Eurofins Scientific SE · EURONEXT:ERF
Eurofins Scientific — H1 2015 Earnings Presentation
51 slides from Eurofins Scientific's earnings presentation, 2015
Slide 1: Eurofins Half-Year 2015 Results Corporate Presentation
Eurofins A global leader in bioanalytical testing in the food, environment and pharmaceutical sectors Consistently delivering strong, sustainable, profitable growth Doubled over 3 times (every 3 years on average since 2004) Sales & EBITDA Multiplied by over 10 times since 2004 Half-Year 2015 Results
Slide 2: Disclaimer
Disclaimer The statements made during this presentation or as response to questions during the Question & Answers period that are not historical facts are forward looking statements. Furthermore, estimates and judgements may be made based on market and competitive information available at a certain
Slide 3: Contents
Contents Introduction Market & Strategic Positioning Finance & Outlook Summary Appendix Title: Eurofins Corporate Presentation H1 2015 Document name: H1 2015.ppt EDR: 1-C-IR-PRE-01274938 Document owner: Pamela Antay 3
Slide 4: Eurofins' Mission is to contribute to global Health, Safety & Environment
Eurofins‟ Mission is to contribute to global Health, Safety & Environment with the best in bioanalysis Eurofins provides testing Founded in 1987 services in three main areas that have a strong impact on IPO in 1997 in Paris at EUR 1.83 per share human health: Food Network of 200 laboratories i
Slide 5: Leading global and local market positions
Leading global and local market positions N°1* N°1 to N°3* N°1* worldwide worldwide worldwide Start 1987 Start 2000-2005 Start 2000 Food & Feed Testing for Environment Testing Pharma/Biotech Testing *Total Market size ~ EUR 2.0bn ~ EUR 5bn ~ EUR 4bn estimate N° 1 in Europe N° 1 Worldwide in Pharma N
Slide 6: Eurofins Clinical Diagnostic Evolution
Eurofins Clinical Diagnostic Evolution “Genomics is one of the key technologies enabling personalized medicine…” Establishing platform to deploy genomics expertise for development of innovative clinical diagnostic tests to serve global healthcare commnunity One of the world‟s leaders in Genomics Ser
Slide 7: Eurofins Clinical Diagnostic Footprint
Eurofins Clinical Diagnostic Footprint Establishing leadership in targeted higher-growth niche areas of the clinical testing market Title: Eurofins Corporate Presentation H1 2015 Document name: H1 2015.ppt EDR: 1-C-IR-PRE-01274938 Document owner: Pamela Antay 7
Slide 8: Drivers for long-term market growth
Drivers for long-term market growth Secular Underlying Fundamentals General Market Drivers Laboratory Market Drivers Consumer Demand for safe Increasing wealth expectations for pharmaceuticals, quality food and quality of Life protection and clean environment Consolidation of the fragmented laborato
Slide 9: Group performance reflects strong underlying fundamentals
Group performance reflects strong underlying fundamentals Strong Growth Momentum Profit improvements alongside revenue growth acceleration H1 2015 / H1 2012: Adjusted EBITDA margin +170 bp Reported EBITDA margin +230 bp Title: Eurofins Corporate Presentation H1 2015 Document name: H1 2015.ppt EDR: 1
Slide 10: Eurofins Growth Cycles
Eurofins is set to reinforce its global market leadership Eurofins Growth Cycles 2004 - 2005 Reaping the Benefits 2,000 End of investment cycle Objective 22% 1 Consolidation 2 20.9% brought 18.7% EBITDA Margin (2006-2010) 20.5% (2000-2004) 19.8% 21.6% ROCE 17 start-ups 19.4% forward 20% 1,800 Entry
Slide 11: On track towards early achievement of objectives
On track towards early achievement of objectives Eurofins 5 year Report Card: 2009-2014 CAGR H1 2015: Strong growth & operating momentum Achievements in 2014 31% revenue growth to EUR 842m on close to Ca. 6% organic growth versus 5% 6% organic growth in H1 2015 objective 19% increase in adjust
Slide 12: International network of standardised laboratories
An international network of world class, standardised laboratories is attractive for our customers H1 2015 revenue split : N. America 34.1% Others 14.9% France 14.1% Germany 13.8% Nordic Region 9.2% Benelux 8.3% Entry into high-growth UK & Ireland 5.5% markets with start ups & acquisitions 80% of th
Slide 13: Geared towards strong economies and fast-growing markets
Geared towards strong economies and fast-growing markets Geographical breakdown of Eurofins’ revenues in H1 2015 2.1% 1.1% 100.0% 14.1% 100% 90% 5.5% 82.7% 44.4% 77.2% 80% 70% 60% 50% 40% 32.7% 17.5% 30% 20% 15.3% 10% 0% Germany Benelux Germany USA Germany UK Total France Italy Spain TOTAL Austria N
Slide 14: Strategy aims at building long lasting competitive advantages
Eurofins‟ strategy aims at building long lasting competitive advantages Leading technology Quality of customer service Competence Centres & R&D activities Extensive expertise in local regulations for all major markets, and one-stop contact for Proprietary technologies for proof of compliance i
Slide 15: Contents
Contents Introduction Market & Strategic Positioning Finance & Outlook Summary Appendix Title: Eurofins Corporate Presentation H1 2015 Document name: H1 2015.ppt EDR: 1-C-IR-PRE-01274938 Document owner: Pamela Antay 15
Slide 16: The Food testing market has robust growth drivers
The Food testing market has robust growth drivers Food scares and Globalisation: Raw Consumers‟ Outsourcing of crises, widely materials sourced increasing awareness industry‟s covered in the from countries and demand for safe internal or state- media with different QC and high quality food owned pra
Slide 17: Food & Feed testing offering is the most comprehensive
Eurofins‟ Food & Feed testing offering is the most comprehensive in the market Agricultural production, product Production Retail & Distribution development Microbiology Sensorial Dioxins Veterinary drug Vitamins Quality Control residues Authenticity Pesticides Organic residues POPs Labelling GMO My
Slide 18: High profile food scares have expensive consequences
High profile food scares have expensive consequences for producers… Year Brand/ Contamination Impact Cost Country 2008 North Salmonella About 1,500 people sick throughout US ~ USD 100- America/ in tomatoes & Canada – pulling of products from 250m Mexico and peppers shops & restaurants FreshPlaza 200
Slide 19: Eurofins is meeting the demands of global players
Eurofins is meeting the demands of global players The largest global food & beverage producers and retailers are clients of Eurofins 2014 Sales in 2014 Sales in Food and Beverage Retailers EUR billion EUR billion Nestlé Switzerland 75.4 Wal-Mart Stores USA 362.6 PepsiCo USA 50.1 Carrefour France 8
Slide 20: The Pharma testing market is healthy and full of potential
The Pharma testing market is both healthy and full of potential Need for big pharma Rapid technological change & companies to expand increasing complexity in testing new drugs pipelines require ongoing investment in technology & expertise The increasing complexity of clinical trials leads to incre
Slide 21: Underlying trends are intact for continued growth
Underlying trends are intact for continued growth Global Drug R&D Spending (US$ bn) Large pharmas need to refill their product pipeline as the „blockbusters‟ start to come off patent Drug development expenditures have increased substantially in recent years Total R&D is over USD 120bn and is e
Slide 22: Eurofins Pharma Services
Eurofins Pharma Services Spanning the entire drug development cycle Genomics Discovery Pre-clinical / Clinical Pharma Specialty Pharmacology Early (Central Products Clinical Development Laboratory) Testing / Diagnostics cGMP QC Sequencing High-throughput- Pharmacology Biomarkers Impurities Analysis
Slide 23: 9 of top 10 pharma companies are clients
9 of the top 10 largest global pharmaceutical companies are clients of Eurofins Eurofins pharma locations Top 10 pharma companies Country Global CRO Market Market Pfizer USA CAGR* Breakdown Sanofi Aventis France GlaxoSmithKline UK USA 60% 12% Novartis Switzerland Europe 20% 9% AstraZeneca UK Merck &
Slide 24: The Environmental testing market continues to grow
The Environmental testing market continues to grow Rise in Progress in epidemiology contamination & & medicine has identified pollution issues more compounds as toxic Increasing demand by citizens for a clean environment EU expanding regulation (e.g. REACH) Increasingly long list of products i
Slide 25: Eurofins serves all the main environmental testing markets
Eurofins serves all the main environmental testing markets Eurofins is the No.1 environmental testing service provider in the world* Lancaster Environmental Consulting and Testing is the laboratory sampling companies of choice for Fortune 500 are natural partners companies in the USA WATER AIR SOIL
Slide 26: Global trends in regulation support the business
Global trends in regulation support the business Strong regulated markets (EU, USA) are still amending and adding regulations Eastern European rules catching up with EU Fast development of regulation in Asia Regulation used for support of trading blocks (e.g. EU, NAFTA, ASEAN) Major pieces o
Slide 27: EU regulations a key driver for the testing industry
EU regulations a key driver for the testing industry – e.g. REACH directive Objectives Examples of affected products or industries Listing and assessing the safety of 30,000 Metals, resins, acids, solvents, oils, fibres in textile, car chemical substances used by industries in components, toys, co
Slide 28: Outsourcing adds to market growth
Outsourcing adds to market growth Examples of laboratories outsourced to Eurofins Company Outsourced Activity Country Danish Hydrology Inst. Official water reference lab Scandinavia Suez/Sita Envirolab The Netherlands Danish farmers association Steins‟ water/environment laboratory Denmark Southern W
Slide 29: Strategy builds high Barriers to Entry
Eurofins‟ strategy builds high Barriers to Entry Offering a premium quality service … ... and leveraging internal efficiencies Portfolio: over 130,000 reliable methods – Industrialising the laboratory process: unique in the world and ahead of rationalisation of sites and personnel competition
Slide 30: Contents
Contents Introduction Market & Strategic Positioning Finance & Outlook Summary Appendix Title: Eurofins Corporate Presentation H1 2015 Document name: H1 2015.ppt EDR: 1-C-IR-PRE-01274938 Document owner: Pamela Antay 30
Slide 31: Laboratory Network Investments
Laboratory Network Investments: Expansion / Modernization of Laboratory Sites 100 new/expanded modern state-of-the-art sites to enable consolidation / closure of smaller or old sites Total of ca. 300,000 m2 added or brought to most modern standards between 2005 – 2014 (60,000 m2 in 2014 alone)
Slide 32: Market Share: Eurofins is the leader in its industry
Market Share: Eurofins is the leader in its industry – and we continue to reach new market leadership positions New Markets 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 X = Market Entry Denmark: Food and Env. X No 1 Brazil: Food Testing X No 1 France Environment Testing X No
Slide 33: Heavy investment in new markets and resources for future profits
Heavy investment in new markets and resources for future profits Building corporate resource Bringing recently acquired Under development perimeter for future size and growth labs to group standards Start-ups: 17 start ups Recruitment of top Deploy IT systems between 2006 and 2010 leadership e
Slide 34: Positive trends drive solid operating results
Positive trends drive solid operating results H1 2015 H1 2014 Adjusted Separately Statutory Adjusted Separately Statutory +/- % Results disclosed Results Results disclosed Results Adjusted EURm Results items items Revenues 841.9 841.9 643.5 643.5 30.8% EBITDA 142.2 -10.1 132.1 109.0 -18.0 91.0 30.5%
Slide 35: Growth and Profitability are critical objectives
Growth and Profitability are critical objectives Group Profitability Objectives++ 3-tiered margin support towards mid-term 2,500 22% profitability objective 20% 1. Start of profit contribution from start-ups 2,000 18% Group Adjusted EBITDA margin 16% 2. Exceptional costs and losses from start- ups
Slide 36: Tangible Commitment from Internal Stakeholders
Tangible Commitment from Internal Stakeholders Upside/Downside for warrant holders In July 2014, Eurofins issued 117,820 warrants exclusively to its leaders Exercise Price €281.58 Purchase Price €18.15 Break-even Price €299.73 (in the money starting at €300) The warrants are not listed but
Slide 37: Solid Balance Sheet
Solid Balance Sheet OBSAAR EUR 117.3m outstanding as of 30 June 2015 Jun‟15 Dec‟14 Maximum maturity: split evenly across June 2016 and 2017 Net Debt/ Adjusted EBITDA 1.34 x 1.90 x 3.5 x Schuldschein EUR 170m issued in July 2011 Net Debt (EUR m) 394.0 493.6 5-7 year maturity; mid-swap or
Slide 38: High Degree of Financial Flexibility
High Degree of Financial Flexibility Strong Balance Sheet Leverage ratio well below covenant limit despite EUR Net Debt/ Adjusted EBITDA: max 3.5x 260m cash invested in the business in H1 2015 Largely capex and acquisitions which did not fully contribute yet Acquisition payments in H2 2015 wil
Slide 39: Outlook: becoming the world leader in bioanalytical testing
Outlook: becoming the world leader in the bioanalytical testing market Sustainable Market Growth Drivers + Key Success Factors = Solid Outlook Food safety & contamination Unique technological portfolio of Earlier Achievement of Mid-term issues over 130,000 methods 2017 objectives: New regulati
Slide 40: Contents
Contents Introduction Market & Strategic Positioning Finance & Outlook Summary Appendix Title: Eurofins Corporate Presentation H1 2015 Document name: H1 2015.ppt EDR: 1-C-IR-PRE-01274938 Document owner: Pamela Antay 40
Slide 41: Conclusion: our sustainable competitive advantage
Conclusion: our sustainable competitive advantage Best in class technology and quality give best brand High-growth, non-cyclical markets driven by secular protection mega-trends No. 1 or 2 worldwide in most business lines Advancing globalisation but with very few global Strong international presence
Slide 42: Appendix / Back up slides
Appendix / Back up slides Title: Eurofins Corporate Presentation H1 2015 Document name: H1 2015.ppt EDR: 1-C-IR-PRE-01274938 Document owner: Pamela Antay 42
Slide 43: Consolidated Income Statement
Consolidated Income Statement HY 2015 HY 2014 Separately Separately Adjusted Adjusted € Thousands disclosed Total disclosed Total results results items items Revenues 841 907 - 841 907 643 500 - 643 500 Operating costs, net -699 691 -10 134 -709 825 -534 502 -18 006 -552 508 EBITDA 142 216 -10 134 1
Slide 44: Consolidated Balance Sheet
Consolidated Balance Sheet As of As of June EUR Thousands December 30, 2015 31, 2014 Property, plant and equipment 364,114 323,747 Goodwill 911,462 679,030 Other intangible assets 263,224 193,534 Investments in associates 7,617 2,887 Financial assets and other receivables 24,743 23,264 Deferred tax
Slide 45: Consolidated Cashflow Statement
Consolidated Cashflow Statement EUR Thousands HY 2015 HY 2014 Cash flows from operating activities Profit before income taxes 46,542 31,808 Adjustments for: Depreciation and amortisation 50,278 37,743 Non-cash stock option charge and acquisition-related expenses, net 15,825 7,145 Other non-cash effe
Slide 46: Eurofins has vastly outperformed the market since its IPO
Eurofins has vastly outperformed the market since its IPO and each of its 3 equity offerings (based on share price of EUR 273.10 as of 30 June 2015) Total equity raised in 4 offerings: only EUR 56m Since IPO Eurofins: +14,819% (32% CAGR) CAC 40: +73% (3% CAGR) SBF 120: +100% (4% CAGR) S&P 500: +135%
Slide 47: Shareholder Returns: TICS & Clinical Diagnostics Companies
Shareholder Returns: TICS & Clinical Diagnostics Companies Based on Eurofins share price of EUR 212.05 at 31.12.2014 Table 1 Shareholder Returns of TICS & Clinical Diagnostics Companies 2009-2014 Shareprice Returns Total Shareholder Returns (RI) Dec 31, 2009 Dec 31, 2010 Dec 31, 2011 Dec 31, 2012 De
Slide 48: Shareholder Returns: TICS & Clinical Diagnostics Companies
Shareholder Returns: TICS & Clinical Diagnostics Companies Based on Eurofins share price of EUR 212.05 at 31.12.2014 – Last 5 Years Table 2 HISTORICAL SHARE PRICE DEVELOPMENT Dec 31st Y-1 to Annual Growth - Compounded* Dec 31st Y Historical 1 Year Performance* 5 Yr Growth 2 years 3 Years 4 Years 5 Y
Slide 49: Comparable organic growth to larger peers with lower cyclicality
In spite of its lower cyclicality, Eurofins generates comparable organic growth to its larger peers in each peak of the cycle, and higher growth when the economy slows TICS Organic Growth Source: Eurofins, Company websites TICS ex ERF = SGS, Intertek, Bureau Veritas Title: Eurofins Corporate Present
Slide 50: Hard-to-replicate world-class infrastructure
We have built a hard-to-replicate world-class infrastructure Eurofins has been consistently investing more than its peers * Source: Eurofins, Company reports TICS ex ERF = SGS, Intertek, Bureau Veritas Title: Eurofins Corporate Presentation H1 2015 Document name: H1 2015.ppt EDR: 1-C-IR-PRE-01274938
Slide 51: Post acquisition and integration, sales and profits increase
Post acquisition and integration into Eurofins, both sales and profits increase significantly Illustration Growth drivers post acquisition: 1) Sales increase through cross selling of Actual example of an acquired lab: Eurofins lab specialities internationally 2) Cost reduction – focus on most freque