Earnings Call: Q3 2018

Oct 25, 2018

Earnings release

Ladies and gentlemen, welcome to the Solcher Third Quarter Results 2018 Conference Call. I'm Konstantinos, the Chorus Call operator. I'd 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 The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Christoph Ladner, Head of Investor Relations. Please go ahead, sir. Thank you, and good morning, and welcome to Zulso's Q3 order intake conference call. Today with me is our CEO, Greg Buglione. 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, Christophe. Good morning, everybody. I know you have a busy day today, so I'll try to keep my remarks concise, and then I'll be happy to take whatever questions you have. So when you read our press release this morning, I'm sure you've seen that our order intake has accelerated again in the 3rd 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. And even RES, RES had a very high baseline in Q3 last year where we had one order of CHF30 1,000,000 in Q3 'seventeen. If you adjust for that order, even RES was growing organically. So 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 CHF15 1,000,000. But even if you deduct these three 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 equipments were driven by oil and gas, which was up 20% organically year on year. And 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. But 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 2 cities. You've got the wastewater business, which is continuing to grow. It's a GDP, GDP plus type of business. And then we've got the lumpy engineered water, which is a fancy name for desalination and water pipelines. And 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 Application Systems division, organic growth was 2% despite the temporary negative effect that we've described before for our beauty business. If I exclude the beauty business, applicator system grew 4 percent organically in Q3, and we're at 6% for the year organically also. And once again, the beauty 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. But we've got the 2nd generation, and we started production in the 2nd generation of the product from this customer. So 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. If we exclude the and if I take RES I'm sorry, CALO was down significantly about 20% if we exclude the large Q3 2017 order in RES. And 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 the same 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. And this after, we were up 15% organically in Q2. So if I have to 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. And 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 increased our guidance for order intake for the 2nd time this year, and we take our guidance up to 10% to 12%. As you remember, we were previously at 7% to 10% up. Now we're saying we're going to be up organic I'm sorry, we're going to be up commercially for the full year by 10% to 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 2 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. And 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 disappointing in shale. But we don't sell fracking pumps. So 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. So 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% to 12% full year. We leave our sales guidance at 6% to 8%, and we also leave our EBITDA margin around 9.5 percent. There's a lag time between when orders are taken and when they transform into sales. So that increased order level is not a 2018 sales and profitability story, but it strengthens our business going forward. And we see the momentum that we're we've experienced year to date continuing into Q4, and we see that momentum continuing to 2019. Once again, for us accepting tower, the indicators are mostly green, and convention and the 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 'eighteen, we placed the 5,000,000 treasury shares, which we had bought from our former majority shareholder, Renova. We placed all 5,000,000 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 109. We sold them at 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% to 25% in the U. K. And the rest everywhere else. So 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 Q3, we were active on the bond market. We raised a total of CHF860 1,000,000 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 3 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. So we're refinanced. We've got staggered maturities. We don't need to go back to the markets. We're in good shape. Finally, you may wonder about the sentence at the bottom of the press release, why we felt the need to explain that growth in net profit would be even higher than growth in OPEBICA in 2018. We are merely fulfilling the request made by 6, the Swiss Exchange. 6 was concerned that an average investor might not have been able to derive that through our guidance. Therefore, we try to be more explicit this time. If you take our current financial guidance, you can calculate an Op EBITDA growth of 20%. And because of lower cost items between Op EBITDA 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 Webcast viewers may submit the questions in writing via the relative field. In the interest of time, please limit yourself to 1 to First question comes from the line of Sergey Pascale with Pompanoag. Please go ahead. Hi, good morning. Three questions from my side. So first of all, on large orders, could you please share with us some additional details? I think you mentioned EUR 15,000,000 in Kempej. How much were booked in pumps? And also in terms of pricing, were they close basically in line with their respective divisionals profitability or above? And then second question with regards to power. So you mentioned 22% decline organically. I assume this was in the 1st 9 months. So this implies a sharp slowdown in 3Q. Is this correct? As before, I remember you were down like 3% to 7% in pumps and RES. And could you give us some more granularity what was the decline in pumps and what was the decline in RES? And then last question on APS. So dental up 23%. Is it fair to assume that this will have a very positive impact on your profitability within APS? And also, yes, that's it basically. All right. Thanks, Pascal. I'll take them in reverse order. So dental up significantly. Yes, usually when dental is up, dental is our most profitable segment in EPS. So when dental is up, that has usually a very positive impact on our profitability. This is not the exception. So yes, it has a profitable impact on our a favorable impact on our profitability. But as you know, this year, we're compensating that volume shortfall in beauty that was at high margin. So essentially, we're replacing 1 high margin customer with significant growth in a high margin segment, which is dental. So it's in 2018, it's really about filling the gap. But anytime dental is growing significantly in APS, it's a good sign. If I could, your power question, power is down 22% organically, but you've got to remember that we have this large order in RES in Q3 last year of CHF 30,000,000. So 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 and PE was down 40% and power and RES was down 20%, excluding the large order. So power and RES was down 20% excluding the large order. So 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 power volume is at lower margins. So 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 better margin is in oil and gas. In RES, as you know, RES business, once again, if you exclude the large order in Q3, power was 20% down. But it's at times a little bit lumpy because we have these joint ventures like the joint venture in China with Wadian. So we'll have larger orders coming from the joint venture that come in 1 quarter. There's a boom coming the other quarter. Overall, power is as a market is a difficult market, but there isn't a cost or concern in our RES business. I think we're holding up pretty well. We are under pressure, but we're holding up pretty well. And in PE, once again, it's a trade off. So I think that was your second question. And the first question was large orders. 3 large orders in TemTech in separation technology. The order size, respectively, dollars 13,000,000, dollars 21,000,000 and dollars 15,000,000. Euros I'm not sure we've disclosed the customers at this point, so I'll stay away from that one. But 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. And we have pricing power in separation technology. So 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. So the temporary discontinuation of this product was related to beauty. And if I remember correctly, when you acquired GECKA, profitability was much lower than what you currently report. So I'm just a bit confused why it should only fill the gap instead of giving a positive contribution? Yes. It's a good question, Pascal. What we've explained previously, I was very detailed, I think, at the on the H1 call. What we explained previously is that this one beauty customer that we 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. So 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. So the point I'm making to you is that in normal terms, beauty goes down, dental goes up, our margin goes up overall. But this year is a little bit of an unusual effect where the shortfall that we have in beauty was a shortfall at a high margin. So I think we're more looking for things to balance out than we are looking for things to overperform 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. Heik Fabian with UBS. Please go ahead, sir. Yes. Good morning. Also three questions, starting one after the other. The first one is also on Power. I mean, how much or what is the downside in Power for 2019, particularly on the margin side after the drop of more than 20% in order? I mean, 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 manufactured in the same plants than the oil and gas and you can just switch around? Or does it mean that you've 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? Sure. So Fabian, your assumption I'm sorry, it wasn't an assumption, it was a question. Power pumps and oil pumps are made in the same factories and the same machines by the same people and designed by the same engineers. These are highly engineered pumps. As I said, they have the oil pumps mostly have API standards, but it doesn't change anything in terms of the asset utilization at Solsys. So it's actually from a load perspective, it's interchangeable and it doesn't create gaps in factories for us. So hopefully, that aspect is clear is we 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 point. I'm not sure they're indicating a much steeper drop off in 2019. And from our perspective, we've the volumes dropped because the market is more challenging in power, but the pricing is 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. So 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 service, that does compressors and turbines. But it's a 3rd party business. We don't sell new equipment. We only do the servicing. Russia. So it's we're not as directly exposed as the OEMs, and we've been managing that downturn pretty well. So hopefully, I've answered your question. If I haven't, please follow-up. Absolutely. Thank you very much. Then another one on Kempek. I mean, after that spike in orders, I mean, my question is what kind of level of capacity are you running? What is the operating leverage potential? Because from a historical hindsight, I mean, you did or you keep margins of significantly higher, also pricing at the time was much better. But still, what is the operating leverage potentially in that division? And are there in that division, are there any kind of bottlenecks or limiting factors to margin expansion? Good question. ChemTek is a really interesting story. ChemTek, the market is active. We're very active. We have a strong position. We're 1 of 2 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 3 years. So at this point, we can continue to ramp up. We've got factories in China and well, in China, a very high level of load. In India, a pretty high level of load. We have we still have spare capacity in Russia. We have spare capacity in the Americas. So our factory network is well positioned, and there are still places where we can push more products. So 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. So essentially, it's a growth that is happening without investing in fixed assets. Okay. And is it in terms of operating leverage, is there, I mean, many kind of, I mean, manpower involved like on field power 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. It's ChemTec has 2 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. And as you may recall from our last call, historically, the separation technology business was about 70% of Chemtech and the tar field services business was about 30%. But 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. And 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. So the growth in ChemTek, when we disclose ChemTek 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 ChemTek. So 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, Fabienne? Absolutely. Then 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, things 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. So 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. Next question comes from the line of Mr. Amstarden Reto with Baader Helvea. Please go ahead, sir. Yes. Good morning. And on the applicator system business, currently performing below the growth target you have there. But 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? And how do you see the risk that you may suffer from another, let's say, inventory cycle of a bigger customer in 'nineteen? How good is your visibility there on that side? Thanks, Brito. To clarify, the impact that we have this year in beauty is really not an inventor I mean, it's not an inventory cycle per se. It's not a customer that over ordered in the past and decided to put his pull his inventory levels down. It's a customer that had a very aggressive has a successful product in part of the world, had a very aggressive commercial rollouts in other parts of the world. And turns out that for a bunch of different commercial and regulatory reasons, he wasn't able to push that commercial rollout as aggressively as he wanted to. So instead, he decided to move to his second to his next generation. So it's 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 next generation and anticipating that product plan given some regulatory and market impacts specifically linked to this product. So it's a bit of an unusual effect. It's probably would not have been noticeable had this customer not been a large volume customer and a high margin customer. And this is why we're having these explanations this year. But I can't really think of another customer where we had as much exposure as with that one. And what I mean by that is this customer was single source. We were the only supplier, and he was growing very aggressively. And therefore, it was kind of like the perfect it was the perfect storm. So 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 in the Solsys' numbers. Beyond that, your question for APS, if I exclude beauty, so if I look at everything else in APS, we grew over the 1st 9 months of the year, we grew 9% organically. So do I have the number right, Christophe? I'm sorry, 6% organically. I had the digit upside down. So we grew 6% organically in the 1st 9 months of the year in APS, excluding beauty. So 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% 7% roughly because these were GDP type of businesses, so 3%, 3 point something. And we've got a better mousetrap than most other guys. And we have had more positive development curve than the market. That's continuing in everything in APS apart from the beauty business, and I'll explain the reason why in beauty. So 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 set ourselves. And the second part of the question could be, do I see beauty recovering next year? And the answer is yes, I see beauty recovering next year. Once we've adjusted for that customer that's rebalanced its product plan, 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 that the historical large players in the market and with social networks and the events of viral marketing, increasingly, the growth has been driven by independents. And that's led us to adjust our commercial focus and adjust our portfolio. But beauty as a whole continues to be a good market for us. Thank you. And maybe the second question on the midstream business and the current situation in the U. S. With the bottlenecks in the pipeline capacity. Now I think it looks like they're going to invest more, right, and add here some capacity. So that's very positive for you. And can you give here some indication? Have you received already some orders on that side? And 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? So I'm not going to quantify how big the opportunity can be over the next quarters, but what I will say is that Solsys 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. And I think we've disclosed have we done a press release on that order? Not yet. So we haven't done a press release, but we've just booked the largest orders that we've booked in pumps probably for the next for the last few years. Probably for the last we've just booked the largest orders in pumps that we've booked for the last 3 years. It was booked in the U. S. With a U. S. Customer. These are for pipeline pumps. And can I say the number, Christophe, or will you shoot me afterwards? No. I think overall, it's $39,000,000 booked in $30,000,000 in October $9,000,000 in November or something like that. It's all signed and secured, and we've already booked the first part of it, I think, the $30,000,000 and we're booking the other $9,000,000 next month. Don't ask me why that was split in 2, but it gives you an idea that things were happening in the pipeline world. And every time you hear comments coming out of the shell patch in the U. S. Where the words offtake or transport are mentioned, that's a positive for Sulzer. We don't do fracking pumps, but we are a big part of debottlenecking the Shell Patch. And debottlenecking the shell patch is pipeline capacity has to be added so they can do the offtake. And that's what we do. Okay. Thank you, everyone. Thank you. The next question comes from the line of Rechberg Armin. Please go ahead, sir. Hello, gentlemen. Again, about APS, you mentioned that your main customer has now the new generation of his product. So 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? And then oil and gas upstream, well, you mentioned piping, you mentioned fracking where you're not active in general. So where does the action come from now in upstream oil and gas? Can you put a bit color on this case? And then my third question regarding pumps equipment. You got lots of engineered pumps from oil and gas now. Are your capacity sufficient? I think you reduced personnel there. So 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. So 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. So right now, our engineered pump factories are still running, I'd say, on average, probably 1.5 shifts at most. So 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. But what you have to understand is that we're also I've said repeatedly that volume has been picking up in oil and gas, but pricing hasn't been picking up. And 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. So it's not just a volume game at this point. It's also there's also a strong focus on pricing on our side. And 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 decent pricing. So that's what we're looking to push these days. You asked the question in oil and gas upstream. We're in the last market studies that I've looked at, we're the market leader in pumps for upstream. And we don't do fracking, but we do everything else. So the 95% of the market, which is conventional around the world and 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 certainly, we have growth in the Middle East, too. So 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 underinvested. And you're seeing now larger projects being sanctions, which is a positive for Sulzer. So we're global in the upstream pumps business. We have factories that serve that market around the world. And 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 customer that I keep cryptically talking about, why given the fact that this customer has started production with us on this 2nd generation, why isn't that leading to a strong rebound for us in Q4? God, I tried to answer these questions without describing who the customer is. But what I'd say is the 1st 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. And we were sole sourced for the 1st generation. For the 2nd generation, we're dual sourced. So we're 1 of 2 suppliers. I think we're the I would like to think that we're the most important one, but we're one of 2 suppliers. And the part that we supply and that the other supplier also supplies is a smaller part of the customer's product. So that means that he's gone to the 2nd generation, but he's gone to something that leads to less sales for us. And we're no longer sole sourced, and therefore, we're dual sourced. And that also 2nd generation. So, 2nd generation for us is not going to be as attractive as the 1st generation, but the volumes are coming back and that's helping. But it doesn't fully compensate for the gap that the 1st 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 BT segments. Did I answer your question, Armin? Yes, yes. Thank you, gentlemen. 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. But it creates a little bit of inefficiency, but not inefficiency that's material. And it's manageable by us, and we've been managing it. So it's not really a soldier 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. And we'll see you soon. Thank you. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call and thank you for participating in the conference. You may now disconnect your lines. Goodbye.