DEUTZ Aktiengesellschaft (DEZ) Earnings Call Transcript

Ladies and gentlemen, thank you for standing by. I'm Stuart, your Chorus Call operator. Welcome, and thank you for joining the DEUTZ AG Nine Months 2022 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Christian Ludwig, Senior Vice President, Communications and Investor Relations. Please go ahead.

Thank you, Operator, also a warm welcome from my side to everybody on the call. Please note that this call is being recorded and a replay will be available on our website at deutsch.com later today. Your participation in this call implies your consent with us. Joining me today are our CEO, Sebastian Schulte as well as our Head of Finance, Oliver Neu. As usual, Sebastian will walk you through the highlights of the performance of the group and then hand over to me as I will provide some more details on our financial figures. Sebastian will close our presentation with our guidance. After this introduction, we will be happy to answer your questions. Please note that management comments during this call will include forward-looking statements, which involve risks and uncertainties. For a discussion of risk factors, I encourage you to review the disclaimer contain in our annual report in this presentation. All documents relating to our 9 months 2020 reporting are available on our website. And without much further ado, I hand over to Sebastian.

Thank you very much, Christian, and also good morning from my side to our earnings call for the first 9 months ‘22. As usual, I would like to start with a few highlights on the operational and also on the strategic development side. So if we start with New Orders, we increased New Orders by 0.4% as we compare with the previous 9-month period last year to a level of EUR 1.52 billion. So that's not a high increase of New Orders, but we have to keep in mind that last year, we had already a record high New Orders figures due to that strong recovery after the COVID crisis. If you look at the book-to-bill ratio for the first 3 quarters, we are now at 1.09, so still higher than 1, but we're moving more towards the normalized level. So that dynamic, I wouldn't say is ending. That's too early, but at least it's slowing down to a more healthy level. And we also have to keep in mind, Christian, we will say that later, when you will go through the figures that our order backlog is still higher than EUR 800 million. So we are here on very, very high numbers. If you look at Unit Sales for the DEUTZ engines. So without the Torqeedo products, we increased by 13% to 130,875 units. So that's a quite development. Particularly taking in mind that the first month of the year, were due to major supply chain issue is still fairly slow, and we have here the summer months of July and August included as well. Revenue rose by 19% to EUR 1.39 billion. So here, we see higher-rise of revenues in Unit sales. See that later. That's partially driven by price increases but also some other mix effects. What we particularly like is that we managed also to transform that into the bottom line impact. And so we increased EBIT adjusted by EUR 35 million to EUR 65.9 million after 9 months. For DEUTZ Group as a whole, that means we're like standing at an EBIT margin of 4.7%. So that's increased by 2.1 percentage points compared with the previous year 9 months. And also, we introduced earlier this year, the new segment structure Classic and Green. And on the Classic segment, which is pretty much all combustion engines for diesel engines, including the service. We're now at 6.9%. So that's quite a good development because in the end, the Classic segment will be the cash flow for us to last for quite some time going ahead and also to fund the journey towards new technologies. So here, the 6.9% shows we are on a good track. As Christian indicated, we have today published the first guidance for '22 -- earlier this year, we developed the guidance, but we put it under review, given the uncertainties out of that global effect geopolitical situation, particularly the one in Ukraine. Now with 9 months, and in fact, actually 10 months down for the year, obviously, we have better visibility, much better visibility, and we know which of the risks have materialized but also which of the risks have not materialized at least for '22. So we see now a revenue range between EUR 1.75 billion and EUR 1.85 billion. And we also see an EBIT margin between 4.5% and 5.0%. And on the strategic side, we have achieved further progress regarding our hydrogen strategy. As DEUTZ, we joined the HyCET research project. HyCET is the hydrogen combustion engine truck will come in the course of this presentation to see more details on that. Also in terms of company leadership, the Supervisory Board has now completed the restructuring of the Management Board. We have now 3 Board members abroad already, and the fourth Board member will join beginning of December. I'll come to that at a later stage. In terms of product development, we had our own trade fair, so to speak, the DEUTZ Day is 22 in Stockstadt in Coreum. It's a very nice location to present products in our application segments where we actually introduced and presented a lot of our developments, and we actually realized quite a lot of interest from not only our customers but also from media. So before going further, summarizing, we can say that after we already achieved some significant milestones in the first half of the year, we were able to continue this past this journey -- and we did continue to generate growth, and also, we recorded double-digit increases in sales revenues. And most importantly, we also managed to translate that into bottom line impact. If we continue to the next page, please. We informed you already earlier this year in the last 2 calls on the strategy program, powering progress, which we initiated. We're working here with 4 main areas of action, priorities, performance, potential, and fashion. Internally, we're pushing on all of these priority areas, of course. But this year, the focus has been a lot on performance because that's where we lacked most in the short term. And you'll see from the results that we hear already on good track, particularly with the first steps implemented, and I'll bring a few examples in the next minutes. One of the -- for this year, most relevant performance initiative has been really the pricing -- the pricing situation and the pricing initiatives. Because as most players in the industrial sectors, we have been affected or we are being affected by this significant price rate in energy prices, raw material prices, logistic costs, product costs at different parts of the year, different areas of that. We're more relevant than others. We saw some initial spikes in raw material that has -- I wouldn't say recovered, but at least relaxed a little bit. Energy is still a very, very big topic, logistics was definitely worse earlier in the year than it's now. But the whole package here is obviously something which brings a lot of pressure on any industrial company. And what we did, we started fairly early this year in approaching that structurally. So in the beginning of February -- mid of February already, we kicked off here into our only project, where we worked together with not only the sales team, but also our procurement department, our controlling department, the technological department to define how we tackle this, how we manage to pass on the majority of those cost increases to our customers, and in the end, to find workable solutions with our customers. And now we can say we conclude it not everything, but almost everything, there's still a couple of customers where we are in intense negotiations. But none of these discussions are easy, but across the board, we are here on track to achieve those 8% to 12%, which we already announced earlier this year. But it will be also something for the next month. I mean the period of stable costs and stable prices, which we all benefited from during the last years. That seems to be over for the next years to come. So that's also something we had to learn as an organization to live with that completely different environment. And here we are on good track, and we are now much more resilient for similar situations to arise in the future. And I mentioned earlier that we made further progress with our hydrogen strategy, and we're quite pleased to announce here this important milestone that we have DEUTZ joined this HyCET research project consortium. So HyCET is hydrogen combustion engine truck. And that is a consortium of very, very good names, particularly led partner BMW, when it's up and DHL, KEYOU, TotalEnergies, and Volvo. And the aim of this project is that there is a truck being developed, which is fitted with a hydrogen internal combustion engine, which I think is going to be trialed in transportation logistically. So mainly on site or on larger production site such as BMW, such as DEUTZ and what's our contribution in there. And the adheres project is to include 2 18-ton trucks, which are fitted with a DEUTZ TCG 7.8 H2 hydrogen engines. And these trucks to be tested in the daily challenges by using them in this regular logistics operation inside of BMW and DEUTZ. So for us, it's so far, a very important step because we have informed you on a regular basis on the TCG 7.8 hydrogen engine, which were developed over the last years and which is currently being used already in stationary genset together with our partner, RheinEnergie -- but this now is the next level, but we're moving it from stationary to moving equipment. And also, we are opening here another route to not focus only on off-highway, but also focus prospectively on highway. So that's something we're proud of as part of that. Investment volume for the entire consortium is roughly EUR 20 million in the protectors 4 years. So it's not only to develop our new business model and making money in the future, but in particular also with that participation we will continue to contribute here to sustainability in the field of transportation logistics. Reorganization of the Board of Management is now completed. And from Dr. Petra Mayer joined us early November, a couple of days ago as COO. She joined from ZF, coming in from ZF. This is a new position to be filled. We didn't have a dedicated COO before. And the rationale behind that is also that she will be in charge of production, for purchasing and for the supply chain areas. And these are all very relevant areas. And in particular, also, the area of supply chain is an area which certainly -- well, has been important previous years, but given the current change in geopolitical circumstances and global supply chain, we are convinced that this is a role which is in the future even more important than it had already been in the past years. So we are very glad to have her aboard and contribute with all her experience in further developing here our operational excellence. And Markus Muller, who's been with DEUTZ for many, many years, most recently as Chief Technology Officer, he now also assumes the function of sales. So he's going to be the Chief Sales Officer as well. And that's also -- and it's also very beneficial, because one major part of our transformation is technology from the combustion engine -- from the diesel combustion engine to sustainable fuels, to electrification, to hydrogen. It's very important that we move from being a technology company to being a technology company with a better connection to the market. And having these 2 functions or 2 roles under 1 roof and 1 hat will prove to be very, very beneficial for our transformation. Timo Krutoff will join beginning of December as CFO and Personal Director. So it's a classical CFO function, but we'll be very, very happy to have him as a challenger of the business, the transformation of the business, including also information technology and myself with CEO will drive the transformation of the business model further, as we already started earlier this year. And looking briefly back to the DEUTZ days as mentioned before, our in-house trade fair, where we had many, many customers visiting and many, many media guys as well. And we've introduced -- we showed here several products, several technologies in the field of E-DEUTZ, high-voltage system. We also show applications like here an example from JLG, one of our most important U.S. customers, where we equip the telehandler with our alternative drive chain technology. But we'll also show that we are strongly continuing to believe in the combustion engine, we showed our most recent development of TCD 3.9, which is a product we developed jointly with John Deere. We showed our hydrogen genset, another application of the hydrogen engines in power generation. We show the EloTrail system, we showed an electric mini-excavator with KTEG, we show an airport tow tractor with company MULAG entered first set of product, which will range more into ecosystems, DEUTZ PowerTree, which is a large mobile charging station for electrical systems where we bring the charging and the electricity on the construction side. We'll keep it on. We kept it on with the motto, -- we ensure the world keeps moving, and we have fantastic discussions with our customers, and this is really the -- was a very, very impressive event where we manage together with our customers to talk about future and to present our innovative products. Again, as I said, combining or including our conventional internal combustion engines as of today and new technologies in the future. So that's a bit of a teaser, let's say, the highlights of the last 9 months. And now I'll hand over to Christian, who will get into more details regarding the numbers.

Thank you, Sebastian. Yes. So let's take a closer look at our 9-month numbers. Starting off with the New Orders. Sebastian already told you, we had a slight growth for 9 months of 0.4% to EUR 1.52 billion. If we take a closer look at the single event of Q3, we saw a small slowdown there. Q3 order intake was down 9%, bringing the book-to-bill ratio to 0.95%. So as already mentioned before, we're seeing a small easing there. It is very different when we look at the different application segments. In agriculture, we still had a strong increase, growth of 24.4% in Q3. While on the other hand, the construction business was down 26% and material handling was down even 38%. But here, we had 2 U.S. clients with high preorder levels last year. So it's basically something that is a one-off and nothing to be taken too seriously overall. Taking a look at the Unit Sales after 9 months, up 16.5% driven to a strong part by the Classic DEUTZ engines. As mentioned before, they were at $130,000. Again, looking at Q3 as a single event Unit Sales for the DEUTZ engines were only flat at 40,400. I'll come to that a little bit later. We had some issues on the logistics side, which -- yes, basically limited us a little bit to how much we were able to bring out to the customer. But still, it was overall a very solid quarter for us. On the Revenue side, revenues in Q3 were up 15.4% to EUR 465 million. And that was driven by a nice increase in price mix as well as growth in the service business. Just to give you some color here, our average sales price for the Classic DEUTZ engine in Q3 was up 17% year-over-year at roughly 8,200. And if you look at the 9-month period, ASPs were up 7%, roughly at 7,700. This is also reflected, of course, in our order backlog. Our order backlog was up 34% year-over-year. If you back out the service business in the order backlog, you arrive at roughly 100,000 engines, which we have in our order backlog at the end of September. So that gives us some nice visibility going forward. We had a quick glance at our service business. As I mentioned before, we had nice growth also in Q3, but also in the 9-month period, up more than 12.7% to be exact. This is also equally reflected in the New Orders, which were up 14.7% and also the orders on hand grew nicely by more than 60%. Of course, here, as it is a very swiftly turning business, the impact is not that large. But overall, we can say with the growth in the business, particularly in the part sales and the DEUTZ's exchange business, we are well on track to achieve our service target of around EUR 500 million sales by 2025. And what's also important to us, we were able to progress with our digitalization strategy. During the DEUTZ days, which Sebastian already mentioned, we were able to showcase a fusion telemetry project together with DEUTZ-FAHR Solutions, where we add additional value for our customers, which gives them remote access to monitoring the engine of sites. So we're working there with partners to have a broader offering for our customers. A quick land at the revenue breakdown by region and by application segment. Maybe 2 things to highlight on the regional view. First of all, Americas with a very strong growth at 52% after 9 months. Here, the region clearly benefited from a strong material handling as well as a strong stationary equipment business. On the flip side, Asia-Pacific with only growth of 2.5%. Here, the weakness -- the relative weakness of the Chinese market plays a major role. The very stringent lockdown policy of the Chinese government at the moment is not helping business there. And unfortunately, the decision of the political Congress in October seems to extend the stock-down policy. So we do not expect any recovery quickly anytime soon here. If you look at the breakdown per application segment, what sticks out is, as I said before, the strong growth in the stationary equipment with almost 50%. And also agriculture machinery is still very strong with plus 30%. But important thing is overall that all our big end markets contributed to our growth all in double-digit figures. And as I said before, especially important for us is the service business, which also was able to grow more than 10%. Now a look at our Profitability. As you can see in the slide, we were able to increase the profitability in the quarter very nicely versus previous year. We were able to post a 5% adjusted EBIT margin in the quarter. And in the 9 months period, our adjusted EBIT improved to EUR 66 million, as Sebastian said before. Main drivers are the increased volume of business, -- the cost savings, we had some positive each effects which was also, as mentioned before, we are increasingly able to pass on to customers the high logistics and materials cost with our price increases. So that also helps us on the margin side. Our EBIT margin before exceptional items for the 9-month period rose to 4.7%. Net income before exceptional items came in at EUR 52.2 million, almost a doubling of the previous 9-month figure. And not surprisingly, EPS came in at $0.43, almost doubling the 22% EPS we had in the 9-month period of last year. A quick look at some balance sheet items. On the R&D spending side, you can see that we had also a significant increase growth of 18% here, but the R&D ratio was stable at 5%. What we are seeing here is that we're seeing a small shift. And the Classic part of our R&D spending portfolio is coming down, while the Green part is going up. Last year, 70% of R&D expenditure was Classic. This year, it's around 64%, and this trend is going to continue in the next years. On the CapEx side, at first stance a very strong increase, but this is mainly driven by our single leasing business effect, we invested in a logistics center. This added EUR 32 million to our leasing book portfolio. This is a long-term contract. If you just look at the brick-and-mortar spending that was flat year-over-year. Another thing that we have to discuss here is the working capital development because this was not quite as we had planned. We saw a very strong increase, especially in Q3 in our inventories, mainly due to some issues in the supply chain, but also we had higher stockpiling level, combined with the higher procurement prices. So in total, we saw an increase of more than EUR 120 million in our working capital versus beginning of the year. And this, of course, had some spillover effects in our free cash flow, our cash flow. Looking at the cash flow from operating activities. Despite the very strong EBIT after 9 months, the cash flow from operating activities was down roughly EUR 80 million, as I said before, due to the buildup in the inventory level. And this, of course, is also visible in our free cash flow development. Net debt additionally is the burden by the high investments in this logistics building, the EUR 32 million of the additional leasing comes on top here. So overall, we now have a EUR 150 million on our existing credit lines. But we're still -- and this is the next slide, very solidly financed. Our equity ratio remains high at well above 40%, and we still have unused credit lines of around EUR 107 million. So we think we have a solid balance sheet and sufficient financial headroom, including for growth by acquisitions, if anything pops up. Finally, a quick plan at our 2 segments. First of all, our Classic segment, where all the diesel engine and the related service is put together, New Orders up 0.9%, very similar to the group figure. Unit Sales already mentioned before, up close to 30% to 130,000 units. And again, here, you can see on the revenue side due to positive price mix effects, revenue disproportionately grew by almost 19%. Especially nice for us is that the adjusted EBIT margin was able to grow significantly, adjusted EBIT more than doubled to EUR 92.5 million. We're now close to 7% after 9 months. And this after being loss-making here only 2 years back in the midst of the corona crisis, so a very nice turnaround. As I said before, it is not -- we're not satisfied with this yet. There's still more way to go, and we'll continue to work on our cost basis to ensure that the margin here stays helpful -- because we need this business to finance our investment in the future. As you can see here, when we look at the Green segment, it is still very small, but it has a negative EBIT contribution as we continue to invest into the future. The adjusted EBIT was minus EUR 26 million after 9 months, and this is mainly driven by R&D investments. The KEYOU contribution was also slightly negative, but really marginal so. And as we believe that we'll continue to invest, especially in E-DEUTZ and the hydrogen applications, we will need the Classic business to finance our investment in the future going forward. That is my piece on the numbers. I will now hand back to Sebastian for the outlook.

Thank you, Christian. Before moving to the Outlook, I wanted to just give a bit of an update on also where we stand with the energy supply situation because you can imagine that's been a bit of a concern for us in the last month is like for most all industrial players. In Germany, we were particularly concerned about potential or effects from potential gas rationing throughout the winter. At the moment, it looks like we have that as a country a bit better under control. The gas storages are almost entirely filled, but this might change quickly. So this is why we at DEUTZ had to prepare ourselves with measures how to react, how to keep production going if there were a shortage. And what we've done here for a major site or biggest site in Cologne Port, the assembly plant, we have completed preparations which enable us to switch the heating supply from gas to heating oil in a very short term. Again, it's not a measure which you would do in the long run. It's not the most sustainable approach, but that would be an emergency measure pretty much to keep production. So we've concluded that. At the moment, I don't think we're going to need that, but it's better to have the possibility than not to have the possibility. Something similar, we've done on our second largest production site in Ulm. Here, we are in the process of implementing an alternative concept also for switching to LPG, which we expect to have completed by the end of this year. And obviously, that's what we can influence by ourselves. Also important is that we're monitoring our suppliers. When it comes to the large suppliers, we have a very, very good transparency now with them with daily contact with them. So you will believe we're well-informed when it comes to sub and sub-suppliers, the visibility is naturally a little less good. But in total, I'd say for the gas, if there were gas rationing, we are prepared, and that was one of our targets in that setup. But also the whole crisis when it comes to electricity, it's in the short term, mainly price prices here. We're also stepping -- we also stepped up again in terms of increasing the share of renewable energy. You know that we already use green electricity at all DEUTZ sites since '21. But what we also now continued to install is PV systems, photovoltaic system. In Cologne, we have installed the first system, and we are in the process of installing further systems. Well, Cologne is not the most sunny area. But when we have installed this, this will make the contribution, but a rather small contribution. Whereas, on our southern side, in Zafra and Sapino, it's a completely different picture. In Zafra, our big component plant in Spain, the Extremadura, here we have now installed 2 photovoltaic systems, which actually contribute to a significant share of the electricity required over there, and same for Sapino. So we will use this also as instruments, as a vehicle to further reduce our CO2 target by 61% compared from 2017 to '23. So this has 2 effects. First of all, really making DEUTZ more sustainable, but also making us more resilient in that field in the current field with the energy crisis. But now moving ahead on the guidance for '22. We put the guidance on the revenue earlier this year pretty much before we've already published it because that was exactly the time when that horrible war in the Ukraine kicked off, and we have a lot of uncertainty on supply chain and market development, and still, there is some uncertainty, but the uncertainty for '22 is going down purely because will move throughout the year. And as we said earlier, actually, pretty well. If we look at our outlook for '22 now, what we see is unit sales in the range between 175,000 and 185,000 DEUTZ engines, the demand is much higher, has been much higher. The limitations were mainly coming from supply chain production capabilities here. So in particular, in the segment smaller 4-liter, the demand is significantly higher than what we can fulfill. So this is the reason why we are in that range, EUR 175 million, EUR 85 million. That translates into revenue EUR 1.75 billion to EUR 1.85 billion is including the service business, in particular, and also Torqeedo is another smaller subsidiaries. We foresee EBIT margin, EBIT adjusted margin between 4.5% and 5.0% so pretty much in line with the first 9 months roughly. And free cash flow, that's the only sort of negative point where we currently foresee a negative low to mid-double-digit million euro amount. Obviously, we are working on reducing the inventories. We are optimizing working capital to pitch here at the higher part of that range. But it's also important in the last month, as Christian explained it earlier, we have to disappoint while a few customers when it comes to delivery performance purely because of the supply chain. So we did not do everything to optimize inventories in terms of just in time production because if there was a slight disturbance on the supply of components, that would have impacted the delivery cost performance in our customers even more. So that's why working capital increased. But now with the supply chain becoming a little more stable, it's the time to bring that better under control as you would normally do it. So that's our outlook here on the free cash flow. And that guidance for '22 is pretty much in line with the forecast we developed originally earlier this year, and we put directly on the review. But let me also sum up, I mean, coming back from the guidance to the first 9 months, as we've said as we've seen earlier, we are on track. We are on track with that growth in revenue with that growth and profitability. We are not yet where we want to be. That must also be very clear, we see as DEUTZ can achieve more, and we are working extremely focused to unlock this potential what we have. And what makes me confident is we saw earlier in the segment reporting makes me very confident is that we see how we develop, how we further increase profitability and business as a whole in our Classic segment, 6.9%. That is, if we take out all the investment in new technologies, which in the past years, we've never had in that range. That's actually by far the best 9-month performance we've had in the last 10 years or so. But again, that is not to be happy with that, but to be satisfied. We need to be more profitable. We also need to earn here the money in order to fund the journey of the transformation for the future. But this Classic segment, hopefully, will be a cash flow for quite some years to grow with us. So I cut a long story short, on track, but we will continue to remain on track and to improve further resilience. We developed in the right way. So whatever the future brings in terms of market development, we are well prepared. Thank you very much for your attention. I'll hand back to Christian and to the Operator to check whether there are any questions.

Thank you, Sebastian. Operator, we would be ready to take the questions.

[Operator Instructions] First question is from Richard Schramm from HSBC.

I have 2 questions, please, one is concerning the price effect. Can you be a bit more precise, how much of this affected the increase in pricing in the sales increase? Was it a complete difference between the volume of plus 13 and plus 19%, we have seen in sales increase over the 6 percentage points. This is what you could realize from better pricing? And how does this compare with your target for the full year of 8% to 12%, which would leave a massive remaining figure for last quarter, is this realistic or how should we put this into context here.

So first of all, the 8% to 12% is always on an annualized number. So we are only -- we started the negotiations in February and the first increase kicked in with the beginning of March, then continuously as we move throughout the year, we got more increases actively in the P&L. And obviously, with the last negotiations being almost completed so we've got a couple of customers where we're still in discussions. But all but those we have completed. So the majority of that round has been now effective from the beginning of October. So yes, you are right that the price increase effect is stronger in the last quarter than in the previous quarters. That's right. But the rising in revenues, not only due to pricing that is a major -- the delta between Revenue and Unit Sales is not only driven by pricing. We did also benefit to an extent from the U.S. dollar. Very well, our exposure in the U.S. is sizable. So the dollar certainly helped a little bit as well. It's a small double-digit million euro amount here. It's not as big as one sometimes would think because with some of our U.S. customers, we also have euro contracts to not having too much exposure on the dollar. But to cut a long story short, it's 2 things. It's price increases is a little bit of the dollar and slightly mix changes, but it's not so much because at the moment the demand is particularly strong for the smaller for later engines.

So would that mean that currency was about 3%, 4%, would that be a good estimate here? And further, does this mean that the majority of your price increases will quite obviously then effect the next year. So there we should expect a significant positive impact from this side?

We cannot. We are not in a position to give a guidance on our outlook on next year. But what we can say is, obviously, what we did this year on the price side will -- vast majority will help us -- will support us also next year. But we also need to see what are the cost developments for next year, because there's also a delay in the realization. And for us, it's important that we're always staying ahead of the wave. And don't -- and this is what we did well by starting in February earlier. So let's not talk about next year. We are well-positioned with what we did because the majority -- vast of the majority of our negotiations with the customers included a sustainable solution and that we don't try to avoid onetime payments as much as we can. So we are on good track.

Okay. And the second question, if I may, concerning the order inflow in Green, which was negative. Is this really only a basis effect or what's behind this trend here because on the relatively low basis one might have expected that there should be at least stable or slightly positive development?

Yes. The order intake as well as the revenues in the Green segment is at the moment mainly driven by Torqeedo. And with Torqeedo, we did see a bit of a slowing growth. I think Christian mentioned it earlier, that in the Corona time, that was actually in terms of top line of business which grew significantly, because in the leisure area, a lot of people then started to invest in their products for personal -- leisure craft and so on. So that's slowing down a little bit. And you know from our several discussions that our Green products in our core businesses, like agriculture, like construction equipment, and so on and so forth, there we are still in the prototype status. So we developed or we sold the first, let's say, PowerTrees, for example, this year. But these are still double-digit numbers and not in the thousands. So yes, the reduction you see is mainly driven by Torqeedo.

[Operator Instructions] Next question comes from the line of Jorge González Sadornil from Hauck Aufhäuser Private Bankers, AG.