Eurofins Scientific SE · EURONEXT:ERF
Eurofins Scientific — Debt Investor Presentation (April 2015)
58 slides from Eurofins Scientific's debt investor presentation, April 2015
Slide 1: Eurofins Corporate Presentation April 2015
Eurofins A global leader in bioanalytical testing in the food, environment and pharmaceutical sectors Corporate Presentation April 2015 www.eurofins.com1
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 Transaction Overview Summary Appendix 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 IPO in 1997 in Paris at EUR 1.83 per share that have a strong impact on Network of 200 laboratories in 36 human health: countr
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 & Testing for Feed Pharma/ Environment Testing Testing Biotech Market size ~ EUR 2.0bn ~ EUR 5bn ~ EUR 4bn estimate Eurofins N° 1 in Europe N° 1 Worldwide in Pharm
Slide 6: 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 7: Strong growth fueled by market growth, share gains and acquisitions
Strong growth fueled by market growth, share gains and acquisitions 2,000 2,000 2014-2017 CAGR 1,800 12% CAGR 1,600 5yrs 17% 2006-2011 (2009-2014) CAGR 18% 1,400 REVENUES EUR m 1,200 CAGR 1,000 10yrs 23% (2004-2014) 800 600 400 200 - 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2
Slide 8: On track towards 2017 objectives
On track towards 2017 objectives Eurofins 5 year Report Card: 2009-2014 CAGR 2014: second year of our 5-year journey Achievements in 2014 15% revenue growth to EUR 1,410m (above EUR Ca. 6% organic growth versus 5% 1,400m objective) objective 19% increase in adjusted EBITDA to around 6% organic growt
Slide 9: Size of scope in restructuring is decreasing
Size of scope in restructuring is decreasing Proportion of revenue contribution from start-ups & Separately Disclosed Items (SDI*) relative to EBITDA businesses in significant restructuring of mature companies** 16% 14.7% Group adjusted EBITDA margin 14% 12.6% 11.8% 12% 10% 8% 6% 4% 2% 0% 2012 2013
Slide 10: Network Build-Out to Position for the Future
Network Build-Out to Position for the Future Faster site roll-out drives capex acceleration 60,000m2 of modern lab surface delivered in 2014, versus plan of 40,000m2 3 new sites; 6 major extension projects Strong progress in IT systems deployment eLIMS deployed in ca. 67% of Food and Environment div
Slide 11: Network Build-Out: 2012-2014 Acquisitions
Network Build-Out to Position for the Future 2012-2014 Acquisitions € 200m Acquisition spend as a multiple of 20% total revenues of acquisitions 0.8x 0.7x 1.7x Total Annualised EBITAS Margin of Acquisitions 17 acquisitions completed in 2014 Total Annualised Revenues of Acquisitions € 150m 15% Mostly
Slide 12: Selective acquisitions to consolidate and secure leadership of our markets
Selective acquisitions to consolidate and secure leadership of our markets Selected recent transactions Rationale/impact Lancaster Laboratories (US, Europe, 2011) Global market leadership in pharma products testing IPL (France, 2011) Leading position in water testing in France Nihon Kankyo (Japan, 2
Slide 13: An international network of world class, standardised laboratories
An international network of world class, standardised laboratories is attractive for our customers 2014 revenue split : N. America 25.3% Germany 16.7% France 16.1% Others 14.7% Nordic Region 11.4% Benelux 10.2% Entry into high-growth UK & Ireland 5.5% markets with start ups & acquisitions 80% of the
Slide 14: Geared towards strong economies and fast-growing markets
Geared towards strong economies and fast-growing markets Geographical breakdown of Eurofins’ revenues in 2014 Germany Benelux Germany USA Germany UK Total France Italy Spain TOTAL Austria Nordics + + Northern Europe & Excluding Portugal Switzerland (Northern Northern APAC USA Ireland France & Europe
Slide 15: Eurofins' 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 in mult
Slide 16: Contents
Contents Introduction Market & Strategic Positioning Finance & Outlook Transaction Overview Summary Appendix 16
Slide 17: 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 18: Eurofins' 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 19: High profile food scares have expensive consequences for producers
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 20: 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 2013 Sales in 2013 Sales in Food and Beverage Retailers EUR billion EUR billion Nestlé Switzerland 74.9 Wal-Mart Stores USA 347.6 Unilever UK /Netherlands 49.8 Carrefo
Slide 21: The Pharma testing market is both 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 increas
Slide 22: 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 expecte
Slide 23: 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 24: 9 of the top 10 largest 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 Breakdown CAGR* Sanofi Aventis France GlaxoSmithKline UK USA 60% 12% Novartis Switzerland Europe 20% 9% AstraZeneca UK Merck &
Slide 25: Clinical Diagnostics Services – a new source of growth
Clinical Diagnostics Services – a new source of growth for Eurofins Viracor IBT Boston Heart • Accelerating medicine • Enabling healthcare through innovative providers and patients molecular and to improve heart health immunodiagnostics and prevent disease • Providing clinical with our integrated di
Slide 26: 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 identif
Slide 27: 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 28: 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 of legisl
Slide 29: EU regulations a key driver – e.g. REACH directive
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, cosm
Slide 30: 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 31: Eurofins' 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 Compet
Slide 32: Contents
Contents Introduction Market & Strategic Positioning Finance & Outlook Transaction Overview Summary Appendix 32
Slide 33: Laboratory Network Investments: Expansion / Modernization of Laboratory Sites
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) 100,0
Slide 34: 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 35: 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 eLIMS,
Slide 36: Positive trends drive solid operating results
Positive trends drive solid operating results 2014 2013 Adjusted Separately Statutory Adjusted Separately Statutory +/- % Results disclosed Results Results disclosed Results Adjusted EURm Results items items Revenues 1,410.2 1,410.2 1,225.6 1,225.6 15.1% EBITDA 260.4 -30.4 230.0 219.3 -30.2 189.1 18
Slide 37: Strong underlying profitability enables investments
Strong underlying profitability enables investments 2014 EBITDA Composition EURm 37
Slide 38: Growth and Profitability are critical objectives
Growth and Profitability are critical objectives Group Profitability Objectives++ 3-tiered margin support towards mid-term profitability objective 2,500 22% Group Adjusted EBITDA margin % 1. Start of profit contribution from start-ups 20% 2,000 2. Proportion of companies in restructuring Group Reven
Slide 39: 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 give acce
Slide 40: Solid Balance Sheet
Solid Balance Sheet OBSAAR Dec’14 Dec’13 Maximum EUR 176m issued June 2010 Net Debt/ Adjusted EBITDA 1.90 x 1.76 x 3.5 x maturity: 1/3 across June 2015, 2016, 2017 Schuldschein Net Debt (EUR m) 493.6 386.8 EUR 170m issued in July 2011 Total Equity (EUR m) 664.2 394.7 5-7 year maturity; mid-swap or E
Slide 41: High Degree of Financial Flexibility
High Degree of Financial Flexibility Substantial headroom in the balance sheet 3.50 x Net Debt/ Adjusted EBITDA: max 3.5x Debt ratios remain well below covenant limits despite EUR 453m* cash invested in the business in 2014 (EUR 215m cash in 2013) 3.00 x Largely capex and acquisitions which did not
Slide 42: Outlook: becoming the world leader in the bioanalytical testing market
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 issues over 130,000 methods New regulations (e.g. FSMA, Volume scale advantage & REACH) Compete
Slide 43: Financing facility overview as of 31 December 2014
Financing facility overview as of 31 December 2014 EUR 709m of gross senior debt as of 31 December 2014 (net debt of EUR 493.6m) >95% of senior debt in Eurofins Scientific SE (holding level) Main facilities in Eurofins Scientific SE: OBSAAR bonds : EUR 176m Schuldschein : EUR 170m Bilateral RCF (und
Slide 44: Maturity profile of senior debt at Holding level
Maturity profile of senior debt at Holding level as of 31 Jan 2015 Senior debt in Eurofins Scientific SE (EURm) € 500m € 362m € 211.7m € 58.7m € 58.7m For private use only – Strictly confidential 44
Slide 45: Eurofins dividend payment history
Eurofins dividend payment history Eurofins Dividend Payments For private use only – Strictly confidential 45
Slide 46: Contents
Contents Introduction Market & Strategic Positioning Finance & Outlook Transaction Overview Summary Appendix 46
Slide 47: Potential transaction rationale
Potential transaction rationale Eurofins is committed to maintaining a very strong balance sheet with significant headroom to be able to respond swiftly to compelling opportunities, in view of its objective to reach EUR 2bn in revenues by 2017 through a combination of organic growth and acquisitions
Slide 48: Terms & Conditions (1/2)
Terms & Conditions (1/2) Issuer: Eurofins Scientific S.E., acting through its French Branch Offering: Undated [7/8]-Year Non-Call Deeply Subordinated Fixed to Floating Rate Bonds (the "Bonds") Issue rating: Not rated Issue size: EUR [ ]m Denomination / Listing: EUR 100k + 1k / Luxembourg Stock Excha
Slide 49: Terms & Conditions (2/2)
Terms & Conditions (2/2) Settlement of Outstanding Optional settlement at any time; must be settled upon interest payment on the Amounts: Bonds, a pusher event, redemption of the Bonds, liquidation of the Issuer Interest on interest: Outstanding Amounts bear interest at the rate of interest then app
Slide 50: Dividend Pusher Mechanism
Dividend Pusher Mechanism Conventional structure with investor friendly enhancements “Dividend Pusher”: • Obligation to pay accrued interest and Outstanding Amounts in cash on an interest payment date in case of distribution, redemption or repurchase in respect of Share Capital Securities or Account
Slide 51: Contents
Contents Introduction Market & Strategic Positioning Finance & Outlook Transaction Overview Summary Appendix 51
Slide 52: 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 53: Appendix / Back up slides
«= eurofins Appendix / Back up slides 53
Slide 54: Consolidated Income Statement
Consolidated Income Statement 2014 2013 Separately Separately Adjusted Reported Adjusted Reported EUR Thousands disclosed disclosed results results results results items items Revenues 1,410,227 - 1,410,227 1,225,572 - 1,225,572 Operating costs, net -1,149,797 -30,420 -1,180,217 -1,006,291 -30,191 -
Slide 55: Consolidated Balance Sheet
Consolidated Balance Sheet EUR Thousands 2014 2013 Property, plant and equipment 323,747 251,113 Goodwill 679,030 456,388 Other intangible assets 193,534 86,382 Investments in associates 2,887 4,594 Financial assets and other receivables 23,264 16,805 Deferred tax assets 26,333 32,757 Total non-curr
Slide 56: Consolidated Cashflow Statement
Consolidated Cashflow Statement EUR Thousands 2014 2013 Cash flows from operating activities Result before income taxes 101,332 89,063 Adjustments for: Depreciation and amortisation 81,283 66,880 Non-cash stock option charge and acquisition-related expenses, net 16,889 9,977 Other non-cash effects 3
Slide 57: 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 212.05 as of 31 December 2014) Total equity raised in 4 offerings: only EUR 56m Since IPO Eurofins: +11,484% (32% CAGR) CAC 40: +54% (3% CAGR) SBF 120: +78% (3% CAGR) S&P 500: +1
Slide 58: Post acquisition and integration, both sales and profits increase significantly
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
Eurofins Scientific — Debt Investor Presentation (April 2015) on 6ix