Eurofins Scientific Se · EURONEXT:ERF
Eurofins Scientific — FY2023 Earnings Presentation
34 slides from Eurofins Scientific's earnings presentation, Feb 27, 2024
Slide 1: 2023 Full Year Results
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: Agenda
Agenda I. Highlights II. Financial review III. Innovation and Sustainability IV. Outlook & summary CONFIDENTIAL AND PROPRIETARY - © Eurofins Scientific (Ireland) Ltd [2024]. All rights reserved. Any use of this material without the specific permission of an authorized representative of Eurofins Scie
Slide 4: I. Highlights
I. Highlights CONFIDENTIAL AND PROPRIETARY - © Eurofins Scientific (Ireland) Ltd [2024]. 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: Forward momentum from H2 2023 expected to carry on into 2024
Forward momentum from H2 2023 expected to carry on into 2024 Key highlights Focus areas for 2024 H2 2023 represents the first period not affected by prior year Continue building on comparables and thus for the first time provides a comparison progress made in 2023 mostly free from the one-time effec
Slide 6: Financial and strategic highlights for FY 2023
Financial and strategic highlights for FY 2023 Financial highlights Strategic highlights Eurofins delivers annual results in line with its Eurofins continues to advance its long-term 2023 objectives growth, sustainability and innovation initiatives • Total revenues of €6,515m declined year-on-year b
Slide 7: Revenue by area of activity in FY 2023
Revenue by area of activity in FY 2023 10% Activities are defined as follows: • Life: • Food and Feed Testing • Agro Testing 20% • Environment Testing 40% • BioPharma: • BioPharma Services • Agrosciences • Genomics • Forensic Services • Diagnostic Services and Products: • Clinical Diagnostics Testin
Slide 8: Eurofins remains committed to its prudent capital allocation strategy centred on growth investments
Eurofins remains committed to its prudent capital allocation strategy centred on growth investments1 Cash flow generation (2019-2023) Investment allocation (2019-2023) 2019-2022 2023 Maintenance % of sales % of sales • Assume 2.5% of sales capex Sales €23.4bn €6.5bn Net cash provided by operating •
Slide 9: Continued increase in site ownership, creating significant long-term value
Continued increase in site ownership, creating significant long-term value Discretionary decision to increase proportion of owned sites Site ownership has high value Surface area (m2) by site ownership Site ownership is key to expanding high-throughput laboratory campuses: >3x total • Unlock economi
Slide 10: Expanding proportion of owned sites in our global laboratory network
Expanding proportion of owned sites in our global laboratory network Examples of owned sites completed in 2023 Planned additions to owned sites in 2024-2025 Eurofins Environment Testing Spain Eurofins BioPharma Product Testing France Castellon, Spain Lentilly, France 5,000 m² 2,000 m2 Tamworth, UK F
Slide 11: Eurofins accelerated its pace of start-up activity in 2023
Eurofins accelerated its pace of start-up activity in 2023 Long track record Strategic rationale Contributions by start-ups in FY 2023 Number of start-ups initiated Complements M&A strategy: • When acquisitions are too expensive or Organic growth contribution Programme Total Per year unavailable 1 2
Slide 12: 40 acquisitions closed in 2023 to augment our technological capabilities and global footprint
40 acquisitions closed in 2023 to augment our technological capabilities and global footprint Acquired companies generated revenues of €122m1 in 2023 Cost of €158m reflects sales multiple of 1.3x North America Europe Rest of the World 5 acquisitions 25 acquisitions 10 acquisitions Acquired: Acquired
Slide 13: H2 2019 and H2 2023 comparison
H2 2019 and H2 2023 comparison In €m except otherwise stated H2 20195 H2 2023 Δ Revenues 2,395 3,305 +38% Reported EBITDA 462 646 +40% Reported EBITDA margin (%) Eurofins finalised adjustments and 19.3% 19.5% +20bps reorganisation following the pandemic, Free cash flow to the firm 248 400 +61% the u
Slide 14: II. Financial review
II. Financial review CONFIDENTIAL AND PROPRIETARY - © Eurofins Scientific (Ireland) Ltd [2024]. All rights reserved. Any use of this material without the specific permission of an authorized representative of Eurofins Scientific (Ireland) Ltd is strictly prohibited. 14
Slide 15: FY 2023 results in line with objectives
FY 2023 results in line with objectives Full Year 2023 Full Year 2022 +/- Δ +/- Δ (€m) Adjusted SDIs Reported Adjusted SDIs Reported Adjusted Reported Results Results Results Results Results Results • Revenues declined y-o-y due to sharp decrease in COVID-19-related revenues Revenues (from just unde
Slide 16: Revenue bridge
Revenue bridge (€m) FY 2023: just over €20m FY 2022: just under €600m 6,749 6,712 H1 2023: +7.0%1 H2 2023: +7.2%1 FY 2023: +7.1%1 • FX headwind of 1.9% due to appreciation of the Euro 6,515 • Sharp y-o-y decrease in COVID-19 revenues • Consistently strong Core Business organic growth1 (+7.1% in FY 2
Slide 17: Organic growth by Operating Segment
Organic growth by Operating Segment Revenues (€m) Core Business1 Operating Segment Commentary organic growth +7.1% • BioPharma Services: sound growth despite softer demand for early-stage R&D activities (Discovery) 6,712 • Food Testing: solid gains in pricing while persisting inflation continued to
Slide 18: Strong margin expansion in H2 2023 expected to carry on into 2024
Strong margin expansion in H2 2023 expected to carry on into 2024 Adjusted EBITDA (€m) Margin +120bps 24.3% Drivers behind year-on-year margin Margin expansion of +120bps in H2 2023: Margin Margin 21.9% 20.7% 19.9% • Both H2 2023 and H2 2022 had little to no revenues from COVID-19 testing and reagen
Slide 19: 2023 cash flow overview
2023 cash flow overview FY 2022 FY 2023 Δ Δ% €m €m €m Change in net working capital 31 -65 -96 Income taxes paid -296 -140 156 Net cash provided by operating activities 1,136 1,018 -118 -10% Net operating capex -459 -392 67 • Stable FCFF year-on-year despite Free cash flow to the firm (FCFF) before
Slide 20: Net working capital
Net working capital 2.1% 2.2% NWC intensity 2.1% Inventory €154m €146m €139m • Net working capital intensity at 5.1% of revenues 2021 2022 2023 • Stable inventory at 2.1% of 19.1% 20.0% 20.4% revenues vs 2.2% in 2022 5.1% receivable1 Accounts 4.5% • Slightly higher DSOs2 at 59 4.2% €1,389m €1,342m €
Slide 21: Strong credit profile and long maturities
Strong credit profile and long maturities Leverage1 Debt maturity profile2 (€m) Key Highlights Hybrid (1st call) • Net debt decreased from €3,245m at 3.2x Schuldschein the end of FY 2019 to €2,705m at the Eurobond end of FY 2023 • Strong cash position of €1.2bn at the end of 2023 or €773m adjusted f
Slide 22: Return on Capital Employed (ROCE)
Return on Capital Employed (ROCE) ROCE & ROCE excluding Goodwill1 • ROCE development affected by the following factors in 2023: 68% • Lower EBITAS due to decline in accretive COVID-19 testing and inflationary headwinds • Increase in Capital Employed related to higher net capex to support Excluding s
Slide 23: III. Innovation and Sustainability
III. Innovation and Sustainability CONFIDENTIAL AND PROPRIETARY - © Eurofins Scientific (Ireland) Ltd [2024]. All rights reserved. Any use of this material without the specific permission of an authorized representative of Eurofins Scientific (Ireland) Ltd is strictly prohibited. 23
Slide 24: We continue to lead our field in terms of innovation
We continue to lead our field in terms of innovation Some 2023 examples obesityLITE Panel ExPeCT™ CAR-T PeekabooTM Click DiscoveryAI™ Eurofins Discovery Eurofins Viracor launched DNA Diagnostics Center (DDC) Eurofins Discovery launched LeadHunterTM Services ExPeCT™ CAR-T to monitor and launched Peek
Slide 25: Further progress in all dimensions of ESG
Further progress in all dimensions of ESG Environmental Social Governance Carbon emissions Carbon intensity by (ktCO2e) revenue (tCO2e/€m) (market-based) (market-based) Female Female representation representation Bitsight Security Net Promoter Score amongst GOC and amongst National Rating2 (NPS)® Re
Slide 26: Almost all 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 Definition1 Examples of Eurofins activities 99% TIC services not eligible under EU Taxonomy and not supporting 76% Level 3 Taxon
Slide 27: IV. Outlook and summary
IV. Outlook and summary CONFIDENTIAL AND PROPRIETARY - © Eurofins Scientific (Ireland) Ltd [2024]. All rights reserved. Any use of this material without the specific permission of an authorized representative of Eurofins Scientific (Ireland) Ltd is strictly prohibited. 27
Slide 28: 2024 and 2027 Objectives
2024 and 2027 Objectives (€m) FY 2024 Mid-term objectives FY 2027 +6.5% organic growth p.a. Revenues €7.075bn – €7.175bn €250m revenues added from M&A p.a. Approaching €10bn Adj. EBITDA €1.525bn – €1.575bn Continued growth investments in: Margin: 24% Ownership of strategic sites FCFF before investme
Slide 29: Summary
Summary FY 2023 successfully concluded Looking ahead to 2024 and towards 2027 objectives Financial achievements 2024: further build on programmes initiated in 2023 and before • Strong +7.1%1 organic growth in the Core Business2 in FY 2023 • Achieve average organic growth of 6.5% p.a. • Above our mid
Slide 30: Q&A
Q&A CONFIDENTIAL AND PROPRIETARY - © Eurofins Scientific (Ireland) Ltd [2024]. All rights reserved. Any use of this material without the specific permission of an authorized representative of Eurofins Scientific (Ireland) Ltd is strictly prohibited. 30
Slide 31: Appendix
Appendix CONFIDENTIAL AND PROPRIETARY - © Eurofins Scientific (Ireland) Ltd [2024]. All rights reserved. Any use of this material without the specific permission of an authorized representative of Eurofins Scientific (Ireland) Ltd is strictly prohibited. 31
Slide 32: Continued investments in strategic initiatives in 2023
Continued investments in strategic initiatives in 2023 Strategic investment initiatives for (€m) 2018 2019 2020 2021 2022 2023 long-term value creation Leasehold improvements (LHI) & others 95 55 71 117 146 70 Owned sites to complete hub and spoke network % of revenues 2.5% 1.2% 1.3% 1.7% 2.2% 1.1%
Slide 33: Site ownership has attractive financial fundamentals
Site ownership has attractive financial fundamentals Benefits Examples • Estimated rent savings of €79m1 in FY 2023 from owned sites 1 Savings • Estimated yield on rent savings from owned sites of 12% (based on the estimated net book value at end of 2023 of €670m) • Lower operating costs from invest
Slide 34: 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