Avio (Milan:AVIO) Q1 2026 Earnings Call

0:00 Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Avio First Quarter twenty twenty six Highlights Presentation. All participants are in listen only mode. And after the presentation, there will be a Q and A session. At this time, I would like to turn the conference over to Mr. Navio S. Quaterina, Head of Investor Relations. Please go ahead, sir. Good evening, everyone, and welcome to Q1 twenty twenty six Results Conference Call of Avio. I'm here with Mr. Giulio Ramzo, newly confirmed Alceti, Chief Executive Avio and Mr. Roberto Ersai, Chief Financial Officer of the company.

0:48 In a moment, we will go through the presentation we just released on our website, which outlines the main highlights and financial results of the quarter. And in the end, we will, as usual, welcome your questions. Thank you for your attention, and I hand the conversation over to Julian. Thank you, Navi, and thank you all for joining the first quarter results, the additional call we have. As Avio was commenting, I was reappointed, so I'm not a newly appointed CEO. I'm secondhand, probably, Off we go. So another quarter. So overall, this first quarter is in line with expectations, continues to show growth on what we do and numbers in line with expectations.

1:41 We're ready to go with VB-twenty nine, the twenty ninth mission of Vega. The SMILE satellite is on the path and in respect to launch on May 19. We had a little bit of a delay over the last few weeks, but we're on track to fly on May 19. We recently had two important successes of our M6. The first flight for Amazon, you may recall, those of you who have followed the stock for a while, that this was an important target for iM6, which we achieved together by improving the performance of iM6 to suit the needs of the Amazon customer. So we were very happy on the last slide. We performed the first mission of iM6 with four of our boosters, so a very, very important milestone achieved.

2:31 It's also important to highlight to you that we are approaching notable milestones on our liquid propulsion technology projects, which we often refer to but don't talk much about. We are now accelerating a little bit towards the first and last, so we want to update you a little bit on that as well. On The U. S. Project, we are progressing as expected. We recently pleaded the land purchase in Virginia and started to order the plant equipment, which are more with more lead time, so we ordered that new plants. As I said on the financial side, the revenues continued to grow at a 20% pace versus last year, which is not irrelevant, if I may comment, because this is the fourth year in a row that we continue to deliver on the top line growth of 20%, which I can guarantee to you that it's anything but simple.

3:34 Then based on these aspects here, we obviously confirm the 2026 guidance, which is communicated a few weeks ago. As I said before, Neger commented, we have a new Board of Directors. Five out of nine have been changed in the directors. So myself and the Chairman remain to grant management continuity, but we have also some new relevant additions that have broadened a little bit perimeter of the competencies we have around the Board of Directors. So now moving on to page five. As I said, the venue, the next legacy mission is about to be launched on May 19. It's an important flight for the European Space Agency.

4:31 The SMILE spacecraft is a scientific mission to measure something particularly complex with solar wind. The mission will be the first operated by Avio as a launch operator. What does that mean? We will essentially replace the former role held by Arianespace for many years since the beginning of the Vega launcher. And so Avio will be overall responsible for the hold on service, which was, as you know, a target we had put to for long time. So everything is ready to go. We should see that next Tuesday, the night I believe between Tuesday and Wednesday in Europe. I told you about the first flight of Amazon Neo. I remember very well when we pursued this customer a few years ago, we promised Amazon to deliver a capable launcher to suit their needs in a peculiar configuration.

5:34 Now we performed the first few flights the first couple of flights Then now later in July, I believe, we will perform the first flight of Ariane six or with the T-one 160 with the larger prep on booster that will deliver more performance and therefore more ability to carry more payloads, more satellites in just one fight, which I think is particularly relevant for Amazon because they have, let's say, scattered their flights across a number of different launchers. IM6 covers a portion of their launching needs, but we are delivering as expected and I believe the customer is very about that. So therefore, this is very important for us as we every flight delivers the propulsion systems, which are very relevant, as you know, since the grant is something like 90% of the cost of the company.

6:36 The schedule this year for flights looks pretty busy. There might be as many as eight thirty six flights and three legacy flights. The schedule for legacy in 2026 has been made complex by scheduling of the satellites that wasn't ideal because what we envisioned is that we might have five flights in 2017, maybe it would have been better to do four rather than three and five. Nonetheless, the schedule of the flights was set due to this tentative schedule for the time being. We continue to have a robust backlog on both IM6 and Vegas for the foreseeable future. So we have covered all the way to 2,030 give or pay. So I think there's quite some visibility over huge flights.

7:31 Now it's all around execution and making sure we deliver on the promise of raising the flight rate. And next year, for sure, for legacy will be extremely relevant for 560 already will be relevant this year and for us too in delivering the most. As we said before, a new Board of Directors with lots of new additions. In particular, we have two U. S. Directors, Steven Wood and Ivy Shu. I think I want to mention the name of Ivy Shu. She was a former Secretary of Defense, so very experienced in defense technologies, very important for us to have this addition. And Steven Wood is a financial investor himself, so with lifetime experience on The U. S. Market. And considering what we have in our plan, I think these are important.

8:39 Ladies and gentlemen, so the combination of these new competencies with us, with some that we already had, and therefore we believe that the usual setup with more than 50% of the directors as independent directors will continue to work. Of course, as I said before, Chairman and CEO remain the same. As I was saying before, quite some advancements on the lipid oxygen methane technology demonstrator that we are currently integrating to perform the first two tests. This is essentially a prototype of an entirely new next generation launcher with using liquid oxygen methane propulsion, which is in a way a novelty in Europe. It's also a novelty in The U. S, but more so in Europe. So this is just an experimental vehicle. It's not meant for the time being to carry any particular payloads, but to improve our technology, hopefully, to a completely different degree of efficiency.

9:45 So this experimental vehicle will perform a number of ground tests and then next year is supposed to perform a flight test to measure essentially the performance of these new propulsion technologies. But not only that, also completely new avionics system and some other systems that will work not only on the ascent phase, but also on the descent phase in the attempt to control the descent phase. So essentially making the first steps towards reusability that, as you know, we have embarked on as a development path also with a separate contract to develop reusability.

10:42 Now to perform these tests, we have put together an infrastructure that will allow us to perform both ground tests and flight tests. It's interesting because it's a removable infrastructure. It's very small but complex, And we can mount and dismount this in different locations. So it's quite some new experience for us and a completely new technology, but hopefully something that will represent the forefront of our knowledge, adding a lot of intellectual property to our assets. In parallel, we are also reaching a very good level of confidence on our MPGE orbital engine, which is an hydrogen peroxide after stage storable engine.

11:41 This is very important and will continue to be very important for orbital maneuvers. So this may in the future be the engine for the upper stage of legacy and for the propulsion system for in orbit service modules derived from the legacy upper stage. So we have never endeavored on developing technologies of this company. We are very happy now that I wouldn't say we are yet mastering the technology, but we are reaching a good level of understanding of what type of technology that can guarantee to you is absolutely forefront and way more efficient than any other currently used and also more environmentally friendly. So we're quite happy to have performed a number of very relevant tests successfully.

12:36 Now more tests will be done on an upgraded version of the engine itself, but the whole infrastructure for testing that we have put together has left our team with a lot of new knowledge. In parallel, in The U. S, we have signed new orders in the course of the first quarter with the U. S. Army in particular. And then we have agreed with the Commonwealth of Virginia, with the State of Virginia, a whole package of incentives to establish our plans for a maximum amount of about $27,000,000 in a mixed form of tax incentives and some other types of more grants.

13:22 On this basis, we have then secured the purchase of 1,200 acres worth land in the Southern part of Virginia in the Pennsylvania country in the so called Southern Virginia Motor Model Park, which is an area that is devoted to industrial activities. So in parallel to purchasing the land, we have also started to hire some people and to issue the first orders for the process equipment. So for the plant equipment, the mixers, the idle play, the premixers, all of the key relevant pieces of machinery that require a long time to procure.

14:10 So that's in a nutshell what happened in the first quarter. I wouldn't spend too much more time on that. I would leave it to Roberto Verasaya, our CFO, to walk you through the details of our first quarter financials and then we will get together again to comment on the outlook. Okay. Thank you, Giulio. Good evening, everyone. It's a real pleasure to walk you through our financial performance for the first quarter, which marks pretty solid start for the year. Moving to the backlog slide, it's worth highlighting that the backlog is still very robust, exceeding 2,100,000,000, in line with last December.

15:03 This is due to the fact that we have booked CHF 8,000,000 orders in the first quarter, largely thanks to this contract that we have signed with the U. S. Army and for the development, requalification and initial production of solid rocket motors defense application. Thanks to this order intake, we have achieved on the defense business segment 31% of the total backlog amounting to €650,000,000 It is increasing also the stake of production inside our backlog in the 70% versus 30% related to the technical development.

15:54 If we move to the next slide, we focus a bit on the revenue performance. As Giulio was saying, we have again achieved an increase of double digit increase compared to last year, almost 20% more than last year, million. As you can appreciate, this increase has been driven by all the three segments, so the space the launch system, the space propulsion and the defense. In particular, the launch system, we have increased the production activity line with bigger sea flight manifests, while on the space propulsion we are increasing the booster production for the M6 and then the defense increase is mostly due by the increased production currents for Rasterline, the two designs that we manufacture.

16:55 And moving to the next slide, we focus a bit on the profit loss. And here, it is important to highlight that this growth on the net revenues driven the growth of the EBITDA adjusted reported that achieved 5.2 with a significant increase of 1.2% compared to last year. And these results have been possible despite the ramp up of The USA cost in line with the expectation that has achieved have achieved 1,500,000,000. In terms of net financial position, we still have a fairly high positive net financial position amounting $560,000,000, slightly declining from the amount that we used to have last December.

17:56 This is as a result of the partial initial slowdown of the advanced payments that we massively collected in the last quarter of twenty twenty five to our suppliers. Moving to the next slide, can here we can focus a bit on the quarterly evolution of both EBITDA and net financial performance net financial position. In terms of EBITDA performance for the year, we expect to follow the same path of the previous year. And in terms of seasonality, you know that this company is experiencing a bit of business seasonality. And the largest bulk of the EBITDA is generated in the second half of the year, in particular in Q4.

18:47 In terms of net financial position, we expect this net financial position to partially decline across the year in order to cover the CapEx spending for The USA project and for the further flow down to the supplier of the advanced payments we collected last year. Moving to the last slide. Yes, based on Q1 results, the company confirmed the full year guidance. Thank you very much. I leave the floor to you again for Q and A. So for those of you who are new to following Avio's results, the first quarter is typically soft. It's not particularly indicative of the year, particularly in terms of the profit because as you can very well see from the distribution of the profit across the quarters, typically, most of the profit gets accumulated on the fourth quarter. So the first three quarters are typically soft.

19:59 So we did well according to expectation, maybe even a little bit more than expectation. So we're on track. I wouldn't take from that the indication that we'll have 20% more at the end of the year. We don't know. But what is indicative instead, and I want to make a clear statement of that, is that crunchy revenues at a 20% increase for the first year in a row is not simple. And in my mind, it is ailing of the ability to convert all of this market demand growth into backlog first, which reached a record high at the end of last year and into net revenues now. So this is requiring a lot of effort, hiring people, mobilizing suppliers, moving a lot of working capital.

20:51 So far, so good. This is moving in the right direction. We will continue to do so, and we'll have more data points maybe by the start. So thank you very much for following our presentation. We're open to any questions. This is the Chorus Call conference operator. We will now begin the question and answer session. To answer the queue for questions, please click on the Q and A icon on the left side of your screen. When announced, please click Continue on the bottom of the pop up window. If you are connected in audio only, please press The first question comes from Martino De Ambroggi with Equita. Please go ahead.

21:45 Thank you. Good evening, everybody. Three general questions. The first one is on the CapEx plan. So everything is progressing in line with your plan so far, but is it conceivable any acceleration considering the environment for the defense propulsion? And on CapEx, if you could quantify and remember us the expectation for the full year and what was spent in Q1? The second is on MBDA because the CEO stated that this year production, there is a 40% production increase. Is there any update on what is the possible news flow in terms of fine?

22:34 I don't know if it's feasible or not in this call, but any update on the order flow would be appreciated. And very last, another general question because if we look around what happened in the past few months, it seems that demand for defense propulsion is only growing more than what you expected at the beginning. Okay. The The path the is long, so you need to build up the plant. Am I right in assuming that the final demand is, I don't know, significantly or in any case higher than what you assumed when you launched the rights issue?

23:26 Okay. The purchase of the land in The U. Was finalized on the very few very first few days of April. So it actually went outside the first quarter, but we expensed a few million there. And therefore, there is a little bit less in the first quarter than we had anticipated, but just because of timing. An acceleration of CapEx, I don't know. We are progressing as we expect.

24:21 On one side, we look at the CapEx. On the other side, we look at the progress of firm orders on The U. S. Hand side. Therefore, we try to keep these two things in balance. So not to overcommit on CapEx too early, but at the same time, we need to be able to deliver against customer requests. So that's why we have started to purchase the land, order the equipment and so on. The amount for the year you asked for, we have planned something around $90,000,000 overall, out of which two third related to There are today in backlog more orders than we had anticipated just six months ago or a year ago. Every now and then, more orders are coming, in particular, on the Aster thirty side from Europe, maybe less so on CAMIAR, which is a bit more long term.

25:33 But the volumes on Aster are expected to grow. The process by which we get the orders, as I commented to you many times, is very fuzzy, so very difficult to predict because it comes from different countries within Europe. We are a supplier, so we don't have visibility over what the final customers decide. We may have some on the Italian customer, but the Italian customer is comparatively small within Europe. But there is no doubt, to answer your question, that there is an expectation for more orders from MBDA exceeding our earlier expectations. In The U. S, if I compare the view of when we presented the plan in September, lots of things changed when we presented our plan in September since the war in Iran was non existing.

26:34 Therefore, we have to make necessary to encounter a substantial consumption of the missile stockpile was actually done in the course of the last few months. And this inevitably will further grow demand for the future beyond our expectations. The difficulty we have is to getting precisely analytical on how much this will be and when because it's not yet completely factored in. The process is long because it goes in The U. S. From Congress realizing that they have to invest more in procurement of weapons than disparate services, Army Navy Air Force to define exactly what they need and then the primes to receive orders from the end customers and then we, as suppliers, receive orders from the primes, taking into account that we will be a second source of production, we will not be the main source of production.

27:49 Therefore, we are going step by step along this complex path. But to answer your question, there is no doubt that there is an expectation for volume upside with respect to what we envisioned in September, and I believe a significant one. Then we will try to be more precise as time goes by. Thank you, Giulio. The next question comes from Gabriele Gambarova with Intesa Sanpaolo. Please go ahead. Yes, good evening. Thanks for taking my questions. Back in March, you said that there were some clients, let's say, with whom you were holding talks because there was the idea that they could, let's say, exploit the existing capacity in Italy in order to source solid rocket motors even before the opening of new US facility. I was wondering if you have any update on this front.

29:06 And the second question is on the guidance for revenues. If I factor in the plus 19% you recorded in the first quarter it comes out that in the next three quarters revenues should stay flat or grow by 6%. So, any comment, any color on this would be helpful. And last, sorry, but I totally missed the level of CapEx Martino asked before in Q1 because the line is very bad, I'm sorry. So first of all, on the story of leveraging Italian capacity, what you are saying is right. In the course of the first quarter twenty twenty six, we received a second order for a second product from the U. S. Army for the development of second product for the U. S. Army to be manufactured in Italy, not in The U. S.

30:18 And we will also receive requests for arranging at some point in the future the production rates of the two products that they have requested us to develop, and all of which would be manufactured in Italy. So that is definitely something interesting because it allows us to start to work for U. S. Customers from Italy while the plant is being constructed essentially. Then the U. S. Army has also asked if in the future they could leverage both the Italian and The U. S. Facility for their needs. And of course, we have made ourselves available for that. So on this basis, I cannot exclude that also other customers other than The U. S. Army may want to do the same. So start using European capacity, And then as soon as The U. S.

31:20 Capacity is available, use that as well, okay? And this is allowing to say a little bit our advantage. The fact that we can use both the European capacity and future U. S. Capacity is an advantage mainly versus other players such as, for example, new startups and so on. And therefore, we will try to leverage this advantage. The guidance, on the guidance. The guidance for the time being, we keep the one we have. We do not have sufficiently precise information other than the sharing of expectations for upside, which are still generic in nature, not sufficient and precise information for us to raise the guidance 26.

32:16 Therefore, we are cautiously keeping it as it is. But as I already commented a month ago, it is clear that the scenario calls for a significant upside with respect to what we had foreseen six or seven months ago. Now when this upside is expected to materialize precisely And how much? With respect to material access, I mean, this is a bit difficult to forecast since the conflicts are still ongoing. We have the Iran war still unresolved. And so it's a bit difficult for us to predict it any in any more precise fashion.

33:10 CapEx in Q1, we have incurred €4,000,000 overall because as Jules said, The U. S. Project was envisaging the land purchase in March, but then at the end we signed the contract in April. So it was just a little postponement. Okay. Thank you very much. If I can make a follow on on the second contract you got in the first quarter exploiting the Italian capacity. Do you have in mind time for the start of production even directionally? I don't have it on top of my mind, but if you think about the fact that with the first product of the U. S. Army, we are already high in production. We started in summer twenty twenty four.

34:08 If everything goes well, we should be able to deliver the first item for production within eighteen months, four months max, which is a very fast development cycle. So the approach used by US Army is extremely fast, simplified development processes to make sure that they reach production as quickly as possible. Okay. Very clear. Thank you, Julie. The next question comes from Andrea Bouncer with Avio S. Please go ahead. Hi. Good evening to everybody.

34:54 Most of my questions have been answered. I got a curiosity. When is the new p 160 engine being, let's say, utilized in in a launch? Because it seems that there are there is no unofficial deadline for for that. If you can comment on that. Thank you very much. So in normally, it should be this summer in IM6. So the way we use MP-one 160 is that it's set to fly on IM6 forward first and later in time, we will introduce it in legacy, okay? So it should be this summer on Ariane 64.

35:42 Okay. So the line is pulled. So if I understood correctly, this summer might be used in the IL-six 40. Is that correct? Yes. Yes. Okay. We have already manufactured something like '25, 26. So we have that installed. Okay. Thank you very much, Julio. The next question comes from Chloe Loumarier with Jefferies. Please go ahead. Ms. Le Maria, please click on the Continue on the bottom of the pop up window.

36:29 Thank you. Sorry for the difficult mishap. Thank you for taking my question. The first one would actually be on MBDA, which announced recently plans to increase production by 40% in 2026. I was wondering if you were seeing orders from them amounting to roughly that level of growth on the Aster and the CAMER programs? The second one, and I'm aware it may be difficult for you to comment, but have you had any recent discussion with Leonardo following the change in management on what they intend to do with the remaining stake in the company? And last one, on the Q1 margin expansion for the non Italian for the non U.

37:18 S. Side of the business, could you maybe share what were the key drivers between growth in defense? And I suspect some volume tailwind in the launch of business, please. So regarding MBDA, we definitely are raising the volumes of deliveries for EBITDA this year, maybe more so on a step 30 than on coming up yet. And we will do the same next year as well. So we are a path to essentially doubling the volumes for them in a matter of a few years. So we're just along with this path, and we are committed to them to continue growing production rates not only this year but also next year and the following year and so on.

38:19 So Leonardo, yes, of course, we have met. I know the CEO very well. We have met. We know each other. He has just started. Of course, he's not new to the company. He knows the company extremely well. I don't know what the strategies will be regarding his share and so on. I think he also needs to have sufficient time to make up his mind as to what he wants to do with the strategy of the company, but he's obviously well aware of the situation. Keep in mind that he was formerly the Chief Commercial Officer of MBDA, so he knows one part of the business he knows extremely well and we will see. Then we have new directors from Leonardo who have joined the Board, and we have started with the first quarter Board today.

39:14 So we'll see if the discussion will be ongoing. By the way, on the sale of their shares, I mean, this is not a transaction that takes place with the company. It's maybe within Leonardo and someone else, not with the company. So I may not necessarily be involved. Regarding the margin expansion, we don't report margins on the single business lines because, as you know, some of these business lines relate to one or two customers, so we don't want to disclose customer specific margins for commercial sensitivity. The margin expansion for production activities are a direct function of volumes. So as we grow in volumes, we expect to improve the margins, while in development activity, margin is not necessarily linked to the volume of activity.

40:13 Therefore, we believe that given the mix we have in the business, which is partly production, partly development, it will take some time to see this full margin expansion, but we are on the right path to to do it. And as a matter of fact, you already saw some improvements modest improvements, I have to say, I have to admit, but some improvements on the margin, and we will continue on that path as we committed to in our plans. Very clear. Thank you. The next question comes from Alex Carnelli with Salamoyo and Co. Please go ahead. Great quarter.

40:58 Most of my questions have been answered. Just the last one, I think in the past you said probably your strategy is to look at vertical integration. Any color on that? Anything you're doing in? Just something there. Yes. So vertical integration will be yet another step to be taken care of once we have more certainty around the long term orders. We also explained in our previous calls that we link more investment into the vertical integration also as a function of the orders we get, but also as a function of the type of government support that we might have.

41:43 The government in The U. S. Is calling for the urgent need to further consolidate the supply chain at all levels between Tier one, Tier two, Tier three suppliers, and we are more than happy to do so. But if this were to be the case, then we need significant more funding, okay? Now as you know, we had already anticipated for the possibility of having to raise additional capital. And if we will see the opportunity to invest them with a return, we will. But we would also like to have, together with more equity, perhaps more government funding to support vertical integration. As a matter of fact, the U. S. Government has put some money available to support vertical integration within the supply chain because they understand very well that the clients and even the Tier one suppliers are we can commit to threefold or quadruple the volumes, why not? We tell you that we will do it. But if there is one supplier who is critical and is not moving, then we all pay with low volumes.

42:55 Therefore, it is clear that this topic will be a material development for the future, but we also have to have the proper funding to do it because Are there any more questions?

43:48 Not on my side. Thank you. The next question is a follow-up from Gabriela Gambarova with Intesa Sanpaolo. Please go ahead. Yes, just a couple of questions more from my side. I was wondering if you can tell me on space launches if you saw any movement in pricing even directionally, of course. And then the last one is on the 90,000,000,000 loan that Europe approved to support Ukraine. I know you are not a tier one, you're not MBDA, but your view on this in terms of effectors, in terms of interception, do you think that this could help export sales of after after missiles further?

44:51 Thank you. So let me start from the story of the the space launches. You know, what what I've seen in the last few months is that everywhere I go, they come to me and they ask for more flight rate, right? So in particular with the European Space Agency, my question to them was, hey, why didn't you invest more at the last ministerial conference to increase the flight rate? Whereas at the last ministerial conference, a lot of money was invested to attempt to develop so many different rockets around Europe and so on. I think the system in Europe is realizing that developing an entirely new rocket is a lengthy process. And we never solve the problems of the near term demand.

45:41 So I think European member states are realizing that they need to invest more in what they have, which is mainly Arian and Vega, end of the story, to secure flight rates to fulfill their demand. Then entertaining development projects to create new rockets is an interesting effort. We have reported to you the advancements of our latest technology. It's all very good, but it doesn't solve the problem of getting stuff to space tomorrow. So what I anticipate and I hope European states will do, they will hopefully converge again into funding more capacity expansion for Ariana and Vega to raise their annual flight rates because this is the only way to respond to undoubtedly an increase in demand within Europe.

46:36 Then on the story of the €90,000,000,000 for defense, I was called in a meeting by the European Commissioner for Space and Defense, along with all the industries for missile manufacturing across Europe, essentially to say, okay, we have this EUR 90,000,000,000, how do we spend it, right? But we are still at the point where you get together in the room, there is only industry in the world, the institutions, but we still need to decide where to invest the money and on which products. And the problem is that all across Europe, as you know, there are different types of products being used by different countries. Some countries procure products from The U. S, some have their own products, some have other products.

47:26 So it's a very complex situation. So I think Europe lacks a central procurement policy versus weaponry that, in these cases, we unfortunately delay decision making on increasing volumes on one platform or the other because there is the money on the table. There is everything, but everyone has a different requirement, has a different product. Moreover, I believe that this €90,000,000,000 will likely become debt for many of the countries. So I don't know how each country will deal with that. So all I can tell you is that it is clear what you say is right.

48:15 It resonates with what I heard, but it's still in the main theme. Thank you, Giulio. Thank you very much. The next question is a follow-up from Martino D'Ambroshi with Equita. Please go ahead. Thank you. Focusing on the energy costs, which is mentioned as a potential risk, although maybe it's only temporary. But I was wondering, number one, what was the impact in Q1, which is mentioned as a limited impact? If your best estimate today is still for $2,000,002,500,000 for the full year and if you already started, as our question, if you already started negotiations to revise the price because of the energy cost increase?

49:11 Thank you. So the energy price is anything but stable at the moment. It's difficult to forecast what the situation will be for the rest of the year. We have focused our attention to decrease the electricity and steam consumption to the least, okay? And in fact, we achieved one very important result. We pretty much had the same consumption in megawatt hour we had last year, but we manufactured something like 19% more. So in terms of the efficiency in delivering output with the same amount of energy, we did a great job.

49:57 And if and then, of course, the price of natural gas, which we procure for generating steam and so on, has unfortunately increased by more than 20 in March 8, maybe by 30%, okay? However, on the first quarter, you don't see much of an impact because it was only in March. Now if this price continues to stay in the end of the year, we might have an impact of about 1,000,000 or $2,000,000 between now and the year end. But who knows what happens between now and year end? It may go down again to reasonable levels. We just don't know. And what's happening in the Strait Of Burgund is at the very core of these issues. So I don't know whether the gas price goes up to 100 or what.

50:52 I have no idea at the moment. We have attempted to see whether we could buy any options to curb the price of gas. But at this point in time, immediately after this crisis, it's impossible to buy an affordable option to do that. We would do that, but the option would be so expensive that it would offset the benefit. And the idea to negotiate renegotiate with your main customers, is it possible or it's If very you would, Makino, because this is hopefully a near term effect. Hopefully, it's not a new normal.

51:37 So they will tell you, okay, but we are facing the same situation. Let's see what happens in six months. Let's discuss it. Of course, if this trend were to endure for too many months, you are right. We shall go back and discuss and negotiate, but we cannot try to renegotiate a contract anytime there is a spike in an energy price. As I told you, we're doing a great job at limiting consumption, which I'm very proud of because that is comes at no need for external discussions with customers. And it's, by the way, always our duty to try and limit consumption anyway.

52:26 Okay, thank you. Thank you. Thank you, everyone. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your devices. Thank you.