Eurofins Scientific Se · EURONEXT:ERF
Eurofins Scientific — FY2022 Earnings Presentation
38 slides from Eurofins Scientific's earnings presentation, Mar 1, 2023
Slide 1: 2022 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 & summary 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 Sci
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 business highlights of FY 2022
Key business highlights of FY 2022 Financial highlights Strategic highlights Solid performance in FY 2022 despite After a strong 2021, accelerated investments for unexpectedly challenging environment sustainable long-term growth • Fully compensated >€800m year-on-year revenue reduction from COVID-19
Slide 6: Eurofins is dedicated to long-term value creation
Eurofins is dedicated to long-term value creation Our capital allocation priorities Rationale • Unlocks economies of scale Infrastructure programme building best-in-class • Custom built for purpose to improve productivity hub and spoke laboratory network including 1 • Reduces risk of rent increases
Slide 7: Increased net capex in 2022 to support strategic initiatives
Increased net capex in 2022 to support strategic initiatives Strategic investment initiatives for (€m) 2018 2019 2020 2021 2022 accelerating growth Leasehold improvements (LHI) & others 95 55 71 117 146 Owned sites to complete hub and spoke network % of revenues 2.5% 1.2% 1.3% 1.7% 2.2% • Ownership
Slide 8: Increasing site ownership creates significant long-term value
Increasing site ownership creates significant long-term value Discretionary decision to increase proportion of owned sites Site ownership has high strategic value Surface area (m2) by site ownership Site ownership is key to expanding high-throughput 2018 3x total 2022 +104% surface area growth labor
Slide 9: Site ownership has attractive financial fundamentals
Site ownership has attractive financial fundamentals Benefits Examples • Estimated rent savings of €68m1 in FY 2022 from owned sites 1 Savings • Estimated yield on rent savings from owned sites of 11% (based on net book value at end of 2022 of €635m) • Lower operating costs from investment in renewa
Slide 10: Expanding list of owned sites in high growth markets and regions
Expanding list of owned sites in high growth markets and regions (examples of sites) BioPharma, Specialty Clinical Diagnostics, Genomics Asia - Pacific Bangalore, India Milan, Italy Lenexa, Kansas, USA Dongguan, China Yokohama, Japan 21,400 m2 17,400 m2 10,200 m2 14,400 m2 4,000 m2 St. Charles, Miss
Slide 11: Eurofins Food & Feed 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 Lancaster, PA Philadelphia, PA Battle Creek
Slide 12: Food Testing campus in U.S. demonstrates value of strategic ownership
Food Testing campus in U.S. demonstrates value of strategic ownership of key strategic sites 2019 2022 Advantage: significant space savings Madison, Wisconsin Laboratory surface area (m2) Sites 2019 consolidated Footprint optimisation – -41% consolidating smaller into large sites into large campus
Slide 13: Investments in start-ups are integral to long-term growth and value creation
Investments in start-ups are integral to long-term growth and value creation Long track record Strategic rationale Contributions by start-ups in FY 2022 Number of start-ups created Complements M&A strategy: • When acquisitions are too expensive or Organic growth contribution +100 bps Programme Total
Slide 14: Investments in start-ups are integral to long-term growth and value creation
Investments in start-ups are integral to long-term growth and value creation Revenue development Profitability development Cash flow development Revenues EBITDA Operating cash flow and capex Establish Ramp Establish Ramp Establish Ramp Group ~ average margin Year 1 2 3 4 5 0 Operating cash flow Year
Slide 15: 59 acquisitions closed in 2022
59 acquisitions closed in 2022 to augment our technological capabilities and global footprint Acquired companies generated revenues of €269m1 in 2022 (acquired at 1.6x of their total FY 2022 revenues) North America Europe Rest of the World 11 acquisitions 36 acquisitions 12 acquisitions Acquired inn
Slide 16: Ongoing investments to be fully digital with proprietary IT solutions
Ongoing investments to be fully digital by deploying sector-leading proprietary IT solutions 30+ years of innovation with bespoke proprietary Laboratory Information Management Systems (LIMS) specific to each business line 1990s Today and beyond • 1991: Started development of proprietary eLIMS for fo
Slide 17: Eurofins' own eLIMS-BPT + LabAccess offers more for clients
Eurofins’ own eLIMS-BPT + LabAccess offers more for clients and costs less than externally available solutions External bioanalytical LIMS on market Eurofins’ proprietary eLIMS-BPT solution Standard feature set Standard feature set + Expanded, value-added feature set + Testing Testing Billing & Serv
Slide 18: 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. 18
Slide 19: FY 2022 results
FY 2022 results Full Year 2022 Full Year 2021 +/- Δ +/- Δ • Revenues stable y-o-y despite a (€m) Adjusted1 SDIs1 Reported Adjusted SDIs Reported Adjusted Reported decline in COVID-19 revenues of more Results Results Results Results Results Results than €800m • Good organic growth in Core Business2 d
Slide 20: Revenue bridge
Revenue bridge (€m) FY +5.8% >€800m H2 +6.7% drop y-o-y 6,782 6,718 6,712 • Y-o-Y drop in COVID-19 revenues of more than €800m fully compensated by: • strong Core Business organic growth (+6.7%1 in H2 2022) • 2022 acquisitions contributed €150m to consolidated 2022 revenues (€269m on full-year pro f
Slide 21: Numerous impacts on adjusted EBITDA in FY 2022
Numerous impacts on adjusted EBITDA in FY 2022 (€m) Fewer Public Working Days 1,600 • Larger effect in H2 Disruptions 1,513 Labour challenges • Severe U.S. winter • COVID-related lockdowns storm in China • Supply chain Unexpected • COVID-related impacts for clients acceleration of absenteeism worldw
Slide 22: 2022 cash flow overview
2022 cash flow overview FY 2022 FY 2021 Δ% €m €m • Good net working capital management Change in net working capital1 31 -19 -296 -297 0% • High taxes paid (due to higher COVID 2021 Income taxes paid profits) Net cash provided by operating activities 1,136 1,511 -25% • Cash provided by operating act
Slide 23: Net working capital
Net working capital 2.3% 2.2% NWC intensity 2.1% Inventory €157m €154m €146m 2020 2021 2022 19.1% 20.0% • Net Working Capital 17.5% improvement y-o-y receivable1 Accounts 4.5% 4.5% 4.2% €1,389m • Slightly higher DSOs2 at 58 €1,342m €328m €1,194m days vs 57 days in 2021 €308m €282m • Improved DPOs3 a
Slide 24: Strong credit profile and long maturities
Strong credit profile and long maturities Debt maturity profile1 (€m) 800 • Strong credit profile at end of 2022: • Net debt of €2,839m includes €528m 700 of lease liabilities • 90% of borrowings at fixed rates 600 • Proactive credit management to sustain investment grade rating: 500 • Issued 7-year
Slide 25: Return on Capital Employed (ROCE)
Return on Capital Employed (ROCE) ROCE & ROCE excluding Goodwill1 • ROCE development affected by the following factors in 2022: 68% • Lower EBITAS due to decline in accretive COVID-19 testing, unexpectedly high inflation and growth-oriented investments Excluding owned real • Increase in Capital Empl
Slide 26: 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. 26
Slide 27: We continue to lead our field in terms of innovation
We continue to lead our field in terms of innovation Some 2022 examples BioPharmaceutical Testing Services: • Launched Onco-PDOTM service, a strategic approach targeting tumours by culturing them in 3-dimensional laboratory systems mimicking the human body environment Environment Testing Services: •
Slide 28: Organ transplant testing continues to grow remarkably
Organ transplant testing continues to grow remarkably Transplant Genomics revenues1 Continued market penetration >4x • Significant growth momentum continues • Revenues more than quadrupled year-on-year in FY 2022 • Further revenue expansion expected in FY 2023 • Hired full-fledged commercial team, i
Slide 29: Divestment of non-core Digital Testing asset
Divestment of non-core Digital Testing asset is another example of Eurofins value creation ability Built unique Digital Testing platform Creating value1 Recognised as a global leader in its space in terms Platform increased substantially in size of technology, innovation & service quality: during Eu
Slide 30: Further progress in all dimensions of ESG
Further progress in all dimensions of ESG Environment Social Achieved further reduction in carbon intensity Strong female representation in leadership roles: • 47% female leaders at all leadership Carbon intensity by revenue (tCO2e/€m) (market-based) levels 98 • 25% female representation at the Grou
Slide 31: Eurofins is an ESG enabler
Eurofins is an ESG enabler Supporting a healthy environment Emphasizing sustainable testing We value biodiversity Our testing services help improve health We have a strong commitment to the The Eurofins Foundation supports outcomes, ensure food safety and protect 3R strategy multiple biodiversity co
Slide 32: Eurofins activities contribute to UN Sustainable Development Goals
Almost all Eurofins activities contribute to United Nations Sustainable Development Goals (UN SDGs) Share of Eurofins revenues by Sustainability Level Sustainability level Definition Examples of Eurofins activities TIC services1 not eligible under 98% Level 4 the EU Taxonomy but contributing • Most
Slide 33: IV. Outlook and summary
IV. Outlook and summary 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. 33
Slide 34: 2023 to 2027 Objectives
2023 to 2027 Objectives (€m) FY 2023 Mid-term objectives FY 2027 €6.6bn – €6.7bn +6.5% organic growth p.a. Revenues Full compensation of ca. €600m of Approaching €10bn COVID revenues in FY 2022 €250m revenues added from M&A p.a. Adj. EBITDA1 €1.35bn – €1.40bn Continued growth investments in: Margin:
Slide 35: Summary
Summary FY 2022 successfully concluded Potential upsides to 2023 and 2027 objectives Financial achievements Faster adaptations to current market headwinds • Fully compensated >€800m year-on-year revenue reduction from • Pricing initiatives COVID-19 testing and reagents • Cost cutting and productivit
Slide 36: 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. 36
Slide 37: 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. 37
Slide 38: 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