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Edited Transcript of KTCG.VA earnings conference call or presentation 20-Nov-19 1:30pm GMT

Half Year 2020 Kapsch Trafficcom AG Earnings Call

Nov 25, 2019 (Thomson StreetEvents) -- Edited Transcript of Kapsch Trafficcom AG earnings conference call or presentation Wednesday, November 20, 2019 at 1:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Georg Kapsch

Kapsch TrafficCom AG - Chairman of Executive Board & CEO

* Hans Lang

Kapsch TrafficCom AG - IR & Compliance Officer

* Ulrike Klemm-Pöttinger

Kapsch TrafficCom AG - EVP of Finance

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Conference Call Participants

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* Charles Bordes

Kepler Cheuvreux, Research Division - Equity Research Analyst

* Christian Bader

Raiffeisen CENTROBANK AG, Research Division - Analyst

* Daniel Lion

Erste Group Bank AG, Research Division - Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by. I am Haley, your Chorus Call operator. Welcome, and thank you for joining the Kapsch TrafficCom's First Half 2019-'20 Results Conference Call. (Operator Instructions) I would now like to turn the conference over to Mr. Georg Kapsch, Chief Executive Officer of Kapsch TrafficCom. Please go ahead.

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Georg Kapsch, Kapsch TrafficCom AG - Chairman of Executive Board & CEO [2]

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Thank you very much. Ladies and gentlemen, good morning, good afternoon, wherever you are around the world. That's what I always say in the beginning of these kinds of conferences. Haley, welcome. Well, what we are presenting today is what we are, of course, not proud of, but there is a reason for it. And I would like to start with a kind of a strategic perspective concerning the company because I'm convinced that we are currently in a kind of a transition period, which, on the one hand side, causes huge investments in future technologies, new business models and transforming the enterprise towards a more service-oriented company.

This does not mean that we will get or we want to get rid of what we did in the past, so we will, anyway, stick to tolling and to IMS. We will remain a technology provider and always looking for excellence in terms of technology, to be ahead of our competition. But anyway, the market is changing, and the business models of our customers are changing as well. So we have, not just to adapt, but to drive the market. That's what we always did in the past.

So let me come back to the results of the first half. They were, of course, affected by onetime effects on the one-hand side and by huge investments on the other side. What are the onetime effects? The one-time effect is, of course, the termination of 2 projects in Germany: One is the reinforcement project; and the other one is the collection project. That caused us, of course, troubles. And this, of course, has an impact on the forthcoming years because this would have been a huge and very stable basis for the forthcoming years. Anyway, we are used to volatility. We are used to changing markets. We are used to changing technologies. That's what we proved in the past several times, and I am convinced that we'll cope with these challenges in the future as well.

Secondly, we are currently winding down our business in the Czech Republic, which also caused onetime costs. Furthermore, we -- and this has also an implication on our profitability, we were growing or we are still growing dramatically in the U.S. This is a huge success for our North American team. But on the other hand, of course, this causes troubles. As you can imagine, if you increase the number of employees, for instance, in one location we increased the number of employees within 1.5 years from 50 to 150. This first, of course, has an impact on productivity and efficiency. But we are convinced that, I think last time, I told you it would take about 12 to 18 months to recover. This will -- this time, I tell you it will take in between 6 and 12 months to recover. Anyway, this has an impact on how we are performing in the delivery of our projects. And there we have a problem, honestly and to be transparent.

Anyway, this market is the strongest growing market with the highest growth potential all around the world. And we are convinced, we are really convinced that this market will stand out like a star in the future. So -- but currently, we are facing problems, problems in projects, because we can't reach the timelines. We don't -- here and there, we can't reach the milestones, and this, of course, has an impact on how we can invoice. This again has an impact on our cash flow situation and on the EBIT as well.

So the other regions are doing more or less according to what we were foreseeing, with the exception of the onetime effects. So that's the current situation. Going back to what I was addressing previously, the strategy. We are currently working and elaborating a new strategy, which is guided by the principle to improve our current business, which is, of course, electronic toll collection and ATMS systems.

On the other hand, we tried to transform the company to a company, which is providing services. What do we mean by services? You know the term software-as-a-service? So which means that we intend not to sell our platforms in the future anymore. Well, if the customer wants to buy it, okay, we'll obviously sell platform to him as well, but to operate the platforms ourselves.

So let them be mobility-as-a-service platforms, let them be tolling-as-a-service platforms for our customer, which would, of course, lead to an increase in recurring revenues. But you can imagine and I just take one example, tolling as a service, while our mobile tolling application -- that this has huge upfront investments. So I always would like you to consider that. And as I always reiterate, we are not activating all these costs, but they go directly into our P&L, which -- and that's what I always tell you, which helps us in more difficult times because we do not have huge depreciations.

So anyway, we are convinced that there is huge growth potential, and we will strengthen our position in the market. On the other hand, we are currently trying to reduce our cost where we are not convinced that these costs are valuable costs for the future, and we will dispose, of course, one or the other activity like our automotive activity, because we decided not to become a supplier to the automotive industry as far as hardware and software products are concerned. This does not concern services to the OEMs.

So this is a basic information about where we intend to head, but frankly speaking, the elaboration and the definition of the strategy will take another couple of months.

So let me go back to our revenue situation. As you can see, we were able to increase our revenues by 7%, which from my perspective, already proves that we are on the right track. We are not losing market share, we are gaining market share, and we are -- this proves that our products and services are highly appreciated on the market. So on the other hand, we have -- sorry, our profitability in the first half of the current fiscal year, and this, of course, shows that the entire fiscal year will not really be a pleasant one where we will reach last year's returns.

Anyway, we are convinced that we are able to keep our growth rates so that we will end up somewhere around growing 5% compared to last year in terms of revenues. But of course, that's what we already indicated and published. We will not reach our EBIT target. And the EBIT margin, of course, went down, and this has the implication on the earnings per share as well.

And I would now like to hand over to Ulrike Klemm-Pöttinger for the details in the financial results, which you have received, I think this morning.

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Ulrike Klemm-Pöttinger, Kapsch TrafficCom AG - EVP of Finance [3]

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So thank you very much, Georg, and welcome to -- from also from my side. I would like to go to the presentation on Slide 5 and for the next pages, I would explain in some details our numbers, facts and figures.

So let me start with our revenues. The keys in this first half year of fiscal year '20, EUR 360 million. As Georg already mentioned, an increase by 7%. We have a stable other operating income, more or less at the very close level. And the impact in our cost base is seen in the increasing cost of materials and other products and services from EUR 140 million up to EUR 157 million, that's an increase by 12%. And I would take also immediately in consideration, the staff costs where we have an increase by 8%. So we are expanding on staff costs, EUR 130 million. These 2 positions are very, very closely related to the execution and delivery of our projects. We have a significant project backlog and push now as much as possible, and use external support also to achieve milestones, invoiceable milestones, and reduce also our contract assets, which are

kept, seen on our balance sheet information and data.

When you look on the staff, then you see that we have an increase in the cost but a decrease in the number of headcount. So the current number of headcount, end of September 2019 is 4,997, more or less 5,000, that's a decrease by 410 people. So we had a decrease in countries where the salary base is much lower in comparison to the U.S. The decrease happened in Poland and happened in the African area. The increase of our staff, for example, 70 million -- 70 people have been onboarded in U.S. are explicitly higher, but the impact of that is pushing forward and deliver our contracts to our customer in the best and optimized way.

Coming to the amortization and depreciation. Here, you see the first recurrence to IFRS 16. IFRS 16 is a standard used to -- for the first time in this fiscal year. You will see at a later stage -- page where we show all the impacts and effects of these new standards in our numbers and figures, but just mentioned here. Amortization, depreciation as well increased from EUR 7 million to EUR 17.8 million, means that we have an impact and a different impact happened on the other operating expenses, which reflects reduction in our ramp-up expenses, which has also to be shown on a different place in our balance sheet structure.

Proportional result of joint ventures, minus EUR 0.9 million, is reflecting the outcome of the German joint venture. Here, we have the 50% shareholder and do not consolidate in full the German project as such. This brings us to an EBIT of EUR 8.8 million in comparison to EUR 17.8 million in the comparable previous period and an EBIT margin from -- by 2.4%, with the effects mentioned already.

Now I would like that you flip to the next page. The next page is finance, how it's cut down to the EBIT down to the results for the period. Financial results is for 6 months, minus EUR 4.4 million. Over here, you have the most significant effect in this position, an adjustment of our Q3 investment by 0 -- EUR 1.7 million and an impact of the IFRS by EUR 0.5 million, which are the major positions impacting the financial result, but minus EUR 4.4 million is quite a good result for us. Proportional results from associates and joint ventures from financial investments that comes from an investment called TTS, where we are highly interested to get the information using these technology, connecting traffic management infrastructure with our network and our back-office as well.

This brings me to the result before income tax in the amount of EUR 3.6 million. Income tax is EUR 1.3 million and the tax rate, which I would like to explain a little bit more in detail. We have -- looking at the actual figures, the tax rate of 35.9%, which considers always different achieved and paid taxes in our actual numbers for the theoretical tax calculation. We used tax rate of 25%, and we have double checked this with the different tax rates in our market areas where we achieved our results.

Yes. That's our profit and loss statement, and the information I would like to share with you. Please flip to the next page where we go in more detail, where the segment results and where our revenues and our EBIT is coming from. So we show our financial data in 2 segments, the ETC and the IMS segments. We have a very constant split between these 2 segments of 78% in the ETC segment of our revenue, EUR 281 million; and in the IMS, EUR 22 million, which means EUR 78 million.

So what -- starting with the information that we really would like to increase the IMS segment in -- quicker. And when you experience your daily traffic environment, I think you'll see that there is a huge necessity and a good opportunity and the market is there to offer to our customer traffic management solutions. So although we are on this still low level, we are highly convinced that we can increase here our net sales position in the future.

The profitability of our segments show that ETC has a profit of EUR 17.5 million and an EBIT margin of 6.2%. And when we look how the revenues by type is structured like implementation, like operation and components, you will see on this slide as well that the implementation has an increase compared to the previous period from 17 -- EUR 73.6 million to EUR 110.5 million, so that's new contracts in Poland and Americas and in the EMEA region. We have -- in the EMEA region, we have a decrease and that's referring to the contract in Poland decreasing the operation, coming from EUR 133 million down to EUR 121 million. And when we're to the components, so we have the components, say, in the last 2 year were extraordinary high. So now we come back to the more expected and average number selling 6.3 million on-board units in this area.

The profitability of our IMS segment is suffering from the low number of net sales from our still big investments, because we really believe in this marketing opportunity, investments in our TTS in Africa as well. So the current EBIT is negative by EUR 8.7 million, but we think that we will improve this as well in the future.

Looking at the geographical split, we will see that the North Americas is growing. In ETC, we have already market share of -- not the market share. Our sales, 37% of our net sales are allocated to Americas in IMS, 44% is allocated to Americas. You see here, as Georg Kapsch already mentioned, the huge opportunity for us and we take the opportunity and grow in this area.

The next slide will give you some more detailed information about the IFRS 16 standard that has a significant impact for all companies, and means that leases have to be recognized and specified in different areas. This Kapsch, as a company, is such -- has lead contract for IT equipment and in some buildings and motor releases, so we don't have huge assets on our balance sheet. Although, and that you will see on -- in the graph and in the table, we had an increase of the balance sheet by EUR 48.6 million, and the total assets increased to EUR 705 million. That has definitely an impact on the equity towards minus EUR 500,000. And of course, based on the ratio also, the equity ratio, which is currently 33.9%. Without consideration of the IFRS 16, we would have achieved 36.5%. It's an equity ratio, which is fine for us and gives us the opportunity to have a very stable balance sheet date information also for our customer and clients.

Net debt. That here, you see that we have invested a lot in our projects. We have increasing contract assets, and that means that the net debt is now by minus EUR 169 million. And out of this EUR 169 million, EUR 49 million are only based due to new presentation, more information out of the IFRS 16. And that's also for the gearing ratio, which 70.6% should be reduced by 20.7% to have a comparable number to the previous year. EBITDA was supported by EUR 6.8 million, so we have an EBITDA from EUR 26.6 million. Financial result, I mentioned already. There is a small effect of EUR 0.8 million and the profit for the period has also, let me say, suffered a little bit by 0.5%.

So I think that's it, and hope that's a very helpful comparison for you to have a good possibility to compare our numbers to the history as well. And up from now on, we will definitely show all these numbers, including the -- more based on the IFRS 16 rules and regulation.

The last information, which I would like to share with you is on Page 9, other key financials. And here, you see our net CapEx position, EUR 5.9 million. We are not a company investing a lot in CapEx, so that's partly coming from North America activities. We have rented a bigger office to deliver and configure our bigger business there, and we have an investment in Zambia.

In respect to the free cash flow. Here, it's improved a little bit of IFRS 16. We have still negative free cash flow, which is EUR 17.8 million. And the net cash -- no, the net debt position is comparable, EUR 119 million. I would mention here as well, plus EUR 49 million, impacted by the standard, comes to EUR 170 million. But -- and not but, and we are working on coming back to a better net debt position, as Georg Kapsch mentioned already, addressing the cost structure and addressing also the efficiency of the organization to speed up in the delivery.

Balance sheet, I have already mentioned as well. So we have seen our equity ratio and our balance sheet numbers are stable and ready, prepared to be an effective supplier for our customer.

Yes. That was the insight in our numbers, with some additional explanation, which I hope have been very useful for you. And now I would like to hand back to Georg Kapsch for the outlook.

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Georg Kapsch, Kapsch TrafficCom AG - Chairman of Executive Board & CEO [4]

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Well, thank you, Ulrike. What I previously did not mention is Africa, because I was saying that North America is fast growing in the future market, but we are facing, due to the growth, we are currently facing some challenges. We are also facing challenges in Africa. That's what I did not mention before when I said that most of the other regions are more or less in line.

So giving you a brief outlook. I already explained that we are confident to reach revenue growth by approximately 5% on a year-on-year basis. Our EBIT expectations are far below, so we will -- we are currently forecasting EUR 35 million, plus-minus, so there will be a range somewhere in between EUR 30 million and EUR 40 million, which is far behind last year's -- last year, but I already explained the reasons for it and the rationale behind. So we will grow in both segments, and we will still grow stronger than the comparable market.

There will be higher growth rates for IMS on the long term, especially in regards to urban areas and municipalities. Our EBIT margin, and that's what I reiterate, is in ETC beyond 10%, and IMS below -- approximately 8%. But this is possible, but that's what we obviously currently do not achieve. Maybe you won't believe that anymore, but this is still our goal, and I'm convinced that this is achievable, but it's not achievable in a growth -- in the growth periods like we are currently in, especially if the growth rate is not derived from a global growth but from a very regional and concentrated growth on one region, because that's what is causing us troubles currently.

Furthermore, we are and we will -- we are investing and we will invest in new business models and in new technologies, primarily in platforms and applications.

Thank you. You're highly welcome to ask questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And the first question comes from the line of Christian Bader of Raiffeisen CENTROBANK.

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Christian Bader, Raiffeisen CENTROBANK AG, Research Division - Analyst [2]

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Yes. Couple of questions, please, regarding your U.S. business. First of all, is it possible to quantify the negative effects on your group results from this capacity problems in the U.S? Secondly, when do we expect these negative effects to disappear? And do we need to hire additional staff in the U.S?

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Georg Kapsch, Kapsch TrafficCom AG - Chairman of Executive Board & CEO [3]

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Okay. Normally, we do not explain profitability on a regional basis. I -- in the beginning, I said that we think we will resolve the problem within the next 6 to 12 months, which is a challenge, but I think it's doable. So...

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Christian Bader, Raiffeisen CENTROBANK AG, Research Division - Analyst [4]

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Okay. Then moving on to Africa, you said that you are facing challenges there. Can you be more specific, please?

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Georg Kapsch, Kapsch TrafficCom AG - Chairman of Executive Board & CEO [5]

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Yes. We have primarily 2 -- we have projects in several countries in Africa, but the main problems are located in South Africa and Zambia. Zambia does not start as fast as we thought because we do not generate sufficient cash in order to be able to complete the rollout, because the model foresees that it's an investors' you-earn-model, because we are not prepared to invest the entire infrastructure in Zambia because the risk would be too high. Secondly, Africa -- South Africa. This project is a project-generating loss over almost a decade meanwhile, and we are currently negotiating a transition of contracts because our current contract ends by the 3rd of December. So we'll see what's going on, and -- well, that's what I can report on South Africa.

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Christian Bader, Raiffeisen CENTROBANK AG, Research Division - Analyst [6]

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Okay. And then maybe a last one from me. What do we -- where do you expect the net debt to be at the end of the fiscal year, please? Approximately.

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Ulrike Klemm-Pöttinger, Kapsch TrafficCom AG - EVP of Finance [7]

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So net debt should decrease, at least by, I would say, 1/3.

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Christian Bader, Raiffeisen CENTROBANK AG, Research Division - Analyst [8]

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Sorry. You said decrease by 1/3?

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Ulrike Klemm-Pöttinger, Kapsch TrafficCom AG - EVP of Finance [9]

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Yes.

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Christian Bader, Raiffeisen CENTROBANK AG, Research Division - Analyst [10]

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On the current ...

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Ulrike Klemm-Pöttinger, Kapsch TrafficCom AG - EVP of Finance [11]

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Yes. But without the impact of IFRS, I would say. That will happen when we can deliver our contract assets and immediately we'll see it. It can be invoice, and we have absolutely no issue but to get the payment from the customer.

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Operator [12]

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The next question is from the line of Charles Bordes of Kepler Cheuvreux.

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Charles Bordes, Kepler Cheuvreux, Research Division - Equity Research Analyst [13]

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First question, just a clarification, actually, concerning the 2019 guidance, the EUR 35 million of EBIT excluding the one-offs. Is it, for example, excluding the EUR 5 million recording in H1?

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Georg Kapsch, Kapsch TrafficCom AG - Chairman of Executive Board & CEO [14]

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Sorry. Sorry, I didn't understand what you said.

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Charles Bordes, Kepler Cheuvreux, Research Division - Equity Research Analyst [15]

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Sorry. Concerning the 2019 guidance and the EUR 35 million of EBIT guided for the year and concerning the one-offs, so your guidance excludes one-off effects. Does it include the EUR 5 million of one-offs recorded during the first semester?

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Georg Kapsch, Kapsch TrafficCom AG - Chairman of Executive Board & CEO [16]

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Yes.

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Charles Bordes, Kepler Cheuvreux, Research Division - Equity Research Analyst [17]

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Okay. Next question if I may. Your thoughts about tolling-as-a-service and more regular revenues. Is it possible to have a bit more color on that? For example, will it have an impact on the length of the contract?

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Georg Kapsch, Kapsch TrafficCom AG - Chairman of Executive Board & CEO [18]

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Well, if it's tolling as a service, this is -- well, one has to distinguish, there are different options. If it concerns the option of a B2C business, it's different to -- if it remains a B2B or B2G business. Currently, 98% of our business is a B2G business, and we are targeting and I apologize that I was not clear in the beginning. I did not explain that, but thank you for the question. We are now targeting a B2C business. And the B2C business is an ongoing business where you have contracts with individuals but you don't have a 10 or 20 or 30 years contract with a B2C customer -- with a B2B customer. So this is a completely different business model. You will always win and lose customers because the customer's the consumer. Yes. Did I answer your question?

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Charles Bordes, Kepler Cheuvreux, Research Division - Equity Research Analyst [19]

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Yes. Perfectly. And last one if I may. Concerning the German toll contracts. Your initial communications stated basically that no money would be lost on these contracts despite the cancellation. Not in your current press release, I read that the claims for compensation of damages could be lower or not supplied at all. So what has prompted this change, sorry? Does that mean that there is a substantial change for your company to lose actually money in this case?

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Georg Kapsch, Kapsch TrafficCom AG - Chairman of Executive Board & CEO [20]

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Well, it's always a question of probability, and we think that the probability is very low that we are going to lose money, due to the contracts we have signed with the German government. But I ask you for your patience because due to confidentiality, I must not explain that in detail because this would harm our legal position, and I really ask you for your understanding.

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Operator [21]

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(Operator Instructions) Next question comes from Daniel Lion of Erste Group.

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Daniel Lion, Erste Group Bank AG, Research Division - Analyst [22]

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I'd like to follow up on the U.S. question of Christian. Maybe you could give us a hint, how many employees you would need for U.S. to basically to be able to fully, yes...

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Georg Kapsch, Kapsch TrafficCom AG - Chairman of Executive Board & CEO [23]

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Able to do U.S. numbers?

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Daniel Lion, Erste Group Bank AG, Research Division - Analyst [24]

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Do your business.

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Georg Kapsch, Kapsch TrafficCom AG - Chairman of Executive Board & CEO [25]

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Okay. Well, that's not that difficult to answer. We -- just for your information, we are currently employing in the U.S. somewhere between 700 and 750 people. And we would need, in addition, roughly 50 to 70 people.

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Daniel Lion, Erste Group Bank AG, Research Division - Analyst [26]

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50 to 70 people. And then if the situation is rather tight to you, we could expect it would take some time until these new employees are -- how to say it? Equipped well enough in order to perform accordingly, right?

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Georg Kapsch, Kapsch TrafficCom AG - Chairman of Executive Board & CEO [27]

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Well, what we are currently doing is looking for people all around the world, so within our organization, who can support North America, and we are successful in doing that. But this is not sufficient because, first of all, due to cost reasons, one cannot send people around the world all the time; and secondly, we are -- we changed our approach in the United States a bit to get more regional, not to employ everybody in our R&D centers and especially in Austin because the market there, the HR market is dry and the costs are high. So finally, we decided to look for people, for trained people in other regions in North America, which are way closer to our customers, customers' premises as those in Austin. And by the way, we already experienced that in a company we acquired, which was Transdyn, because they did it for decades already, and this is a good example for us. And meanwhile, we convinced our ETC tolling people in the states to do the same.

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Daniel Lion, Erste Group Bank AG, Research Division - Analyst [28]

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Okay. As you were referring to the automotive business that you would like to dispose, what is this exactly? Are you talking here about connected vehicles business? Or is this something else?

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Georg Kapsch, Kapsch TrafficCom AG - Chairman of Executive Board & CEO [29]

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Yes. This is primarily hardware and software stacks for the automotive industry, for the OEMs, which were used for connected vehicles. And we decided not to be a supplier to the OEMs in regards to hardware and maybe software stacks, but to concentrate on platforms and infrastructure and services. And the services, again, could be kind of white label services to the OEMs, to the automotive industry, because then, we are not obliged to follow the strict manufacturing rules and standards of the automotive industry.

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Daniel Lion, Erste Group Bank AG, Research Division - Analyst [30]

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So this means the roadside equipment, you're keeping anyway.

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Georg Kapsch, Kapsch TrafficCom AG - Chairman of Executive Board & CEO [31]

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Certainly. Yes.

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Daniel Lion, Erste Group Bank AG, Research Division - Analyst [32]

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For the connected -- sure.

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Georg Kapsch, Kapsch TrafficCom AG - Chairman of Executive Board & CEO [33]

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Roadside equipment and platforms. And maybe, I can tell you something else, which also is very tied to surveillance on roads. We are also concentrating on sensor systems, media sensor systems and their respective algorithms. So we are using AI and especially in regards to machine learning.

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Daniel Lion, Erste Group Bank AG, Research Division - Analyst [34]

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Okay. Very interesting. And then I would like you -- if you could give us an overview of maybe some large-scale project potentials that you see within the coming 12 to 24 months to be tendered, referring to projects like the one expected maybe in Poland, in Croatia, maybe some in France or U.S. Or what do you see currently from this point of view?

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Georg Kapsch, Kapsch TrafficCom AG - Chairman of Executive Board & CEO [35]

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Well we have a very good sales funnel. But currently, we are in a situation that having a huge order backlog, we need to manage to deliver this order backlog, which does not mean that we are not going to sell our product to the market anymore. But there are, of course, potentials, and you mentioned lots of them.

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Operator [36]

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And there are no more questions at this time. I hand back to Mr. Lang for closing comments.

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Hans Lang, Kapsch TrafficCom AG - IR & Compliance Officer [37]

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Yes. Also from my side, thank you very much for attending the call. If you have further questions, don't hesitate reaching out to me. The next event will take place on the 18th of February when we will publish the Q3 highlights report. The next conference call will be on June 16 with the annual results. And in the meantime, perhaps we see each other to one -- or rather, roadshow. So for the time being, I wish you a great, great time, a great season and all the best.

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Georg Kapsch, Kapsch TrafficCom AG - Chairman of Executive Board & CEO [38]

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All the best from my side as well.

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Ulrike Klemm-Pöttinger, Kapsch TrafficCom AG - EVP of Finance [39]

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Goodbye.

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Georg Kapsch, Kapsch TrafficCom AG - Chairman of Executive Board & CEO [40]

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Bye.

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Operator [41]

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Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.