Eurofins Scientific Se · EURONEXT:ERF
Eurofins Scientific — Investor Day (November 2024)
68 slides from Eurofins Scientific's investor day presentation, Nov 13, 2024
Slide 1: 2024 North America Investor Day
CONFIDENTIAL AND PROPRIETARY - © Eurofins Scientific (Ireland) Ltd, 2024. 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: CEO Presentation
CONFIDENTIAL AND PROPRIETARY - © Eurofins Scientific (Ireland) Ltd, 2024. 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 4: Eurofins: The World Leader in Testing for Life
Eurofins: The World Leader in Testing for Life Key Figures 37 years of value creation • Long-term track record of turning investments into growth, productivity, margin expansion and Return on Capital Employed ca. 900 laboratories Over • Competitive advantages based on 450,000,000 scale and one-of-a-
Slide 5: Eurofins remains confident in its objectives for organic growth and M&A
Eurofins remains confident in its objectives for organic growth1 and M&A Revenue bridge (2019 to 2027E) Approaching organic growth M&A €10bn organic M&A organic growth Close to growth M&A organic €7bn M&A growth organic M&A €6.515bn growth €4.632bn 2 • Continued strength in Life and Consumer and Tec
Slide 6: Recovery in profitability is well underway, targeting 24% adjusted EBITDA margin by 2027
Recovery in profitability is well underway, with high confidence in achieving 24% adjusted EBITDA1 margin objective by 2027 COVID Challenges 2019-H1 2023: 3,000 30% • Unexpected acceleration of inflation starting in Q2 2022 due to the war in Ukraine not Before IFRS 16 Objective: adequately compensat
Slide 7: Start-ups continue to contribute materially to growth, but losses are on the decline
Start-ups continue to contribute materially to growth, but losses are on the decline Long track record Strategic rationale Contributions by start-ups in 9M 2024 Number of start-ups initiated Complements M&A strategy: • When acquisitions are too expensive or Organic growth contribution Programme Tota
Slide 8: Strong credit profile and long maturities
Strong credit profile and long maturities Leverage1 Debt maturity profile2 (€m) Key Highlights Hybrid (1st call) Eurofins’ balance sheet remains very solid Target range at the end of June 2024: 1.5x-2.5x Schuldschein Eurobond • Financial leverage1 was 1.9x at the end of June 2024 vs 2.0x at the end
Slide 9: Achieve self-financing of all needs by increasing cash conversion and disciplined use of cash
Achieve self-financing of all needs by increasing cash conversion2 and disciplined use of cash Drivers Objectives Result • Increased EBITDA1 Free Cash Flow FCFF before • Net operating capex: ca. €400m p.a. • 2024: €800m – €840m investment in owned • Separately disclosed items1 at the EBITDA1 level:
Slide 10: Return on Capital Employed (ROCE) to improve in coming years
Return on Capital Employed (ROCE) to improve in coming years ROCE & ROCE excluding Goodwill1 • ROCE development affected by the following factors in 2023: 68% • Lower EBITAS due to decline in accretive COVID-19 testing, COVID-19 cost overhang and sudden inflationary headwinds Excluding owned • Incre
Slide 11: Our mid-term objectives & drivers
Our mid-term objectives & drivers (€m) FY 2023 FY 2024 Mid-term objectives & drivers FY 2027 Close to €7bn • Average +6.5% organic growth p.a. Revenues €6.515bn • Potential average revenues from acquisitions of €250m p.a. Approaching €10bn (Previously €7.075bn – €7.175bn) €1.525bn – • Organic growth
Slide 12: All of Muddy Waters' baseless allegations have been disproved
All of Muddy Waters’ baseless allegations and disparaging claims have been disproved Subjects1 Eurofins’ response and refutations1 • Clearly demonstrated MW’s complete lack of understanding of Eurofins, its activities and representative peers Eurofins’ business 1 • Eurofins’ decentralised structure
Slide 13: Planned actions on subjects of greatest importance to key stakeholders
Planned actions on subjects of greatest importance to Eurofins’ key stakeholders Subjects Planned actions • Ernst & Young Paris has performed an additional independent audit Eurofins’ cash pooling arrangements and cash situation 1 Cash accounting in its consolidated financial statements as at 31 Dec
Slide 14: Summary
Summary Continued strong secular growth outlook in all Eurofins activities; mid-term Biopharma outlook is strong after reset of post-COVID pipelines Recovery in profitability is well underway, with high confidence in achieving 24% adjusted EBITDA margin objective by 2027 Strong credit profile with l
Slide 15: Who you will meet today
Who you will meet today Laurent Lebras Timothy Oostdyk Group Finance & Administration Director Executive Vice President BioPharma, Genomics and Agrosciences Services North America Sean Murray Brian Williams Senior Vice President Executive Vice President Food Testing USA Environment Testing North Ame
Slide 16: CFO Presentation
CONFIDENTIAL AND PROPRIETARY - © Eurofins Scientific (Ireland) Ltd, 2024. 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 17: Eurofins framework organised for focus and efficiency
Eurofins framework organised for focus and efficiency Eurofins network organisation • >1,000 companies (= legal entities, or LEs) in the Eurofins network • As a comparison, Bureau Veritas1 has 507 LEs and Intertek2 has approximately 600 LEs • Each laboratory is a LE led by a local leader (= managing
Slide 18: Effective systems and controls
Effective systems and controls Standard global systems, including: • Microsoft Dynamics and Microsoft Great Plains for accounting platforms in Europe and North America with a coverage of ca. 90% of activities • IBM Cognos Controller and TM1 for consolidation, budgeting and monthly financial reportin
Slide 19: Cash audit
Cash audit The forensic tests performed by Ernst & Young Paris provide direct refutations to the baseless allegations in short seller reports published by Muddy Waters, LLC in June and July 2024: • No indication of irregularly altered documents was identified when performing dedicated forensic tests
Slide 20: Summary
Summary Eurofins framework organised for focus and efficiency Effective systems and controls Results of cash audit confirm Eurofins’ FY 2023 cash balance and the high integrity of its systems and controls 20
Slide 21: BioPharma Services
CONFIDENTIAL AND PROPRIETARY - © Eurofins Scientific (Ireland) Ltd, 2024. 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 22: BioPharma Services – Comprehensive Global Offering
BioPharma Services – Comprehensive Global Offering Pre-clinical / Clinical BioPharma PSS1 Testing (Central Development& Agroscience Discovery Early Product Insourcing Genomics Services Development Laboratory/ Testing Solutions Manufacturing Bioanalytical) (CTDMO) 21 countries Germany US 50 sites US
Slide 23: BioPharma Services Evolution
BioPharma Services Evolution Started Select milestones / acquisitions Market position today 2011: Global infrastructure established (US, Among top 5 global players 2001 Central Laboratory / Bioanalytical Acquisitions: Netherlands, Singapore, China, India) 2005 Genomic Services Acquisitions: Among to
Slide 24: Leading Global BioPharma Network
Leading Global BioPharma Network 86 laboratories ~190,000 ~135,000 m2 m2 Leader in significant markets 38 laboratories Europe • Global leader in BioPharma Product Testing • Global leader in Discovery Pharmacology Services • Global leader in Agroscience CRO Services North America 144 laboratories in
Slide 25: Clients & Peers
Clients & Peers Major Biopharma companies Innovative biotech Example clients Clients1 + regional & local players Typical contractual ➢ Product Testing: annual master service agreements relationship: ➢ Research & Development Services: project-based agreements Peers + regional & local competitors 1 Ex
Slide 26: Market Update
Market Update 26
Slide 27: State of BioPharma Industry Funding
State of BioPharma Industry Funding BioPharma Funding ($bn) BioPharma Firepower ($tn) (IPOs, Follow-ons, Private and Public/Other) • Biotech funding has improved 1.4 significantly in 9M 2024, although it 120 remains more heavily focused on later 1.2 117 phase assets • VC funds remain selective in te
Slide 28: Recent Funding Highlights
Recent Funding Highlights September 2024 • Bain Capital Life Sciences - $3B fund - transformative medicines, medical devices1 • Arch Venture Partners - $3B fund - support early stage biotech companies2 October 2024 • Frazier Life Sciences - $630M fund – small and mid-cap biotechs3 • Forbion - 2.1B e
Slide 29: Continued growth of R&D candidates in pipeline
Continued growth of R&D candidates in pipeline and proportion of biologics to grow Total R&D pipeline size Market drivers 25,000 22,825 R&D pipeline size continues to grow substantially, 21,292 driven by intensity & speed of innovation 20,109 20,000 18,582 • Increased focus on biologics vs. small 17
Slide 30: Large Market Opportunities
Large Market Opportunities Novel innovations1 Chemicals Biologics Cell and gene therapies Opportunities for Eurofins Description / Increasing complexity in Complexity2 testing and clinical trials Altering of genetic material Increased likelihood of outsourcing of testing Traditional, biomarkers, Tra
Slide 31: Established leading player in Cell and Gene Therapy
Established leading player in Cell and Gene Therapy with comprehensive client offering and >10 years of experience Successful and long track Supported the development of: record with Cell and Gene • 21 of 30 FDA-approved1 Cell and Gene Therapy Products Therapies (C>) • All 9 CAR-T therapies Eurofi
Slide 32: Delivering Value to our Clients
Delivering Value to our Clients 32
Slide 33: DiscoveryOne: Enabling Drug Discovery Through Integrated Capabilities
DiscoveryOne Enabling Drug Discovery Through the Integration of Our Testing and Consulting Capabilities 10 Eurofins Companies Integrated service offering Strong Growth >6X revenues Acquired 2013 Biotherapeutics & Acquired 2004 Acquired 2012 Chemistry Cell/Gene Therapy Discovery & Development Solutio
Slide 34: Solutions for Obesity and Diabetes Drug Discovery
Eurofins Discovery Provides a Wide Portfolio of Solutions for Obesity and Diabetes Drug Discovery and Development Market Leading GLP1R Agonist Anti-Obesity Drugs • Novo Nordisk Semaglutide • Eli Lilly Tirzepatide and Retatrutide Eurofins Discovery obesityLITE Panel of Cell Based Assays • The obesity
Slide 35: BioPharma Product Testing Footprint Strategy in North America
BioPharma Product Testing Footprint Strategy in North America Heat map of addressable customers for BioPharma Product Testing • >4,000 addressable customers in the US • We currently service 1,200 • Smaller regional customers value local relationships and nearby access to the laboratory • Infinity La
Slide 36: CTDMO capacity and capability expansion
CTDMO capacity and capability expansion: to provide fully integrated services offering Toronto Large Scale API Manufacturing Expansion • 1st plant completed H2 2024. Multiple 2,000L reactors installed • Plant capacity is nearly fully sold for next several years • Site can accommodate two additional
Slide 37: Eurofins' proprietary IT solution offers more for clients and costs less
Eurofins’ proprietary IT solution offers more for clients and costs less than externally available software (example BioPharma Product Testing solutions suite) Eurofins’ proprietary BPT solution Benefits of Eurofins bespoke proprietary IT solutions Advantage: Differentiation and standardisation acro
Slide 38: Summary
Summary Biopharma funding environment will continue to drive secular mid-term growth, despite temporary slowdown following post-COVID pipeline resets and higher interest rates Strong rebound in BioPharma expected in 2025 when large studies that ended in early 2024 should be replaced by programs part
Slide 39: Food & Feed Testing North American Laboratories Network
CONFIDENTIAL AND PROPRIETARY - © Eurofins Scientific (Ireland) Ltd, 2024. 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 40: Best-in-class hub and spoke network in North America
Eurofins Food & Feed has built and operates the best-in- class hub and spoke network in North America HUB LABS Des Moines, IA Madison, WI Madison, WI New Orleans, LA Toronto, ON Toronto, ON Los Angeles, CA Minneapolis, MN Madison, WI SPOKE LABS Atlanta, GA Gordon, NE Omaha, NE Battle Creek, MI Idaho
Slide 41: North American 3rd party food testing is a ~$2.6bn market
North American 3rd party food testing is a ~$2.6bn market with tailwinds that accelerated through the pandemic NA 3rd Party Testing & Services $ Billion est 2023 Relevant market trends 2.6 • Supplement/Nutraceutical production 10+% CAGR with desire for healthier, functional foods, sports nutrition i
Slide 42: Eurofins is the clear leader in North America
Eurofins is the clear leader in North America because of our differentiated breadth, science and reputation Competitors Eurofins’ market share1 Small local players1 Other major players #1 share ~2/3 share Chemistry Microbiology Services Science & Reputation Contaminants Nearly 100 years of expertise
Slide 43: Market position strong because of hard-to-copy network nodes
Our market position is strong because of many “nodes” in our network and support systems are difficult to copy General micro Difficult-to-copy (across 13+ network node Specialty U.S. regions) GMO testing microbiology Common Lab IT Lab System Single nodes Inter-business price list pricing Allergens S
Slide 44: Better facility matching and anchor clients reduce break-even timing
Better matching of facility and market requirements, along with anchor clients, have greatly reduced break-even timing Louisville Spoke Idaho Falls Spoke • Start-up in 2017 • Start-up in 2022 • Net floor area: 835 sqm • Net floor area: 115 sqm • Break-even: years • Break-even: months • Modular lab i
Slide 45: Accretive acquisition opportunities: Barrow Agee
Accretive acquisition opportunities are also available as PE firms exit. Barrow Agee is a good example How is it possible to acquire a company …which becomes a good investment inside that was losing money with negative ROI… Eurofins? Private Equity Owned Eurofins Owned ~3x less than Investment* Inve
Slide 46: Scale and test overlap enable high ROI consolidation
Scale and test overlap enable high ROI consolidation Key facets of the target company which enable incremental cash flow inside Eurofins: ✓ Ownership which cannot extract value from scale…. • Barrow Agee owned by Private Equity for 4 years, lost #1 client from loss of founder • Single site, dedicate
Slide 47: With hubs complete, serving growth requires less incremental cost and capital
With hubs complete, serving growth requires less incremental cost and capital Madison, WI Hub Des Moines Hub Addition • Opened: January 2021 • Initial building developed in 2010 and expanded several times • Addition opened: August 2023 • Net floor area: 10,000 sqm • Net floor area leased: 5,600 sqm
Slide 48: We expect continued above-market growth
We expect continued above-market growth with new speed, and quality standards hard to match without our scale Performance area One-stop shop • Hyper local microbiology laboratories (e.g. meat/produce/supplements) coverage • Retailer supplements support: testing, certification for thousands of suppli
Slide 49: Summary
Summary Operate best-in-class Food & Feed Testing network in N. America Provide most comprehensive offering Market Deliver above-market growth from hard-to-copy network leadership Accelerate sales from start-up programs, prudent M&A Disrupt industry even further, setting new standards for food testi
Slide 50: Eurofins Environment Testing U.S.
CONFIDENTIAL AND PROPRIETARY - © Eurofins Scientific (Ireland) Ltd, 2024. 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 51: US Market Overview
«= eurofins US Market Overview
Slide 52: Macro Trends – ESG fuelled sector growth decoupled from GDP
Macro Trends – ESG fuelled Sector growth decoupled from GDP ANNUAL GROWTH IN THE ENVIRONMENTAL INDUSTRY 2000-2025 9% Environment sectorsector Environment growthgrowth expected aboveabove expected GDP driven by GDP driven by increasing regulations, social awareness of environmental increasing regulat
Slide 53: U.S. Environment Market Overview
U.S. Environment Market Overview Env. Sectors Env. Services Env. Testing Eurofins Env. Testing US $43.2 $80.5 37% $16.0 48% $530B $253B ~$2.2B (Testing ~1% of services) (Testing ~5% of Consulting & Engineering) $2.2 15% $110.7 WWTW (Wastewater Treatment Works) Greater than 30% of market to still be
Slide 54: Regulatory/Political Drivers
Regulatory/Political Drivers Overview U.S. EPA Budget ($B) • US EPA increased their 2024 budget by ~20%. $12.1 $9.2 $9.6 $10.1 $9.1 • The fifth Unregulated Contaminant Monitoring Rule (UCMR5) driving drinking water system upgrades and analytical spend. • Global demand for PFAS testing market is expe
Slide 55: PFAS Spotlight
«= eurofins PFAS Spotlight
Slide 56: Federal Regulations
Federal Regulations Safe Drinking Water Act CERCLA TSCA Effective June 25, 2024 Effective July 8, 2024 Effective Sept 18, 2023 • Adopted Maximum Contaminant Levels • Order investigation/cleanup of • Manufacturers/importers required to report (MCLs) for PFAS in Drinking Water PFOA/PFOS, including cos
Slide 57: PFAS Sensitivity and Scope
Defining PFAS: Evolution of the Science EPA estimates OECD revised ~16,000 PFAS OECD estimates PFAS Sensitivity and Scope Buck et al. defines definition establishes PFAS as highly ~4730 PFAS ~7M ‘Compounds’ Number of fluorinated aliphatic ~200 PFAS Compounds 2009 2011 2016 2018 2019-2020 2021 - 2023
Slide 58: Largest PFAS Laboratory Network in the US
Largest PFAS Laboratory Network in the US Specializing in Production, Innovation and Research 9 PFAS Laboratories 24 yrs of PFAS analytical experience >100 instruments dedicated to PFAS 100+ compounds in dozens of matrices 40,000 samples/month capacity >820,000 samples analyzed >10,000 PFAS Projects
Slide 59: PFAS – Positive Drivers and Full Sector Coverage
PFAS – Positive Drivers and Full Sector Coverage Market Drivers Eurofins comprehensive PFAS testing suite Human Serum $$$ Treatment Class Approach Whole Blood AFFF Product AFFF Impacted Media At-Home Test Kit Significant investment in Treat all PFAS as toxic treatment technologies and and regulate a
Slide 60: Eurofins Environment Testing in the U.S.
Eurofins Environment Testing in the U.S. 60
Slide 61: Eurofins Environment Testing USA
Eurofins Environment Testing USA 67 Laboratory Locations ~3,000 Staff (2023) 5.5M Samples (2023 actual) 550+ Accreditations & Certifications 61
Slide 62: Investing in Network Growth to Drive Productivity
Investing in Network Growth to Drive Productivity Seattle 20K sq ft Renovation Chicago 03/2024 35K sq ft New Build, Cleveland Relocation 50K sq ft 03/2025 New Build, Relocation Sacramento 03/2022 68K sq ft New Build 2027 Orlando Pomona 35K sq ft 48K sq ft New Build, New Build, Relocation Relocation
Slide 63: Geographic Orientation with Specialty and Drinking Water
Eurofins Environment Testing U.S. Geographic Orientation with Specialty and Drinking Water Hub & Spoke Model Specialty Services* Sacramento (x2) Knoxville Lancaster St. Louis Burlington Denver Drinking Water Los Angeles South Bend Orlando Built Environment Distributed Model 26 locations Six local sh
Slide 64: IT – Digitalization = Efficiency
IT – Digitalization = Efficiency Auto Reporting TAT saved 34% On average 18,000 reports are sent a month 34% quicker due to auto reporting Reports auto-reported 35% Reports sent via auto-reporting in an average month. Auto Narrative Narratives auto-generated 78% Report narratives auto-generated in a
Slide 65: IT - Digitalization eCOC → Strategy: Accept All
IT - Digitalization eCOC → Strategy: Accept All Eurofins Environment Testing US Third Party Providers: Formalized partnerships electronic Chain-of-Custody service Integrated to Eurofins Processes & TALS • Completely mobile • Optimized for tablet or laptop Largest provider of digital services for env
Slide 66: What Next? Global Plastic Pollution, Legislations & Eurofins Solution
What Next?...(One Example) Global Plastic Pollution, Legislations & Eurofins Solution Global Problem Eurofins Solution • Exponential Rise in Global Plastic • 5 State-of-the-Art Laboratories: US, Spain, Production Norway, Hungary, Australia • Microplastics found in the environment, food, and air • IS
Slide 67: Appendix
Appendix 67
Slide 68: Definitions / Alternative Performance Measures (APMs)
Definitions / Alternative Performance Measures (APMs) APMs used in this presentation Adjusted results – reflect the ongoing performance of the mature and recurring activities excluding “separately disclosed items”. Separately disclosed items (SDI) – include: • one-off costs from integration and reor