Earnings Call: Q2 2017

Jul 13, 2017

Welcome to the conference call regarding the publication of Gerasimme AG's Q2 Results 2017. At the moment, all participants have been placed on a listen only mode. The floor will be open for questions following the presentation. Now I hand over to Ms. Sieveringkamp, Corporate Senior Director, Investor Relations at Gerasimer AG. Good afternoon or good morning, everybody, and thank you very much for joining our Q2 earnings conference call. With me today are Hugo Leurold, our CEO and Heine Beaujean, our CFO. And as we usually do, we are presenting a set of slides to accompany our remarks on this conference call. The interim reports, the slide presentation as well as the press release are posted on the Investor Relations website at geosynor.com/investorrelations. Please note that this call is being webcast and will be archived on our website. Before we start, I would like to remind you that the presentations and discussions are conducted subject to the disclaimer. We will not read the disclaimer, but propose we take it as read into the records for the purpose of this conference call. Our agenda for today starts first with the presentation and the prepared remarks. And after that, we will also have time for Q and A. And with that in mind, I now hand it over to Ruben. Thank you, Severin. Good afternoon or good morning to all of those attending our Q2 2017 earnings conference call. Let me start with Slide 4 of the presentation deck with a couple of observations. 1st, and as anticipated, the customer demand trends observed at the beginning of the year have continued to affect our performance in Q2 2017. However, the financial impact is less pronounced than in Q1. Reported revenues amounted to €339,500,000 in Q2 compared to 3 and €47,300,000 in Q2 2016. On a reported basis, revenues decreased by 2.2% in Q2, an improving sequential trend after a decrease of 5.4% in Q1. Looking at this on a half year basis, reported revenues decreased overall by 3.8%. Revenues were 3.7% lower on an organic basis in the 2nd quarter. The currency tailwinds stem essentially from the Brazilian real, the U. S. Dollar and to a lesser extent the Indian rupee. Whilst adverse currency movements were quite limited across the board. 2nd, with regards to adjusted EBITDA, which amounted to €75,800,000 in Q2 'seventeen compared to €80,700,000 in Q2 '16. The corresponding margin was 22.3% in Q2 'seventeen against 23 point 2% in Q2 'sixteen. I will comment on the divisional performance in greater detail on the next slide. But the decrease in margin year on year is essentially linked to the lower margins in the primary packaging glass, whilst margins in plastic and devices remained stable during that period. Cash and earning financials will be developed later on in the financials by Rainer, but most of the trends are all essentially derived from the top line development. What I want to spend more time on in this section of the presentation is to review and analyze the main reasons behind the revenue decrease we have experienced in the first half of the year. Additionally, based on the increased visibility with regards to our customers' commercial and operational plans over the next 6 to 8 months. I also want to walk you through the main identified revenue drivers for the 2nd part of this year. We are indeed expecting to return to growth, both in terms of revenue as well as earnings during the second half of the year. We currently foresee an important improvement from Q3 into Q4 with Q4 other than last year when Q4 was only a little better than the previous quarter, is expected to be far the strongest quarter and Q3 growth being about flat year on year. With that in mind, we can also confirm the initial assumptions we outlined earlier in the year with revenues expected now to come on at the bottom end of our forecasted revenue range and the corresponding adjusted EBITDA to land around the midpoint of the targeted range. More precise indications at the end of the presentation. Moving on to Slide 5. Overall, group revenues decreased by €7,400,000 in Q2 'seventeen versus the same period last year. And within that, the majority of the decrease stem from our plastics and devices. Here, we continue to see lower demand in Q2 as well as postponements of orders into the second half of the year. Now when it comes to analyzing the reasons for these declines in demand, there is not just a single one prevailing. 1st, a number of customers within our device and system solutions order less than anticipated. This is also to some extent impacting us more directly as we tend to have a reasonable number of customers in these businesses where we are single source supplier. This might be linked to competitive dynamics within the pharma market for products being prescribed for similar treatments or for example, in the case of our larger inhaler project at Peachtree, just timing and postponement of a higher ramp up in the second half of the year. Nothing to worry about regarding the latter, only a change in timing. 2nd, it's also worth noting that tooling revenues were still lower year on year. So here, as in Q1, we had some residual timing effect. On the flip side, we could see organic growth for primary plastic packaging in line with our expectations. So overall, the revenue decrease of 3.8 percent for plastic and devices in Q2 'seventeen year on year or minus 5 0.7% on an organic basis. Profitability wise, lower volumes in the device business triggered contractually agreed price escalation clauses. Such higher prices in combination with a decrease in the lower margin tooling revenues translating in a favorable sales mix have enabled us to maintain the adjusted EBITDA margin at 27% despite lower revenues. By the way, if you compare first half year 'seventeen margin year on year, we posted a slight increase of 40 basis points. With regards to our Primary Packaging Glass division, revenues were pretty stable year on year at €153,700,000 versus €154,300,000 That's actually 1.1% down organically. However, we note greater discrepancies observed in the various geographies. In the U. S, despite encouraging trends towards the normalization of demand during Q2, we encountered lower sales and postponements into the second half of the year, both for our Molle Glass and our converting businesses. For some selected projects, we also encountered negative price mix during the quarter, which also had an impact on profitability given the absence of significant volume growth. We have posted growth outside the U. S. And within that, particularly in our cosmetics and in our Chinese operations. The decrease in profitability was more pronounced than the decrease in revenues. And that is essentially linked to our decision to reduce the production output and therefore accept underutilization. We need to remain highly flexible to ramp up capacity quickly and serve our customers on short notice into the second half of the year. Overall, adjusted EBITDA margin was 20.4% for the 2nd quarter, 230 basis points lower than in Q2 'sixteen but 300 basis points better than in Q1 'seventeen. It's worth noting that the Q2 'sixteen margin of 22.7% represented the highest quarterly margin of last year. But a margin of 20.4% would have presented the 2nd best quarterly margin during the same year. So actually, I think the margin development is nothing to worry about. These trends underpin the situation that we have lagged earlier in the year, which is that we observed a relatively cautious behavior from our clients overall. Moving on to Slide 6 to address what we see for the 2nd part of the year. In terms of key drivers for the second half, we essentially expect in plastic and devices, a catch up in devices and systems, both in Europe as well as in the U. S. We are definitely expecting a much higher production run rate in our PEACHTREE facility by the end of the year. Injectable products should also add to the top line in the second half of the year. Tooling revenues are expected to come back strongly in Q3 and Q4 as we basically expect the annual revenues in tooling to be at about last year's level. On a side note, we have a high amount of very diverse and promising projects we are working on. Of course, and as always, not all of them might come to the fore, but the pipeline looks very good to support future growth. In plastic packaging, we expect growth in line with our expectations in all regions. In terms of timing, it is important to mention that the phasing of revenues will be very significantly geared towards Q4. As for example, in tooling, we expect most of the revenue uplift to come towards year end when equipment and tooling revenues are expected to be high. So far, we had a higher share of engineering revenues than usual. The identical timing effects towards Q4 is expected for our inhaler in the U. S. In Primary Packaging Glass, in the U. S, we now have secured more than 80% of our orders for the second half of the year, which is in line with the order book coverage for the past years. Additionally, we have renewed contracts with our main U. S. Customers, so we definitely expect to catch up here as well. And for the rest of the business, including Europe and Cosmetics, we also expect that that business will continue to deliver as planned. So based on our order book and sales forecast of our customers, we see growth in the second half. Phasing wise, top line growth should also be stronger in the Q4. I also want to outline that we are starting the commercial production of our Vela and Elite glass products in the second half twenty seventeen and that we are sampling our ready to use vials and encountering encouraging customer feedback. This will not affect revenues in 2017, however. On the margin side with PPG, it is also worth noting that here we will be cycling favorable comparables versus last year, given the furnace repair at Tethau that impacted profitability during the second half of last year. I had already mentioned that last year Q2 was by far the best margin quarter. So the comps are a bit easier in the second half of the year. So at a group level, we definitely have more visibility, but also know that the upside on our current year. I hope I have shared with you more insights of what to expect in the short term. I'm now handing over to Reinhard for a more detailed review of the Q2 financials. Many thanks, Uwe, and good afternoon or good morning from my side as well. I'm not going to comment the usual slide on revenues and profitability for the quarter as this has been just has been done by Uber. For comparison purposes, however, you will find this slide in the appendix section of the presentation. So on this Slide number 8, along what we have presented in Q1 already, we are comparing the reported Q2 twenty seventeen results with those of Q2 twenty sixteen for continued operations only as both exclude the results from Life Science Research, which have been treated as discontinued operations for full year 2016 and subsequently for each quarter of 2016. With that in mind, we can see that the reduction in adjusted EBITDA coupled with some depreciation increase and partially mitigated by a decrease in taxes, which overall leads to a €3,800,000 decrease in the net income from continued operations. Let me describe the main positions here. The €1,400,000 increase in depreciation is in line with scheduled depreciation, so nothing out of the extraordinary year as it also reflects the level of CapEx spend in the past. The one off effects of €500,000 to include, among others, nonrecurring costs occurred in conjunction with an M A opportunity we evaluated in the first half of the year, but for which another buyer was ultimately selected for price reasons. The amortization of the fair value adjustment is as in the precedent quarters for a large part driven by the Center acquisition. As a whole, we thus achieved an EBIT of €43,900,000 in Q2 compared to €50,300,000 in Q2 20.60. Below the EBIT line, the net finance expenses is essentially in line with last year. Less taxable income overall in the group accounts for the decrease in taxes year on year. On a half year basis, the tax rate at group level remains stable at 30.3%. This led to a net income of €25,100,000 in Q2 2017 compared with our net income from continuing operations of €28,900,000 last year. After adding back the one offs and subtracting the noncontrolling interest and on the basis of a stable share count year on year, the adjusted earnings per share after non controlling interest amounted to €0.97 compared to 1.08 euros in Q1 2017. Please move with me to Slide number 9 to review selected balance sheet and cash items. Looking first at the equity portion of our balance sheet, we know that the we know the decrease of 1.5 percent compared to total equity from €763,300,000 at the end of full year 2016 compared to €752,000,000 as of May 31, 2017. This decrease results, on the one hand, from the payment of the dividends recorded for the period under review and negative currency effects. As a whole, the equity ratio increased slightly from 32.1% at the end of full year 2016 to 32.9% at the end of Q2 2017. The €30,100,000 increase in the net working capital is slightly higher than what we have recorded over first half year twenty sixteen and essentially linked to a decrease in trade payables and a greater magnitude as we experienced during the same period last year. This is essentially a function of the specific payment terms we have with different suppliers, and this can vary from 1 quarter to another. Better than average, the average net working capital in percentage of the last 12 months, revenues were 16.4% compared to 15.8% at the end of last year and is in line with the expectations set out for 2018. Operating cash flow decreased from €87,000,000 to €68,600,000 year on year, a trend that is explained by the lower adjusted EBITDA contribution on the one hand and the increase in net working capital I just mentioned. In absolute terms and excluding Life Science Research for the first half twenty seventeen, CapEx remained practically unchanged year on year at €35,400,000 and so was CapEx as well in relation to sales for the 1st part of the year at a bit more than 5% for the first half. This also means that the bulk of CapEx spend will come into the second half with overall target remaining on a foreign exchange neutral and foreign a full year basis of approximately 8% of sales. Net debt amounted to €812,600,000 which corresponds to an increase of €24,200,000 and is essentially driven by the dividend payment and the interest payments on our corporate bond. Based on the last 12 months, adjusted EBITDA are calculated as of May 31, 2017, Leverage, therefore, slightly increased to 2.7x compared to 2.6x at the end of last year. One additional comment on the debt. As you might have seen, this is in our quarterly report. The existing €300,000,000 senior notes maturing on May 19, 2018, have now been classified as short term debt. As required by the IFRS regulations and as mentioned as well in latest Moody's report published in June, we are planning to refinance this bond in advance of the current financial year ending November 30, 2017. However, to be clear, we will not repay the current existing bond ahead of time. This would conclude my first review on the financials for the quarter, and I'm handing back over to for the conclusion. Thanks, Rainer. Moving on to Slide 11, where we present you in a compact way all our ambitions for the short term and midterm. Our current assumptions led us to more precise expectations for the end of the year. For our revenue target, based on the trends that we have just outlined to you, we can confirm that we expect to land at approximately €1,400,000,000 We are cognizant of the fact that this proposes a strong second half of the year and within that a very strong Q4 in the light of the phasing of the revenues we are currently anticipating. Having said that, Q4 has always been our strongest quarter as it is the ideal one given that there are no holidays apart from Thanksgiving. So this is a trend we are currently preparing ourselves for from an operational standpoint on the basis of the orders we have and the numerous discussions we conducted with our customers. Regarding the other metrics, we are more which are more within our control, such as profitability, earnings our assumptions for 2017 are as follows. We continue to be more optimistic with regards to adjusted EBITDA as we can adapt our cost structure to the temporary changes in order patterns and continue to work on efficiency improvements. Our expectations remain along the lines of what we communicated earlier this year. That is the midpoint of the range or approximately €320,000,000 For the adjusted EPS after non controlling interest, we are aiming for approximately €4.25 this year. All the other objectives for this year as well as goals for the mid- and longer term are unchanged as communicated before. What I would like to do on the next page is also to recap a number of important milestones we have achieved this half year and that paved the way for future growth, in particular in specialty pharma. Three main initiatives I would like to cover on this slide. 1st, over the past years, we have been systematically upgrading our glass and plastics product portfolio. COP syringes and multilayer COP vials have been added before. During our last conference call, we talked about the license agreement we signed with the Stefaanato Group to offer ready to fill packaging solutions for violin cartridges based on the OMPI EASY Fill packaging design. Here, as I mentioned before, we are currently sampling these vials to our customers, and we are encountering encouraging feedback. We will also offering RTU cartridges shortly. As I have already mentioned before, we are starting to offer commercial quantities of Elite and Velar Glass products starting Q4 2017. This completes a comprehensive and unique product line offering to address the high quality needs of the injectable pharma market and especially for biotech drug market for both ready to fill and bioprocessing products. 2nd, there are clear opportunities arising from the specialty market and I already touched on this earlier in the year during the full year 2016 earnings call. This is further evidenced by the large amount of biological and bio simulators currently in development and the current investments by CDMOs in smaller sized biopharma reactors. Here, we expect that the supply chain will have different characteristics as neither biotech companies nor CDMOs have a lot of packaging expertise. And this is why we have launched CaraScyma Solutions at the beginning of the year. As mentioned before, this is a business and product development outlet targeted for the specialty pharma market to offer multi material platform system solutions all the way from conventional vials, cartridges and syringes to ready to fill customized solutions for packaging and safe application of complex biological drugs. I can report that we have made progress in structuring the organization, both with external hires on the commercial side as well as allocating dedicated resources from our technical competence centers and the relevant businesses on the product bunding and developing side. The main three prerequisites are to master small batch production process, which we can to have a very good insight into the regulatory and filing requirements, which we also have and of course, last but not least, to display the widest range of injectable packaging and delivery solutions in the market. Here we have made further progress during this year. And I wanted to show some examples for drug delivery solutions. Our product offering has been really bolstered in the past 12 to 18 months as we can offer now, baked on ready to fill syringes with a drastically reduced amount of silicone oil particles, ensuring the stability of drug formula during the period of medication storage. Metal free and low tungsten syringes that exclude or reduce potential residues with tungsten COB Syringes, particularly suitable for high viscous formulations. Here we have been offering a product that we purchased from our Japanese partner, Tazai Cargo. Starting next year, we will commence commercial production of our own produced stake in needle syringes with a broad product range and a faster reaction time to customer demands. Additionally, some of our own proprietary accessories such as the TALC, a Tempur Evident LureLock Safety Seal are also starting to encounter encouraging demand as we now need to produce it in different sizes on the back of customer requests. One missing piece, if you want, in the specialty pharma syringe systems assortment are the safety devices for needle protection. Hopefully, this is a gap we will manage to close in the very near future. And as I have mentioned earlier, we have a very diverse and promising pipeline for new product developments that is expected to contribute to future growth starting in 2018. Obviously, we now need to execute on the business development and commercial front of this exciting fast growing and high value market segment before this started to impact the top line in a meaningful way. But I'm personally glad to see the progress achieved by the teams here. So before we open the floor for your questions, some word of conclusion from my side. Clearly, the trends of the first half do show some improvements quarter on quarter and we are very clear about the challenges we face ahead of Q3 and most importantly Q4. Underlying markets are intact, Contracts are in place and the visibility is not changed compared to prior years. From an operational standpoint, I mentioned client centricity during the last conference call and it remains paramount. We need to strictly monitor our customer schedules and the resulting demand as it is a basis for our production forecast and we have taken all the necessary measures in order to meet this demand throughout the second half of the year. At all times, we control strictly all the drivers of margin performance as we are committed to our profitability target framework. Personally, I would hope that the performance of the first half of the year does not entirely include the steps we have taken in the course of the year to enhance our volume proposition by a more value driven approach. I know there are still a few missing pieces in the puzzle, but I'm confident that we will close those gaps shortly. We have continued to lay important groundwork to support the growth strategy in the long term. And while this might take some time to be visible in our P and L, this is still a critical element of our daily focus. Finally, and we recently attended a Quindas IMS presentation on the subject, all long term megatrends that are that have listed that we have listed as part of our equity story are still extremely relevant. And from that angle, our general external environment has not changed. For now, Rainer and myself are happy to take your questions. And I hand briefly over to Severin for the Q and A. Thank you very much. So we are now ready to start our Q and A session. And the line will be open or are now open for any questions you might have. So the first question will come from Friedrich Falcao from Deutsche Bank. I have 3, if I may. So firstly, could you share with us why you're adjusting your EPS guidance to the lower end while keeping the midpoint of your EBITDA guidance? Are there any changes below the line that we should be aware of? Then secondly, could you share a bit more color on what is causing the order in your inhalation business? If I remember correctly, you mentioned on the previous call that the business was performing very well in Q1. And then thirdly, you stated the main part of your CapEx went into creating additional production capacity for plastics and devices. Could you maybe share with us for which product categories you're spending the most here? So let me start with the adjusted earnings per share guidance of $4.25 which we have given out. The metrics above below the adjusted EBITDA haven't changed. So we believe that the depreciation for the group will be around maximum 7% for the year. We also believe that the financial interest or financial results will be around the number which we have given before, which is around the year 2016 number, which is approximately €32,000,000 up to €34,000,000 And also the tax rate should stay at 29%. So the reason why we have 425%, you can say it looks a little bit conservative, but currency downwards from the $320,000,000 you also can come up to downwards from the 320, you also can come up to 430. But at the end of the day, is there it's a little bit calculation, whatever you have in mind here or there. Yes. I continue with the CapEx question on the plastic side. Basically, the capacity increases are related to. Two main projects that are worth mentioning, number 1 is capacity increase in primary packaging plastics. That is in the investments. And of course, our inhaler project in North America, those are the 2. In the glass sector, basically all the spending that we have is around the injectable product category and around providing for capacity step by step here for the new product that I have mentioned, and you are going to continue to see that as well in the near future. On the order postponements in Q2, I want to put that a little bit into perspective. We are by, I think, by far the market leader in providing inhalers contract manufacturing to most of the large pharma company serving that business. And what we have seen here is, particularly with a couple of customers, a very, very soft Q2 based obviously on the demand pattern of our customers. And we are expecting that part of that is going to return to normal in the second half of the year. And in one case, actually, it is more of a shift of the orders into the second half of the year. On top of that, I mentioned that the ramp up of the U. S. Business pretty much hits the, I would say, hit the hot phase in the Q4 2017. So we are basically running here on all cylinders we have installed, so to speak. Okay, great. Just one follow-up question on the guidance. So do I understand it correctly that revenue and EBITDA guidance is at constant currency, while adjusted EPS isn't? And if that is true, could you potentially share what sort of FX impact you factor in here? The $425,000,000 is also based on adjusted means also currency neutral. But at the end of the day, we see a certain risk here. So the $425,000,000 doesn't calculate correctly to the $320,000,000 if you go downwards with the numbers which I've provided with. But we have taken here a little bit of conservative stance. You can have a higher number here a little bit, as I said. But again, there is fundamentally between the lines no change. So we will see at the end of the day, if the tax rate is exactly 29%, we have to have in mind is the financial result is around €32,000,000 to €34,000,000 and the €1,000,000 up and plays for the adjusted EPS, a very important role. That's the reason why we have said, we take here a conservative stand on the adjusted earnings per share of the 4.25 because the little changes do have major impact on this number. Okay, great. Thank you very much. Thank you. So we're going to take the next question from Scott Barlow from Berenberg. Yes. Thanks very much for taking my questions. So first question, please, just relates to the flexibility that the organization appears to have on cost side. If I remember back post crisis where the company had quite a lot of destocking effects and impacts to capacity utilization. That was very apparent in negative operational leverage for the business given your fixed costs, so margins got impacted. That doesn't appear to happen this time. So if you could just highlight what has actually changed and whether this is a change for the future. So a bit more details there, please. 2nd question relates to the Plastics and Device business. I think not only this year, but over the last few years, this business has not perhaps lived up to some of the higher growth rates we've seen in the past. And you're pulling out asthma inhalation this year. I wonder if you could confirm whether has also been the case in previous years, so this market coming off the board a little bit or whether you are have high exposure with customers that are not doing so well in this segment. So perhaps a little bit of flavor as to whether anything is changing in the end market or your exposure to it, please? The last question for me relates to the drivers of the end market volume growth. I think you refer again to IMS volume growth trends for the industry. I think if I understand correctly that a major volume driver at the moment is coming from the Chinese market for which Garocheimer has limited exposure and not been so successful. So I wondered if you could talk a little bit as to plans to move more firmly into some of these higher volume growth opportunities. Thank you. All right. Thanks, Scott. I'll start with the flexibility. And I think the most fundamental difference that you might keep in mind is that we have exited the tubing business, which means on the glass side, if I have a certain underutilization in capacity on the tubing converting side, I am fairly flexible in handling that because I have no furnaces anymore. On the mold and glass side, this is from a capacity perspective, unchanged, but we certainly have moved to a more flexible way on running our factories over the years. It gives us opportunities to flex cost up and down in a short term. This is for this business, I want to caution, however, that if you would see a longer underutilization, we always would have to go and attack the fixed cost short term because those methods and tools we use basically help for periods like we have seen where we only see a temporary issue when we see the capacity coming back. But at the tubular glass side, our flexibility has tremendously increased by not having the furnaces anymore. On the inhaler side, yes, you're absolutely right. We have a as I said before, we have a very, very high market share, which means we have a high exposure to that sector by nature. And we have by nature a number of customers that we single supply. So we are obviously depending on their success. In addition, I would say a couple of things that need to be observed. While we still have a number of inhaler projects in our pipeline, we see continued development towards to new products and new products coming to the market where Geras Heimer is a partner. On the other side, what we have observed over the past is probably more cannibalization between existing devices and new devices or better actually by the medication, the new devices used versus medication that's in old devices and have seen more cannibalization that we probably have seen before because we generally think that customers or patients stay fairly loyal to the device even if the medication goes generic. So from that perspective, I would say that if we haven't launched, quite frankly, we haven't launched a big one other than the U. S. Project in the last two years, basically means that we were at an timing effect on life cycle where we probably saw a couple of negative impacts with some larger ones that actually we will overcome with the new launches that we have in the pipeline in the future. So looking forward, I'm quite optimistic with that. But keep in mind that this is probably the device area where for us, it is fairly difficult to grow above the market because of our already high market share. On the volume growth, I would say, if you look at the growth for the next 3 years, I want to really give you a different perspective than what you have outlined. I think with the and that is the work of the last 18 months we have done, we have added a number of products into our portfolio that have enhanced value. And that is actually to add a growth dimension to our portfolio, particularly for injectable drugs and here particularly for specialty products in the injectable and biotech market, where we have not participated on the growth opportunity as we should have been in the past. And then actually, particularly for the next 3 years, if you take a look at our growth profile, will add significantly to our growth with those type of projects and products. And you are absolutely right that the volume growth for standardized products will actually only come out of the emerging markets. And what I can confirm this year is that we are doing fairly well in China again, even though that our exposure is particularly for standard products only in the tubular glass market with a significance, we are doing much better than we have done in the Brazilian market that is returning to normal. We have difficulties this year in the Indian market, particularly after the tax situations and changes and monetary changes we have seen that is a very sensitive market to those things. I think we are reasonably positioned, but that has upside potential. However, for the next year, I think the real potential is in the new product and in the product pipeline of medical plastic that is heavily and very heavily geared to the injectable market and not to the inhalation market. Very comprehensive answer. Just a very quick follow-up. So is it possible just to clarify of this 4%, 5% growth that you foresee next year, how much of that is reliant, if you like, on this new wave of products? And is this just a feeling you have? Or already are you in sort of discussions and commitments into next year for these new products? Thank you. I think if it would be a feeling, they should have let me go already 5 years ago. So no, it is hard discussions. It is already commitment. It's project that we are working on. And I believe that the value of new products over the next 3 years on average is about the contribution is around 2% to 3% of the growth overall. Great. I'll jump back in the queue. Thanks, guys. Well, actually, there is no right now. So if somebody wants to ask a question, it's probably the best opportunity. So maybe we can poll one more time. If anybody wants to ask a question, It looks like there are no other questions. So with that in mind, we can conclude the call. Oh, sorry, Scott, you want to ask it? Go ahead. Sorry. Thanks. I hadn't appreciated. There were no further follow ups. Yes, thanks, Eva. Just want to understand a little bit this Peachtree development because obviously, this was strategically very important for Garishheimer to enter the North American injectable plastics market. We've talked about this for some time. I know there's been high degree of investment in this facility. Just to understand, if we consider 2017 being x% of the full volume of that facility, can you give us some degree of is next year twice the contribution of this year? Or just to help us understand how tangible and how timely the scale up is of this facility? Yes. So how can I phrase that without talking too much about things that I'm not allowed to talk about and give you some guidance on that? What I would say is that a significant contribution of our expected 2018 growth in plastics and devices will come out of this product compared to 2017. So which explains to you that the volume output very much is geared to the very end of the year and that we achieve already a high output level. Then and that makes the run rate going into 2018 much, much different. Okay. Thank you very much. Understood. And then no, I'll call it there. Thanks very much, Uwe. That's much appreciated. You're welcome, Scott. Okay. Well, if in the meantime, you have any other questions, the Investor Relations team is there. And just as a reminder, the next set of results will be released on October 11. So thank you very much for joining us today. Bye bye.