Sulzer AG (SUN) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Sulzer conference call on the spin-off of APS. I am Sandra, the Chorus Call operator. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Christoph Ladner, Head of Investor Relations. Please go ahead, sir.

Good afternoon, and welcome to Sulzer's conference call on the spin-off of APS. Today with me is our CEO, Greg Guillaume; and our CFO, Jill Lee. For this call, we have prepared a presentation, which you can find on our homepage. As always, I want to draw your attention on the disclaimer on Slide #2. The call contains forward-looking statements, including, but not limited to, projections of financial developments, market activities, future performance of products and solutions or planned transactions containing risks and uncertainties. These forward-looking statements are subject to change based on known or unknown risks and various other factors, which could cause the actual results, performance or events to differ materially from the statements made in the call. Please also take note that on the slide, you see additional disclaimers, so read them through carefully. Having said that, I hand now over to Greg for the presentation. Thereafter, you have opportunity to ask questions. Please, go ahead.

Thank you, Christoph. Good afternoon, everyone. It's a pleasure for Jill Lee and I to be with you today. I'll walk you through the presentation quickly, and then we'll take questions. As you see on Page 3, the first slide, the bar chart with the Sulzer businesses over 2 centuries, Sulzer has a history of, as I said, almost 200 years in which we ventured into new businesses and set them on a path of continued profitable growth, sometimes outside Sulzer. And Sulzer really for 200 years has been an incubator for pioneering technologies. We've done that very successfully, and we believe that Applicator Systems would be another chapter of the story. So today, we announced our intention to spin off our Applicator Systems division, which we have built into a leader for high-precision delivery devices over the last 5 years and from the ground up over the last 20-some years. We believe that it's the right time as the Applicator Systems markets have almost recovered from the pandemic, and profitability is already close to pre-pandemic level. Let me give you an overview of the transaction on Page 4, the transaction summary page. Applicator Systems has leading positions for high-precision delivery devices in all its end markets, industry, beauty and health care. Today, Applicator Systems is well positioned to succeed and grow independently. Sulzer itself has made significant shifts in its core portfolio away from oil and gas towards more sustainable sectors such as water, chemicals, biopolymers and recycling. We also have a unique offering in servicing rotating equipment, where we believe we are the largest and certainly the most technical -- technically advanced independent service provider. In light of this evolution, Sulzer has decided to spin-off the Applicator Systems division under the name Medmix. The spin-off will technically take the form of a symmetrical split where Sulzer shareholders get 1 Medmix share in addition to each Sulzer share that they own. Medmix will raise CHF 200 million to CHF 300 million of capital at the time of the split. This capital increase will go without subscription rights and is targeted to reinforce the capital structure to fund growth initiatives, to increase trading liquidity by increasing free float and to add health care-focused investors to Medmix shareholder base. The transaction was unanimously approved by our Board of Directors, including the 3 Tiwel representatives. As Tiwel will not participate in the planned capital increase, Medmix free float will be increased. The listing of Medmix on the Swiss Stock Exchange and the concurrent capital increase is expected for late Q3 or early Q4 and is subject to Sulzer shareholder approval at an extraordinary general meeting. Moving on to Page 5. The result of the transaction will be 2 focused leaders for attractive end markets. Sulzer will be a pure-play flow control specialist for water, chemical, industry and energy with global coverage of its end markets. The company will continue to shift towards water and industrial applications and pumps and focus on its renewable technologies such as biopolymer and recycling technologies in Chemtech. And digital advances will build on our unique offering and technical know-how to accelerate our growth in the service segment. Medmix is a leader in innovative, high-precision delivery devices with leading market positions in dental, pharma, adhesives and beauty. In all segments, the company owns its own IP and is not a contract development manufacturing organization, so not a CDMO. We're really an IP and innovation-driven player. Medmix is active in markets that are driven by strong mega trends, allow for significant differentiation based on technology and have high entry barriers and limited price fluctuations. Medmix is increasingly shifting towards high-growth health care end markets. On Slide 6, you see how Medmix is set up. The business areas, health care -- I'm sorry, the business area, no S, health care, will include the segment's dental, drug delivery and surgery. The business area, consumer and industrials will include the segment industry and beauty. Common to all segments is that they have a long-standing innovation track record and that their devices are setting standards in their respective markets. The customer and product aspect of each segment are managed independently of each other. But the industrial synergies and asset neutralization between the segments are important, and that's what holds Medmix together. If I go on Slide 7, we show that Medmix has a diversified exposure to growing end markets and a particular focus on health care that will be growing the fastest. Medmix is a leader in attractive and resilient niche markets. Growth is driven by strong macro trends such as aging population. It also has the advantage of operating in markets where there's no large-scale competitor. The markets can be qualified as niches to the extent that drug delivery can be seen as a niche, and they are protected by high-entry barriers based on innovation and IP. Medmix, therefore, has a high share of repeat business. Medmix legacy of standard setting innovation, its recognition as a technology and quality leader in all segments and a growing base of long-standing customer relationships make the business a perfect platform for growth. Medmix expects sales of about CHF 450 million in 2021 and high single-digit growth thereafter. Adjusted EBITDA is -- margin is targeted at around 25% in 2021 and at a higher than 26% in 2022, so 25% EBITDA adjusted in '21, above 26% in 2022, which is really pre-pandemic levels for that business. Midterm objective is to increase the EBITDA margin to a level of around 30% as health care will contribute more and more to revenue, ultimately reaching a level of more than 50% of sales. If I move to Page 8, I'd like to talk about Sulzer. Our core business in Sulzer will continue its journey of top line growth and profitability improvements. It will accelerate its growth through its focus on sustainable sectors such as water and pumps and windmill technologies in Chemtech. And our aftermarket revenues, which already represent 50% of Sulzer will be boosted by our sector leadership in digital and additive manufacturing. The growing service revenue, the shift towards sustainable sectors and new products in the mix will lead to higher margins. For Sulzer, excluding Medmix, so post spin, we are targeting an operational EBITA margin of 9% in 2021 on sales of CHF 3 billion. With that, Sulzer in 2021, without APS, is 25% bigger in terms of volumes and 30% bigger in terms of profits than Sulzer was in 2016 with APS. So really, you have to keep in mind that the core of Sulzer has grown and has grown profitably over that period. It isn't that we've just invested in Applicator Systems. We've invested in all our businesses. And in the core flow control businesses, it is really clear that the margin improvement has been driven by operational excellence and the interesting assets that we've added along the way. Midterm, we see operational profitability in the range of 10% to 11% for Sulzer. We will continue to look for small to midsized acquisitions in complementary markets with a focus on technology and service to make the offering to our customers even stronger. If I go Page 9, you'll find an indicative timetable of the transaction. We'll give you more insights into Medmix and into Sulzer's core portfolio in the Capital Markets Day that we've planned for June 15. Once again, we'll discuss both Medmix and Sulzer. And we'll publish our H1 results on July 22. We plan an Extraordinary Shareholder Meeting in late Q2, so late in the second quarter and the spin-off and capital increase as well as the first trading day of Medmix at SIX shortly thereafter. I think it's -- what I said might be confusing. The Extraordinary Shareholder Meeting, we'll call for the shareholder meeting in August, and the shareholder meeting will happen in late Q3. I don't know why I said Q2, but I said Q2 when it's Q3. And the first trading day of Medmix is shortly thereafter. So it means end of Q3, beginning of Q4. Hopefully, I didn't confuse you guys. I just got carried away. Key takeaways on Page 10. Sulzer will be split into 2 companies with focus on different end markets. Sulzer retains its core industrial businesses, while Applicator System is spun off and will be listed separately as Medmix on the Swiss Stock Market. Sulzer will be focused as a pure-play industrial flow control company. Medmix will accelerate its growth in health care and further develop its industrial and consumer segments. We believe that the transaction can leverage the full potential of both businesses and provide an attractive value creation opportunity for Sulzer shareholders. The capital increase of Medmix of CHF 200 million to CHF 300 million will happen simultaneously with the listing. And it will reinforce the Medmix capital structure. It'll fund growth initiatives, and it will increase free float, which we think is important. As I said, Capital Markets Day on June 15. We'll give you more details on both companies, their end markets and their strategy. On those words, Jill and I are happy to open this up for questions. Thank you.

The first question comes from Aurelio Calderon from Morgan Stanley.

I've got 2 if I may, please. So first question is if you ever considered selling the business instead of spinning it off to investors. And I guess, if that's the case, why have you decided go down the route of spinning it off? And second question is around kind of your assumptions for Medmix and your medium-term growth assumption of high single digit. If you could break that down into what you expect of health care because you mentioned that you expect that to be more or less 50% or more than 50% of the Medmix business in the future. And I guess that's a faster-growing segment than the consumer industrial business, so any indication around that would be helpful.

Sure. Okay. Aurelio, thank you. The first question, did we consider selling the business? We never considered seriously selling the business for really 2 reasons. The first one is Sulzer doesn't need the cash, so the idea of selling the business and having massive capital entering Sulzer is -- it's not necessary for Sulzer's development. We have a strong balance sheet. We don't need the additional capital at this point, and we felt that, that wasn't the right move for that reason. The second one, which is related, to some extent, is that we believe that the value creation in Medmix is really only getting started, and we want to give all investors the opportunity to continue the adventure and to take part in that value creation. And from that perspective, we think that the spin is a much better outcome for investors. They get to have the Sulzer portfolio to decide what part they want to focus on. And both businesses have a renewed focus and the ability to fund their own development in a way that's easier to understand for investors. Your second question on health care and the growth of health care for the Medmix business, I mean, we'll go through that in a lot of detail at the Capital Markets Day on the 15th of June. Girts and the team will actually speak to you guys directly. What I would point to is if you look at the acquisition that we made of Haselmeier, I think we announced at the time that we think we can triple the size of the business roughly in the next 5 years. Haselmeier is a really interesting portfolio. It's got good products. It's got the D-Flex range, which had only recently been introduced and is only at the beginning of its commercial development. And we have a few other interesting things that we'll come out with in the near future. So that's what's going to drive it. Anything we can do also in our dental business, we'll also push because that's a very solid business in which there is also still a lot of room to play. You'll see at the Capital Markets Day that we're very present in certain segments in dental but a lot less in some others. And we believe that we have opportunities beyond the markets that we're operating in today. But for a more analytical answer, I'll push it to the Capital Markets Day.

Okay. That's helpful. If I may, I can squeeze one more question. Is that okay?

Sure. Go ahead.

Yes. So I guess, on the kind of RemainCo and Sulzer, I guess you were -- you have a midterm target now of 10% to 11% margin, but you don't have a growth target. Is that for a specific reason? Or is it just because you are in that process to shrink the energy pumps business and keep growing the Water business and the parts of the portfolio that have more growth ahead.

No, not really. I mean there's no -- that wasn't the thinking. Really, we prepared today's communication focused on Medmix because that was the new business, the new instrument that we wanted to make sure you guys understood well. Our thinking has always been that we will be more explicit also on Sulzer at the Capital Markets Day on June 15, and we just didn't want to preempt it. It's very much business as usual for the rest of Sulzer. And we'll explain the growth that we anticipate in our Water business. I mean that -- the water market, for example, for pumps is growing 4% to 6% a year. Industry, we have a wide range of segments that all have growth rates that we can detail and will allow you guys to do your -- kind of the sum-of-the-part analysis. You're right. I mean Energy is -- has contracted. It's -- the business has gotten smaller, but that was the objective. And there's a moment when it'll start growing again because we do see that the market will start picking up sometime in the second half of the year. But I think that we have to break these things apart so that you guys don't get confused by the fluctuation of energy, which now is a small part of our pumps business and that you have the detail on the other segments. As you recall, Water is the largest part of our pumps business today, not Energy. But once again, we'll break all of that down at the Capital Markets Day. Our aim was not to keep you in suspense. It was just to keep the spotlight today on Medmix.

The next question comes from Patrick Rafaisz from UBS.

Yes. I have 2, please. One is on the use of funds of the proposed -- the capital increase on Medmix. And I mean you talked about the growth opportunities here. But can you give us a bit more color on how much is earmarked for strengthening balance sheet, how much is for organic growth and how much is for M&A-related growth? And then secondly, in terms of [ ramping ] costs and one-offs associated with the separation, can you give us some rough guidance on what you're expecting here?

Okay. Thank you, Patrick. I'll start with the second question, and I'll hand the first one over to Jill. The second question is we don't expect the separation costs to be -- to, I guess -- I would -- what I'd like to address is the additional cost linked to the business is being separated. I think that might have been your question. And we don't expect that to be significant because, today, Medmix, Applicator Systems is really operating pretty much as a stand-alone business. They do benefit from things like the legal function of Sulzer and the treasury function of Sulzer and a few other things as well as the oversight that Jill and I provide. Many of these services, treasury and legal, for example, we'll continue to provide for a transition period as we take the time to calibrate how big they should be in Medmix. So I don't expect that, in the first 18 months, you'll have much of an impact either on Sulzer or on Medmix because that service agreement will be in place. Certainly, over time, Medmix will have its own resources, but that'll probably involve some transfer of people from Sulzer to Medmix. We're just taking the time to do that in a thoughtful manner without having to hurry. I mean there are some one-off costs associated to legal separation and obviously, the support we're getting on the split and the capital increase. And we'll also break that down for you guys if you want. I think most of it will be against equity, Jill?

Yes. The -- well, the part that's related to share capital increase will be going to equity. And if you are thinking about modeling on the one-off, then I think you can see about CHF 6 million to CHF 8 million of costs going to P&L in the combined form. So more on the Medmix side, and you can plan like around CHF 5 million to CHF 6 million on Medmix from that perspective. And in terms of the support cost, frankly, I think we are fairly lean. So it's not a big amount of central cost that we have, and it's actually less than CHF 10 million that we're talking about of the support cost that is common between the 2 units. And as Greg rightly point out, this will be something that goes through a transition period of 18 to 24 months, whereby both companies will have a very small phase in, and we don't expect that to be a drag on anybody's P&L.

Use of funds, Jill?

Yes. So on the use of funds, CHF 300 million -- CHF 200 million to CHF 300 million, as we mentioned, will -- as we have in mind the 3 objectives, which is to reinforce the capital structure, fund growth initiatives and increase free flow. And they are really quite connected. But let me walk you through the thinking we have around the capital structure. If you look to Sulzer pre-spin, we have a net debt to EBITDA of about 2x if you exclude the -- Tiwel's cash, and I know that most of you calculate with Tiwel's cash excluded because if you include that, then it's around 1.3, 1.4x. And if you exclude that, we are at 2x. So when you take a scenario of CHF 300 million of capital increase, essentially, it brings the combined company pre-split to a net debt to EBITDA of around 1.4x. We expect Medmix after splitting and capital increase to have a net debt to EBITDA of 1x. That would make it comparable with peers in the industry, and it's also giving it a solid basis to finance its growth both organically as well as other bolt-on that may come in the future. And when you do the math of pre-split minus what I just mentioned of Medmix with this 1x, then you end up with the rest of Sulzer having around 1.5x. And I think that's something you can use for your modeling. And I think with this capital structure, both companies are on very solid basis and good comparable against peers in the industry.

Thank you, Jill. And I would add that we have an active M&A pipeline for Medmix at all times. We continue to look for opportunities to strengthen our businesses, particularly in health care. And we certainly don't want to have money burning our pocket, but we want to make sure that we're able to execute our strategy. Did we answer your question, Patrick? Is -- moderator, is he still on the call?

Yes. I suppose Mr. Patrick disconnected his line.

Okay, we'll take the next question.

The next question comes from Vera Bonte from Generali.

Yes, I guess one is a follow-up question for Jill. And could you explain how you arrived at the 1.5x net debt to EBITDA, excluding Tiwel post transaction given that you're coming from 2.1x as of the end of last year? And the second question regards the potential bond buybacks, I guess, I read a note on the demerger plan that you may be required to buy back the bonds if the bondholders request. So given that you have CHF 1.7 billion of bonds outstanding, I was wondering if you have any backup funding for this or if you don't expect this to happen.

No. We don't expect the -- we don't expect at all to have any bond buybacks to do. We believe that the conditions for bondholders, given the legal nature of the symmetrical split, fully protected bondholders, and we have no anticipation that we'll have to buy back any bonds. Jill?

Yes, that's right. And the financial liabilities that we have today remain in Sulzer. So there's actually no change of legal entity as well from that perspective. Now Vera, on your question regarding -- I think you were taking the balance sheet from last year. And naturally, that is a year where we have the pandemic effect and we also had a restructuring last year, which we have done on the energy adaptation. So when I speak about the 1 and 1.5x, I'm already giving you a sense of where we are seeing in 2021. And obviously, we see ourselves trading well. We have also alluded to that in our Q1 release, order release that we are significantly up on profitability this year.

Okay. So this is a forward-looking ratio.

Yes.

Perfect. Understood. And then a technical question on the ratings. I mean you currently have 3 ratings. The fedafin 1 is sub-investment grade. And then you have 2 Swiss Bank ratings of which 1 may be restricted because they are acting as advisers for this transaction. For the SPI rules, would the restrictive ratings still count? Or do you risk leaving the SPI?

Well, actually, I think when you look to the rating, [indiscernible] and Credit Suisse, which have that they are still putting us on investment grade, so 2 out of 3 have put us on that. We have actually also had discussions with fedafin, and I think once more for fedafin, they have referred to the balance sheet that was coming out of 2020. At the same time, I think we had to clarify some of the considerations that it took in terms of the item within the balance sheet. And I think when we come out with our H1, we would be able to also show the state of our balance sheet in this year. And once again, I see that, that should have no bearing on the investment-grade rating because it's just a point in time that fedafin has done this.

Yes. I discussed it with Christoph Ladner already and I understand the rationale behind. I was just wondering, but I might investigate for the SIX stock exchange, if they still currently restricted rating by Credit Suisse because then you would be on the safe side presumably.

We think we will be anyway because, as Jill said, we think the fedafin analysis was done at a very unfavorable point, which was right when our balance sheet was reflecting the impact of the pandemic. We think that as we come out with our numbers at the midyear in July that this will all fall into place. So we're not concerned, Jill.

Yes. Right. And for example, when I say about the balance sheet item, we have the financial assets reflected as financial assets, but essentially, the bank deposits are more than 3 months, less than 12 months. And you all know that in the sales market, we have also to think about how we cannot be subject to the negative interest with the good liquidity that we have on our balance sheet. And in the calculation of fedafin, they have actually excluded that, and they have not treated it as equivalent to the cash and cash equivalents item.

Okay. So look, we don't want to do sort of a debt rating course on this call. What we're saying is that we respect the opinion of fedafin. We've engaged with them to explain why there's different ways of looking at things, and the timing of their analysis was probably unfavorable. And we think this will fall into place as we come out with our H1 numbers and as we -- they reflect the good discussion that we had with them. So we don't think there's an issue on this side.

The next question comes from [ Dominik Serges ] from [ NZZ ].

Yes. Well, does this Medmix really have the critical size to survive on its own? Or is it rather likely to end up then sooner or later. We saw it with Sulzer Medical much earlier on but maybe in the hands really of a bigger company, maybe also a bit of a health conglomerate like Danaher or 3M or whatever. And what we know about the competitors of Sulzer in its core business and the pumps business, but what about Medmix, what -- I mean how fragmented is this market? Maybe who -- which are the main competitors?

In terms of Medmix as a target, we don't think so. I mean we think that, first of all, this is an attractive business that is -- it generates CHF 120 million, CHF 130 million of EBITDA. It's a growing business. It is certainly able to -- it's certainly able to sustain its development and to finance itself and to grow successfully, so we're not worried about it as a stand-alone entity. Otherwise, we wouldn't spin it off. We've got no particular pressure to spin it off. We just think it's the right time for them and for Sulzer. But it's a very solid business and very resilient. The pandemic has been very -- an unusual event in the sense that it closed dentists and retailers, but that's kind of a one-off. And any other situation, the businesses that you have in Medmix are businesses that are very solid. Is it an attractive business? Yes, it's an attractive business, and therefore, it has in effect an investment case. But I wouldn't comment on any speculation about a takeover. And I'd also remind everyone that there's an initial dilution where we do a capital increase that doesn't have preferential rights, which means that if you look at Tiwel, they're going to go down in the capital structure. But they remain with a significant stake, which means that until they're further diluted, there's really nothing that anybody can do to Medmix that Medmix doesn't want it to be done to it. I think that pretty much guarantees that the business has a little bit of runway in front of it to execute strategy, and I think it'll execute its strategy really successfully. Does that answer your question, [ Dominik ]?

Please, yes, one more apart from the competition. Maybe you could elaborate a bit on who -- what are the competitors in this market or what market share it is. And I mean -- yes, I mean, we've heard in the past that it is a bit of problem for you to have Mr. Vekselberg still as your main shareholder. But as this is a bit of a -- can be a deterrent to certain investors, I mean, is this now going to improve at least in the case of Medmix?

To the second part of your question, as part of the capital increase, given the fact that Tiwel is not taking part in the capital increase because of restrictions that they have, it means that, naturally, they'll be dilutive. And that dilution will make them a smaller player in the capital structure. And the fact that they're supporting this transaction also tells you that they're okay with being a smaller player in the governance. So I don't think it's going to be an issue. I think, on the contrary, the fact that we're able to spin off -- to announce that we have a unanimous board vote to support a spin-off, including the 3 Tiwel representatives despite the fact that they're going to be diluted. Tells you that they have at heart the best interest of the business and that they'll be what they've been for us certainly in the 5 years that I've been here, which is fairly passive but supportive shareholder. In terms of competitors for Medmix, we'll have a detailed analysis segment per segment in the Capital Markets Day on June 15. But the companies you should think about are a company called Nordson, N-O-R-D-S-O-N, Nordson, in the U.S. They compete with us on multiple segments. You've got Ypsomed that competes with us on the drug delivery device segment, competes with Haselmeier. You've got AptarGroup that competes with us on the beauty side of things. So those are just 3 direct competitors on either 1 or multiple segments that I would point to. But if you want a more detailed analysis, we'll make that available on June 15 or if you have questions before that, Christoph is happy to field calls and to answer all those -- Domenico, I'm sorry, is happy to field calls and answer all these questions. Did that help, [ Dominik ]?

Yes, sure. Aktar Group, what was the name of the last...

Aptar, A-P-T-A-R Group. It's another U.S. company that it's U.S. and European. They're really global, and they compete with us on multiple segments, particularly the beauty one, but they do sorts of delivery devices and similarly to what we do. And Nordson, the first one, I think you know, N-O-R-D-S-O-N, also a U.S. company, and they compete with us on multiple segments, including the industrial segment. Ypsomed, I don't have to spell it to anybody. You guys all know that. And once again, if you want more on analysis per segment, Domenico can share all of that with you guys at any time.

The next question comes from Christian Arnold from Stifel Schweiz.

Finally, I do have an oil and gas question. Sorry about that, Greg.

No, it's okay.

But nevertheless, I mean you're writing that you expect accelerated growth of services segment -- or in the services segment. Last year, looking at the sales fleet, I mean, there was still, let's say, 40% exposure to oil and gas, and we can read these days everywhere that investment will be lower in this end market. And also you have reduced your Pumps Equipment business in that end market. And I wonder, how do you want to accelerate growth in your service business if you [indiscernible]?

It's a very fair question, and I'm happy to take an oil and gas question. Our service business is multimarket. It covers pumps and other equipment, ours and other people's in a bunch of different markets. If you have a look at our performance last year, what was striking about our service business is an order intake, really the reflection of the market, service at Sulzer was up 1%. It wasn't down. So what it tells you is despite a market where some customers were cutting investments where some sites were not accessible, where it was difficult to send service people to location, we still managed to grow 1% in a market like that, which tells you that business is extremely resilient. Our service business, if you look at the last 4 years, 5 years, I think, actually, our service business has been every year between 13.8 and 13.7 and 14.1 of op EBITA, of operational profitability. And a good year for that business is anywhere between 5% and 7% growth and a bad year is 1% growth. So last year, without the pandemic, we certainly would have been on the higher end of the range. This year will recover because the market is reopening up. And even in oil and gas, we see customers that are reinitiating things that they delayed last year. And then the final 2 points that I would make is the way that we grow is, one, we regained some of our installed base. Sulzer has 200 years of installed base. And over periods of our history, we've done a various -- well, more or less good job of retaining that installed base. And our initiatives over the last few years have been how to reclaim that installed base and make sure that any Sulzer pump out there is serviced by Sulzer. And we still have ways to go on that. That's the first point. The second point is we increasingly do something that I think Sulzer does much better than anybody else. We do these retrofits where essentially we take somebody else's pumps. We keep the casing, so we keep the outside shelf -- shell, I'm sorry, the outer shell, which is the big metal stuff that you see when you see a pump. And we change everything inside. We changed the impeller. We change the hydraulics. We change the seals. We change a bunch of things, and we actually make it a Sulzer pump. So if you look at our business from the last few years in service, we've gone from having almost no third-party work in pump service to having something like I think we're close to -- we're around 100 million of service on other people's pumps. And we do that better than other people because we've been doing it on turbines and compressors for decades. Our gas turbine service business is really a third-party service business where we reverse engineer and improve GE, Siemens gas turbines or other people's turbines. And if you can do that on a gas turbine, it's actually pretty straightforward to do on a pump because a pump is much simpler than a gas turbine. So we can grow even in a market that is not growing. We've shown that last year. The market contracted very significantly in service. I mean all you have to do is have a look at Flowserve or some of the other competitors that we have. Have a look at their service revenue. You'll see that they contracted and we didn't. And when the market is normal to good, we should be growing faster than 5%, as I said, 5% to 7% in service business. Hopefully, I answered your question.

If there are no more questions on the call, maybe last chance to have one. Otherwise, we will just wrap up and close the call. No more question.

All right. So I'll wrap up. It's a very exciting day for us at Sulzer, and whether it's the Sulzer people part of the flow control business or the Applicator Systems, Medmix people, I think everybody is energized by today's decision. We think that this is a great way to focus these businesses and to accelerate growth and to also become more readable to investors in terms of what we do, what we stand for and what the value drivers are. We believe that will be a positive story going forward. And what we have to do is to convince you of it because it's a significant change, but it's a significant change that, as you know, has been part of our strategy for a number of years. I've talked about it before. And today, it happens. We've chosen a mechanism to do it, which is a very transparent mechanism with a consultation period with a super majority shareholder vote of 2/3. And this transaction essentially will be executed if we have shareholder support, as we hope so, at the end of September. So we have a lot of time to get ready for it and to educate the market, to answer questions and to make everybody comfortable that this is going to be creating value. We thank you for your time today. We remind you that on June 15 we have a pretty exhaustive Capital Markets Day, exhaustive to the point where we probably have to take a few slides out because it's on the heavy side, but we will answer all these questions in as much detail as we can in order to make you believers that not only is Medmix an exciting business but that Sulzer itself has never been stronger and has exciting days ahead of it. On those words, I thank you for your time today, and we'll talk to you soon.