Ladies and gentlemen, welcome to the Sulzer third quarter results 2018 conference call. I am Constantinos, the conference call operator. I would like to remind you that all participants will be in a listen-only mode, and the conference is being recorded. The presentation will be followed by a question and answer session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Mr. Christoph Ladner, Head of Investor Relations. Please go ahead, sir.
Thank you. Good morning, and welcome to Sulzer's Q3 order intake conference call. Today with me is our CEO, Greg Poux-Guillaume. As usual, with order intake releases, we have not prepared a presentation. Nevertheless, the safe harbor statement applies also to this call. Just as a reminder, the call may contain forward-looking statements containing risks and uncertainties. These statements are subject to change based on known and unknown risks and various other factors, which could cause the actual results or performance to differ materially from the statements made herein. Having said that, I hand now over to Greg for a short introduction. Thereafter, you have the opportunity to ask questions. Greg, please.
Thanks, Christoph. Good morning, everybody. I know you have a busy day today, I will try to keep my remarks concise, and then I will be happy to take whatever questions you have. When you read our press release this morning, I am sure you have seen that our order intake has accelerated again in the third quarter. Organic growth in Q3 was almost 9%, 8.7% specifically, and that takes us to 7.2% organic year-to-date. This good momentum was driven by oil and gas, the chemical process industry, but also strong growth in smaller markets like dental for the Applicator Systems division. Looking at Q3, we had organic growth in all divisions except RES. Even RES had a very high baseline in Q3 last year, where we had one order of CHF 30 million in Q3 2017. If you adjust for that order, even RES was growing organically.
Really Q3 is a story about growth. Chemtech was very successful commercially in Q3. The order intake year-on-year was up 62%. This is a growth that was driven in part by 3 large orders that totaled about CHF 50 million . Even if you deduct these 3 orders, Chemtech would still have been growing double digit organically year-on-year. The Pumps Equipment division showed organic growth of about 3% in Q3, which takes us organically in Pumps Equipment to 9% year-to-date. The growth in Q3 was actually 10%, including the JWC acquisition that we made in January. The Q3 orders in Pumps Equipment were driven by oil and gas, which was up 20% organically year-on-year. If I include chemical processing, oil and gas at large was up 24%. The part that was down was the power business in pumps.
Power, as we've expressed before, is a challenging market these days. As you know, the engineered pumps that we make for oil and gas and power are fairly similar, and therefore for us, it's really a case of trade-offs. Power is lower margin than oil and gas, and given the growth that we have at this point in oil and gas, we don't necessarily mind being at a lower level in power. Apart from that, there's also water and Pumps Equipment, which in Q3 is flat, but it's once again a tale of sort of two cities. You've got the wastewater business, which is continuing to grow. It's a GDP+ type of business. Then we've got the lumpy engineered water, which is a fancy name for desalination and water pipelines.
Because these are larger projects, they're a bit lumpy and that part was down, and overall water was flat. Finally, if I move to our Applicator Systems division, organic growth was 2%, despite the temporary negative effect that we've described before for our Beauty segment. If I exclude the Beauty segment, Applicator Systems grew 4% organically in Q3, and we're at 6% for the year organically also. Once again, the Beauty segment impact is really one significant customer that changed its product plan, and this is not in any way something that's inherent to the business. It's one product, one customer, just turns out to be a large customer, that's all. We've got the second generation, and we started production on the second generation of the product from this customer.
Looking at the end markets in Q3, organic growth was driven by oil and gas, CPI, and industry. Power was down significantly, as we said, about 20% down. Power was down significantly, about 20%, if we exclude the large Q3 2017 order in RES. Water was essentially flat, as I've just explained, with wastewater being up and engineered water being lumpy and the orders are shifting around a little bit. Geographically, our organic orders grew strongly in Q3 in APAC. APAC is up about 17% organically in Q3, and the Americas were up roughly by the same level, 16% organically in the Americas. For those of you that are still concerned about our performance in the U.S. post sanctions, in Q3 we're up 20% organically. This after we were up 15% organically in Q2.
I'm not sure I have to repeat it again, but there's no sanction impact. EMEA was flattish, but it's a mix of different things. If I look, for example, at our spares business for pumps, the most active market was Europe. What do we expect for Q4? What do we expect going forward? Q4, we expect the momentum to continue, and therefore we increase our guidance for order intake for the second time this year, and we take our guidance up to 10%-12%. As you remember, we were previously at 7%-10% up. Now we're saying we're going to be up commercially for the full year by 10%-12%. The oil and gas market, which represents about 45% of Sulzer, continues to recover and support our growth. We remind you again, there were some recent announcements about shale from companies like Schlumberger.
We remind you again that our exposure to shale is minimal. The U.S. shale-related comments made by companies like Schlumberger are of limited relevance to Sulzer. Yes, there are two impacts in shale in the U.S. There's an offtake impact, which is that there's no pipeline capacity to essentially transport the crude. There's a well efficiency impact, which is that some of the acreage has been drilled to the extent where there starts to be interference, and production levels have been a little bit disappointing in shale. We don't sell fracking pumps. For us, this is not really a relevant issue. The part that's relevant actually is the offtake problem, because as you know, Sulzer is the world leader in pipeline pumps, and anything that leads to building more pipelines is favorable to Sulzer.
Keep in mind once again that our turf is the 95% of the world's oil market, which falls under the conventional header, i.e., the non-shale side of things. Our guidance for orders, therefore, again, is taken up to 10%-12% full year. We leave our sales guidance at 6%-8%, and we also leave our EBIT margin around 9.5%. There's a lag time between when orders are taken and when they transform into sales. That increased order level is not a 2018 sales and profitability story, but it strengthens our business going forward. We see the momentum that we've experienced year to date continuing into Q4, and we see that momentum continuing into 2019. Once again, for us, excepting power, the indicators are mostly green, and conventional oil investments will continue to be high in 2019 from our perspective.
That's certainly what we're seeing in our commercial pipeline and our exceptionally high tender level currently. Beyond that, you saw that on September 18, we placed the 5 million treasury shares, which we had bought from our former majority shareholder, Renova. We placed all 5 million of those shares with domestic and international investors, and we increased our free float to a bit more than 51%. We bought the shares at CHF 109, we sold them at CHF 112, so we recognized a capital gain, and we placed them in a very geographically balanced manner. Roughly something like 30% in Switzerland, 25% in the U.S., I think 20%-25% in the U.K., and the rest everywhere else. We've got this behind us. Our free float is up, and we focused our attention on refinancing our balance sheet.
You saw that in the third quarter, we were active on the bond market. We raised a total of CHF 860 million to refinance our rolling credit facility to stagger our maturities and to support our future bolt-on acquisitions pipeline. There's nothing imminent, but as you know, our strategy over the last three years has been to have an active pipeline of small to medium-sized businesses, very targeted, very focused, makes it easier to integrate and with a view on value. We've been clearly conservative on the multiples, and we intend to continue to do so. We're refinanced. We've got staggered maturities. We don't need to go back to the markets. We're in good shape.
You may wonder about the sentence at the bottom of the press release, why we felt the need to explain that growth and net profit would be even higher than growth and EBITA in 2018. We are merely fulfilling the request made by SIX Swiss Exchange. SIX was concerned that an average investor might not have been able to derive that through our guidance. Therefore, we tried to be more explicit this time. If you take our current financial guidance, you can calculate an EBITA growth of 20%. Because of lower cost items between EBITA and EBIT, we expect net profit to grow significantly faster than that. That concludes my opening remarks, and I'd be really happy to take your questions.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only a handset while asking a question. Webcast viewers may submit their questions in writing via the relative field. In the interest of time, please limit yourself to one to three questions. Anyone who has a question may press star and one at this time. The first question comes from the line of Pascal Dudle with Vontobel. Please go ahead.
Hi. Good morning. I have three questions from my side. First of all, on the larger orders, could you please share with us some additional details? I think you mentioned CHF 15 million booked in Chemtech. How much were booked in pumps? Also in terms of pricing, were they close, basically in line with their respective divisional profitability or above? A second question with regards to power. You mentioned 22% decline organically, I assume that was in the first nine months. This implies a sharp slowdown in three Q. Is this correct? As before, I remember you were down 3%-7% in pumps and RES. Could you give us some more granularity? What was the decline in pumps and what was the decline in RES? Then last question on APS. Dental up 23%.
Is it fair to assume that this will have a very positive impact on your profitability within APS? Also, that's it basically.
All right. Thanks, Pascal. I'll take them in reverse order. Dental up significantly. Yes, usually when dental is up, dental is our most profitable segment in APS. When dental's up, that has usually a very positive impact on our profitability. This is not the exception. Yes, it has a favorable impact on our profitability. But as you know, this year, we're compensating that volume shortfall in Beauty segment that was at a high margin. Essentially, we're replacing one high-margin customer with significant growth in a high-margin segment, which is dental. In 2018, it's really about filling the gap. Anytime dental is growing significantly in APS, it's a good sign. If I take your power question, power is down 22% organically. You've got to remember that we had this large order in RES in Q3 last year of CHF 30 million.
In RES, we had a very high baseline last year. If you adjust that for that baseline, then it's really not as significant. If I try to break it down for you, power in PE was down 40%, and power in RES was down 20%, excluding-
The large order
excluding the large order. Power in RES was down 20%, excluding the large order. Should you be concerned about the power volume erosion at Sulzer? In PE, certainly not, because PE, once again, is a trade-off between oil and gas and power. We make the pumps in the same factories. They look remarkably similar. The pump for oil and gas are API, and the power ones are not API, but same factories made by the same people, and we've got so much demand in oil and gas that we're happy to sacrifice a little bit of the power volume knowing that the power volume is at lower margins. I don't think about it in terms of, "Oh, the market is dropping by 40%." It isn't. It's more of a trade-off in terms of PE.
We're chasing good pricing, we're chasing margin, and the better margin is in oil and gas. In RES, as you know, our RES business, once again, if you exclude the large order in Q3, power was 20% down. It's at times a little bit lumpy because we have these joint ventures like the joint venture in China with Huadian. We'll have larger orders coming from the joint venture that come in one quarter, doesn't then come in the other quarter. Overall, power as a market is a difficult market, but there isn't a cause for concern in our RES business. I think we're holding up pretty well. We are under pressure, but we're holding up pretty well. In PE, once again, it's a trade-off. I think that was your second question. The first question was the large orders.
Three large orders in Chemtech, in separation technology. The order size, respectively, CHF 13 million, CHF 21 million, and CHF 15 million. I'm not sure we've disclosed the customers at this point, so I'll stay away from that one. What I can tell you is that these are all at a healthy level of pricing, and we do not see those as dilutive for our business. The separation technology market worldwide is very active. Buoyant, really, is the term. We have pricing power in separation technology. Large orders that help, not large orders that dilute the margin. Pascal, did I answer your questions?
Yes, almost. It was the exception of the dental impact on APS. The temporary discontinuation of this product was related to Beauty. If I remember correctly, when you acquired Geka, profitability was much lower than what you currently report.
Yeah.
I'm just a bit confused why this should only fill the gap instead of giving a positive contribution.
No, it's a good question, Pascal. What we've explained previously, I was very detailed, I think, on the H1 call. What we explained previously is that this one Beauty customer that decided to change its product plan was the largest volume for one product that we had in Beauty, and it was actually pretty high margin. Beauty, yes, you're 100% correct, is lower margin than Dental, but it turns out, it's Murphy's Law, the one customer that decided to change its product plan is actually the one that was at significant volumes and a pretty high margin. The point I'm making to you is that in normal terms, Beauty goes down, Dental goes up, our margin goes up overall.
This year is a little bit of an unusual effect where the shortfall that we had in Beauty was a shortfall at a high margin. I think we're more looking for things to balance out than we are looking for things to over-perform this year from that perspective. Does that answer your question?
Yes. Thank you so much.
Thank you.
Next question comes from the line of Mr. Heike Fabian with UBS. Please go ahead, sir.
Yeah. Good morning. Also three questions, starting one after the other. The first one is also on Power. What is the downside in Power for 2019, particularly on the margin side after the drop of more than 20% in order? You said that less Power, more Oil and Gas gives a positive mix effect, but is the calculation that simple, i.e., are the power pumps manufacturing in the same plants than the oil and gas and you can just switch around? Or does it mean that you got underutilized plants in some areas, and you might even have to start restructuring for the Power business? Can you give a bit of color on that? Thank you.
Sure. Fabian, I'm sorry, it wasn't an assumption, it was a question. Power pumps and oil pumps are made in the same factories on the same machines by the same people and designed by the same engineers. These are highly engineered pumps. As I said, the oil pumps mostly have API standards, but it doesn't change anything in terms of the asset utilization at Sulzer. It's actually from a load perspective, it's interchangeable, and it doesn't create gaps in factories for us. Hopefully that aspect is clear, is if we have more oil and gas and we have less power, it's actually better for our margins. The second part of your question on the downside in Power for 2019. If you follow companies like GE and Siemens, they indicated that the power market is at a low level at this point.
I'm not sure they're indicating a much steeper drop-off in 2019. From our perspective, the volumes dropped because the market is more challenging in Power, but the pricing was already pretty low, and I wouldn't say that there's a lot of downside in the pricing at this point. We're able to arbitrate favorably by taking oil and gas orders instead. Not a negative for Sulzer in pumps. As you know, in RES, we also have power impact because we have a business that does Turbo Services, that does compressors and turbines. It's a third-party business. We don't sell new equipment. We only do the servicing, and part of the servicing that we do, we do under joint ventures like the one we have in China or the business that we have in Russia.
We're not as directly exposed as the OEMs, and we've been managing that downturn pretty well. Hopefully, I've answered your question. If I haven't.
Absolutely
please follow up. Okay.
Absolutely. Thank you very much. Another one on Chemtech. After that spike in orders, my question is what kind of level of capacity are you running? What is the operating leverage potential? From a historical hindsight, your peak margins obviously were significantly higher. Also, pricing at the time was much better, but still, what is the operating leverage potential in that division? Are there any kind of bottlenecks or limiting factors to margin expansion?
Good question. Chemtech is a really interesting story. Chemtech, the market is active, very active. We have a strong position. We're one of two players that have leading positions around the world, and we've been capitalizing on that market rebound. We've also capitalized on the fact that we've taken a lot of cost out from the business over the last three years. At this point, we can continue to ramp up. We've got factories in China, very high level of load, in India, pretty high level of load. We still have spare capacity in Russia. We have spare capacity in the Americas. Our factory network is well-positioned, and there are still places where we can push more products. What I would say is that we really have no need to invest significantly in our assets. We don't need to expand capacity.
We need to use the capacity that we have available around the world in an intelligent manner, and that will continue to fuel our growth. Essentially, it's a growth that is happening without investing in fixed assets.
Okay. Is it in terms of operating leverage? Is there many kind of manpower involved, like on Tower Field Services and stuff, or is it really a business or orders in an area where you can leverage particularly a fixed asset base?
It's the latter. Chemtech has two businesses. It's got the Separation Technology business, which is a products business, and it's got the Tower Field Services business, which is a service business, a field service business mostly. As you may recall from our last call, historically, the Separation Technology business was about 70% of Chemtech, and the Tower Field Services business was about 30%. We're growing significantly in Separation Technology on the product side, and we've taken the decision to shrink the Tower Field Services business to take it from something like 30% of Chemtech to about 20% of Chemtech. The reason for that is that it's field service, it's aftermarket, but we want to make sure that we're focused on the type of outages, of turnarounds, where we have a lot of Sulzer added value, including as much product content as possible.
The growth in Chemtech, when we disclose Chemtech as a whole, actually underreports the growth in products, the growth in Separation Technology, because we're shrinking the TFS business voluntarily, and we're growing the Separation Technology, the products business, actually faster than what we're reporting overall for Chemtech. It is really a model of leverage because the growth is happening in the business, which is the products business, where you have the factories and where, as per my comment, we don't need to invest in factory expansion. We have what we need. We just have to utilize it in an intelligent manner. Did I answer your question, Fabian?
Absolutely. The last one. Overall, is there any external factors like particularly raw materials and wage inflation that could actually inhibit or let's say, come across your saving targets and margin potential?
Wage inflation, not really. Not particularly. I'd say that part of it is business as usual. Raw materials. The raw material cycle has been up. It's plateauing, we feel now. We've managed that pretty well because we've had a very active approach to procurement and we've secured our pricing for periods that up till now have been longer than our exposure period when we were bidding for something. We've been able to absorb that, and I think that, yes, the market is challenging, but I don't see that as a significant weight on our business at this point.
Okay. Thank you very much.
Pleasure. Thank you.
Next question comes on the line of Mr. Reto Amstalden with Baader Helvea. Please go ahead, sir.
Yes, good morning. On the Applicator Systems business, currently performing below the growth target you have there. When you look at your project road map going into next year, how confident are you that you can recover the growth back to, let's say, mid-single-digit? How do you see the risk that you may suffer from another, let's say, inventory cycle of a bigger customer in 2019? How good is your visibility there on that side?
Thanks, Reto. To clarify, the impact that we have this year in Beauty it's not an inventory cycle per se. It's not a customer that over-ordered in the past and decided to pull his inventory levels down. It's a customer that has a successful product in part of the world, had very aggressive commercial rollouts in other parts of the world. Turns out that for a bunch of different commercial and regulatory reasons, wasn't able to push that commercial rollout as aggressively as he wanted to. Instead, he decided to move to his next generation. We try to be careful that we know what stock levels our customers have and try not to get ahead of ourselves.
This one is really the combination of the customer having a product plan to go to the next generation and anticipating that product plan given some regulatory and market impacts specifically linked to his product. It's a bit of an unusual effect. It probably would not have been noticeable had this customer not been a large volume customer and a high-margin customer. This is why we're having these explanations this year. I can't really think of another customer where we had as much exposure as with that one. What I mean by that is this customer was single sourced. We were the only supplier, and he was growing very aggressively. Therefore, it was the perfect storm.
Look, it is what it is, but I don't really see that as replicating, or I don't see other customers that have similar issues or similar weight in the Sulzer numbers. Beyond that, your question for APS. If I exclude Beauty, if I look at everything else in APS, we grew over the first nine months of the year, we grew 9% organically. Do I have the number right, Christoph? I'm sorry, 6% organically. I had the digit upside down. We grew 6% organically in the first nine months of the year in APS, excluding Beauty. Once again, if I exclude that effect, we grew at the target levels that we set for ourselves. We think that we should be able to grow somewhere between 4% and 7% roughly because these are GDP type of businesses, three point something.
We've got a better mouse trap than most other guys, and we have had a more positive development curve than the market. That's continuing in everything in APS apart from the Beauty business, and I've explained the reason why in Beauty. I think the question you're asking, which is a good one, is do I see any reason why APS excluding Beauty would not continue on the same growth path next year? No, I see no reason why we shouldn't continue along the corridor that we've set ourselves. The second part of the question could be, do I see Beauty recovering next year? The answer is yes, I see Beauty recovering next year. Once we've adjusted for that customer that's rebalanced its product plan, the rest of the Beauty business is doing fine.
Really, our challenge in Beauty is that the market overall is changing from the market being dominated by the large beauty companies, the historical large players in the market. With social networks and the advent of viral marketing, increasingly the growth is being driven by independents. That's led us to adjust our commercial focus and adjust our portfolio. Beauty as a whole continues to be a good market for us.
Thank you. Maybe the second question on the midstream business and the current situation in the U.S. with the bottlenecks in the pipeline capacity. I think it looks like they're going to invest more and add here some capacity. That's very positive for you. Can you give here some indication, have you received already some orders on that side? How big this, let's say, this business opportunity can it be over the next couple of quarters when the U.S. guys there invest much more in pipeline capacity?
I'm not going to quantify how big the opportunity can be over the next quarters, but what I will say is that Sulzer is the market leader for midstream pumps or for pipeline pumps. We've got very good products. We've got a very strong market presence. We've got a very strong market presence in the U.S. because our main factory for pipeline pumps is actually based in the U.S. I think we've disclosed, have we done a press release on that order?
Not yet.
We haven't done a press release, but we've just booked the largest orders that we've booked in pumps probably for the last few years. We've just booked the largest orders in pumps that we've booked for the last three years. It was booked in the U.S. with a U.S. customer. These were for pipeline pumps. Can I say the number, Christoph, or will you shoot me afterwards?
No.
I think overall it's $39 million booked, $30 million in October and $9 million in November, or something like that. It's all signed and secure, we've already booked the first part of it, I think the 30, and we're booking the other nine next month. Don't ask me why that was split in two, it gives you an idea that things are happening in the pipeline world. Every time you hear comments coming out of the shale patch in the U.S., the words offtake or transport are mentioned, that's a positive for Sulzer. We don't do fracking pumps, we are a big part of debottlenecking the shale patch. Debottlenecking the shale patch is pipeline capacity has to be added so they can do the offtake. That's what we do.
Okay. Thank you very much.
Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question comes from the line of Armin Rechtberger. Please go ahead, sir.
Hello, gentlemen. Again, about APS, you mentioned that your main customer has now the new generation of his product. I would assume or expect a big rebound in Beauty for the coming months now. Why is that not the case? Does he source it from different sources now, or are you still the only one? Oil and gas upstream. Well, you mentioned piping. You mentioned fracking, where you are not active in general. Where does the action come from now in upstream oil and gas? Can you put a bit color on this case? My third question regarding Pumps Equipment. You got lots of engineered pumps from oil and gas now. Are your capacities sufficient? I think you reduced personnel there, and your plant is sufficient, big enough, or do you see some bottlenecks coming, delays in deliveries for the big engineered pumps?
Okay. Armin, thank you. I'll start with your last question. Energy pumps, we have sufficient capacity. We took out a lot of cost and we closed a few factories, but we also invested to debottleneck our factories. What I would say is that our maximum capacity, if we add shifts after all these adjustments and after closing the factories that we closed, is probably not significantly different from the capacity that we had before we made all these adjustments. We've just become a lot more efficient. Right now, our engineered pump factories are still running, I'd say on average, probably one and a half shifts at most. We still have a lot of runway in terms of pushing products through our factories. We just need to add people, and we'll do that as the need arises.
What you have to understand is that I've said repeatedly that volume's been picking up in oil and gas, but pricing hasn't been picking up. We're one of the market leaders in pumps for oil and gas, and part of our ambition is also to contribute to the pricing rebound. It's not just a volume game at this point, there's also a strong focus on pricing on our side. Therefore, we'll increase our headcount and we will increase the utilization of our assets based on not so much our ability to gain additional volume, because there is additional volume in oil and gas right now, but also our ability to gain additional volume at a decent pricing. That's what we're looking to push these days. You asked a question in oil and gas upstream.
In the last market studies that I've looked at, we're the market leader in pumps for upstream. We don't do fracking, but we do everything else. The 95% of the market, which is conventional around the world. There's growth coming from lots of places currently. You saw our growth in oil and gas overall, but you saw that we grew 17% in APAC and 16% in the Americas, and certainly we have growth in the Middle East too. It's happening. It's kind of what people like Schlumberger said a few days ago. The international oil market, if you use the term international to describe everything outside of the U.S., is very active and will continue to be active for the next few years because it's been under-invested. You're seeing now larger projects being sanctioned, which is a positive for Sulzer.
We're global in the upstream pumps business. We have factories that serve that market around the world. We are seeing this year that a lot of the additional growth that we're seeing this year is coming from the upstream side of things. Going back to your third question, which was the APS question. Why, given the fact that this customer that I keep cryptically talking about, why given the fact that this customer has started production with us on his second generation, why isn't that leading to a strong rebound for us in Q4? God, I try to answer these questions without describing who the customer is. What I'd say is the first generation, our product, what we were selling to this customer was part of the product that he was taking to the market. It was only part of the product.
We were sole sourced for the first generation. For the second generation, we're dual sourced. We're one of two suppliers. I would like to think that we're the most important one, but we're one of two suppliers. The part that we supply and that the other supplier also supplies is a smaller part of the customer's product. That means that he's gone to the second generation, but he's gone to something that leads to less sales for us. We're no longer sole sourced, and therefore we're dual sourced, and that also has a margin impact on that second generation. Second generation for us is not going to be as attractive as the first generation, but the volumes are coming back and that's helping. It doesn't fully compensate for the gap that the first generation of this customer's product created.
What will compensate for that gap is the additional growth that we have with other customers in the VT segment. Did I answer your question, Armin?
Yes. Thank you, gentlemen.
Once again, to ask a question, please press star and one on your telephone.
I haven't had any trade war questions, so I assume you guys have read my comments from this morning that it's manageable for Sulzer. It's a nuisance because we have to change our supply chain at times and tweak things here and there. It creates a little bit of inefficiency, but not inefficiency that's material. It's manageable by us, and we've been managing it. It's not really a Sulzer story. It's a nuisance, but a manageable nuisance. Final questions or should we wrap up. Okay. Well, thank you very much. I know it's a busy day for all of you, so I appreciate your taking the time and I appreciate your thoughtful questions. We'll see you soon. Thank you.
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