Avon Protection PLC

LSE:AVON

Good morning, everybody. Thank you very much for coming, and welcome to those on the phone. Thank you, especially to those that went to the Chelsea Flower Show last night, who are probably feeling a little bit worse for were. We have had an excellent start to the year, a growing order book significantly increased profits and much improved cash flow. Our strategy is working, and we're seeing the benefit of our initiatives. There is meaningful improvement in our key operating metrics such as productivity, scrap and inventory turns. These are leading indicators and demonstrate the improvements we're making. The order book and pipeline are both very strong. We closed the half with an order book of nearly $200 million, up more than $50 million on the prior year. This gives us confidence going into the second half. We are trading ahead of expectations for this year. And looking beyond that, we still have a lot to do, but the momentum that we have demonstrated so far gives us confidence that we can achieve our medium-term goals. The group consists of 2 strategic business units: Avon Protection and Team Wendy. Both are the leaders in their fields and provide mission-critical protection for those who protect us. We realize that the similarity between the name of the respiratory division and the group is a little confusing at the moment. We intend to change the name of the PRC holding company to avoid this. I'll now hand over to Rich to pick up the numbers.

Thank you, Jos, and good morning, everyone. So as Jos has already mentioned, we have had a good start to FY '24. The headlines on this slide look pretty strong with closing order book up 37%, giving confidence in continuing growth, revenue up 24%, operating profit up 40% and EPS up almost 60%, all compared to the same period last year on a constant currency basis. As expected at the time of the full year results, we've also seen very strong cash conversion as the high receivables balance at the end of September has unwound, coupled with a strengthening focus on inventory management. This has dropped through to a further reduction in leverage down to 1.69x net debt to EBITDA comfortably within our target range of 1 to 2x. So, a good start. There is, however, still a lot to do if we're going to hit our midterm targets that we set out in February. So, starting with the P&L. And as usual, comparators will be on a constant currency basis. Order intake of $190.3 million equates to a book-to-bill of 1.5x. Highlights include strong growth in DoD mask demand and further NSBA demand from a number of countries, including Belgium, Finland and Lithuania, a sizable contract with the Swedish Police and of course, the German rebreather contract, both represent good new European work and the $50 million of order intake across the 2 key DoD helmet programs give more good order cover well into 2025. All of this has helped move the closing order book up to a record $199 million, which clearly gives confidence in the group's prospects for further growth. Revenue of $127.1 million is 24% up on last year, which is a creditable performance, although I will remind you that the first half growth rate benefited from the fact that we only started NextGen IN HIPS deliveries at the very end of the first half of last year. As such, this growth rate is not representative of the full year. Growth in Team Wendy, therefore, has been very strong and offset an expected decline in Avon Protection, although this decline was a little smaller than we had thought. Adjusted operating profit margin across the business has been a little stronger than we expected with operational gearing in Team Wendy as the growth came through, boosted by some early benefits of our transformation activities in addition to better than normal demand for high-margin pads. Good control on SG&A expenses dropped through to operating profit of 11% -- $11.9 million, forgive me, up 40% on last year. The effective tax rate went up a bit as guided, giving adjusted basic EPS of $0.223 per share, an increase of 59% on last year. In line with the dividend policy set out with the full year results in November, the distribution to shareholders has dropped to $0.72 per share, enabling a greater focus on organic growth and investment in our transformation program. As referenced on the previous slide, the Avon Protection business unit has benefited from healthy order intake in the recurring part of the business in addition to the German rebreather order, resulting in a closing order book of $55.5 million, of which $37 million is for delivery in the second half. The decline in the order book year-on-year reflects a couple of significant orders that were sitting on the books this time last year for H2 delivery, including the Middle Eastern Respiratory contract and, of course, U.S. filters. As trailed, revenue saw a modest decline in the half, reflecting the lack of U.S. DoD filter sales following our shipment of 2 years' worth of orders in FY '23 and a lower volume of U.S. mask shipments, partially offset by NSBA mask deliveries and initial rebreather deliveries to Germany.Adjusted operating profit of $11.1 million for the half represents a solid 16.5% operating margin. While this is lower than last year, H1 '23 margin was unusually high, reflecting high levels of overhead being absorbed into inventory as we built ahead of large H2 delivery schedules. And it is this sort of volatility that we're seeking to minimize through level-loading the factories. Higher expensed R&D also contributed to the change. Looking forward for the remainder of the year, we expect second half Avon Protection revenue to be a little below the H2 ‘23 level, unchanged from the guidance given at the time of the full year '23 results. Team Wendy has seen significant progress in the last 6 months. Orders grew by 140% with $50 million of orders under the contracted IHIPS and ACH programs, further bolstering a decent performance across the balance of the business. The closing order book of $143.5 million gives excellent coverage for the remainder of this year and well into next. Revenue growth of 81% to $59.8 million reflects the half-on-half effect of IHIPS’ deliveries, which commenced at the end of the first half last year. The business also shipped its first couple of lots of the new ACH helmet to the U.S. DoD earlier than expected. Gross margins improved dramatically as the inefficiencies of low production rates started to fall away. And notwithstanding the increased SG&A costs to support the enlarged business, operating profit margin turned positive a little earlier than we might have expected. This improvement was further aided by higher pad volumes referred to earlier and a reduction in scrap. As we detailed at the Capital Markets Day, however, the real opportunity for further margin expansion will come towards the end of FY '25 and into FY '26 as we execute the footprint optimization plans and the benefits of continuous improvement really start to come through. For the second half, we continue to expect comfortably greater than 10% revenue growth compared to H2 last year, with ACH II shipments ramping up and continuing IHPS deliveries. So as usual, this bridge sets out the key moving parts in the reported adjusted operating profit from last year to this year. As you can see, we have had a modest nudge down from translational FX in the period. The impact of lower revenue within the Avon Protection business was, however, more drive stronger profitability levels into the future. We have also seen a meaningful level of scrap production in the period of $1 million. And if things continue as they are, that variance will increase further at the end of the year. Going the other way, the nonrecurrence of overhead absorbed onto the Avon Protection balance sheet last year represented a year-on-year headwind. The R&D capitalization bar refers to a small number but an important point. As we continue our focus on quality of earnings, we have applied rigid criteria to meet prior to capitalizing R&D costs onto the balance sheet. And we capitalized just $0.3 million of R&D costs in the first 6 months compared to $2.2 million in the first half of last year, although the net year-on-year variance reduced to the $1 million shown on the chart through lower amortization levels this year. And finally, as ever, the other bar represents a number of things, including lower SG&A and freight costs in Avon protection more than offset by higher SG&A and Team Wendy to support the growth of the business. Moving on to cash flow. You can see that net debt was down by $14.5 million compared to the same period last year. A $1.8 million improvement in EBITDA was followed by an $8 million cash inflow from working capital, which compares to an outflow of $31.6 million last year. The headline drivers here are improving inventory turns and the achievement of a steady-state run rate on IHPS. This gives a very strong cash conversion of 155%, which represents a catch-up from some of last year's overhangs. We clearly do not expect it to remain at these levels going forward. Cash costs of the transformation activities in the first half were $4.1 million. And while these will accelerate in the coming months, we remain comfortable that this is an excellent investment with a very strong payback. Cash of $4.9 million was received in respect of armor deliveries late in FY '23. We expect this to be the last significant entry related to the now discontinued armor business. And beyond cash flow from operations, we paid $6.3 million into the pension scheme, in line with the guidance issued at the full year, which compares to 0 in the first half of '23. As a reminder, we prepaid last year's contributions the year before in order to help us [indiscernible] de-risk its LDI position. As a reminder, contributions in 2024 are higher than future years, reflecting a top-up agreed as part of the triennial valuation. And as usual, guidance is provided in the appendix. Capital expenditure increased modestly half-on-half as we invested in capacity for ACH and boots and gloves. And of course, dividend distributions fell following the rebasing of the dividend announced in November. So, the first key item to pick out on the balance sheet is inventory reduction. The scale of reduction on the face of the balance sheet is flattered somewhat as we still had some armor inventory on the books this time last year. But nevertheless, it represents a very strong performance by the businesses. Moving down to the retirement benefit scheme, the accounting deficit increased to $50.7 million, an increase of $10.5 million since the end of last year. This results from the adoption of a lower discount rate assumption, reflecting reduced corporate bond yields. Half-to-half, the deficit movement also incorporates adverse actuarial experience adjustments incurred in H2 '23 following the triennial valuation last year. As a reminder, the accounting deficit does not impact cash. This is driven by the repayment schedule determined as part of the triennial valuation. The net effect of all of this is that bank leverage has improved from 2.58x at the end of the first half last year to 1.69x at the end of March, comfortably within our 1x to 2x range. Perhaps the most exciting news in relation to the balance sheet, though, is that we have successfully refinanced the revolving credit facility for a further 3 years plus 2 option years, comfortably ahead of the deadline of September this year. The new facility is $137 million and has been secured on terms that are more favorable than the existing facility. This is an update to the slide we first put up with the full year results last year. The left-hand column represents our view of OpEx investment at the full year results in November. And the next column shows our updated view. As you can see, our expected investment this year in footprint optimization has increased from $5 million to $6 million to $10 million, partly offset by lower-than-expected investment in commercial optimization activity, where we feel we are already making good progress using internal resource. CapEx expectations remain unchanged. Importantly, our view for the overall transformation investment for projects identified last year remains unchanged, but we have pulled forward investment in a number of work streams to de-risk the overall program. As such, while we previously expected transformation costs to be evenly spread between 2024 and '25, we now expect that investment will be biased towards 2024. As we have progressed our transformation activities, we have added a number of potential new projects to the funnel. These are currently in the planning and appraisal stages and initial indications suggest that they will have a very good payback. These projects would involve some additional costs but could potentially accelerate delivery of our medium-term goals. So given the performance year-to-date and the clarity we have in the backlog, which is, of course, subject to execution, our outlook for the full year has improved. Revenue growth in Team Wendy driven by strong execution on the key DoD programs, including earlier-than-expected deliveries of ACH and a more modest than expected decline in revenue in Avon Protection means that our revenue guidance for the full year is now for 10% growth, up from the high single-digit growth expected previously. And the H1-H2 split will also be a little less marked because of the good first half performance. Given the success to date in improving our operational KPIs and the improvements afforded by our operating leverage, we now expect operating profit margin to be marginally better at 10% or perhaps a little more. This compares to approaching 10% in the previous guidance. Our transformation programs are progressing well. And as mentioned on the previous slide, we have pulled forward activity on a few work streams in order to further de-risk delivery. Total spend on existing programs is expected to be unchanged versus prior guidance, although phasing is now biased more towards 2024. And finally, the passage of time has enabled us to be a little more specific on the expected net debt reduction, which should now come in at a little below 1.5x net debt to EBITDA for the full year, with our expectation of greater than 100% cash conversion unchanged. And I'll now hand back to Jos to talk about strategic progress.

Thank you very much, Rich. Turning now to the strategy. We have clear medium-term goals. The Star strategy is designed to deliver those goals. The strength in stage positions us for superb execution. Transform reduces costs and improves working capital turns, freeing up resources to invest into growth and to reduce debt. Advance is delivering innovative products, driving increased sales, orders and pipeline. Revolutionize is driving long-term growth by using our powerful customer relationships to increase co-funding and develop innovative products for the future. The heavy lifting on the strengthened stage is now largely complete. We have the right organization and leadership team. And we have a strong, highly motivated team. We moved quickly to improve productivity in Avon Protection. This has resulted in a much stronger business, able to deliver excellent margins and cash flow. We've made real progress improving program management. This is fundamental to the delivery of our large transformation programs and the successful ramp-up of the DoD helmet program. Driving change in any company is not easy. I'm therefore, delighted that we have a very strong Board, which has recently been augmented by the appointment of Maggie Brereton. Maggie is an excellent fit for Avon's journey, bringing deep expertise in transformation and the depth of insight and challenge, which will help us as an executive team be the best that we can. We recently assessed by the Department of Defense against their emerging and ever more stringent cybersecurity standards. These assessments are pretty rare and could be an illustration of how important Avon is for the DoD. The important thing is that we were found to be keeping up with the evolving standards and to be performing well compared to our peers. This matters because it positions us well to win future contracts with the Department of Defense. Overall, we have a fitter, stronger organization. This slide is a high-level representation of how our transformation programs are moving through the gates. The amount each star is colored shows roughly how much progress we've made. In reality, each program contains multiple projects. So, this is a fairly subjective view, but I think it gives you a sense of progress. The main takeaway is that all programs are on track and are now firmly into the execution phase. 6 months ago, most programs were still in the planning phase, so there is a lot more activity going on now. As we develop the transformation muscle, we are seeing some potential new opportunities, which is still early stage, but look very promising. This slide shows the milestones that we have achieved on the current programs. Just to pick out a few highlights. Starting with footprint optimization, the Unity program to consolidate helmet manufacturing on the East Coast is progressing well and is on track for completion in the middle of 2025, perhaps a little earlier. We have achieved some critical milestones. The DoD has approved the first ACH Gen II lot finished in Cleveland for ballistic testing. This is important because it means that we've demonstrated to the DoD that Cleveland's processes are robust enough to meet their exacting standards. In operational excellence, we are changing the factory layouts and processes in all 3 of the Team Wendy sites. We expect the new processes to enable us to improve productivity, lead times and inventory terms. We also see opportunities in our Melksham factory and have made some changes to operational leadership to drive improvements faster. In financial excellence, we've completed the restructuring of the finance function, saving $1 million a year on a recurring basis. With a view to ensuring that the value we deliver is reflected in our pricing. We have made some significant changes to prices in some areas, particularly in product categories that have historically been undermanaged. We expect to see some benefits of this in the second half. At the recent Capital Markets Day, we introduced some new operational metrics and targets. We said that we were aiming for a 25% improvement in productivity, a 60% reduction in scrap and inventory turns of over 5%, all the while maintaining excellent on-time delivery to our customers. These 3 charts show the changes to our operational metrics half-on-half. Direct labor productivity has improved 23%. Scrap has reduced 45% and inventory turns have improved 37%. But this is only the start. There is more that we can do. The productivity improvement in the Avon Protection business has been particularly impressive. Half-on-half, direct headcount reduced by over 150 people on flat revenue, improving productivity by 44%. And we've doubled inventory turns from 2.5 to nearly 5, converting $23 million of stock into cash. As inventory is reduced, $1.8 million of overhead unwound from the balance sheet, dragging margins as expected. This is one of the quirks of absorption accounting as you improve a business, you actually hurt your margins in the short term. As you can see from the right-hand side of this chart, on-time delivery to the customer and quality have both increased at the same time that we've improved productivity and inventory turns. Avon Protection has improved its operational metrics faster than Team Wendy. In Team Wendy, the focus so far has been on successfully ramping up the DoD programs and moving production to Cleveland. As those programs mature, we are turning our attention to driving similar improvement on the factory floors in Team Wendy, and we have a plan to do just that. I wanted to give you an example of why I'm excited by the new opportunities we're finding. Last month, we completely re-laid out the EXFIL helmet line in Cleveland. Most senior leadership was involved on the factory floor, including our CFO. The picture on this slide probably doesn't do justice to the amount of change we made. We moved everything, including the laser cutting machine for the first time since it was installed 5 years ago. As you can see, the results of the Kaizen are startling. In the planned ideal state, we can reduce work in progress and need times by 99% and reduce the number of operators by 83%, some of whom will retrain into other roles to support future growth and improvements. We're now working on improving all 4 lines in Cleveland and building the business case to transform the entire factory. We have a record order book of some $200 million. We also have a large pipeline of opportunities, which gives us confidence in the future. The geopolitical situation remains unstable, which is driving increased defense spending. The changing nature of warfare now involving both inventory and the heavy use of drones is relevant for Avon because inventory needs protection from chemical weapons and blast and bullets, we can help provide that protection through our mass and helmets. The threat of chemical attack was recently highlighted by the U.S. State Department, which formerly accuses Russia of using chemical weapons as a method of warfare against Ukrainian troops. We are also seeing good demand from helmets and mass from police forces in the U.S. as we approach the U.S. elections. That will also benefit us during the second half. In Avon Protection, the order pipeline is strengthening. DoD demand for mass has increased with more than 25,000 M50s ordered so far this year. Furthermore, the DoD has exercised their option to extend the M53A1 contract until March 2025 and have indicated that they will extend for another year after that. We recently won the contract for the General Service Respirator for the U.K. MOD. This is a 4-year contract with 5 further option years. This win is important. It cements our position as the sovereign U.K. CBRN expert and avoids a competitor re-entering the market. It is also a cornerstone contract for our U.K. factory. As a reminder, this is one of our only build-to-print contracts, so we expect gross margins to start fairly low. We have a plan to increase into our normal range during the first 2 years of the contract through our continuous improvement program and some in-sourcing. In the commercial sector, demand in the U.S. has been good, and we recently won a 7-year framework contract with the Swedish Police, which we expect to be worth around $15 million with roughly 1/3 of that shipping this year. We've also seen very encouraging demand from militaries outside of the U.S., some of which is no doubt linked to the increase in chemical warfare. Our MCM rebreather continues to be the system of choice across NATO with important wins in Germany and another NATO country. We expect to deliver around 230 rebreathers to these countries, plus related spares, consumables and training. Looking forward, we are excited to launch the MetaMask, and we're focused on ramping up production of both rebreathers and boots and gloves to meet the increased demand. In Team Wendy, the order book remains very strong. Our focus is on successfully delivering on the existing programs. We continue to deliver excellent quality helmets to the DoD. IHPS’ deliveries are now on a steady cadence with no lot failures. And the first 2 ACH slots were delivered ahead of schedule. This has no doubt contributed to further orders in the half of $36 million on NextGen IHPS and $14 million for ACH Gen II. We also saw strong ongoing demand for pads and bump helmets. We're working with the DoD to agree a new Comfort Pad systems for the IHPS and are focused on ramping up ACH production to 50,000 helmets a year. We are also working on launching a brand-new rifle rated helmet for customers beyond the DoD and expanding the pipeline more broadly internationally. As a reminder, our portfolio of long-term sole and dual source contracts provides a stable foundation upon which we can build. We've highlighted in orange on this chart, the 4 new wins from this half, which demonstrate that we continue to be well positioned with our customers. Turning to the long term. We are progressing well with our existing co-funded programs with the DoD to deliver a next generation of filters, which will provide enhanced protection. In addition, we're now working with the DoD towards 3 new programs, which will increase the amount of R&D funding from the DoD and will hopefully lead to further programs of record. In Team Wendy, we have successfully demonstrated that we can use our new hybrid tooling for production of the next-generation ACH II and Epic Helmets. This will significantly increase capacity and enable us to expand into the international market without a lot of additional CapEx. Six months ago, I talked about the rest and opportunities for this year. I thought it would be helpful to update you on where we are now. Our biggest risk was losing the MOD General Service Respirator. We've eliminated that risk by winning the contract. And we do have work to do through our continuous improvement program to get the gross margins to a target range of well over 30%. We won the German rebreather contract and have already delivered the first 30 of 205 rebreathers. So, we no longer see rebreather timing as a risk for this year. The German Navy was admirably fast. The rebreather pipeline remains very strong, but we still do not know whether we've won the U.S. rebreather tender. The program office has kept its cards very close to its chest. [indiscernible] are well in the first half, and we've now improved manufacturing and reduced lead times, setting us up well for the second half. Pad demand was excellent. We're now seeing more opportunity for process optimization than we thought 6 months ago. But we've not yet fully estimated the cost and related benefits. We'll update you in due course. Scrap rates have improved, but there is still more to do, and some of the remaining causes of scrap are technically challenging to resolve. Overall, the retiring of risks and crystallization of opportunities means that we're optimistic for the full year and beyond. Perhaps our biggest risk now is being able to successfully meet the increasing demand for homes, while at the same time, consolidating factories and transforming our Cleveland factory. Timing is also dependent on customer approvals, and we know from experience that those can take longer than we expect. This slide shows our performance over the last 12 months versus our medium-term financial goals. Main takeaway for me is that we are making progress across all of our key financial metrics, revenue, cash conversion and leverage are all at or better than our goals. We still have more to do on margin in ROIC, but we have a very clear plan, which will move them both into our target range in the medium term. We are on the right track. So, in conclusion, Avon is well positioned to deliver exceptional growth to shareholders. The changes made to the organization, people and processes have enabled us to successfully ramp up IHPS’ production and deliver the first ACH slots ahead of the competition. We have a record order book. We had a lot of strategic wins. The pace of change is accelerating, and we're already seeing the benefit of our actions. We are the leading supplier of CBRN protection and helmets to the U.S. DoD and continue our sole source positions on masks and filters to the U.K. MOD. And the geopolitical backdrop provides a supportive market for our world-leading products. With that, I will hand over to questions.

Three questions, please. You made a huge amount of progress on transform in the first half. Can you just give us a flavor for the important milestones you are looking at in the second half, just so we can kind of figure out where we're going and how confident we are in that 2025 completion of the Unity project, I guess, in particular.

Yes, sure. Well, we've just moved the press from Irvine and Salem, so we need to commission that. It's in the foundations we're in, but we've got to get it working. That will help us make IHPS helmets. And we need to get the full ACH line approved by the DoD and get the first lot approved through ballistic testing, although, that it should be quite straightforward, but we do need to do it

And the molding element to the ACH, is that in the second half? Or is that next year?

That is in the second half.

Well, it's in the calendar second half. So, it will fall just outside our financial [indiscernible].

Behind you, you've talked about a strong competitive moat. Can you just give us a flavor for how you feel about that now compared to when you first joined Avon. It feels like, if anything, it's strengthened and the risk, I guess, was that some of your peers caught up on some helmet contracts. Just wondering kind of where they are there and how you feel about that.

Yes. I don't know that we see a change on helmets actually. Gentex have -- we think they're getting close on IHPS. They do seem to be still -- they still haven't submitted; we understand fat approval on the ACH. So, there's still quite a long way behind us. But there's still a competitor that we respect. And if anything, I think they're quite helpful because they sort of keep us pushing forward and making sure we're as productive as possible. Yes, so still 2 players in that market. I think on respiratory; I think that market has changed a bit for us. We had a small competitor trying to get into the U.S. civilian market, but then we launched our own line for the civilian market, which I think has probably taken some of the wind out of their sales. And I think most importantly, we did see 3M starting to try and push the general service respirator or a variant of it in the U.S. commercial market that would have been quite unhelpful for us. But I think now we've won the main GSR program for the MOD. If I was them, I'd probably give up on that now because I can't believe they've got a robust enough supply chain really to keep that going. So yes, I feel good about that.

And then last, small suits on some more contracts. Are you able to tell us where the customers are and the opportunity there?

Do we call them European? Are they in Europe? Not sure. That was interesting. Strategically interesting, but they are not yet financially particularly material. But what's interesting about it is it's the first time a customer has said, "I want to buy masks, boots, gloves and suits all in one package. We like that idea because we get a bigger share of their wallet effectively. They're currently buying it from all sorts of people. If we can offer a one-stop shop, we like that. So, I think it's good a customer has demonstrated they want that offering. Now we need to find more customers that on the offering.

Just on the issue of scrapping. Can you talk a bit more about some of the measures you've taken to reduce scrapping? And are you confident that you've stabilized those processes at 1.5% of revenue. And you did mention towards the end some of the technical challenges going forward. So perhaps a bit more -- a few more insights perhaps on that issue.

Well, there was a long list of root causes of scrap, probably more than 10. So, the first thing we did was just prioritize the operator end. And then a lot of them are actually caused by quite simple process, things like operators dropping helmets. As soon as you drop the helmet, you have to scrap it, very frustrating. We were also having issues. We have to trace every helmet for the DoD through the production all the way from raw material through every single manufacturing process, and if you lose traceability at any point, you have to scrap the helmet. And our traceability system was having glitches, and that was leading to quite a lot of scrap, also very frustrating. And then some of the presses, unfortunately, the rotary presses are not the most reliable thing, which is why we want to move to vertical pressing. They're also going in and out of the temperatures were changing and that was also causing scrap. So, there's a lot of things that we have fixed and the process definitely now is much more stable, and we were very pleased we went to California recently. They've done a great job on improving the lines there. We do still have an issue with LARS delaminating, particularly in one of the sizes of helmets. Fortunately, it's actually the size of the DoD orders the distaff. That we've got a root cause analysis, what we call an AD analysis. We're still working on that. But that's going to be, I think, probably we can fix it through a combination of different heats and pressures, but that one is going to take a bit more time, I think.

So, just you seem to be in slight contrast to maybe some of your peers on the U.S. contracts, no real issues in terms of contracting, maybe the U.S. rebreathers, an example where it is. But how is the U.S. contract environment at the moment, particularly given election year and so forth?

We haven't seen any impact from the election year, I mean. Yes, so far, the contracts have been flowing through absolutely fine to us.

No, other than we have seen the margins and uptick in demand, possibly linked to the election year and some of the protective stuff.

And then on that, on the respirator side, the filters order, when should we expect that 2-year order to come in?

The back end of this financial year at the beginning of next financial year, I think.

And of a similar quantity as usual levels?

It's competitive as a reminder. So, generally speaking, we'll put in a bid. Our competitor will put in a bid. And if they follow the same causes history, no reason to assume they won't, they'll give 60% to the lowest bidder and 40% to the higher bidder. But we'll see.

And just on -- remind us on the ACH Gen II ramp. What sort of -- how quickly do you think you'll get to that full year run rate?

I would think next year, we should get there.

Yes, [ a little over ].

Thank you, guys.