Welcome to the Atalian Q1 2024 earnings release. My name is Caroline, and I'll be your coordinator for today's event. Please note, this call is being recorded, and for the duration of the call, your lines will be on listen-only mode. However, you'll have an opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your questions. If you require assistance at any point, please press star zero, and you'll be connected to an operator. I will now hand over the call to your host, the CEO of Atalian, to begin today's conference. Thank you. Hello, good afternoon, everyone, or good morning for those joining from the U.S. I hope you can hear us properly. Last time we held the financial presentation, it was on April 5 for our 2023 annual results, and we were just after the closing of the refinancing of our bond debt, which took place on March 28. Today, I'm pleased to present you the financial results of Atalian Group for the Q1 of 2024. I will do, naturally, the presentation together with Laurent Carozzi, our CFO, and after the presentation, we will naturally be ready to answer your questions. Let's start with slide number 5. So as usual, we have tried to summarize the key messages in the first slide, and what are the key takeaways for this Q1? First of all, let me remind you that in the facility management business, the Q1 is traditionally a less intense quarter in terms of results, notably due to the seasonal nature of special works. As you know, special works generally contribute more to margin than lump sum contracts, and they are more often ordered by our customers in the second half of the year, be it for technical or be it for budgetary reasons. The other major factor in the seasonality of our business is the rise of our staff costs with branch collective agreement on wages, and our Social Security increase that often occurs at the beginning of the year, very often at the first of January. So there may be a time lag between this cost increase and the indexation of our contracts, either a calendar lag, or a lag in levels, and we will come back on this specific point later on. So for these two main factors, the Q1 is therefore generally a low point in the year. It was the case last year, and it's also the case this year, as you will see. The second reminder that I wanted to make at this stage is the successful closing of our bond debt refinancing. It remains certainly one of the very major event of the Q1, and so it is mentioned. Talking now about the commercial and the operational business, what are the main messages? I would say that we are on the right track in implementing our strategic plan, which focuses, as you know, on organic growth and on improved profitability. However, the situation varies slightly from country to country and from business to business. First of all, following last year, Central and Eastern Europe remains a real source of satisfaction with profitable growth. Turkey, in particular, performs remarkably well. Also, this is unfortunately mitigated in our accounts by the volatility of the Turkish lira. Benelux is on target, absorbing the few market losses suffered in 2023, but Benelux is on target. Integrated FM and maintenance and energy activities in France continue to develop satisfactory. Security in France, which was loss-making, as you remember, in 2023, following the loss of its biggest contract with Aéroports de Paris, is making a fine recovery. We have not yet returned to a positive operating income, but we are ahead of schedule with our business plan. And last but not least, cleaning services in France faces on the contrary a slightly slower start in terms of financial results. As you know, also, we showed a real resilience in 2023 in terms of tenders. We still lost some contract last year, often with effect from January 1, 2024, and so we have the impact this year. We are also a little behind schedule at this stage in our contract indexations, and we'll come back on this later. To put it simply, I would say that we are managing to pass on tariff increase in line with the general price index in France, but we are finding it a little harder to pass on cost increases specific to the cleaning business, which this year are exceptionally slightly higher than the current price increase and the minimum wages increase in France. Finally, in this introduction, two important messages. The first one, and it's certainly something you were expected, at this stage. We confirm our guidance for our 2024 financial results... and, we recall that we had announced that 2024 should be a year of stabilization, while obviously being very, very busy. It's a busy year, for sure, but it's 2025 that should benefit from the full impact of the implementation of our strategy. Let's go to slide number six. So Laurent will come back in a few minutes in more detail on our financial results for Q1. I will just give you the main headlines. So our net sales are easy to memorize. It's exactly EUR 500 million, with a growth of 4.3% on comparable basis versus Q1 2023. Our recurring EBITDA reaches EUR 17.1 million, representing a growth of 11.8% on comparable basis versus Q1 2023. Our recurring EBIT amounts to EUR 3.5 million. It remains low for sure, but the increase versus previous year is significant in percentage. Our CFFO, sorry, is very negative. We are not going to hide it, but it is mainly due to calendar effect impacting the change of the working capital requirement. The main issue is the long Easter weekend that was exactly at the end of March, and which has shifted the billing and factoring periods. And, as we have said in the commentary, in the press release, it has been smoothed in the days a week after. And the Q1 CFFO is also impacted by some non-recurring items directly linked to the refinancing, for which we had to pay some fees, Laurent will come back on. And these fees now are not going to be paid, and it will not happen in the next quarters. Let's go to slide number 7. And as this was, I said, probably the main event of the quarter, we couldn't fail to mention the refinancing, which ended with the public exchange offer subscribed over 85% of our bondholders. I remind you that we closed the public exchange on March 28. And I won't go back over the financial data, as you know, you know them well, and they are detailed on the slide. I just wanted to stress that the two rating agencies that monitor us have upgraded Atalian's rating after the refinancing, and our current rating now is CCC+ for Standard & Poor's, and Caa3 for Moody's. It's good news to have been upgraded. Slide number 8. A few words to repeat that we confirm our guidance for 2024. We confirm that what we had announced on January 19 and already confirmed on April 5. And as a reminder, we had announced what you can read on the slide. That mean net sales, stable or slight growth. And I would say we are the growth should be there. I think we have not that much gap. Recurring EBITDA around EUR 100 million, and CFFO in the range of EUR 20 million-EUR 30 million. And we do confirm these targets, taking into account the fact that Q1 is the low seasonal quarter in our business, but also, and I would say moreover, taking into account all the action plan that are underway throughout the world group as part of our continuous improvement plan. And to say a word about this action plan, on the sales side, we try to be proactive on the one hand, to improve the hit rate on tenders, especially in France, and on the other hand, to develop special works proactively, for which we have put in place some specific incentive scheme for the first line management line or for frontline management line, the very one in front of the customer, who in most of the case has to supervise the realization of the special works. Still talking about sales, we also go on in developing specifically the integrated FM offer. Our dedicated commercial teams is very active, looking especially for multi-site or multi-countries contract as the one that we won in the last two years for Schneider Electric and for Bosch, where there are not so many competitors at the European level. But we know that this kind of contract of complex FM contracts needs sometimes a long time, one year, sometimes more, to come to, to come to, to tender. Now talking about the cost, of course, we maintain a strong pressure to index our contract so as to ensure that our tariff accurately reflects the increase of our operating cost. In France, we are currently actively preparing a second indexation campaign to take into account the new salary increase that is scheduled on July first. I would say that even a greater pressure is being placed on the treatment of loss-making contracts, some of which have become so automatically as a result of the high cumulative inflation over the last two years. If you consider the in the cleaning business in France, the staff cost increase between 3rd January 2022 until the end of 2024, within three years, we will have something that reach closely 17% increase in staff costs, taking all the different effects. And so, as a cumulative effect, some contracts have turned to be loss-making contracts. I'll be very clear, I have not hesitated to terminate contracts, which, as sometimes, I would say, said often had the effect of getting the customers to accept a contractual increase, just in order to avoid a higher rise if the contract is put to tender again. We have this continuous improvement plan on track. It's clearly part of the management dialogue at the different level of the organization, from the very local agencies to the major business business units. And it makes me confident about about our ability to deliver our targets for this year, despite an environment which remain complex on one side and competitive on the other side, because in every countries where we operate, we have many many competitors, but we do not fear competition. And now I'll turn the floor to Laurent to present more in detail our Q1. Thank you, Frédéric, and good afternoon, and good morning, all. So let's move to slide 10, if you don't mind. Thank you. So let's start with a brief overview of the key figures. So some have already been commented by, Frédéric, of course, and as he mentioned, Q1 is the lowest quarter of the year, with traditionally low levels of special works and delays of clients' orders at the start of the year. We also had to navigate in a still challenging environment. So our refinancing notably has created a context of uncertainties for some of our clients. It was, as you know, only finalized the refinancing at the end of the quarter and weighed on our trade balance. In addition, we had to face a still inflationary staff cost trend beyond inflation in France, and the hyperinflation environment in Turkey. But nevertheless, year-on-year, Q1 2024, is in the continuation now of the end of last year, with progressive improvements, illustrating the benefits of the productivity measures, the indexation plans in all our territories, commercial discipline, and the in-depth review of our clients' portfolio. So this is reflected in the year-on-year Q1 improvement, with net sales, which are broadly flat at EUR 500 million, while EBITDA is up 5.1% to EUR 17.1 million, and operating profit, excluding non-recurring item, up EUR 1.2 million to EUR 3.5 million. Non-recurring costs in Q1 2024 amounted to EUR 16 million, and they are mainly composed of the refinancing cost. Net loss for Q1 2024 is negative EUR 35 million, compared to a net profit of EUR 144 million in Q1 2023. But you remember, it included the capital gain from the sale of operations to CD&R. Total amount was EUR 149 million. Lastly, a few words on the CFFO, cash flow from operation, that we will discuss with more details later. As already mentioned by Frédéric, it declined by EUR 67 million, mainly impacted by a negative change in working cap of negative EUR 69 million. This mainly relates to a calendar effect in invoicing and also in low factoring. This Q1 ended with Easter holiday, which created some delays in invoicing and factoring. Factoring was passed through in early April. A bit less of EUR 20 million were collected only a few days after, and also billing, of course, has accelerated, reducing significantly the negativity in the month following the quarter. If we move to slide 11, net sales increased by 4.3% on a comparable basis. Comparable basis now only captures the Forex changes, as there was no major scope impact in Q1 2024. All of main disposal occurred in 2023. Operation sold to CD&R early 2023, and U.S assets sold end of 2023, are now accounted for have been accounted for as discontinued operations. Forex, sorry, negative impact represents a cost of EUR 21 million and mainly reflects the depreciation of Turkish lira vis-à-vis the euro. This number is also the EUR 21 million. This number is also net of hyperinflation in Turkey. The performance is mainly due to good improvements of integrated FM and international operations, while French trade balance remains challenged, as expected, notably with the loss of a major security and safety contract at the end of Q1 2023. Let's move on to the slide 12. It focuses on EBITDA evolution. So year-on-year recurring EBITDA improved by EUR 0.8 million to EUR 17.1 million, an increase of 5.1%. Excluding the impact of exchange rates, net of hyperinflation in Turkey, this is a -6.7%, the recurring EBITDA on a comparable basis increased by close to 12% in Q1 2024, compared with Q1 2023. As mentioned previously, this improvement reflects the positive contribution of continuous improvement measures or productivity, the improvement of the international trade balance, and to a lesser extent, lower holding costs. These positives have been partly offset by the negative trade balance in France, along with lag effect to fully pass through French staff cost increase, already commented by Frédéric. Before commenting in more details performance by segments, let me remind you that when publishing our full year 2023 numbers, we had decided to reallocate the dedicated holding cost to each segment. Previously, they were in the other column. In order to better illustrate the performance of each segment, so this change has been reflected in the numbers I'm going to comment later on. So moving to the slide 13. On slide 13, returning to French operation. Q1 net sales decreased by 0.5%, while EBITDA decreased by 2.8%, with margins slightly down by 10 basis points to 4.3%. As already mentioned, the indexation plans and productivity measures, along with the growth in IFM and maintenance and energy, were more than offset by lower trade balance, notably, with the loss of the ADP contract in France, the security and safety business, still in Q1, 2023 numbers. The performance of French operations has also been negatively impacted by the traditional lag effect to fully pass through our staff cost 2024 increase in cleaning. The indexation negotiations are more difficult with clients as overall inflation, including the minimum official wage inflation, has reduced versus prior years. As direct FM costs, city management cost inflation is higher than the official, more general marker. For instance, staff costs in the FM industries are growing more than the 1.13% SMIC increase. More conversations are required now to pass this increase to the clients. Nevertheless, Atalian has put actions in place with its sales forces to meet with customers and help to offset this specific point. So we usually do not comment quarter-on-quarter evolution. However, we have reported on this slide the last Q4 performance and the EBITDA, which at the time was higher than the Q1 EBITDA. To understand the difference, one first needs to remember that Q1 is, as mentioned, the lowest quarter of the year. The cyclical indexation lag impact described above explains some of the variation. In addition, we traditionally observe a concentration of special works at year-end, in Q4, as customers are using their budget envelope. They are spending less, therefore, at the start of the year. And finally, the impact of contract losses, contract loss at the end of 2023, are being felt in Q1. And you will, if you remember, we had quite a high level of these, in particular in H2. So if we move to slide 14, a few words now about international operations, CEE and Benelux. So the year-on-year Q1 2024 net sales of international operations increased by 17.3% on a comparable basis, and that exclude Forex impact net of hyperinflation in Turkey. Q1 2024 EBITDA increased by 1.4%, but 19.4% on a comparable basis. This increase was driven by account wins and productivity measures, notably in the CEE. The CEE delivered strong results improvement, despite the difficult economic environment, with, in particular, hyperinflation in Turkey. This good performance results from successful actions to boost organic growth implemented since last year, along with successful inflation pass-through. Again, as for France, you can witness a quarter-on-quarter negative change. We continue to make significant and structural operational progress. However, Q1 remains the lowest quarter of the year, mainly explained by the concentration of special works customer requests in the second half of the year, not fully reconducted in Q1, although the performance in Q1 improves year-over-year. Here, some explanation as for the French operations, our customers are concentrating their budget envelope spend at the end of the year. Slide 15.... Let's now move to have a look at the few items in the P&L that have not been commented yet. So going now below the EBITDA, no significant change in D&A, which slightly decreased to reach EUR 13.6 million. I have already commented on other income and expenses line corresponding to the non-recurring items of EUR 16.1 million relating to the refinancing cost. These refinancing costs have been passed through the P&L in full, and so therefore, we do not expect further major non-recurring costs relating to refinancing for the remaining part of the year. Net financial costs decreased by EUR 3 million to EUR 18 million. This positive change mainly results from positive financial income from the placement in secure risk-free instruments of the cash received following the disposal of the activities to CD&R in Q1 2023, and along with a lower level of growth debt after the reimbursement of the EUR 103 million RCF. EUR 30 million were reimbursed in Q1, and the balance in Q2 last year, if you remember. Other financial results decreased by approximately EUR 11 million, mainly as last year. In last year, it included positive Forex impact as part of the Madison transaction. The net profit from continuing operations for the period is negative at EUR 35 million. The net income from discontinued operations in Q1 2023, including the capital gain from the sale of operation in the UK, Ireland, and Asia. In 2024, we are only left with some small running costs, mainly linked to the remaining U.S non-active entities, and that should remain the same. Let's move to slide 22. The slide 22 presents the evolution of the CFFO, negative in Q1 2024, and down versus last year. So it's a negative EUR 61.7 million, excluding non-recurring item, EUR 75.8 after. To be compared to EUR 53.8 million before recurring items last year, and sorry, EUR 7.8 million last year and EUR 8.7 million after non-recurring item. So this decline mainly results from unfavorable calendar effects that will be compensated and have been actually partly compensated in the last few weeks. We continue to improve working cap management, so this negative variation is not structural, but rather explained, as I said in the comments of my first slide, by unfavorable calendar effects, end of Q1 being impacted by Easter holidays and generating delays in factoring and invoicing. To make it simple, because of these long weekend, we factored and therefore we cashed in, not at the end of March, but in early April, and the amounts are significant. Second element is in terms of factoring. The level of billing through the quarter, and in particular at the end of the quarter, was—could have been higher, allowing to more factoring. So we were basically penalized by the two impacts, and these elements have been worked upon, and are being turned around as we speak. CapEx are slightly lower than last year. Exceptional cash non-recurring item amounts to EUR 14 million in 2023, relating to the refocusing of the group's operations geographically and its refinancing. The +EUR 5 million factoring deposit is mostly coming from the decrease in factoring financing mentioned earlier. So let's move now down to the little slide, slide 17. So slide 17 shows the net debt evolution, which amounts to EUR 909 million as at the end of March 2024, to be compared to EUR 791 million at the end of December 2023. Cash and cash equivalents and financial debt are both impacted by the EUR 400 million reimbursement of the 2024, 2025 bonds, but with no impact on the net financial debt. Net debts increase mainly results from the CFFO deterioration I've just commented. We also paid EUR 18 million of interest for the bond before refinancing, which reduced our cash amounts. Gross debt increased by EUR 25 million, reflecting the new vendor loan debt related to the acquisition, as you recall, of the minority stake in Atalian Propreté and Atalian Sûreté, as part of the overall refinancing deal. Increased recourse factoring was offset by some other various elements. So this conclude my presentation, and I now hand over the floor back to Frédéric for the conclusion. Thank you, Laurent. And so on slide 19, but I will be quite short on the conclusion. We are clearly at work, and we are clearly at work delivering good quality of service to our customers and implementing our strategic plan. As earlier said, Q1 is a low seasonal quarter in our business, and I would say that except cleaning in France, the situation is fully satisfactory. That means that at least for half of the group, the situation is fully satisfactory. And cleaning in France is not grabbing the- the, the, well, exactly in the graph, where would you use? It's not worst? No, it's not worse, but it's slightly suffering from a staff cost increase that outpaces this year, and this is unusual, that outpaces this year, the global price index as well as the minimum wage increase, and this is true since the beginning of the year, due to the fact that mainly the cost increase decided by the collective agreement has been higher than the minimum wage. This is unusual, and I would say it's not an Italian problem. It's a profession problem, and we are currently working to compensate this situation by additional action towards indexation on one side and productivity. Taking into consideration what is already achieved and what is underway, we can confirm the guidance for 2024. I would say that during beyond this current year, we are confident that we can succeed in the achievement of what we had the opportunity to present earlier, that mean our customer-centric and profitability-oriented strategy, which support our 2024 to 2026 business strategic plan. We keep this midterm view, and we are confident for this year as well as for the two coming years. And now we'll be happy to answer your questions. Thank you. As a reminder, if you would like to ask a question, please signal by pressing star one on your telephone keypad. We'll pause for a moment to allow everyone an opportunity. Thank you. We will take the first question from line, Michael from Bain Capital. The line is open now. Please go ahead. Hi, can you hear me? Yes. Yes. Okay. Thank you for the presentation. First, I wanted to ask about the working capital thing. You say that it's, you know, driven by timing of billing, et cetera. So out of, you know, if we compare this, the outflow last year with the EUR 60 million or EUR 70 million this year, how much of the outflow this year is going to be reverted in Q2? So, you know, if we compare first half and second half of... Sorry, first half of 2023 and first half of 2024, is it going to be comparable, or is 2024 still going to be worse? I mean, is most of the outflow going to be reversed in Q2? I think I'm gonna take this one. Look, I think, I mean, it's a little bit early to to answer your question in a precise fashion. But we think most of the, I mean, you know, everything being equal, if we, if we can factor in time at the end of June, the factoring shouldn't be particularly different or delayed versus last year. So, and we are recovering it now, so that's that. And in terms of billing and invoicing, we've had a very good month of April. May, you still have a few holidays that is slowing it down, but the teams are quite active. So I would expect, but again, here we are, we are trying to forecast variations of working cap that are impacted by many things, so one needs to be prudent. But, the timing effect, we hope will be reversed in Q2, so leading us to, to something of a more normal trend, in Q2. Something- Okay ... I... I forgot to mention as well is that in Q1, I had as part of my work cap, remember, I had also in this work cap, EUR 13 million, 13, 14 million of cost associated to the refinancing. Not yet paid, all right? Not yet paid, so they will be paid, and therefore, they will get out, get out of the work cap. So part also of the variation of the work cap, EUR 13 million of it, is linked to the refinancing cost, not yet funded, reimbursed. so EUR 13 million or EUR 14 million will be paid, so will be an outflow in Q2? Yeah. Yeah, or it's being actually re- They were not paid at the end of March, but now they are paid. Voilà, exactly. Okay. Okay, that, that's understood. Thank you. Then next question is: overall, Q1, you mentioned that, you know, inflation was a bit higher than CPI inflation that affected your, your margins, et cetera. Was that, you know, was that expected? You know, how does Q1 compare to your budget? I would say that what we have, the increase of the cost is slightly higher than what we had expected. This is... And, mainly the effect, if we go into some details, the profession, the cleaning profession, decided to make staff cost increase of 2.5% at the beginning of this year and 4.7% of, at, in, in July. And it was decided and negotiated with the trade unions, at the branch level, not at, Atalian, Atalian level. And at this stage, they thought that probably the minimum wages, decided by the government should be higher than what it has been exactly decided in January first, because January first, the government has taken 1.13%, 1.13%, in, in January. And the fact that you have a discrepancy between the increase of 2.5% and the increase, which is the one for the cleaning staff and the minimum wages, for the average, for all employees, it has an impact on some, what we call allègement charges sociales, or we make subsidies or relief of social charges that are dedicated to low salaries, and this was not expected. We didn't saw that we add this discrepancy with an impact on some subsidies on low salaries, and it is part of the things that we need now to pass through to our customers. It's true that the customers, what they consider is mainly, okay, you say that you have a problem, but what we see is that, the minimum wages have increased only 1.13%, and, the index price in France is at the moment between 2.2%-2.5%. Okay, if you want to have something more, we consider that, it may be discussed. It's an issue not only for Atalian, I insist, and it's an issue for the cleaning business. We do not have the same in the security business or in the maintenance and energy business. It's really in cleaning, where they have decided, an amount of increase that was, I would... There are no trade union on the, around the table, but I would say that it has been overestimated. Mm-hmm. Okay. That's understood. So what I understand from there is that maybe Q1 was maybe a bit weaker than expected, but you still expect 2024 to be in line with your initial expectations? So maybe you expect, you know, Q2, Q3, Q4, to be a bit better than what you initially expected? We are currently fighting to obtain a price increase. We make productivity, and we try to have more special works. Special works are very contributive. In most of the case, you're in a position where you have no tenders. You're in a more or less captive position to sell special works to customers, and therefore, we have a better price. We are currently working on that strongly. I've mentioned the action towards loss-making contracts. We have terminate some loss-making contracts, and when you terminate loss-making contracts, it has an impact that may be considered as productivity. And maybe to add to that, in terms of sequencing of quarters, so as Frederic has mentioned, this is now the whole point is to bolster indexation, because more or less this cost should be carried by the clients. And so the discussion is starting. I would expect that these discussions have started already. We are obviously now already in the beginning of Q2. I think our Q2 or Q2 will probably still be, but less, hopefully, affected, impacted by that, because it takes some time to push the lag. And conversely, and hopefully, it should be recouped in Q3, Q4. So it's sort of, it's not a V-shaped curve, but it's a, you know, some sort of erosion in Q2, which should be nevertheless a better quarter, as we all know, given the cycle of the company. And then hopefully, if we manage to have it fully passed, an improved Q3 and Q4. Okay. Okay, that's understood. And I mean, last question from my side. Following up on this, you mentioned you are discussing with clients, discussions are difficult because, you know, CPI inflation is lower, et cetera. How are discussions with clients going? Do you think you are going to be able to fully pass through? Because, you know, in previous years, you have struggled to actually fully pass through your inflation. Do you think this time, even if overall inflation level is lower, you're going to be successful? I would say it's never simple to pass through inflation to customers, but we try to be convincing, and by being transparent. We show exactly what are the cost, the cost increase. Mainly, it's staff, but we have also some consumable products, like papers, like cleaning products, and we come with full detail into... And we are quite determined. And you can believe me, I put strong pressure on all the teams, and I visit also myself, a few customers, to explain that we have no choice. And we are fully legitimate because to ask for this increase, because it's an increase that we suffer. It's an external increase. But I would say, in some case, and I've seen, there are a few examples that I show to customers, when they, some cases they have refused, we have refused, they have refused, indexation. We have terminated the contract, and afterwards, they add a 20% increase of the cost when they come back to tender. Mm-hmm. Okay. So we try everything, but we want to keep the confidence of the customers. That's why, in most of the case, we play the card of transparency, explanation, pedagogy. Okay, that sounds good. Thank you. Thank you. We will take the next question from line Davis from Arkkan. The line is open now, please go ahead. ... Hi there. Thanks for the call. Could you just talk a bit about the factoring lines and the maturity and specifically the recourse factoring line that I thought matured last year or was gonna mature. Could you talk about what maturities they are? I think the off-balance sheet one matures in September 2024, so we're getting quite close. What's the plan there? And is there any plan to put an RCF in place, and how are those discussions going? I, I'll take these. So as you... Yeah, you recall perfectly well, so the factoring line ends in September. And as we told you before, we have already started the discussions with the banks. They are actually very well advanced. So, we are actually expecting, they are in their final rounds, in terms of their own credit committee discussions. The idea is that it should be the new line and potentially, it could be a multi-year line, should be in place in mid-June. So, it should be decided in mid-June to take over from the previous line in September, but we should have the decision before the summer. And at the moment, so the discussions are going on, and are going on very nicely, and, well, we have reasonable hope. As long as—it's not done, so before it's done, you cannot say call victory, but, but it's moving on in the right direction, and we should know about it shortly. In terms of RCF, look, we haven't—we've touched base with a lot of the banks, or current banks and some new ones, of course, mentioning the fact that at some point in time, we will come to maybe try to discuss with them an RCF, maybe a little early at present. They are all saying that they want—they wanted to expect—to wait first for the end of the refinancing. Now we are here. They wanna hear a little bit about also compliance and how things are going. So that takes us to July. So, you know, the French and August. So, probably, it's wise to say that they will be actually, not us, but they will be in a better position to start to have a look at that towards Q4. We have obtained an increase of guarantee lines. In terms of small guarantee lines, I mean, the relationship is good. I mean, has really improved with the banks, although they're not very generous in terms of a large financing line, but they've opened up some guarantee lines. They've, you know, we talk to them all the time, and the climate is actually quite positive. Okay, and the factoring that you guys are trying to negotiate is the same size as before, or you think it'll be a bit smaller? Oh, no, no, we're talking about the same, the same size of the program. It's gonna be large. Okay. Okay, and then, second question is more about just, the French business. What you guys are seeing in terms of contract wins, contract losses, renewals. Obviously, you have this loss of ADP. And is there anything else that's major or any big wins that you can talk to? Generally, we do not comment in detail, and we have not necessarily the right from the customers to talk about the... What we can say that until two weeks ago, we were quite positive in winning contracts, and we had a net balance that was close to EUR 15 million positive. And we are currently fearing to lose one, it's a many contract, but for the same customer, but with a very low margin. That mean the impact on the margin will be quite low. But we still stick to the target to have a positive balance between offensive contracts gain and defensive contract lost for the whole year. Okay, and when you're losing potentially a big contract like that, it's based on pricing, it's based on customer service, it's based on, you know, something else? What's the dynamic there? In this case, the main reason is that probably last year we went too far in productivity. That mean that we've been probably a bit more too aggressive in optimizing the mean, and the customer was not fully satisfied of quality of service. It was done before I arrived, and today there is a clear position that productivity should never jeopardize the relationship with the customers, never jeopardize the confidence of the customer. We do not lose very often on price. I mean, all the competitors are quite close. And what I can say, it's something that I already the opportunity to say last year. We have lost a few contracts for rating issues, especially in the finance business. We have lost some customers in the bank business and in insurance business for rating reason because they consider that our ratio, well, our rating was too low. I have no knowledge of customers that we lost for reputation reason. But what is true is that I have in mind a few new customers, I mean, prospects, that at the very end of the process, even if we were put in first line by the procurement department, decided that, okay, there is a reputation issue, and a reputation issue just it's a buzz. It's not it's not something that is quite quite consistent. But they preferred not to switch to Atalian as a new provider for reputation reason. But we have not lost any contract for a reputation reason so far. Okay. If it was your questions. Yeah, yeah. No, that's great. I'm just wondering... Like, obviously that was before your time, but to hear that you're losing a contract because of a productivity issue, sounds like you know you cut the quality of service too much. Feels like to me there should be a conversation between you and the customer in this period without losing the contract. You know, a customer comes back to you, says, "Hey, I'm not happy with the quality of service." You turn around and improve the service rather than lose the customer. I just wonder if there's sort of checks and balances in place or things are changing operationally that would mean that won't happen again. For sure, we want to be in a virtuous circle, where you have... We deliver good quality, then they accept indexation of the cost. They provide us with special works, and we are in good position when we come at renewal time. This is the virtuous circle in our business. And in some case, you may have a devil circle or a vicious circle, I should say, where since you're not satisfied with the margin, you go far in productivity to improve the margin. But you go too far with the decrease of quality perceived by the customers, he will refuse indexation. He will not give you special works, and when it comes to renewal, you're in bad position. I really stick to the first position. I'm quite determined when it's a loss-making contract, and when it's a loss-making contract, I was about to say no mercy, but it's probably not the right word. But we are determined. But for the rest, the idea is really to play the long term with our customers and considering the contract in a long-term perspective, including the renewal time. And maybe to add to Frédéric's answer, since Frédéric has arrived, he's insisting and it's been put in place. It's gradual, because he wasn't fully in the company's culture, but he's pushing, to your point, the sales and the operators to go and visit the client repeatedly just to check if they're satisfied, not satisfied, and get the feedback early. So this is part of the changes that have been implemented by Frédéric since he arrived. Every quarter, we ask our customers if they are satisfied, and it's consolidated, and it's analyzed, and it's part, at least the first of all, the number of customers that have answered to this survey is part of the objectives of our managers. I really want to feel the feeling of our customers, so to make sure that we are not going to lose them just because we have not been consistent in delivering what they expect. Okay. Thank you. Thank you. We will take the next question from line. Mustaba Davoodi from Arini. The line is open now. Please go ahead. Hi. Thanks for taking my question. Maybe I missed the initial question on net working capital, though. How much of the net working capital outflow is expected to get reversed in the Q2? No, you didn't miss the answer because I didn't give a specific number. Because we're here, we're talking about working cap movements, so this is quite significant. So but we what we know is that the fluctuations around the factoring are have been already corrected. So the negative we had the negative EUR 20 million is already back in our books. We had a lack of... We should have billed more, and the teams have done that as well. And so I'm quite prudent in terms of giving you a specific number for Q2, but we hope that a great deal of the of the- Okay. - activity- But it's fair to assume it's gonna be a positive number? Say again. Is it fair to assume that Q2 working capital is gonna be an inflow? Look, you know, it's. We honestly, we'll see. We'll see how we are. I hope so, yeah. Should be if you have this reversed, but we gotta be prudent and look at, you know, again, the calendar and what are. Do understand something, part of the volatility of this work cap is due to the fact that we have a very large factor program. And this factor program, what we are doing, is that we are factoring. At the moment, it's twice a month, but we are maybe thinking of doing it a bit more. Large quantities of invoices. So depending if they fall in one week or in another, they can move from one month to another, and then the batches are quite significant. So that's why I'm slightly prudent with my answer. But obviously, the working cap of this company should be neutral in the long run. You could have movements, negative or positive, but there is no structural reason to have this working cap being either too positive or too negative. Well, so I hope we see where it goes in Q2, but it should be improved, yes. Okay, understood. That's helpful. In terms of churn rates, appreciate that the refinancing may have elevated churn rates before, but can you comment in terms of what you're seeing sequentially, and when can we expect the benefits of some of the contract wins to kick in, from a top-line perspective? Generally, if you consider in the cleaning business, the contracts are awarded three to four months before they start. In some case, it might be even closer. We are currently answering a tender where it's a EUR 5 million contract a year, and they expect. It's a offensive contract, and they expect the new provider to start first of July. In France, you have some tenders that are postponed after the Olympic Games period because it's quite, it's supposed to be quite complicated to work during this period. That's why some of the tenders we answer, they should rather start in October or in even some case, beginning of next year. And the term contract, at the moment, as I told you, in France, and I follow it every week. I I think we had an advance that will probably be reduced. But we stick to the target to have a positive balance between offensive tenders gained and defensive tenders lost. In sales. In sales. I don't know if it answers properly your questions. Yeah, a little bit. Maybe just as a final question is on the vendor loan note. Has there anything changed in that respect, or is the expected timing of receiving that still as per the original maturity date? No, in terms of the vendor loan, no, there's no change at all. Absolutely no change at all. So, yeah, just remind us, when is that expected to be received? Is that Q3 or, February? No, no, no, it's February 2025. Five. 5. Yeah. Okay, understood. Thank you. Thank you. Thank you. We will take the next question from line. Matthew Szajer from Morgan Stanley. The line is open now. Please go ahead. Hey, thank you. Can you clarify what is the actual current liquidity besides the cash? Do you have any bilateral loans still available, and what's the availability of the factoring? I know that you have to refinance it, but do you have still anything outside of the cash on the balance sheet available for you if you need to? Yeah, so I'm not gonna give you the exact... Mm-hmm ... level of the of my cash now, if you don't mind. Mm-hmm. Yeah. Yes, of course, we're monitoring the, we're monitoring our cash, and we do projections of our cash for a few months. So we have swings, as you know, and they are linked to, maybe, honestly, to the balance of the working capital, because there's a... The flows, the outflows are usually paying the wages or paying the taxes, and the inflows are when we do, we trigger the factoring program, we're receiving the cash. So we have swings. The swings are in line with what we showed you back in the days at the business plan days. Our low points are, you know, we, you go EUR 40 million, 40, 50 million in this. We are in a low period because we are part of the year where we, of course, we've paid salaries and wages- Mm-hmm ... but this is a part of the year where also we're paying a lot of the taxes. Don't ask me why, but in France, you have a lot of social charges, taxes in batch that are being paid through May. Yeah. And we also have basically Q1 and Q2 are not the strongest quarter in the year. So you, this is not the period where you generate really significant cash flows. So I think at the moment we are in the low levels. But we have, you know... Yeah, we have at the low points, we have some quite significant room. But just to clarify, besides the cash on the balance sheet, do you still have anything available in terms of liquidity? You can draw some bilateral lines if you have to, or cash on the balance sheet, is that the- No, no, no, no -primary, that's the primary source of liquidity right now? No, but as you remember, we have no RCF. Yeah, that's what I'm asking for it. Yeah. We have no RCF. We don't even have intraday lines. Okay ... with the bank's cash, the cash pool. So we have some tiny lines for guarantees, that's it. Mm-hmm. But if you're talking about- Okay ... understood. ... That, that's all I wanted. And my second question is, sorry to continue to come back to this working capital swing, because even if you look at the historicals, that type of swings we've seen probably in 2020, there was the, you know, the big swing in Q3 and then the reverse in Q4. If I look at your full year projections and your targets, you're confirming today that you're gonna achieve EUR 100 million of EBITDA, and you're targeting operating free cash flow of around EUR 20-30 million. That means that on the EUR 80 million of EBITDA, you're gonna generate in the Q2, Q3, Q4, or you're expecting to generate, you're gonna generate quite a lot of cash. And again, can you walk us through a little bit through the cash flow bridge, how you should think about a full year? Like, what do you expect to pay for taxes this year? What do you expect for CapEx this year? What do you expect for the working capital for the full year? We don't need to go into the Q2 reversal or anything, but can you walk us through the main items, how we should go from that EUR 100 million of EBITDA to, CFFO of EUR 20 million one more time? I'm sorry, because I just wanna confirm that with what we discussed on the Q4 call. Yeah. No, I mean, taking your points- Mm-hmm. all of your points, one after the other. Just remember Mm-hmm ... something, so before I start. Yeah. In Q1 last year, in terms of factoring, you had- Mm-hmm ... because the program was being ramped up, you had a positive contribution of 20, okay? Mm-hmm. Plus twenty. Yeah. Actually, even more than that, it was 25, 26. Yeah. This year, because of delay, I have basically factored EUR 20 million less. So the two combined makes a negative EUR 50 million. But one, you know, part is due to comparison- Totally understood. So that's why you should be careful about that. Mm-hmm ... if you take all of the lines of our- Mm-hmm ... our cash flow, CapEx, is expected to be in line with last year, no change. You can witness that we are probably slightly lower today, so nothing fancy here. That should be in line. Mm-hmm. Taxes, we pay a very, very tiny amount of taxes with I think our cash. But our tax paid in terms of cash out is EUR 1.5 million at the end of Q1. Mm-hmm. So, you know, we should have more or less something in line with our expectations towards the end. No change here. If anything, the year after, we will be paying even less taxes because of the integration of Atalian- Mm-hmm ... So that's that. In terms of, in terms of a non-recurring, we've had, as you've seen, something in the region of EUR 18 million linked to- Mm-hmm ... refinancing costs. Some of that had been paid already before. And at the moment, we don't—I don't foresee any major restructuring after. Mm-hmm. The guidance in any way is before non-recurring. In terms of interest, but you can do the calculations, there's nothing fancy again here. So- Yeah ... then it will come down to the work cap and its movement. Again, yes, we think that we planning, of course, on the reversal of the working cap. We've been very prudent at the end of last year with the suppliers, so we've paid actually earlier than before. We are quite active in terms of the billing, in terms of the factoring. So honestly, the, I think the big swing will be in the regional with the work cap, and I don't see any reason- Mm-hmm ... why we shouldn't be in line with what we are planning. Again, being prudent because you're talking about things- Yeah ... at the time you... In terms of your performance, your overall performance of your EBITDA, again, you know, some tension, as Frédéric has mentioned in France- Mm-hmm ... but overperformance elsewhere. So it will be, you know, what could impair your CFFO, you have your working capital swings. Mm-hmm. So hopefully, again, there is no structural reason to have options. Sorry, I go back to that and I insist on that. We haven't been drawing on our suppliers list. To the contrary, we're paying earlier. Yeah. We are making sure we're factoring in line with what we used to do, except we've been factoring less in Q1. In terms of billing, we have a weekly follow-up. We've billed a little bit less in Q1, you know, compared to what we should have, and we have intensified. So April has been quite a record month in terms of collection. So that's how we're running this work cap. I have no indication, nothing, no sign that something else could come in and move my number. So you go back to your guidance, and you go back to what? To your CFFO, more or less, to your... Sorry, to your EBITDA. So if we hit our EBITDA target, you know, and if we miss it or if we go higher than that, you know, it should reflect in terms of impact on the CFFO. So, well, and at the moment, everything is fine, except that we have some softness in cleaning, as mentioned. Mm-hmm. It's mainly linked to indexation issues. We're pushing, we're gonna push for activity as well. So look, this is we are in the beginning of the year, and we have some time and some good action plans to come back to it. Understood. Thank you very much. Thank you. Thank you. We will take the next question from line, Gemma Permalloo from JP Morgan. The line is open now. Please go ahead. Hi, thank you for the presentation, and appreciate the transparency on some of the questions, although it's been a bit hard to reconcile some of the items. I just wanted to go back to Davis's question earlier about the contract that you said you fear you might be losing. Can you confirm if that's in France cleaning? And maybe as a follow-up to this question, I haven't fully gone through your press release, but I remember you used to provide the retention rates for the businesses by region. Can you maybe update us on your retention rate for France and international, and if you have the breakdown by low margin contracts versus high margin contracts? I will try to answer perhaps maybe probably partly your question, due to the fact that some questions may not be. In fact, there are questions that are confidential, for commercial reasons. It's in cleaning business that we, there are one contract that we may lose. We had a target retention rate of 92%, to be transparent on what we expected. So far, I think we should stay within this, maybe a little lower than 92%. If it's confirmed that we lose the contract that I have in mind, it's a very low margin contract. The impact on the margin would be quite. I would not say insignificant, but it's a contract that is by far below the average gross margin of what we have in the portfolio. And I recall one more time, the general idea is to have a net positive balance, net balance between offensive tenders won and defensive tenders lost. We had a few significant wins since the beginning of the year, not huge ones that you can say, "Okay, we've won a EUR 20 million contract, EUR 20 million a year contract," but we have won many contracts up to EUR 1 million, EUR 2 million. I am also very much interested in even smaller contracts, which are generally with a better gross margin. If you consider a small contract that can be below 50,000 EUR a year, so it's we are talking of contracts below 5,000 EUR a month. These are contracts that are won really on the local level, but we have very often a gross margin that is two times, 2.5 times bigger than the large contracts. When you are talking about a large contract, it's tenders with a very accurate procurement department in front of us. They use every levers to reduce the price. They tease the different competitors each against the other, and in most of the case, we come to margins that are not so high. We are reasonable and I would not give you the numbers, but there are some figures under which I refuse to go, and I will stick to this. But we try not only to look at big fish. We look at big fish, but in the same time, we want to look also at the very small fish that are not going to be gained at the general management level, which are going to be gained at the very local level. Thank you. And, uh- Sorry, go ahead. So, sorry, now maybe to add to that, as far as the international part is concerned, we've mentioned that the trade balance, whether it sells or EBITDA is positive, so actually you have a good trend in wins and in retention. The retention rate is fairly high. If you look at France, the retention rate or the loss rate was actually very low since the start of the year. It seems that now, because we are entering in a period of renewal, it's heavy renewal, so now the situation might evolve a bit, but so far we are running better than... way better than expectations, actually. We see where we land in terms of retention and losses. But Frédéric is highlighting the fact that we are entering into a period of heavy renegotiations, and some contract might be lost in there. I would say a third element, which is in terms of these loss rates of retention, and I relate that to what Frédéric said at the start of the call. Honestly, it doesn't really matter if you lose a contract where you're loss-making. And actually, it would be quite a good thing to lose quite a few of these because that would help the EBITDA. So just saying that to mitigate a little bit your approach of loss and win rates. Noted. Then just to summarize, I think you mentioned the 2.5% in staff costs, and there was a time when you were guiding for 3% price indexation. I don't know if that's still a target, given obviously inflation is coming down, or if you've provided any target as such. Can you just update it on away from the cost increase, what sort of price indexation are you looking at? I would say that our idea, it's, to have a fair indexation, and, so far, it's true that, we started with 2.5%, and 2.5% was, close to the general index. But in addition to the 2.5% that, are directly coming from the, collective bargaining agreement at branch level. We have the impact of the lowest subsidies due to the fact that there is a discrepancy between the cleaning cost increase and the minimum wages increase, and the French government determines the subsidies to low salaries on the minimum wages and not the minimum wages for all branches, and not. It's not done branch by branch, and this is an additional increase that is not very far from 1%. And this is what we try to obtain. But we... I would not communicate on a target in absolute figures. What we try to obtain is something that is directly related to the cost increase that we have. One of our major customers has refused a cost increase, but it's a very satisfactory customers, and that give us almost every day additional Special work. additional special works, and I try to be not stupid. It's a major customer. He give us every day, additional special works, and, altogether, the margin is quite good. Okay, if the procurement department doesn't want to increase our rates because they refuse additional rates for other customers, which are nothing to do with our business, okay, that's fine. But if it's a customers that put us in a loss-making contract and refuse, okay, we say, "Sorry, guys, part of our job is not to subsidize our customers. And then maybe as a follow-up to this one, so if I think about the business, it's a labor-intensive business, and obviously, we, we can see the impact from wage inflation. I was just wondering, is there any headroom for headcount reduction? Or maybe can you tell us about how does it work in the French market with, you know, is there any allowance for you to maybe cut down on your headcount? Is that not an option at all, or is your cost action plan away from headcount reduction, if that makes sense? I would say for sure, it's part of our job is to optimize headcounts everywhere. And when you're talking of the business, you have two kind of contract. You have what we call SLA contract, for service level agreement contract, and you have FTE contracts. When it's SLA contract, we have the room to optimize. We are supposed to deliver a specific service, but it's up to us to assign the relevant people to do the job, and it's mostly the case in cleaning in France. And in such contracts, we try to optimize every day, and we try to optimize and to optimize again, always. If it's a FTE contract, like, for example, it's very often the case in the safety business, in the safety or security, I always have a mix between the two words in English, but if it's a security business, they ask to have one security agent from this hour to this hour, and so you have no room for improvement. And in such case, the idea is mainly to make sure that you always have the people being invoiced to customers and not to have staff agents that are paid without working, if I may say so. And this is also very part of our job, and I would say it's our core business to optimize this. Apart from that, you have headcounts in HQ, and we try to have optimization, and part of the improvement of the accounts versus next year is the fact that we have been quite active in streamlining our HQ. And this is true for high wage, high salaries as well as for low salaries. We try to optimize everything, but for sure, as you said, it's a labor-intensive business. Altogether, we have roughly 70% of our costs that are staff cost. And then my last question is on your cash. So you have about EUR 75 million of cash in balance sheet. As you said, you haven't put in an RCF yet, and just given the guidance, it appears that you would need somewhat between EUR 80 million-EUR 100 million of cash flow generation to get to the confirmed guidance. And then you do have your coupon payment on the new notes that's due in June. How much cash or how much minimum cash do you think you need to run the business operationally? I think, look, the minimum, minimum of cash to run this company, the lowest point should be seen in the region of EUR 25 million. You cannot. You don't want to go near EUR 25 million. Below EUR 25 million, it becomes a little bit complicated. So that's that, but we are above that, obviously, even in the low point as we speak. That's helpful. Thank you. ... We will take the next question from line, Ghislain de Cotentin from Melqart. The line is open now, please go ahead. Hi, good afternoon. One question first on the factoring line you mentioned. So you obviously in discussion, I hear that, but do we have to expect that when you get a final outcome, you will communicate to the market if you get the extension? That's my first question. Second question is on the first, on the French business, you know, could you comment, you know, if you expect any or factor any impact from the Olympics on your special works expected for H2? And on the cleaning side, you know, in France, can you comment a bit on the business activity? Which sector, industrial sector are the most, I would say, active or promising and where you focus your effort at the moment? And lastly, on the international divisions, you know, are you still happy with the current perimeter or could you consider, you know, exiting, as we have seen in the U.S, you know, some sub, subdivision? Thank you very much. I mean, in terms of factoring line, we haven't discussed it actually at all. So, are we going to publish a press release saying that we renewed the factoring line? I'll discuss with my boss, and I'll tell him if he wants to do so. But honestly, we haven't discussed that. Why not? But yeah. France then. Okay, maybe regarding the Olympic Games, we are going to have a few additional works for the Olympics. We are going to clean the Olympic Village. So it's something that is very specific here. And also the village for the journalists. But I would say that apart from that, we have many additional requests from large customers active in public transportation, SNCF, RATP, ADP, and B for cleaning business or being for safety reasons. They have asked additional services during the Olympics and to a lesser extent, the Paralympic Games. At the same time, we know that it's going to be quite difficult to work in the Paris area during the Olympic Games. So it's in the middle of summer, and it's so that you have probably less business. And we are currently preparing to have cleaning products, hygienic papers stocked in different places within the Paris area to make sure that we are not going to face any shortage. But I would say at the end of the day, there should not be a huge impact due to the Olympic Games on our sales. But if there is an impact, it would be positive and not negative. Talking about exiting business or entering additional businesses. So far, our taking of different segments, we do not intend to exit any segments on which we are at the moment. Talking of countries, we had said that there are two countries that we consider as not part of continental Europe, which is not surprising. It's Myanmar and Lebanon. If we can exit these two countries, we will do so, and we'll try to do it by the end of the year. Considering different entering new business line, I would say that in some countries, we try to enter business lines that are active in Atalian but not in these specific countries. We have countries where you are mainly in cleaning, and we try to develop multi-tech services because we consider multi-tech services as being one of the important factor to develop integrated FM contract. And so we are, at the moment, quite active in improving our footprint into multi-technical services in Eastern Europe, among others. In France, we are considering potentially to develop more in logistics. It's not well known, but Atalian is already quite active in logistics, in supply chain, logistics by customers. And we do it by customers. We also do it in reshaping pallets. I don't know the word in English. Uh, no. We work for CHEP Company, which CHEP is quite well known, and, you know, it's these devices that you put in logistics. I don't know the word, the word in English, pallet. If someone can translate. But it's we intend to develop in logistics because it's always the same story. We are in a position where you have to make low-skill people working in productivity, in quality of service. It's part of our DNA, it's part of our job, and we, we, we- Pallets. Pallets. Okay, it's apparently it's pallets, so, I was- Wooden pallets. Wooden, wooden pallets. Wooden or rubber pallets, okay, but logistics could be something. So far it's part of the cleaning business, but maybe one day if we sufficiently develop, we may raise logistics as a business line in itself. About in cleaning, any difference in terms of trading for the various industries? Uh, um- Better than others. I would say that in the we try to be active in all the different segments. There is probably at the moment one segment that we try to address more than we used before, it's housing. Large housing, not a small private housing, but I would say big buildings like social buildings where we clean and we make a lot of small technical works to maintain the different flats. It's something on which we developed, but for the rest, we try in each country where we operate, we try to answer the different segments. I had already the opportunity to say it, in some Eastern Central and Eastern Europe countries, we do not operate on the public sectors for compliance issue. I would not give any examples, but we know that in some countries, to answer public tenders, it's not compliant. And we do not want any compromise on conformity and compliance, and that's why, in some case, we stick apart from public sector and... But as private sector operator, we take, I would say, almost every kind of customers, whatever the size, whatever the business sector. Thank you. Thank you. It appears no further question at this time. I'll hand it back over to your host for closing remarks. Okay. First of all, thank you for listening, and I hope that it was clear. What we wanted to show you is that we are busy and we are working hard at the moment. Facility management is for sure a low-margin business, and we need to pay attention to every line of the P&L, sales, and every line of costs. It's what we do every day, and I can assure you that the teams are committed on the field as well as in the HQ. We try to be camping in customer premises, 'cause like every business, it's the customers that give us the sales and the margin. And in the same times, we want to be fully transparent towards investors, and that's what we have tried to do this afternoon, and that I hope it was perceived. And therefore, we'll be happy to talk with you end of August for our first semester results. And thank you, and have a nice weekend. Thank you. Thanks for joining today's call. You may now disconnect.