U.S. markets closed
  • S&P 500

    3,699.12
    +32.40 (+0.88%)
     
  • Dow 30

    30,218.26
    +248.74 (+0.83%)
     
  • Nasdaq

    12,464.23
    +87.05 (+0.70%)
     
  • Russell 2000

    1,892.45
    +43.75 (+2.37%)
     
  • Crude Oil

    46.09
    +0.45 (+0.99%)
     
  • Gold

    1,842.00
    +0.90 (+0.05%)
     
  • Silver

    24.32
    +0.18 (+0.76%)
     
  • EUR/USD

    1.2127
    -0.0022 (-0.18%)
     
  • 10-Yr Bond

    0.9690
    +0.0490 (+5.33%)
     
  • GBP/USD

    1.3438
    -0.0015 (-0.11%)
     
  • USD/JPY

    104.1400
    +0.2800 (+0.27%)
     
  • BTC-USD

    19,261.91
    +55.11 (+0.29%)
     
  • CMC Crypto 200

    365.19
    -14.05 (-3.71%)
     
  • FTSE 100

    6,550.23
    +59.96 (+0.92%)
     
  • Nikkei 225

    26,751.24
    -58.13 (-0.22%)
     

Edited Transcript of HOTG.DE earnings conference call or presentation 15-Oct-20 2:00pm GMT

·25 min read

Q3 2020 Hochtief AG Earnings Call Essen Nov 19, 2020 (Thomson StreetEvents) -- Edited Transcript of Hochtief AG earnings conference call or presentation Thursday, October 15, 2020 at 2:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Marcelino Fernández Verdes HOCHTIEF Aktiengesellschaft - Chairman of the Executive Board & CEO * Michael Pinkney HOCHTIEF Aktiengesellschaft - Head of Corporate Strategy ================================================================================ Conference Call Participants ================================================================================ * Christian Korth HSBC, Research Division - Analyst * Rushil Paiva Stifel Europe, Research Division - Research Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good day, and welcome to the HOCHTIEF 9 Months 2020 Results Conference Call. This conference is being recorded. And now at this time, I would like to turn the conference over to Mike Pinkney. Please go ahead. -------------------------------------------------------------------------------- Michael Pinkney, HOCHTIEF Aktiengesellschaft - Head of Corporate Strategy [2] -------------------------------------------------------------------------------- Hi, operator, and thanks very much. Good afternoon to everyone, and thank you for joining the HOCHTIEF 9 months 2020 results call. I'm Mike Pinkney, Head of Corporate Strategy, and I'm here with our Chief Executive, Marcelino Fernández; our CFO, Peter Sassenfeld; and our Head of Capital Markets, Tobias Loskamp, along with are the colleagues from the senior management team of HOCHTIEF. And we look forward to taking your questions later, but to start off with our CEO is going to run us through the key aspects of the numbers. Marcelino, all yours. -------------------------------------------------------------------------------- Marcelino Fernández Verdes, HOCHTIEF Aktiengesellschaft - Chairman of the Executive Board & CEO [3] -------------------------------------------------------------------------------- Thank you, Mike and the team, and good afternoon to everyone. I'd like to start by, again, publicly thanking HOCHTIEF teams in the different regions for the continuing to meet the needs of our clients while managing the uncertainty and personal impacts of the COVID crisis. And I'm pleased that our group companies have been able to continue supporting government efforts in our different regions to mitigate the impacts from the pandemic. HOCHTIEF has delivered a solid set of results for the first 9 months of 2020 with a nominal net profit of EUR 324 million and a positive momentum in terms of sales, cash flow and new orders, notwithstanding the impact of COVID-19. This robust performance benefited from the group's diversification by geography across its core developed markets as well as by activity. Let's look at the key highlights for the period on Slide #3. 9-month sales of almost EUR 18 billion, were just 3% lower year-on-year on FX-adjusted basis. Focusing on Q3, revenues were 7% higher than Q2 in local currency terms. As you can see in the chart, this positive sales momentum was broad-based across our 3 divisions. Operational net profit was EUR 363 million. Ex Abertis, this profit level reflects the resilience of the group's operating divisions and is just 4% below the corresponding period of 2019 with solid margins across the group. Looking at the last 12 months, net cash from operating activities of EUR 1.2 billion, is up by over EUR 150 million with a stable Q3 performance year-on-year. HOCHTIEF ended September with a net debt position of EUR 950 million. Adjusting for nonoperating effects and shareholder remuneration, HOCHTIEF would have a net cash position of close to EUR 800 million. We finished the quarter with a strong liquidity position of EUR 5.5 billion. And at the beginning of this week, Standard & Poor's reaffirmed it's BBB investment grade rating for HOCHTIEF. The group's order book remains solid at EUR 49 million, and was stable during the quarter, helped by the positive trend in new orders and the group's prospects are further supported by the substantial project pipeline of nearly EUR 600 billion identified by our teams. Cash flow. If we examine the third quarter performance, you will see that the EUR 214 million of net cash from operating activities pre-factoring is stable year-on-year, a very positive performance, given the challenging environment we are all experiencing. In the 9-month period, the year-on-year change in the working capital variation was driven by COVID-19 impact. Net operating CapEx stood at EUR 272 million for the period. Looking at the last 12 months, HOCHTIEF delivered EUR 1.2 billion in operating cash flow pre-factoring. In absolute terms, HOCHTIEF have generated an average of over EUR 150 million of net cash from operating activities in the second half of the year during the '15 to '19 period, 2015 to 2019 period, particularly in the fourth quarter, and obviously subject to COVID, we remain confident on the outlook for the rest of the year. Balance sheet, key metrics. HOCHTIEF ended September with EUR 952 million of net debt, there have been several significant nonoperating impacts on our balance sheet over the last 12 months, EUR 445 million pay out in group dividends; share buybacks at HOCHTIEF and CIMIC of EUR 242 million. The EUR 103 million invested the HOCHTIEF to increase its stake in CIMIC, which is now 77.4%. EUR 125 million reduction in factoring and EUR 832 million cash effect this year from BICC. If we adjust for these effects, we are -- which are nonoperating in nature, HOCHTIEF would show a net cash position of almost EUR 800 million, as illustrated in the chart. Terms of liquidity, the gross position remains strong at EUR 5.5 billion, with a further EUR 1.1 billion of a unused credit facilities. Overall, we have a sound balance sheet and this was underlined earlier this week when Standard & Poor's reaffirmed its BBB investment-grade rating for us. Some major recent project wins on Slide 7. In Americas, for instance, a Turner and Flatiron lead joint venture secured a USD 2.3 billion project to build a new terminal at San Diego Airport. Turner and Flatiron has a strong track record of successfully delivering airport projects in the U.S., including in San Francisco, Oakland, Sacramento and Denver. Flatiron has won several projects in the U.S. under the progressive contracting method similar to the alliance-styled contract model we have mentioned on previous occasions in relation to Australia. In Europe, HOCHTIEF has been awarded a new school building as part of a PPP project in Cologne. And CIMIC has secured a number of project wins, including a AUD 340 million mining services contract in the Hunter Valley, contract for resources and water projects in Western Australia and Queensland, worth AUD 120 million among others. Order book; the group's order book has remained very robust and it stands at EUR 49 billion. Adjusting for FX, this is stable compared with the end of June. And it is worth highlighting the geographic diversification we have with Americas, now accounting for almost half of our order book, Asia Pacific another 44% and Europe, almost 10%. Importantly, you can see positive trend in new orders, which have sequentially increased on a quarterly basis. New orders in Q3 2020 of EUR 6.5 billion are at a similar level to Q3 2019 on an FX-adjusted basis. Looking at the last 12 months, the EUR 25.7 billion in new orders secured is equivalent to 1x work done, COVID notwithstanding. Looking forward, our local teams have identified a project tender pipeline with close to EUR 600 billion of relevant projects coming to our markets in North America, Asia Pacific and Europe for the remaining of 2020 and beyond, with around EUR 200 billion of PPP projects in developed markets. A look at Americas, the division delivered an outstanding performance during 9 months 2020. Sales of EUR 11.3 billion was solid 2% higher compared with the previous year, or up 3% local currency terms, with a steady performance during the third quarter, notwithstanding the impact of COVID-19. Operational PBT increased by 2% year-on-year to EUR 247 million with a robust margin of 2.2%, and operational net profit rose 8% to EUR 165 million. In terms of cash, the Americas division is delivering in a strong and sustainable manner. For the first 9 months 2020, the net cash from operating activities of about EUR 330 million pre-factoring, was up EUR 94 million year-on-year, supported by a strong Q3 performance. The divisional net cash position at the end September 2020 stood at EUR 1.4 billion, up EUR 94 million year-on-year. And the order situation at Americas continues to be very robust. New orders of EUR 11.7 billion in 9 months 2020 were at a similar level of 9 months '19, with EUR 5.2 billion in the third quarter, representing an increase year-on-year of over 40%. The 9 months order intake accounted for 1.1x the work done during the period. As a consequence of the positive new order trend, the order backlog at the end of September stood at EUR 23.3 billion, an increase of 7% year-on-year. The operational safety measures we implemented in the spring have proven effective as essentially all our projects are currently operational and the outlook for the division is positive, particularly in some of our key areas of specialization. The healthcare and pharma industries are actively transitioning as we see a demand for more flexible hospital space for more science centers and laboratories at the universities. The data center segment continues to grow. Airport operators have taken a long term view and continue to invest, the San Diego Airport award being a good example. Asia Pacific. The division at the CIMIC result published last week and CIMIC reported revenues of AUD 9.3 billion compared to AUD 10.7 billion in the prior year period with the impact of COVID-19, leading to a slowdown in revenues across activities and a temporary delay in new work. Q3 2020 revenue was 7% higher than Q2, and margins remained robust during the period, and PBT stood at AUD 648 million. Net profit after-tax, NPAT, was AUD 474 million. Pre-factoring operating cash flow reached a total of over AUD 922 million in last 12 months, impacted by COVID-19 mainly in Q2 and Q3 2020. The group maintains a disciplined focus on net capital expenditure with AUD 419 million invested during 9 months 2020 to deliver mining operations and job-costed tunneling opportunities. CIMIC's net debt position of AUD 1.67 billion, with net cash of AUD 25 million, excluding the gross cash impact from BICC, share buybacks and reduction in factoring. Solid investment-grade credit ratings were reaffirmed by Moody's in June and Standard & Poor's in August, BBB. The work in hand of AUD 35.5 billion compares with AUD 37.2 billion a year ago, whilst maintaining busy discipline, total new work of AUD 1.4 billion was secured during Q3 2020. AUD 25 billion of tenders relevant to CIMIC to be bid and awarded for the remainder of 2020, and around AUD 525 billion for 2021 and beyond, including AUD 110 billion of identified PPP projects. CIMIC has announced that their transaction with a new equity investor for Thiess is well progressed, and negotiations are expected to be finalized in the near term. Europe. HOCHTIEF Europe has delivered a solid performance during 9 months 2020. Sales were 5% higher compared with 9 months '19 at EUR 947 million, reflecting a disciplined bidding approach and timing effects. The division achieved a stable EBITDA and EBIT with a solid performance in the construction activities. Operational PBT and net profit of EUR 39 million, both increased when adjusted for year-on-year FX effect of EUR 15 million. HOCHTIEF Europe's net cash from operating activities improved by EUR 29 million year-on-year, in 9 months 2020, notwithstanding COVID impacts. At the end of 9 months 2020, HOCHTIEF Europe's balance sheet showed a solid net cash position of EUR 343 million, up EUR 23 million year-on-year. New orders remained at a firm level with EUR 2.0 billion of work secured during the last 12 months, equivalent to 1.2x work done. The divisional order backlog ended the period at EUR 3.8 billion, of which, Germany accounts for over 70%, representing visibility of around 2.5 years. Then let's summarize the 9 months 2020 performance of Abertis. Following the strong decline in Q2 after extensive lockdown measures were enforced by governments in key markets due to COVID-19, traffic trends have been improving. Revenues of EUR 3 billion were lower year-on-year on a comparable basis. Lower traffic volume resulted in a 9 months 2020 EBITDA of EUR 1.9 billion. Net profit pre-PPA was EUR 318 million, and the 9 months 2020 contribution of Abertis to HOCHTIEF amounted to minus EUR 4 million compared with EUR 96 million in 9 months '19, reflecting the impact from COVID-19. Quarterly in Q3 '20, we have incorporated a positive net profit from Abertis of EUR 14 million, a significant improvement versus the minus EUR 19 million of Q2. The Board of Directors of Abertis will convene this quarter to assess the COVID-19 impacts and decide on the second half of the dividend. Abertis strategic plan to focus on investments in new assets in order to perpetuate the duration of cash flows and to diversify the portfolio geographically remains on track. So let's conclude with Slide #14 (sic) [Slide #13] HOCHTIEF management continues to actively assess its capital allocation options, of which shareholder remuneration remains a key ingredient. In July, HOCHTIEF paid shareholders a dividend full year '19 of EUR 5.80 per share or EUR 406 million. This represents a 16% increase compared with 2018, and this is in addition to the EUR 136 million returned to shareholders via the buyback of 2.8% of our shares during 9 months 2020. CIMIC announced at the end of July that it was in exclusive negotiations regarding a potential investment by Elliott for a 50% joint control stake in Thiess. Negotiations are expected to finalize in the near term. In terms of the business outlook, accompanied by the encouraging trends we have reported for the third quarter in terms of sales, cash flow and the orders, the fundamental outlook for our core business remains positive. Our local teams have identified a project under pipeline worth around EUR 50 billion for the final quarter of 2020, and EUR 540 billion beyond of relevant projects coming to our market supported by EUR 200 billion in PPP projects and helped by the numerous stimulus packages approved by the government. And we continue to monitor the consequence of COVID-19 on our 2020 operational and financial performance. So thank you very much, everyone, for listening. And I hope that you and your families stay safe in this challenging times. I look forward to talking to you again early next year with half fold results. Thank you. So, thank you very much everyone for listening. And now I welcome your questions. -------------------------------------------------------------------------------- Michael Pinkney, HOCHTIEF Aktiengesellschaft - Head of Corporate Strategy [4] -------------------------------------------------------------------------------- Yes, operator, we're ready to take questions. Thank you. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) And we will hear first from Korth, Christian with HSBC. -------------------------------------------------------------------------------- Christian Korth, HSBC, Research Division - Analyst [2] -------------------------------------------------------------------------------- I have a few, just kind of clarification. First of all, I believe that some part of the dividend from Abertis is still potentially to come later in this year. I think there will be a rating evaluation service, and I would just like to ask if you have any update on this or insights on this? Secondly, you have no quantitative guidance out there, while you had one earlier in the year. I just would like to ask, is there strategic reason why there is none? Or is the old one still valid? Which I guess is not the case. And then 2 things about Australia. Firstly, about Gorgon Jetty and Thiess. Do you have any insights into timing? I know that you said in the coming days, you expect something on due course, you expect something from Thiess? And then the last question from my side would be on the West Gate Tunnel project. Is there currently any progress? I read in the Australian newspapers that there are a couple of new reports out suggesting that there's AUD 3 billion cost overrun right now. Maybe you could update us on the project? And if there's any view and how far that might affect you? -------------------------------------------------------------------------------- Marcelino Fernández Verdes, HOCHTIEF Aktiengesellschaft - Chairman of the Executive Board & CEO [3] -------------------------------------------------------------------------------- Okay. Thank you very much, Christian. So your first comment in regard of Abertis dividends coming later. As I said in my speech, we need to assess at the Board level. Once we analyze the potential impact coming from the COVID, and this will come in the next Boards -- if we are going to, say, to approve the pending -- remaining of the dividend. This is all I can tell you, because, obviously, it will be a Board decision, and we will make it in the next weeks. The guidance -- guidance, you are asking for guidance. What we always tried to give to you is visibility. You realize that visibility under the current circumstances is very difficult because the COVID is impacting us in a different way in the different regions. The COVID is not having the same speed for the same moment in the different regions that we are, in Europe, Americas, Australia, Asia Pacific. And then because of that, it's very difficult, let's say, to assess what is going to be the impact. And because of that, it's very difficult to know exactly with this second wave that probably is just starting. You realize that you can read that the states and the government are giving new protections for the different countries and then making things a little bit more difficult, that's why it's so difficult. The only thing that we can tell you is that Q4 usually and then seasonally speaking is a good one regarding, let's say, the performance in different ways, cash-wise, et cetera. And then obviously, subject to these potential impacts that are very difficult, we would like just to continue performing similar than we did in the previous year, but it's all I can tell you. Because otherwise, it's very difficult to say any figures, any numbers. You can see the numbers in the 9 months, and then you could more or less assess. But obviously, the impact is going to be very, very difficult. In any case, you know that we are always very focused on rewarding our shareholders and stakeholders, and this is a priority to us. We'll do our best in order to say, to be in a position that this can be done properly. Gorgon Jetty. Gorgon Jetty is a thing that you now that is under arbitration, and obviously, we don't know exactly when it's going to be the final decision of the arbitrators, but maybe this can, let's say, can at any moment. Because you know that in the previous call, we just were saying that we expected this to come in the coming months, but it was July now we are October -- in the coming days, in the coming times, I don't know. But we expect the Gorgon Jetty resolution relatively soon at any time. It's all I can tell you because it's not depending on us. And it is, what I can say is what CIMIC said in its report, that it looks like there is an expectation that the transaction can be realized in the near term, and this is all I can tell you. Regarding these newspaper's news, West Gate, you know that we never comment on our projects, ongoing projects. The question more of our clients than ourselves. But what I can tell you that we are very close to our clients. We are very close to the people at Thiess. And we are in continuous negotiations in order, let's say, to try to reach an agreement as soon as possible. And this is what I can tell you, no more than that. -------------------------------------------------------------------------------- Christian Korth, HSBC, Research Division - Analyst [4] -------------------------------------------------------------------------------- Okay. Maybe just one follow-up on the guidance then. So how do you cope with this uncertainty internally? Do you think in scenarios to cope with this uncertainty? How do you approach this for the remainder of this year? -------------------------------------------------------------------------------- Marcelino Fernández Verdes, HOCHTIEF Aktiengesellschaft - Chairman of the Executive Board & CEO [5] -------------------------------------------------------------------------------- If you read the newspapers, the today's newspapers in the different countries, you realize that the COVID scenario is changing. The conditions and restrictions in the different countries are different even for traveling, even for traveling, even just for going from one country to another country, but in the same country. It is very difficult right now, let's say, to assess about how this can impact us, whether it was Europe. But Europe, depending on the countries, the situation is different. If you go to Americas, you know the situation in Americas. In the states, they have a different approach to this. Australia is the same. There is no easy communication, you cannot say travel for the different places. And then obviously, the situation is not any standard situation. We need, let's say, to continue working on-site with the teams, and we need to continue managing this with this kind of online ways that we are doing in contact with our clients internally with the company. It's very difficult, let's say, to have concrete scenario because of the geographic diversification that we have, and the overlapping of the situation is not the same. Now you look at the restrictions and the restrictions are totally depending on the moments or depending the COVID impacting different countries. That's why for us, it's not easy, let's say, to give any scenario. -------------------------------------------------------------------------------- Operator [6] -------------------------------------------------------------------------------- I'll now move to the next caller in the queue, and that will be Rushil Paiva with MainFirst. -------------------------------------------------------------------------------- Rushil Paiva, Stifel Europe, Research Division - Research Analyst [7] -------------------------------------------------------------------------------- I'll just ask 3 questions, if I may. So the first one is just in relation to CIMIC. I was just wondering if you can provide an update in regards to the segments within CIMIC. So in the year-to-date, we've seen that mining and mineral processing has been quite resilient compared to the other divisions. Was this still the case in the third quarter? And then also on the new orders within the Asia Pacific division, they did seem to drop quite significantly within the quarter. So again, if you can point to any segments where this is particularly evident? My second question relates to BICC and the potential cash impact. If possible, it would be great to just get your forecast for what the potential cash impact is going forward and if that has changed? And then lastly, on the cash flow itself. I know that HOCHTIEF is quite -- has quite a strong weighting towards the second half in the fourth quarter, in particular, as you've mentioned. First, possible, if you can provide us with a bit of guidance in regards to what we can expect for operating cash flow in the fourth quarter. We have seen that the negative working capital impact in the first half started to unwind in the third quarter. So how much more of that can we expect in the fourth quarter and just overall guidance, if possible? -------------------------------------------------------------------------------- Marcelino Fernández Verdes, HOCHTIEF Aktiengesellschaft - Chairman of the Executive Board & CEO [8] -------------------------------------------------------------------------------- Okay. Thank you, Rushil. Some of your questions -- the CIMIC performance, CIMIC resilience, CIMIC. Well, CIMIC is really -- last week, they were just releasing the Q3 numbers and then, say, a little bit of guidance. And the CMIC information was that they expected, let's say, to continue with this resiliency at the margins level. In Australia, one of the things that is more evident is like the COVID is affecting the sales, and then you can look at the numbers, and it's affecting also the new projects coming in. There is a kind of delay, postponement in new projects. And obviously, if you are having less speed in the private label project because of the restrictions. And then you are having less projects coming in at the same time, there is a delay on all these kind of things, and this is exactly what CIMIC seems to be showing in numbers. But in any case, you realize that they reported resilient margins, which is very good news. And obviously, in Q3, Q4, should be Q4 -- according to the last year -- so the problem we have here is like, Christian's question, now at the problem we have year like we don't know how to assess the impact that the COVID could give us on that, but the problem is or the idea is like usually, Q4 is about 75%, 80% of the cash collection of the year, and this is because of seasonality. In any standard year, we should aim to get something like that. With a COVID impact with all the restrictions with all these kind of sales restrictions, et cetera, maybe it's difficult right now to say a number, but we are trying to, say, to do our best in order, say, to continue having a very great performance in this regard. New orders is -- you were talking about new orders. Well, new orders is the same thing. If you know that currently, all the governments, they want to say, to speed up the recovery because of the impact in the different economies. And this is coming from different stimulus packages, but the stimulus packages will come really to the market in the near months, meaning that not affecting us in an immediate -- with immediate effect. And obviously, what we are aiming is just to be there. And then obviously to try said to get the number of projects that we consider is the [proper one] taking into account that you know, but we are very, very, very focused on having this kind of bidding approach, taking into account, risks. And then we want to continue just emphasizing that because we believe that it's very important for us and for our sustainability and for this kind of sustainability in our margins. -------------------------------------------------------------------------------- Operator [9] -------------------------------------------------------------------------------- (Operator Instructions) We'll move to (inaudible) -------------------------------------------------------------------------------- Unidentified Analyst, [10] -------------------------------------------------------------------------------- I have 2 questions. One, first of all, is regarding Abertis and the possible dividend. What is the metric that HOCHTIEF is measuring in order to, for example, Marcelino, as a Board member of Abertis? What are the metrics that you measure as a Board member in order to propose a new dividend or not? Does it have to be something with net debt-to-EBITDA or equity ratio against something, so what exactly do you have to see to propose a new dividend? Or what you have to -- for not proposing a new dividend? And then, for example, there are other question is regarding the intrinsic value of the HOCHTIEF shares. Where do you situate the intrinsic value of HOCHTIEF? So where would you have to see the share of HOCHTIEF in order to execute the 7% more or less that you can buy back more in the market? -------------------------------------------------------------------------------- Marcelino Fernández Verdes, HOCHTIEF Aktiengesellschaft - Chairman of the Executive Board & CEO [11] -------------------------------------------------------------------------------- It is the company who is assessing the Board members. It's not ourselves that who are -- so the company is just collecting all the information that is coming from the performance of the year and then it's establishing how the company will continue performing just with a business plan. And then based on that, they will assess if it is possible or they consider that it's good for the company and for the shareholders, let's say, to give a positive opinion that of the dividend. But it's nothing that we particularly consider something that has to be very objective. Because otherwise, you know that the company has to continue been rating in the same way that it's important for the company to continue. Then taking into account all the considerations in this regard, the company will propose to the Board and kind of decisions, and then we will analyze at that point. And then depending on the proposal and depending on the reasons we will make such a decision. Okay? -------------------------------------------------------------------------------- Michael Pinkney, HOCHTIEF Aktiengesellschaft - Head of Corporate Strategy [12] -------------------------------------------------------------------------------- It's Mike Pinkney here. Just on your question about the share buyback. I mean, obviously, we've been -- we've bought now since about March 2.8% of our shares, that's been an investment of EUR 130 million, EUR 140 million or so. And we've done that at an average price of very close to EUR 70 a share. So I think that gives you a good feeling for where we think the shares are fundamentally very attractive. And obviously, apart from blackout periods, we were taking a prudent approach to our share buyback and managing it in the best interest of the company and taking into account some COVID impact on cash flow. But capital allocation is and remains a management priority and buybacks are a key part of that capital allocation option, which we regularly evaluate. So the idea is that we're buying back shares because we think we can create value for shareholders by buying them back when they are significantly undervalued, and that's what we're doing. -------------------------------------------------------------------------------- Operator [13] -------------------------------------------------------------------------------- (Operator Instructions) With no additional questions in our queue, I'll turn the call back over to your host for any additional or closing remarks. -------------------------------------------------------------------------------- Marcelino Fernández Verdes, HOCHTIEF Aktiengesellschaft - Chairman of the Executive Board & CEO [14] -------------------------------------------------------------------------------- Okay. Thank you very much to everyone. And I hope that you and your families stay safe in these challenging times. I look forward to talking to you again early next year with half fold results. Thank you. -------------------------------------------------------------------------------- Operator [15] -------------------------------------------------------------------------------- And ladies and gentlemen, this will conclude your conference for today. We do thank you for your participation, and you may now disconnect.