CGG (CGG), a global geoscience company, reported a significant increase in its first-quarter revenue for 2024, citing strong activity across all business lines and regions. The company's Q1 revenue soared to $273 million, marking a 30% rise year-over-year (YoY).
The financial results also included positive developments such as an upgrade in long-term debt rating and the resolution of a longstanding dispute in India, which netted approximately $30 million.
Key Takeaways
- CGG's Q1 2024 revenue climbed 30% YoY to $273 million.
- Geoscience, Earth Data, and Sensing & Monitoring segments all reported strong YoY growth.
- The company generated $13 million in net cash flow and settled an Indian dispute for a net $30 million.
- CGG is developing carbon capture and storage solutions with Baker Hughes and an AI Cloud Solution for diverse industries.
- Sensing & Monitoring Optimization (SMO) plan is expected to yield long-term cost savings and efficiency improvements.
Company Outlook
- CGG anticipates Q2 volatility but remains positive about the full year, with further trajectory refinements after Q2.
- The SMO optimization plan aims to enhance profitability, with potential impacts on margins extending beyond 2024.
Bearish Highlights
- The company expects some volatility in Q2 due to the non-linear nature of after-sale sequencing and fluctuation of larger deals.
Bullish Highlights
- CGG's alliance with Baker Hughes to develop integrated CCS offerings.
- Launch of an AI Cloud Solution targeting high-performance computing and infrastructure monitoring sectors.
- Positive client feedback for the company's expansion into low carbon markets and other sectors.
Misses
- No specific misses were mentioned in the provided context.
Q&A Highlights
- CGG addressed the potential impact of the PGS-TGS merger, noting that some clients may prefer CGG due to competition concerns.
- The company discussed its comprehensive workflow in subsurface and reservoir characterization with Baker Hughes.
- CGG's AI Cloud Solution is designed to offer outcome-as-a-service in niche markets, including the biosense life science and AI sectors.
- The SMO optimization plan includes inventory management and cost reduction measures, with expected benefits to EBITDA and cash flow.
In summary, CGG's robust Q1 performance reflects the company's strategic initiatives and focus on diversifying its offerings. While there is anticipation of short-term volatility, CGG's long-term plans, including the development of carbon capture solutions and AI Cloud services, as well as the SMO optimization, position the company to capitalize on future growth opportunities. The financial results and strategic updates provide a comprehensive view of CGG's current performance and future prospects.
InvestingPro Insights
CGG (CGG) has shown a dynamic start to the year with its first-quarter revenue for 2024. To further understand the company's financial health and stock performance, here are some InvestingPro Insights that could offer additional perspective to investors:
InvestingPro Data shows that CGG has a market capitalization of $358.22 million, which is reflective of the company's size and market value. Despite a significant expected growth in net income this year, the company is trading at a high earnings multiple, with a P/E Ratio of 28.08 and an adjusted P/E Ratio for the last twelve months as of Q4 2023 at 629.02. This could indicate that the market has high expectations for future earnings growth. Moreover, CGG's Price / Book ratio as of the last twelve months stands at a low 0.34, which might appeal to value investors looking for potentially undervalued stocks.
From an operational standpoint, CGG's revenue for the last twelve months as of Q4 2023 was $1075.8 million, with a revenue growth of 16.0%. This aligns with the company's reported increase in Q1 2024 revenue, underscoring its ongoing growth trajectory.
InvestingPro Tips suggest that CGG's stock price movements have been quite volatile, which is an important consideration for risk-averse investors. Still, the company's liquid assets exceed its short-term obligations, indicating a strong liquidity position that could reassure investors about the company's ability to meet its immediate financial obligations.
For those interested in more detailed analysis and additional insights, there are 11 more InvestingPro Tips available for CGG. These can provide a deeper dive into CGG's financials and market performance, which could be crucial for making informed investment decisions. Readers can access these tips and consider the potential of CGG by utilizing the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
In summary, these InvestingPro Insights complement the article's narrative on CGG's promising start to 2024, with a focus on the company's financial metrics and stock performance that could be pivotal for investors evaluating CGG's position in the market.
Full transcript - CCG Veritas (CGGYY (OTC:CGGYY)) Q1 2024:
Operator: Good day and thank you for standing by. Welcome to the CGG Q1 2024 Financial Results Conference Call. [Operator Instructions] I would now like to hand the conference over CGG, please go ahead.
Christophe Barnini: Thank you, Sung. Good morning and good afternoon ladies and gentlemen, we have come to this presentation of CGG’s first quarter 2024 results. The call today is hosted from Paris, where Mrs. Sophie Zurquiyah, Chief Executive Officer; and from Los Angeles where Mr. Jérôme Serve, our Group CFO, will provide an overview of the quarter results as well as provide comments on our outlook. Let me remind you that some of the information contains forward-looking statements, and therefore that may change at any time. Following the overview of the quarter, we will be pleased to take your questions. And now I will turn the call over to Sophie. Thanks.
Sophie Zurquiyah: Thank you, Christophe. Good morning and good afternoon ladies and gentlemen. And thank you for participating in this Q1 2024 conference call. I would like to start by first recognizing Christophe’s numerous contributions to CGG. After 28 years in the company and holding various key finance, business and commercial leadership positions, he will be retiring in a few weeks. All the best into your future endeavors, Christophe, and thank you for the great work. We are now moving on to Slide 2. We are off to a good start in 2024. Overall activity was strong in Q1 across all our three business lines and across all geographic locations. Exploration activities continued to progressively pick up globally with interest from all clients profiles in all geographies, including in an increasing number of frontier areas. To respond to projected supply demand balance our clients are also continuing to accelerate their field development programs where Ocean Bottom Node technology, which requires advanced imaging, is establishing itself as the reference in mature basins across the globe. The Gulf of Mexico and Norway remain very active, sustained by demand for incremental barrels which is driving increased high end imaging and OBN activity. The Middle East and North Africa are active while Asia Pacific is picking up nicely with increasing IOC presence. Looking at CGG in Q1, I am very pleased to report our best first quarter since 2018. Overall, the quarter was strong with excellent performance and $13 million in net cash flow generation, despite $20 million paid for our vessel contractual commitments, which highlights the benefits of our decision to become an asset-light company. Q1 revenue reached $273 million, up 30% year-on-year. Geoscience was up 11% year-on-year at $88 million. Global activity remained strong, supported by demand for high end large projects and NOCs’ increasing activity. Earth Data was up 50% year-on-year at $97 million, driven mainly by broader geographical demand. Sensing & Monitoring was up 35% year-on-year at $89 million, with high deliveries of land equipment this quarter. Segment EBITDA was up 58% year-on-year at $106 million, including $16 million of penalty fees from vessel commitments at 39% margin. Now on Slide 3, there were two positive post closing events in April that I would like to highlight. First, the S&P Global ratings upgraded our long-term debt, recognizing our commitment to deleverage our balance sheet. And second, the settlement of our long-lasting dispute in India for a net amount of around $30 million. These are positive events for our financial roadmap. Going on to Slide 4, DDE segment revenue was solid this quarter at $185 million, up 28% year-on-year, with growth in both Geoscience and Earth Data. Profitability improved year-on-year to 56% EBITDA margin while still being impacted by penalty fees from vessel commitments. Let's go on to the business line now on Slide 5. Geoscience external revenue was $88 million in Q1, up 11% year-on-year. Geoscience had very solid activity led by high-end work in all regions. The market continues to strengthen, driven mainly by increased activity in infrastructure-led exploration and field development. Backlog at $227 million is up 23% since the end of last year thanks to catch up in order intake. Slide 6, following 18% external revenue growth in 2023, Geoscience grew 11% in Q1 year-on-year. Increasing demand for our high end technologies, along with the increasing size of projects drove the solid start of the year for Geoscience. Use of our unique elastic full waveform inversion is expanding geographically, increasingly providing value in all basins globally across all geologic settings, including those that are [indiscernible] definition and fidelity we can also apply the latest artificial intelligence and machine learning techniques with our expert modifications to extract insights that accelerate the speed and accuracy of structural and stratigraphic interpretation. The picture on this slide is a very nice example of the added value of AI to detect sand injectites, and they are in green on the picture in the Norwegian North Sea, which are expected to be oil-bearing. Combining the best geoscience technology with the best data science technology is a powerful combination and fits CGG’s strength very well. Looking at our low carbon businesses in CCUS, we see increasing demand in reservoir screening along with monitoring design. And in Minerals & Mining we used our high-end imaging technology to successfully map an ore body of interest deep below the surface in Australia to identify new extraction opportunities. Slide 7 we continue to advance the value of seismic for reservoir management. Reservoir engineers are interested in understanding small reservoir changes in time, which has historically been a challenge. Full waveform inversion is increasingly being applied successfully in the space. And this example is offshore Brazil and it shows our advanced 4D full waveform inversion technology clearly distinguish the producing and water injection layers in the 4D response, helping reservoir engineers adjust their reservoir models and optimize production. Now going on to Earth Data, Slide 8. In general, we see our clients starting to expand the breadth of their focus areas, especially IOCs, international oil companies, who are regaining interest and becoming more active in frontier areas. Q1 Earth Data cash CapEx was $50 million, up 79% year-on-year, driven by a larger portfolio of well funded ongoing projects. Pre-funding revenue was very strong at $58 million, driving our pre-funding rate to 116%. After sales were $39 million this quarter, up 32% year-on-year, mainly driven by active projects and interest in South America, North Sea and Africa. Slide 9, with a strong level of pre-funding, our portfolio of ongoing multi-client projects is growing larger and geographically broader in scope. This quarter, we completed our second Gulf of Mexico node project ahead of schedule, despite initial weather delays. In Asia, we completed our 2D survey in Malaysia and started a new survey in Australia. We continued the expansion of our CCUS subsurface data packages in the Gulf of Mexico and in the UK, mainly for screening application and the recent CCUS lease round in Norway fits very well our data library. Now on Sensing & Monitoring, Slide 10. Our Sensing & Monitoring segment revenue at $89 million was stronger year-over-year this quarter, up 35%. The growth was mainly supported by land equipment sales at $39 million, while marine equipment sales remained stable year-on-year at $34 million, driven by demand for OBN equipment. Sales from our new businesses were stable at $11 million and at this level of revenue, the EBITDA margin of the Sensing & Monitoring business line was 11%. Now with highlights on Slide 11. During the quarter, SMO sold its first 528 Land Acquisition System together with the new VE564 Vibrator Electronics System. The 528 Land Acquisition System includes several new features designed to improve recording capacity, reliability, productivity and data fidelity in this challenging survey requirements. We had significant deliveries of our GPR300 node this quarter in Europe, as clients appreciate the quality of our unique sensor which enables better imaging. In our new businesses, we deployed a commercial railway monitoring solution during the first quarter and it is worth noting that we see a progressively increasing portion of our equipment, standard equipment going to a new group of clients for application outside the oil and gas industry. Let me now give the floor to Jérôme for more comments on our financials.
Jérôme Serve: Thank you, Sophie. Good morning and good afternoon, ladies and gentlemen. I will comment the Q1 2024 financial results starting with the P&L on Slide 13. Our segment revenue was up 30% year-on-year at $273 million, which was our best first quarter since our decision to become an asset-light company in 2018. As mentioned by Sophie, all Group businesses were up this quarter with Geoscience growing in line with the E&P CapEx, EDA driven by both higher pre-funding and after sales and SMO benefiting from strong land system deliveries. The respective contributions from the Group businesses were 32% from geo, 35% from EDA and 33% from the SMO segment. Adjusted segment EBITDA was $106 million despite $16 million fees related to vessel underutilization. Segment EBITDA was up 59% year-on-year at a margin of 39%. The segment EBITDA was at $103 million or 56% margin and our SMO segment EBITDA was at $10 million or 11% margin. Adjusted segment operating income was $29 million or 11% margin and with an IFRS 15 adjustment of negative $8 million, this lead to an IFRS operating income of $20 million for the quarter. Net income was close to breakeven at minus $3 million. Moving on to Slide 14, Q1 2024 segment operating cash flow, which is EBITDA minus tax, but before change in working capital was at $102 million. This quarter, we had no change in working capital with the negative impact of our revenue growth offset by the tight management of the sales and inventory, showing the first benefits of the transformation plan that we initiated in sale at the end of last year. Q1 2024 CapEx was $58 million, up 11% year-on-year. Industrial CapEx was $4 million down back to a more normal level, while 2023 included $18 million related to the construction of the new HPC data center in UK. Research and development CapEx was $4 million quite stable and our multi-client cash CapEx was $50 million, up $22 million versus last year, driven by our first node project in the Gulf of Mexico. Prefunding ratio remained very high at 116% this quarter. After $2 million of other financial items, $12 million lease repayments, $3 million discounted operations, the net cash flow ended up for the quarter at $30 million. As a reminder, the $30 million net cash flow does not include circa $30 million settlements from ONGC, the Indian litigation that Sophie referred to initially that we received early May. Moving on to Slide 15, on the group balance sheet, the group liquidity at the end of March amounted to $350 million, excluding $90 million of undrawn RCF. Before IFRS 16, gross debt was close to $1.2 billion and group net debt was at $858 million. After IFRS 16 group gross debt was close to $1.3 billion and net debt was $966 million. Segment leverage ratio of net debt to segment EBITDA improved to 2.2 multiples at the end of March 2024. I now hand the floor back to Sophie for the conclusion.
Sophie Zurquiyah: Thank you, Jérôme. As a summary, I’m very pleased with our first quarter performance. We continue to see gradual improvements in our core markets abide with continued volatility quarters-to-quarter, especially in SMO and EDA after sales. Overall, we see a positive dynamic in our backlog and a higher level of client interactions, which increases our confidence in delivering our 2024 objectives. And in our new businesses, while they’re still in the early stages of development, increasing market interest and early feedback from our new clients is building confidence in our unique value proposition and our ability to develop meaningful businesses in the low carbon markets of CCUS and Minerals & Mining, as well as outside of energy in the HPC and Cloud Solutions and infrastructure monitoring market. Thank you for your interest and we're now ready to take your questions.
Operator: Thank you. [Operator Instructions] And your first question comes from the line of Daniel Thomson from BNP Paribas (OTC:BNPQY). Please go ahead.
Daniel Thomson: Hi, good evening. Thanks for taking my questions and congrats to Christophe on the retirement. Firstly, Sophie, if I could just touch on the point around the IOC demand and that sort of coming back, and I think you said previously that that's kind of been the one missing ingredient in this up cycle for the seismic companies. So wondered, when did you sort of first start seeing the demand from IOCs coming back? How does it compare to previous years? And is it one or two of them or all of them? And lastly, when can we start to see the benefits flowing to CGG. And then the second question is just on the cash flow. You've left guidance unchanged, but obviously we've had a very good Q1. And then combined with the ONGC settlement, I was just sort of wondering on what your expectations are for the rest of the year in terms of cash flow and particularly working capital as you've left that guidance unchanged. Thank you.
Sophie Zurquiyah: Yes, thank you and good evening, Daniel. Thanks for the great question, as usual. So the first to comment on the more sort of the macro environment. IOCs actually have never really left. They've always kept portfolios in frontier areas, but kind of some of them had put them more in the dormant mode and had made comments like they wouldn't go into new countries and things like that. So we're starting to see them this year break those paradigms. And so we're seeing some IOC who said we won't go into any new countries, starting to enter new countries. So I'd say really this year marks a bit of a broader interest from pretty much across the board. So obviously, as you would know, the American IOCs were always, as of last year, already looking more broadly. And initially, when you look at broadly, it doesn't cost you a lot of money because it is more acquiring, sometimes just 3D seismic data, all the data looking, evaluating. So you could start doing those things a bit cheaply under the radar. And I think a lot of that happened last year and this is becoming more visible. So I would still add a caveat to that, is that they still remain very disciplined, right. So you'll see them focusing on, say, Suriname, you'll see them focusing on Namibia, Egypt. But more and more, we're seeing, say, Malaysia emerge. We're seeing countries like Uruguay, which is a sort of an equivalent to Namibia, on the other side, starting to emerge, Brazil, definitely you saw the last we run good interest in the Pelotas area. So I think last year maybe undercover, more work was happening that was visible externally, but it is becoming more visible this year. And on the cash flow side, I will let Jérôme answer the question.
Jérôme Serve: Thank you, Daniel. So, honestly, it’s a bit early to upgrade the cash guidance at this stage. To be fully transparent, we are actually contemplating a potential strategic, but non-budgeted investment in our library. And the good news on ONGC could help partly fund this investment. So again, a bit too early and I think we’ll provide more details in July for future results.
Daniel Thomson: Okay. Thanks. Understood. I’ll turn it back.
Operator: Thank you. [Operator Instructions] We will now take the next question. And your next question comes from the line of Baptiste Lebacq from Oddo-BHF. Please go ahead.
Baptiste Lebacq: Yes, good afternoon. Thanks for taking my question. A special word for Christophe, when I started, he was already there, and I wish for him, let’s say, a good new life. A question, let’s say, from my side, regarding you already answered part of this question, but regarding, let’s say, the cash coming from the ONGC settlement. If I understand quite well your answer, this cash will be used as, let’s say, CapEx and not to reimburse part of your debt. Please correct me if I’m wrong. And second question, regarding your target in terms of petaflops, what is the target that you have in mind for the end of the year and for the next three or four years? Because we clearly see that there is an acceleration of appetite from AI and so on. What do you have in mind in terms of target of petaflop from your side? Thank you.
Sophie Zurquiyah: So, maybe I’ll – thank you and good evening, Baptiste. I might take – actually make a comment still on the cash side. I think really what you need to get to take away from our response is that it’s a little early to really define exactly where we’ll land. So we have a few moving parts and we just want to be cautious at this point in time and not change the guidance. On the – and Jérôme, we can add later on. On the petaflops, this year, we’re not going to do a huge increase. Last year, if you remember, we increased our petaflops by 50%, 5-0 from 350 to 500. And the reason we did that is, as we invested into a new center, we decided to upgrade and change a lot of the material that was – and the computing that was in the old center into the new centers. There was a big step up. So therefore, this year, we don’t expect that number of petaflops to increase significantly. Still around the same number, maybe 5% increase to 530, somewhere along these lines. But I think that as of next year, we’ll continue the ramp up and we have defined as sort of a five year roadmap. And you should see us definitely going into the 600 and 700 petaflops in the next few years. And it’s a bit of a – there’s always a balance investing by what do we need for our computing. We’re looking, of course, at our CapEx and our profitability. So we’re putting all these elements into the equation. And keep in mind, as well, we work on our efficiency gains. We constantly work at optimizing our workflows so that we could do more with the same amount of petaflops. So all these things are happening in parallel, and every year we reevaluate what we need for the following year. But we did a big step up in 2023, and therefore, this year, we don’t need to do such a big step. So, Jérôme, did you want to add the cash?
Jérôme Serve: So, Baptiste, no much further one. What I said, I mean, obviously, if this investment does not materialize, the additional CapEx – sorry, the additional cash will be used for paying down more debt, either through debt buybacks or at the time of the refinancing, as per the financial roadmap that we outlined in May. So both options are on the table at the moment and a bit of moving pieces. So that's why we don't want to commit at this stage.
Baptiste Lebacq: Thank you, Jérôme.
Operator: Thank you. We'll now go to the next question. And your next question comes from the line of Kevin Roger from Kepler Cheuvreaux. Please go ahead.
Kevin Roger: Yes, good evening. Thanks for taking the time. And again on my side, congrats to Christophe [ph] to all the work that you have done. That CGG has been always very helpful. So thanks for all the things that you have done, Christophe. If I may come back on the guidance, and maybe on a more broadly side, in terms of top line EBITDA, because basically you confirm the full guidance, but you have a Q1 that is probably better than expected. You just mentioned, Sophie, that the international oil companies are, in a way, coming back a bit. So why don't you increase the full guidance on some plan and EBITDA, if you have seen those moves recently on the industry? And the second question is also in the industry, two of your direct peers, PGS and TGS, are now very close to in their merger. Have you seen any change in the industry behavior, even on their side, on the client side, as we are moving close to their merger, is there any change in the industry behavior? Thanks a lot.
Sophie Zurquiyah: Yes. Thank you, Kevin, and good evening. So, why not change the guidance? I think we're in Q1. It is a little early, and we, as you know, Geoscience has backlog and we have decent visibility. So we're confident that Geoscience will continue that sort of gradual increase through the year. We do have continued volatility, both in Earth Data and in SMO, because in Earth Data, again, the sequencing of the after sale is not linear, unfortunately. So we had a really a good Q1, maybe Q2 is not as good, but we still feel we are not trajectory and Sensing & Monitoring has that element too, because it's made all the recurring business if you want, which is the sort of the spare parts for the install base. But then you always have this sort of larger deals that could be in a quarter and not in the next quarter. So we do expect that quarterly volatility. So I wouldn't draw a straight line again, but okay, we're increasing 30%, we're not going to increase 30% full year, right? So yes, things fall, all fell in place, many good things fell in place in Q1. But it is early to just to draw a line for the full year. We're still confident about the full year. And then I guess in Q2, it'll be a good time to refine that, that trajectory for the year. So that's the first question. On the PGS, TGS merger, we certainly see a change in behavior of TGS, which is a logical change as they've become asset heavy. The natural thing for them to do is to utilize the assets on their multi-client. So there's been a definite trend as of them acquiring [indiscernible] to utilizing OBN – their own OBN acquisition on their projects. And we do expect to see the same happening on once they [ph] embrace PGS that they start wanting to use PGS vessels on their multi-client survey. So that's one change of TGS behaviors, which is totally fair and logical. The second change we do see clients are a bit concerned because it creates a larger company. And as a result of that some clients tend to favor – would tend to favor perhaps a CGG, which is, again, in a setting like that where you've got two large two companies merging that clients get concerned and want to make sure there's competition out there. So you'll see, I guess, you'll see the procurement organization of the clients start trying to spread the work a little differently.
Kevin Roger: Okay. Thanks a lot for that.
Sophie Zurquiyah: Sure.
Operator: Thank you. There are currently no further questions. I will hand the call back to CGG.
Sophie Zurquiyah: Thank you very much. Thank you for attending.
Jérôme Serve: Daniel has one question.
Sophie Zurquiyah: Daniel has one more question.
Operator: Thank you. We will now go to the next question. One moment, sorry. Daniel, your line is open.
Daniel Thomson: Hi, sorry. Thanks for me jump back in. I did have two further questions if I could. Yes, Sophie, I just wanted to give you the opportunity to maybe talk a bit about the two very recent announcements. Firstly, the CCS alliance with Baker Hughes, any more color on what you're targeting there and sort of timelines and the firmness of that agreement. And then of course, the launch of the AI Cloud Solution, yes, just how that sort of feeds into the – to be on the core growth story? And then secondly, just on the SMO optimization plan that was outlined the last quarter, has there sort of been a bit of progress there in delineating the sort of cost savings that we can expect? And would any of that sort of hit in 2024, or is that more a 2025-plus story for the margins in SMO? Thank you.
Sophie Zurquiyah: Thank you, Daniel. So on the first question pertaining to our new businesses. So the Baker Hughes CGG announcement is very exciting. It actually has been driven by both companies seeing the value of one-plus-one being more than two. So we each have our strength, and the idea was to be able to provide a larger part of the workflow. So Baker Hughes, of course, as you know, is all in the subsurface. They actually have quite a number of elements around the surface transportation of CCUS, compressors and things like that. And we're, of course, sort of best-in-class when it comes to reservoir characterization. And so we believe the alliance of the two is very powerful. So just to remind you what CGG is focusing on right now, we're focusing on that imaging, characterization of the reservoirs, and we're focusing as well on the monitoring. So the modeling of the monitoring, how will you – what will you need to put in place to monitor that reservoir in the long-term? And so there's a lot of modeling associated to that, and then possibly installing the sensors and CGG sensors to be able to do that in the long-run, which complements really nicely what Baker has. So our plan is to start targeting clients where we're very recognized and strong, the two of us and see if we can we get take up for those combined offers. So this early days, we're very excited by what this entails, and our game plan is to be very targeted with the number of clients where we feel we can make a difference. The launch of the AI Cloud is just a step forward into our strategy to be able to provide outcome as a service, in terms of cloud services. So we're trying to target a sort of a niche market where we think it's a combination of need of super intense, high performance computing is required, but also where we can add value by helping the client optimize their workflow or optimize their algorithms, bit of a combination of helping them optimize the outcome. And we've chosen a number of verticals, and one of them is the AI. Not AI broadly, but the inference. And the inference is once you have a trained model that you actually run instances of that trained model. So we believe that requires computing and that we can make a difference there. So that's just that step forward. We have a few clients in the actually biosense life science space and then in the AI space that we're pursuing. So that's for beyond the core. Now going on to the Sensing & Monitoring optimization plan, as you would imagine, we're looking at pretty much everything. And some are going to be quick wins and others are going to take longer. So some of the quick wins is around inventory management. So just take one thing, which is safety stocks. Perhaps we were too cautious on the level of safety stock we were keeping or the level of inventory we were keeping. So we visited that. So there will be immediate benefits that Jérôme commented already on Q1. But also there are things that are a bit longer, like some of the costs that are in the structure that we're carefully identifying, and then perhaps those will take a little bit longer to realize, but certainly expect a chunk. And this has been sized, and I think we did commented on that last quarter, and we think part of it, say, call it half, or part of it will be this year and the other half will be next year. Jérôme, you want to comment on which number we gave last quarter? I think…
Jérôme Serve: Yes. So we said between $20 million and $30 million benefits to the P&L, to the EBITDA, and we could add another $20 million on the cash by a tighter management of our working capital, and then maybe a bit of CapEx as well that we can play with. So it's the full benefit. And I would say in $25 million of $50 million, that's what we believe we can achieve for the [indiscernible] transformation.
Daniel Thomson: Perfect. Thanks for the color and good evening.
Sophie Zurquiyah: Thank you.
Operator: Thank you. There are currently no further questions. I will hand the call back.
Sophie Zurquiyah: Yes. Thank you very much. Thank you for the great questions and thank you for attending. And I look forward to future interactions in the coming weeks. Good evening, everyone.
Jérôme Serve: Good evening, everybody.
Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
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