Eurofins Scientific Se · EURONEXT:ERF
Eurofins Scientific — FY2021 Earnings Presentation
45 slides from Eurofins Scientific's earnings presentation, Feb 22, 2022
Slide 1: 2021 Full Year Results
CONFIDENTIAL AND PROPRIETARY - © Eurofins Scientific (Ireland) Ltd, 2021. All rights reserved. This document contains information that is confidential and proprietary to Eurofins Scientific SE and / or its affiliates and is solely for the use of the personnel of Eurofins Scientific SE and all its af
Slide 2: Disclaimer
Disclaimer This presentation does not constitute or form part of, and should not be construed as, an offer or invitation to subscribe for or purchase securities in Eurofins Scientific S.E. and neither this document nor anything contained or referred to in it shall form the basis of, or be relied on
Slide 3: Agenda
Agenda I. Highlights II. Financial review III. Operational and strategic update IV. Outlook CONFIDENTIAL AND PROPRIETARY - © Eurofins Scientific (Ireland) Ltd 2021. All rights reserved. Any use of this material without the specific permission of an authorized representative of Eurofins Scientific (I
Slide 4: I. Highlights
I. Highlights CONFIDENTIAL AND PROPRIETARY - © Eurofins Scientific (Ireland) Ltd 2021. All rights reserved. Any use of this material without the specific permission of an authorized representative of Eurofins Scientific (Ireland) Ltd is strictly prohibited. 4
Slide 5: Key financial highlights
Key financial highlights Reported Revenues Core Business2 Org. Growth3 Adjusted4 EBITDA5 Adjusted4 EBITDA Margin €6.7bn ▲24%1 12.3% vs. FY 2020 €1,902m ▲35%1 28.3% ▲230bps1 +6% vs. objective 11.9% vs. FY 201911 +12% vs. objective FCFF before investment Adjusted4 EPS6 in owned sites9 Free Cash Flow t
Slide 6: Key business highlights
Key business highlights • Despite multiple lockdowns, our Core Business1 continued to demonstrate strong resilience and growth • Core Business organic growth of 12.3% in FY 2021 vs. FY 2020, +11.9% vs. FY 2019 adjusted for cyber-attack (+12.6% in Q4 2021 vs. Q4 2019) • Significant business confidenc
Slide 7: Increasing momentum with ESG rating agencies
Increasing momentum with ESG rating agencies Rating agency Scale 2020 Rating 2021 Rating Change Benchmark1 MSCI AAA – CCC BB BBB AAA 21.9 19.7 18.1 Sustainalytics 0 – 40 (worst) Medium Risk Low Risk Low Risk Vigeo Eiris (Moody’s) 100 (best) – 0 34 53 49 Refinitiv (London Stock Exchange) 100 (best) –
Slide 8: II. Financial review
II. Financial review CONFIDENTIAL AND PROPRIETARY - © Eurofins Scientific (Ireland) Ltd 2021. All rights reserved. Any use of this material without the specific permission of an authorized representative of Eurofins Scientific (Ireland) Ltd is strictly prohibited. 8
Slide 9: Very strong results ahead of the Group's most recent objectives
Very strong results ahead of the Group’s most recent objectives Full Year 2021 Full Year 2020 +/- Δ +/- Δ In €m except Adjusted1 SDIs2 Reported Adjusted1 SDIs2 Reported • Very strong revenue growth in Adjusted Reported otherwise stated Results Results Results Results FY 2021 exceeding by 6% the Resu
Slide 10: Revenue bridge
Revenue bridge Figures in €m • Revenue grew 24% year-on- year to €6,718m in FY 2021, 6% above our latest €6,350m objective for FY 2021 upgraded in October 2021 • Very strong Core Business organic growth of 12.3% in FY 2021 • COVID-19 activities contributed about €1,425m to FY 2021 revenues (over €80
Slide 11: FY21 Cash flow breakdown
FY21 Cash flow breakdown Figures in €m • 130% cash conversion1 • Cash from Operations enabled to fully finance acquisitions, to own a larger share of Eurofins sites and to reduce gross debt in 2021 • €1,133m bonds at 2.97% weighted average interest rate redeemed and partially refinanced by a €750m b
Slide 12: Net working capital intensity stable in FY 2021
Net working capital intensity stable in FY 2021 NWC intensity 1.6% Inventory 2.3% 2.1% 79 157 154 • Overall Net Working Capital stable year-on-year FY 2019 FY 2020 FY 2021 5.3% 20.4% • Some increase in accounts receivable1 4.5% 4.5% 19.1% Accounts 17.5% receivable related to COVID 328 1,001 activiti
Slide 13: Increased capex in 2021 to capitalise on large future market opportunities
Increased capex in 2021 to capitalise on large future market opportunities and to own our laboratories Net capex (€m) Infrastructure1 & IT² capex (€m) • 2021 Capex split: Net IT² • 77% Net operating capex: operating Machinery and Laboratory Equipment capex o 18% IT Leashold Improvements (LHI) & othe
Slide 14: Very robust liquidity position at year end
Very robust liquidity position at year end Leverage1 Debt maturity profile (€m) • Net debt of €2,239m at the end of 800 Dec 2021 (stable yoy) Hybrid (1st call) Schuldschein Eurobond 700 • €401m decrease in gross debt 3.5x 3.4x • Eurofins used none of its bilateral 600 credit lines in 2021 500 • Leve
Slide 15: Return on Capital Employed (ROCE)
Return on Capital Employed (ROCE) ROCE & ROCE excluding Goodwill1 80% 70% 68% ▪ ROCE was diluted during the 2016-2020 investment phase (M&A, laboratory expansion, start-ups, IT investment) 60% 51% 51% ▪ Goodwill from M&A increased the capital base by €2,553m with 48% over 110 acquisitions in 2017 an
Slide 16: III. Operational and strategic update
III. Operational and strategic update CONFIDENTIAL AND PROPRIETARY - © Eurofins Scientific (Ireland) Ltd 2021. All rights reserved. Any use of this material without the specific permission of an authorized representative of Eurofins Scientific (Ireland) Ltd is strictly prohibited. 16
Slide 17: Innovation driven growth
We continue to lead our field in terms of innovation Eurofins continued to invest, throughout 2021, to ensure our entrepreneurs have the strongest foundation to pursue innovation-driven growth In 2021, Eurofins’ scientists published over 50 scientific papers in academic journals 1 Scientific Scienti
Slide 18: Growth through innovation
Growth through innovation Some 2021 innovations Food and Feed Testing Services: • Developed an update to ICP-MS method to determine heavy metal limits and levels of arsenic, cadmium, lead & mercury in baby food products, in line with the Baby Food Safety Act of 2021 • Launched new method for the rap
Slide 19: Strong contribution to fight COVID-19 pandemic
Strong contribution to fight COVID-19 pandemic • Continued innovation to support fight against pandemic: • CE-marked multiplex kits to detect and differentiate 3 viral infections in same PCR run (SARS-CoV-2, Influenza and RSV) • Added virus variant monitoring capabilities to wastewater, food and env
Slide 20: Our long term growth strategies remain unchanged and funded from internal cash flow
Our long term growth strategies remain unchanged and funded from internal cash flow generation Organic growth and investment Acquisition growth 2021 2021 • Significant ramp-up in new facilities to meet increasing demand • 38 acquisitions for a cost of €533m and delivering €252m in BioPharma and Geno
Slide 21: Investing for the future: global network of state-of-the-art laboratories
Investing for the future Building a global network of state-of-the-art laboratories • Added nearly 100,000m² to our network in 2021 (significant acceleration vs. initial plan of adding 85,000m 2 in 2021 and 2022) – Surface of owned sites increased by 43% while leased sites surface increased by less
Slide 22: Good track record of successfully integrating acquired businesses
Eurofins has a good track record of successfully integrating acquired businesses Good pipeline of M&A opportunities 60 500 437 Cumulative number of acquisitions 450 Average number of acquisitions 399 50 373 400 347 350 40 56 300 235 per year 30 250 200 20 127 38 150 26 26 100 10 18 10 per year 50 pe
Slide 23: M&A Value Creation Case study: Covance Food Solutions 1/2
M&A Value Creation Case study: Covance Food Solutions (CFS) 1/2 Integration in US Food & Feed Testing Laboratory Network • Acquisition of CFS brought 9 facilities to US network • 7 new laboratories renovated or newly constructed to optimise hub & spoke network • 6 of the CFS facilities in the US wer
Slide 24: M&A Value Creation Case study: Covance Food Solutions 2/2
M&A Value Creation Case study: Covance Food Solutions (CFS) 2/2 Key highlights Key drivers of value creation • CFS acquired in August 2018 from LabCorp • 12 facilities (9 US, 2 UK, 1 Singapore) • Acquisition rationale: • Significantly strengthened scale and scientific depth of US Food & Feed Testing
Slide 25: M&A Value Creation Case study: TestAmerica 1/2
M&A Value Creation Case study: TestAmerica (TA) 1/2 Integration in US Environment Testing Laboratory Network • Acquisition of TA brought 24 laboratories to US network • 7 new laboratories renovated or newly constructed to optimise hub & spoke network • 10 of TA laboratories and 6 of Eurofins laborat
Slide 26: M&A Value Creation Case study: TestAmerica 2/2
M&A Value Creation Case study: TestAmerica (TA) 2/2 Key highlights Key drivers of value creation • TestAmerica acquired in October 2018 from JSTI Group Environment testing and sampling still affected by COVID in 2020 and 2021 • 24 full service testing laboratories and 40 service centres throughout t
Slide 27: M&A Value Creation Case study: EAG Materials & Engineering Sciences
M&A Value Creation Case study: EAG Materials & Engineering Sciences (MS/ES) Key highlights Key drivers of value creation • EAG acquired in September 2017 from Odyssey Investment Partners • Acquisition rationale: • 21 laboratories in 18 locations worldwide • Capabilities in Agroscience testing turned
Slide 28: M&A Value Creation Case study: DiscoverX
M&A Value Creation Case study: DiscoverX Key highlights Key drivers of value creation • DiscoverX acquired in 2017 • 4 facilities (3 US, 1 UK) • Acquisition rationale: Financial performance • DiscoverX was a leader in drug discovery products and services across all stages of discovery • Eurofins Pha
Slide 29: M&A has consistently created value
M&A has consistently created value Covance Food Solutions TestAmerica • Acquired in August 2018 • Acquired in October 2018 • Enabled Eurofins to become leader in US Food & Feed Testing • Enabled Eurofins to become leader in US Environment Testing market (previously 2nd-3rd largest player) market (pr
Slide 30: Organ transplant testing 1/2
Organ transplant testing 1/2 • Cell-free DNA assay to use in • First blood gene expression test transplant monitoring approved by CMS/Medicare • Non-Invasive • Only test in the market able to +322% • On renal dysfunction + rule out silent subclinical rejection sample volumes (y-o-y 2020/2021) with s
Slide 31: Organ transplant testing 2/2
Organ transplant testing 2/2 Transplant Genomics (TruGraf® and TRAC®) • Ramp-up of core business at TGI toward positive EBITDA generation revenues ($k) excluding COVID activities • +322% growth in TruGraf sample volumes (FY 2021 vs. FY 2020) • Still having a significant cash drain as medical & sales
Slide 32: Organic Growth case study: PFAS testing across our business lines
Organic Growth case study: PFAS1 testing across our business lines Per- and Polyfluorinated Alkyl Substances, or “forever chemicals”, resist natural breakdown in the environment and human bodies and may cause adverse health effects such as cancers and respiratory diseases . Environmental testing Foo
Slide 33: Further progress in ESG
Further progress in ESG Environment Social Governance Increasingly strong female representation in Leadership roles: • 49% female leaders at all leadership levels Significantly increased scope of carbon footprint • 30% National Business Line leaders/Business Unit Managers Established Sustainability
Slide 34: IV. Summary and outlook
IV. Summary and outlook CONFIDENTIAL AND PROPRIETARY - © Eurofins Scientific (Ireland) Ltd 2021. All rights reserved. Any use of this material without the specific permission of an authorized representative of Eurofins Scientific (Ireland) Ltd is strictly prohibited. 34
Slide 35: Fastest growing TIC company and leader of an industry with resilient organic growth
Fastest growing TIC company which became the leader of an industry with attractive and resilient organic growth • Market Structural growth: est. ~1.5-2.0x Gross Domestic Product growth • Globalisation, urbanisation and outsourcing increasing need and demand for a healthier life and safer environment
Slide 36: Increased confidence leads to upgraded objectives
Increased confidence around Core Business growth and resilience leads to upgraded objectives Upgraded mid-term annual organic growth objective to 6.5% (vs. 5% previously) as a result of strength of our Core Business After exceeding 2021 financial objectives, we update 20221 & 20231 objectives and se
Slide 37: Intended uses of increased FCF post pandemic
Intended uses of increased FCF post pandemic If these financial objectives are achieved, they will support strong free cash flow generation which, alongside organic investment and M&A, would enable the Group to deploy its cash as follows (average yearly amounts for 2022-2024): • €900m of FCFF before
Slide 38: Summary
Summary Another year of strong performance in 2021 – exceeding all financial objectives • Core Business exceeded once again the 5% long run Organic Growth objective with developing margins • COVID-19 related activities remained robust in 2021 at about €1,425m • Significant progress made in BioPharma
Slide 39: Q&A
Q&A CONFIDENTIAL AND PROPRIETARY - © Eurofins Scientific (Ireland) Ltd 2021. All rights reserved. Any use of this material without the specific permission of an authorized representative of Eurofins Scientific (Ireland) Ltd is strictly prohibited. 39
Slide 40: Appendix
Appendix CONFIDENTIAL AND PROPRIETARY - © Eurofins Scientific (Ireland) Ltd 2021. All rights reserved. Any use of this material without the specific permission of an authorized representative of Eurofins Scientific (Ireland) Ltd is strictly prohibited. 40
Slide 41: Revenue objectives bridge 2021-2024
Revenue objectives bridge 2021-2024 (assumes 6.5% organic growth and other objectives are achieved) Figures in €m CONFIDENTIAL AND PROPRIETARY - © Eurofins Scientific (Ireland) Ltd 2021. All rights reserved. Any use of this material without the specific permission of an authorized representative of
Slide 42: FY 2022 Objectives reconciliation
FY 2022 Objectives reconciliation In €m Old New +/-∆ Revenues • Strong organic growth in both 2021 & 2022 Core 5,450 5,548 +98 • More revenues from M&A M&A 2021 150 252 +102 (mostly in 2021) 1 M&A 2022* 100 125 +25 • €300m revenues from COVID in COVID-19 - 300 2022 Total 5,700 6,225 +525 EBITDA • €2
Slide 43: FY 2023 Objectives reconciliation
FY 2023 Objectives reconciliation In €m Old New +/-∆ Revenues Core 5,725 5,923 +198 • Strong organic growth in 2021, M&A 2021 150 252 +102 2022 & 2023 M&A 2022 200 250 +50 • More revenues from M&A 1 M&A 2023* 100 125 +25 Total 6,175 6,550 +375 EBITDA • €175m more EBITDA thanks to Core/Total 1,375 1,
Slide 44: Regional performance in 2021
Regional performance in 2021 Reported YoY Δ in €m Revenues YoY Δ Reported YoY Δ EBITDA Rep. EBITDA Segment 2021 (%) EBITDA 2021 (%) margin 2021 margin (bps) Europe 3,999 +27% 1,172 +41% 29.3% +280bps • Strong performance (EU) across all business lines and regions • Majority of COVID-19 North 2,147 +
Slide 45: Definitions / Alternative Performance Measures (APMs)
Definitions / Alternative Performance Measures (APMs) Eurofins is providing in the consolidated financial statements certain alternative performance measures (non-IFRS information). APMs used in the Consolidated Income Statement Adjusted results – reflect the ongoing performance of the mature and re