring revenue stream and a central component of our one-stop shop approach. At the same time, we see an opportunity here to clearly differentiate ourselves with sustainable, efficient solutions. And finally, A significant portion of the market is not yet actively addressed by us, our so-called sleeping customers. The interplay of service digital, chemicals and green and targeted market development is the core of our growth strategy in North America. Before we dive into the details, let me briefly introduce today's panel. I'm pleased to say that today you will be guided through our strategy from 3 different perspectives. I will start by providing an overview of the market and our current situation. Next, CEO of MAC will take over and walk you through our U.S. strategy and the row to 2030. And finally, Andreas Pabst, our CFO, will explain the financial goals and implications. It is important to us to provide you with a comprehensive integrated overview today. From our understanding of the market to the strategic measures and their financial implementation. Let me briefly go over the agenda. We will start by providing an overview of the North American market and our performance to date. Building on that, we'll present Mark 7's strategy with a clear vision for 2030. This is the central part of this presentation. We will then move on to the financial targets and the economic rationale. And of course, we'll have plenty of time at the end for your questions. The overarching team is very clear. What have we learned? What will we do differently in the future? And how does that translate into profitable growth. Let me start by making a clear statement. The performance of our North American business in recent years has fallen short of our expectations. And it is important to us to address this openly. The key point is for a long time, we did not sufficiently understand the market based on its own logic but instead put it too much through our European lens. However, the U.S. market operates fundamentally differently. Different customer needs different operating models, different economic levers. At the same time, North America is our largest legal market and thus, a correspondingly high strategic importance. The conclusion is clear. We do not need incremental adjustments but rather a distinct market-specific strategy. And it is precisely this new perspective that we would like to present to you today. When we look at the numbers, it becomes very clear why we had to take action. For one thing, our business has underperformed expectations. For another, there is a clear structural difference between North America and Europe. In North America, our business is more equipment driven, while in Europe, service and consumables account for significantly larger shares. And this is precisely the key point. Service and consumables are the high-margin, stable and recurring sources of revenue. This means our previous mix in North America was not optimal for sustainable profitability. Furthermore, we have not consistently addressed the market in certain segments based on our customer segments and needs. Our conclusion is, we must serve deeper in the market, clearly defined where we want to succeed and deploy our resources there in a targeted manner. With this focus, we expect significant revenue growth accompanied by disproportionately high EBIT growth. To understand the new strategy, one point is clear. The U.S. car wash market diversed fundamentally from the European market. I would like to illustrate this across 4 dimensions. First, equipment. The market is dominated by tunnel systems with extremely high throughput. Speed is this is the factor a wash cycle often takes only 2 to 3 minutes. Second, customers. U.S. vehicles are larger, usage is more intensive and above all, subscription models are widespread and are driving usage up sharply. Third, our operators. Operators expect maximum convenience and integrated solutions. This extends to automated chemical supply and data-driven operations. Fourth, the market structure. We see consolidation at the top tier combined with many specialized niche providers. And overall, it is a clearly cash-driven business. The bottom line can be boiled down to 3 key concepts: speed, convenience, integration. And it is precisely these 3 dimensions that we are aligning our strategy with. Let's now take a closer look at the structure of the North American car wash market. because it is crucial to our strategic approach. What you see there, the market comprises around 73,000 professional car both locations with 1 dominant segment panel car washes. These tunnels not only account for a large portion of the installed base, but also represent the core economic market as they have very high utilization and throughput rates. In contrast, our classic in-bay carwashes where we have traditionally been strong. Here, however, we see 2 things. First, in the U.S., the share of brushless solutions is significantly higher than in Europe. Second, the importance of this segment in the overall market is lower than that of tunnels. And this is exactly where our key strategic point arises. We are currently well positioned but not sufficiently represented in all relevant growth segments. Another difference is the logic behind the segments. In the terminal business, speed and volume are the primary factors. In the EBA segment, flexibility and specific use cases play a greater role. And in areas that as jet wash or truck and bus, our opportunities are currently still selective with a priority on digitalization. Therefore, we must sharpen our focus, invest strategically in the relevant segments and where necessary, expand our portfolio in a targeted manner. The key message is, therefore, the North America market is highly segmented and success means addressing the right segments with the right solutions. And our strategy is based precisely on this market logic. What we specifically derived from this, what priorities we are setting and how we intend to further develop Mark by 2030. Uver will explain now this to you in detail.

Thank you. Good afternoon, everyone, and thank you for joining us. Over the next 20 minutes, I want to take you to North America to show you the market we operate in, the company we have built there and the strategy that will carry Mark 7 to 2030. Let me start with the market itself because the opportunity in North America begins with demand that is large, durable and growing. Consider the foundation. There are 288 million registered light vehicles in the United States. Americans are driving more miles each year. They are washing their cars more often. 12 to 13x per vehicle on average every year. Total consumer spending on car washing in the U.S. runs to about $16 billion to $18 billion annually. Registered vehicles, rising mileage, increasing wash frequency, growing consumer spending, every one of these driver points in the same direction. The slide of that world reserve directly is equipment, service and consumables, which is a #2.3 billion market across the U.S. and Canada in 2025. and it is growing. By 2030, we expect it to reach $3.3 billion with a compounded annual growth rate of around 7%. With that, Equipment and Consumables are of similar size, roughly $0.9 billion and $0.8 billion, respectively, while service at about 30% on top of equipment revenue. There's also a truck and bus segment worth an additional $300 million in the U.S., a segment where Mark Savas not presently today, but 1 we are aware of. So the picture is clear, strong underlying demand, healthy structural growth and a market that darts the player who is closest to the customer. That is the backdrop of everything that follows. Next, the competitive landscape, and this is where the opportunity sharpens. The North American market shows a very particular shape, strong consolidation at the top and highly fragmented field below. A small number of players generate more than $100 million in revenue. Below them, sits a long tail of smaller competitors in the $50 million to $100 million range, the $20 million to $50 million range and many more under $20 million. A couple of points of orientation. Sunny sits at the large end as a reference point for scale. And while Esteva appears on the landscape, it does not generate its main revenue in the U.S. and Canada. So it is not fully comparable to the players competing head-to-head in our markets. Why does this structure matter? Because a market that is consolidated at the top and fragmented below is a market where we were focused, more capitalized full-line player can take share, both by competing for the large quartile site operators and by consolidating the fragmented mill. That is precisely the position Mark 7 is building takes. So who is Mark 7. Let me give you the company at a glance in 4 numbers, 60 years of history, founded in 1966 in Nevada, Colorado, roughly 5,500 Mark 7 car batches operating across North America today, around 275 committed employees in North America and of this approximately 130 service staff backed by additional local partner technicians on the ground. Those numbers tell you something important. This is an established, deeply rooted business with 6 decades of installed base, a substantial service footprint and a committed local team. That installed base and that service presence are the platform on which we build everything else. I would like to show you now a small video about Mark 7. Operator, please start the video. [Presentation]

So let me add a little more detail on the business itself. Mark 7 has been part of the WashTec family since 2006, and -- we operate from 2 locations. Our headquarters in Nevada and Colorado and a facility in Burlington, Ontario, which is serving the Canadian market. Our Colorado footprint comprises of 3 billion, about 120,000 square feet on 8 acres with a team of around 275 people. On the product side, we combine local manufacturing with the best of WashTec. In Colorado, we fabricate and assemble equipment built for the North American market, local for local. The SL1, which is a durable speed tunnel, Choice fort, Aquage, Software and Jetwah. From the WashTec in Germany, we import the SL2, which is a durable high-end tunnel, wheel washer, AquaPure as well as some key components such as the site brush carriages, wheel jet and hub scopes. What sets Mark 7 apart is the completeness of our model. We cover the United States and Canada through both direct sales and distributor network. We provide full service coverage and we serve the consumables market with our own private label chemicals. Mark 7 is a fully integrated equipment service and consumables business anchored in the North American business powered by WashTec. AUC, our product portfolio at the glance, expands the full spectrum of professional vehicle watchers. from inba automatics to mini short and long tones, self-service and water reclaim as well as ancillaries such as dryers, reverse osmosis all those cover the needs of fuel and convenience retailers, professional car wash operators and fleet customers. Many tons are considered when an in-bay automatic is converted to a tunnel in a very small space, usually a minimum of about 37 feet. With that market and the company in mind our road to 2030 rests on 5 strategic pillars: Pillar #1, geographical expansion. For us, focus means servicing the top states directly, so we can be as close as possible to our customers. Pillar #2, service excellence. Our customers benefit from maximum uptime, high convenience and reliable availability. Pillar #3, true green leadership, sustainability that pays off. the smartest way to run a sustainable car wash is less water, less chemistry, lower cost, proven at scale. Pillar #4, digital and intelligence digital solutions that empower our customers and differentiate Mark 7 from our competitors and Pillar #5, the portfolio completion. -- winning as a one-stop shop closing portfolio gaps to share, scale faster and monetize profitable niches. Let me take you through each 1 of them. First, geographical expansion. North America is not a homogeneous market. as the metros, the top 15 states each have more than 1,600 car sites, while the bottom 15 have fewer than 200 where we compete matters enormously. Our expansion logic follows the volume. We are expanding in the high-volume wash markets with direct sales and direct service because direct presence keeps the customer relationships close to Mark 7. In some areas, we will operate hybrid territories alongside our distributors. Equally important, we are establishing direct chemical sales channels in these high-volume markets. This is what lets us participate in the large tender of major multisite operators, tenders that are simply not accessible through an indirect model. It directly supports our push into the convenience store and fuel station segment as well as professional car wash operators. The ambition shows in the coverage numbers. Today, our direct coverage reaches around 180 million people for equipment and EUR 55 million for consumables. In the future, -- that grows to roughly EUR 270 million for equipment and EUR 190 million for consumables. On the consumables side, that is more than a threefold increase in direct market access. Second, service excellence. In this industry, uptime is everything. Every hour washes down. Our customers lose revenue. So service is not a cost center for us. It is a competitive weapon. We are investing in 3 areas: First, a new training excellence center, enabling faster onboarding of service technicians and extending to the training of our customers and distributors. That is driving efficiency and higher quality across the network. Second, we are strengthening our leadership in remote monitoring. Today, we already solved 65% of all issues remotely from Colorado for our key account customers. We are now rolling that capability out to all of our North American customers, meaning faster responses and increased uptime. And third, we are transforming towards data and AI-driven service. By combining the data we already hold with artificial intelligence -- higher uptime and with it, stronger customer loyalty. [ Third, ] true green leadership. Sustainability in our industry is not a marketing exercise. It is economics. Less water and less chemistry mean lower operating cost for our customers, green that will pay off. Our path here has 3 steps. We will introduce our own formulations for true green chemicals. We will significantly expand our consumable sales network geographically, as I described previously, under Pillar #1, once a certain volume threshold is reached, we see the potential to in-source consumables production in the future. A clear growth path has been built. Mark 7 intends to lead the green transition of the North America car wash market and to capture the margin that comes with it. Fourth, digital and intelligence. The headline is the launch of car wash assist in North America. Car wash is being rolled out successfully across Europe today and we will bring it across the Atlantic. The goal is simple, reduce downtime, increase uptime, and it is a key tool for easing operations at convenience stores and for enabling unmanned side, which is where this market is heading. Alongside, we are expanding mymark7.net, our digital interface for the customer. Billing service reports, machine status, water quality, electricity consumption, wash programs, configurations, key performance indicators, everything the operator needs in one place. Digital is how we differentiate and how we stay embedded in our customers' daily operation. And fifth, portfolio completion. Our ambition is to win as a one-stop shop, and that means 4 work streams: one, modernization of our automatic solutions. We will strengthen our core market leadership by enhancing existing technologies and closing featured gaps with most features launched by 2028. Two, in-sourcing of certain key components currently sourced externally. This increases our margins, improve system integration and gives us greater control over supply with most of this in-sourcing completed by 2028. Three, the introduction of new innovations, targeted product and features launches between '27 and 2029. that are new to the North American market to close the portfolio gap and sharpen our differentiation and for entry into a new product segment. We see significant market potential in the segment we do not yet cover today. For a customer base, we already serve very well. We are currently evaluating several avenues to enter this market and the time line will depend on the avenues we select. Let me close by being direct with you because you deserve candor as much as ambition. I'm not satisfied with where Mark 7 stands today. We have a 60-year heritage, a strong installed base and the backing of WashTec. But we are not yet the player where we should be in the North American market. There's a great deal to accomplish. I see that clearly, and we are ready for that challenge. We're not here to defend the position we are here to build one. Our ambition is clear: make Mark 7 a successful leading player in the carwash equipment manufacturing business in North America. And what gives me confidence and not optimism? It is concrete plan with concrete actions behind every commitment. Let me show you what I mean by walking through what Mark 7 will be in 2030 and the actions that will get us there. By 2030, I along with our partners. Mark 7 will compete to win in every product category that matters in this market. The white space is real. Every gap we close the share we capture and revenue we add. A modernized in-a-automatic line, a wave of innovations landing through 2029 and a brand-new segment, we do not touch today. That is a broader product engine and a bigger addressable market for the same customers we already serve. Mark 7 will sit right next to its customers. not at the end of the distribution chain, but face-to-face in the markets that drive the volume. Direct services and chemical channels in the highest volume states unlock something we cannot reach today. Those are the large multisite tenders were the biggest contracts are on -- this is how we convert proximity into pipeline and pipeline into recurring revenues. Also like 2030, Mark 7 will be a great the center in North America and an engine that is building products designed for this market. We will be putting our money where our ambition is by at least doubling our research and development efforts. That, combined with in-sourcing key components that we buy externally today, lifts our margins, tightens our supply control and turn innovations from a promise into a pipeline. Uptime will be our signature. Today, we already fixed 2 out of 3 issues remotely from Colorado with our key account customers. Tomorrow, we extend that reach to every customer in North America and superchargers with data and AI. Every hour, a wash stays running in perfect condition is even for our customers and loyalty for Mark 7 -- market where service revenue rights on top of equipment, this is not as a service. It is a higher margin and a more defensible revenue stream. The most important of all our people. None of what I have just described patent on the slide. It happens because of the Mark 7 team. We have 6 decades of deep part 1 knowledge sitting inside this company. knowledge of these machines is customers, this market that you simply cannot buy. By 2030, we will have grown that knowledge, not lose. And we will have paired it with fresh talent and fresh ideas that push us forward. Experienced personnel that mentor the next generation combined with new energies veterans. -- we need both, we will invest in both because the strategy is on a strong asset team that executed and his team is ready will not participate in the green shift, we will lead it. Our own true green chemical formulations and a far wider consumables network turn sustainability into a profit center with higher margin product for us. In this industry, screen is not the cost, we absorb. This is a value we create. So this is my response to you. Yes. It's much -- but every 1 of these commitments is backed by a specific action on a specific time line in a market that is large, growing and ready for focused full line player. With the action we are planning and convinced we will succeed with our strategy 2030. We know where the growth is. We know how to reach it, and we have started executing. Thank you very much for your attention. I would like to hand now over to our CFO, Andreas as Well.

Thank you, Uli, for this good and very profound explanation of our strategy in North America. Hello, everybody. Good to have you here. Ladies and gentlemen, let's now touch some of the financial implications about what you have heard. I guess you fully understand that we cannot dive too deep into the figures due to the competitive reasons. Nonetheless, please find our key statements for North America on this slide. In all discussions we had over the last months developing the strategy for North America, we focused on rising revenues with overproportional development of our profitability. We are targeting an up to 50% increase of revenue until 2030. And in terms of EBIT margin, we want to knock on the double-digit bill. All that, we want to achieve by an optimized capital allocation, meaning low single million CapEx per annum in North America, ramping up local R&D team with strong ties to our team in Europe. And what Uwe already implied, we have learned from the past that we cannot and will not do all by ourselves. -- we open up for partnerships where appropriate to relieve our own spend. If we now look a little bit closer to the expected revenue stream, we see that on a long term, Mark 7 was somehow a $90 million company influenced over the last years by some contractual effects with key accounts and by the general market trends, as we explained before. That is what we changed now with our new strategy, especially with our geographical expansion and our investments in service excellence, we will be able to increase revenue in the next 2 years. We expect a double-digit CAGR. We have clear target figures for every new sales rep and service technicians we hire in the designated new areas. -- meaning strong focus on controlling of the expected results is given. Midterm, we still believe that we can achieve a mid-single-digit CAGR. And that further increase will be supported by our additional investments in our ambition for true green leadership and the enhancement in our value proposition and our product portfolio. Just a few words about what we believe in the development of recurring revenues, meaning service and consumables. As you have seen on Michael's starting side, this is very important for us also in North America. Therefore, we focus on that business here as well. We expect to increase the ratio of recurring revenues until 2030 to 40% to 50%. Coming now to EBIT. As you see in the past, the total EBIT was very volatile, mainly related to up and down of equipment business and in general, shrinking over the last years. This we will break with our recurring revenues and our strategy initiatives for service excellence and our improving digital intelligence. Both programs are focused on higher efficiency and profitability. The strategic initiatives for geographical expansion, portfolio completion and the green leadership will come along with higher revenues and additional EBIT. For me, it is important to mention here that for every strategic initiatives, we made detailed business plans. You understand that I will not go into the details here, but I can assure you that for every move we make with our new North America strategy, we, the management board of WashTec requested that we have an overproportional growth in EBIT. We are aiming for a double-digit EBIT margin until 2030 also in North America. And I am very happy that our local management, Uver and his team is here fully on the same page. Having said that, I thank you for your participation and open the floor for questions you might have. Michael Uwe and myself are happy to answer your questions. Therefore, I'm handing back to the operator now.

Yes. Thank you very much for your presentation. [Operator Instructions]. We have already received a risen hand by Mr. Wolfgang Specht, you may amityourself now. I just send you an invite. Mr. Wolfgang Specht. Can you hear us? I just sent you an invite to meet yourself. Okay. I think we have some complications with Mr. Specht. I will check our Q&A chat box where we have not received any questions so far. So Mr. Specht, I wil send you an invite to unmute yourself again. But I think Mr. Spec, maybe you can type in your question into our chat box, and I can read it out loud for you. [Operator Instructions]. We have not received any questions in our Q&A box yet. I will send Mr. Specht another request to unmute himself just in case. But I think there are no questions so far nor others in hands than the 1 I have received from Mr. Specht. With that said, we already received 1 from Mr. Movies in our chat box. He says, "Can you elaborate on the CapEx plans for America?

Yes. I'll take this question. Thank you, Mr. Walt for asking this question. I guess I said it in, let's say, in a site sentence. So we made really for every single step we want to make, we made really detailed business plans that includes, for sure, all the CapEx we need for the different plants. What is important or what can I say here is that we do not see for the next years in any year, really a high CapEx spend. It is always low single million digit number, which we have there. So it's overall a little bit more than we have today. That's correct. Yes, we need to invest. We want to invest, but overall, not really big money.

All right. Thank you very much, and thank you very much, Mr. Bids for your question. I don't think Mr. Specht is able to mute himself at the moment. So Mr. Seth, if your question -- if you still want to ask a question, maybe you can put it into a chat box or you can always contact Investor Relations at WashTec. We have received another question in our chat box by Mr. James by -- he's asking, you mentioned that the structure of the market is quite fragmented other than the 45 large players. Would it make sense for you to play an active role in consolidation if the opportunity arises?

Okay. What we want to do as a first step is to go in the specific segments to get a larger market share. And for sure, if we see a chance to consolidate, then we took -- we take this also into consideration for sure.

All right. Thank you very much, Mr. Levy, for your question. We have not received any further questions so far or risen hands. [Operator Instructions] There are no questions so far anymore. I mean, as we have not received any further questions, we may come to the end of today's call. No, there's no question anymore. Well, thank you for your interest in WashTec. With that said, actually, there's another question by Mr. Vyas. He's asking, is the order intake in the U.S. still positive in the U.S. to marks the momentum?

Yes. I would like to answer this. We have very good positive momentum, especially in this year. Order intake, even at the end of last year, has picked up considering the economic factors. But I must say that it's really good. We are above target in order intake. I see the momentum. There was some in '23, '24, people were holding back a little bit, but it's definitely '26. I see a major uptick on this one. So we see -- in all the segments also. It's for us in the tunnel as well as the in automatic throughout all of our customer segments, I see positive developments.

Perfect. Thank you so much. We actually made it, I think, Mr. Specht, can you hear us? Specht Yes. Okay. Yes. The system is tricky. 3 or 4 questions from my end, if I may. First, regarding your service employees for the U.S. figure 135 looks very low. How are your plans to ramp that up to get better coverage or are there any plans to add more direct personnel. And the second 1 is the sales slide of Mark 7 since 2023. I'm very sure you're making detailed channel checks to which competitors did the business you were missing out since then went mostly. Third question is what happens to the tail end of the market. The colleague already raised the question. if there will be an active consolidation? Or do you also that some smaller competitors will simply fade out and leave the market? That would be the first 3 months from my end.

Maybe I can answer the first one. So the first 1 in terms of how to ramp up the service personnel. We have been putting -- it starts all with hiring the right people, right? This is very important and putting up a proper training program. And 1 of the pillars is also training excellence center where we will not only train our sells our employees, but we are also going to train our distributors and as well as some of our customers because some of our customers have service direct, right? So it's all about how well you perform, especially in America, the service is everything. I mean a customer doesn't want to wait a full day to get this machine fixed. How are we going to scale this up? I think with the right HR strategy, and we're also using some of the weaknesses from our competitors that we currently see in the market, especially on the service side, we're taking advantage of that and also to recruit the right people in the right places. But hiring the right people is also, we're doing a thorough analysis of each area where we add more people because it requires a certain amount of machines that need to be in that market for a certain amount of people. And with our new training strategy, also our people are continuously tested and retested to see the skill level. So if there's any lags in certain areas, we can retrain them, reskill them and -- but we're very strict on every level, not just in service, but also in the sales performance and chemicals to make sure our people are performing to our expectations.

That a question? Second 1 was about which competitors did our machine scale have -- maybe if I answer the question, and then you can add something, Mr. Specht. So if you look at the at the revenue streams we had over the different years. So you can see that in -- from 2023 onwards, we had declining revenues in North America. I guess that is much more related to 2 topics. One topic is that the overall market was shrinking a little bit to our understanding that was also for some of the competitors. And late in the year, so meaning the year before. We had some topics with 1 of our main customers where the big contract was still under negotiation. And during the negotiation, this customer did not order too much machines. So that is mainly the 2 explanations for the shrinking revenue streams from 2023 to 2025.

Yes, definitely. It was in the middle of the negotiation. And if you look at the North American market, it was declining in -- you saw the already the order intake in '23, not just with us, but throughout the industry. And if you talk to our competitors, there's similar pictures to this. And '24, you really saw '24, '25. However, as I mentioned, it has been greatly picked up now at the end of '25. And it was -- yes, when you have like the large accounts and when you're in the middle of the renegotiation of a year-long contract, then they start to be a little bit more careful in that specific year. Thankfully, we have secured long-term contracts with our key accounts with all of them. And so this is very positively to see. And I think we're going to have momentum out of this in the next years, for sure. And what you also can see is like the geographical expansion. So also, we make sure that we have the right people, salespeople, measure them accordingly. And we're expecting also an increase in sales in terms of certain areas that we determined would be good for the future.

Third question I take -- there was a question if we see more consolidation disappearing of our competitors, or small competitors in the U.S. market and if there's any talent there. We think that the market was consolidated, especially between 2020 and 2024. We don't see a huge consolidation in the next 2, 3 years today. And there is more disappearing. We expect that the 1 or the other small machine provider or machine producer will disappear because of the competitiveness of the other actors in the market.

Thanks a lot. If there are no other questions, I will continue with the last one. Okay. On the chemical side, if I understand you're right, you will, for the time being, continue with white label solution. Are there any important competitors in the U.S. on the equipment side that have their own chemicals production or do -- does everybody use a white label solution?

So there's definitely some of the larger players, they do have their own chemical production, of course. And it always -- when you have your own chemical production, it always helps with the attach rate when you can sell bundles of equipment, chemicals and service. So yes, there are some of them, the larger ones, but the smaller ones, they usually do white labeling. And it's a calculation, to be honest. And if you reach a certain number, meaning so many thousands of tons, then it is worth exploring and investing into our committed production. but a certain number has to be reached.

Okay. So for the time being, you're fine with white label, but if your growth plans materialize, it could be a natural step to move to nonproduction.

Yes. Exactly.

Thank you very much, Mr. Best for your questions. In the meantime, we have received 1 more question by Mr. Ali -- he's asking a question on the strategy of in-sourcing. Some of the components that are purchased from third parties, what are the main components that you are referring to? And how complicated is it to in-source them? Is it more of an R&D issue or a question of manufacturing capacity?

Okay, I don't think -- well, 1 is the industry buys from each other in the car wash industry. Of course, there's a certain -- we used to have different ancillaries that were in our portfolio that were no longer in our portfolio. One is, for instance, the reversal mass that I mentioned earlier. We're offering this again because we can -- based on our cost structure, we can produce it at a very competitive rate. And -- yes, there are certain components that we buy in. I wouldn't want to go into the details yet into which components we are looking into. However, there are certain skills that is required to do the R&D project to develop something, but we look deeply into it. What are we paying into the -- or what do we have to pay and what will it cost us? So we have a very detailed business plans before we make decisions to produce something or develop something on our own and then produce something on our own. And in terms of R&D capacity, yes, that was -- I don't want to say a roadblock, but it was basically in the past something that we didn't have enough capacity, but as you saw in my presentation that R&D will at least double in the next years, and we already have specific plans. We already are hiring the right people for that. And so R&D, yes, we need to bring more people in. I also want to combine the experience of what we have with our seasoned engineering team together with newer technologies and fresh minds that come enter the industry. In terms of production capabilities, we have 8 acres. So we have a really large facility. We have 3 buildings. And so production floor is manufacturing space is not a problem for us. we can expand further. So we're ready. It was a more R&D approach in the past, and we have managed now to build up teams driven by U.S. but also supported by Oxbo employees to speed up here, and we already started with 1 or the other topic.

Thank you so much. Mr. Give has another question. He said, sorry, 1 last one. Is it still economic to source some components from Elsburg -- and could these be insourced directly in the U.S. as well?

Yes, that is -- we made you already very detailed examination of our complete supply chain after the Liberation Day. And so -- as of today, we are only delivering 30% of our purchasing volume from North America is coming from Europe. That is already pretty low, I would say. Nonetheless, we are enforcing our purging and our supply -- supply chain team in North America to do even more local. So overall, once again, I think we are in a good shape, but we are moving further to be even more local for local.

13% is all percentage -- so 3.3.

All right. Thank you very much. We have not received any further questions in our chatbox or is in hand. So I would say -- we come to the end of today's Capital Markets webcast. Thank you for your interest in WashTec. If you have any further questions at a later time, please feel free to contact Investor Relations. A big thank you also to the management team for the presentation and the time you took to answer all the questions. I wish you all a successful day. And I'm handing over to you, Mr. Alta once again for your closing remarks.

Ladies and gentlemen, on behalf of the Management Board, -- we would like to thank you for your interest in our company and wish you a good day. Thank you very much.

Thank you.