Sartorius AG · XETR:SRT

Sartorius — Q1 2020 Earnings Presentation

55 slides from Sartorius's earnings presentation, April 2020

1. Slide 1: Simplifying Progress Investors Presentation Q1 2020 Results

   Simplifying Progress Investors Presentation Q1 2020 Results

2. Slide 2: Disclaimer

   Disclaimer This presentation contains statements concerning the future performance of the Sartorius Group. These statements are based on assumptions and estimates. Although we are convinced that these forward-looking statements are realistic, we cannot guarantee that they will actually materialize.

3. Slide 3: Agenda

   Agenda Overview | Strategy Bioprocess Solutions Division Lab Products & Services Division FY 2020 Guidance | Q1 2020 Results 3

4. Slide 4: Partner of biopharmaceutical research and industry

   Partner of biopharmaceutical research and industry We empower scientists and engineers to simplify and accelerate progress in life science and bioprocessing, enabling the development of new and better therapies and more affordable medicine. 4 Overview | Strategy

5. Slide 5: Sartorius at a glance

   Sartorius at a glance ~€1.8bn High exposure to attractive biopharma and life science industry Sales revenue Group sales revenue ~14% Sales CAGR1 2014-2019 €1,827m 27.1% EBITDA margin2 €412m 60+ Sales with life science customers Locations worldwide, headquartered in Göttingen, Germany ~35% ~85% 9,016

6. Slide 6: Strategic focus of both divisions on the biopharma value chain

   Strategic focus of both divisions on the biopharma value chain Bioprocess Solutions Division Molecule Cell line and Upstream & development process development downstream production Quality | Testing | Validation Lab Products & Services Division 6 Overview | Strategy

7. Slide 7: Attractive market environment with strong growth opportunities

   Attractive market environment with strong growth opportunities Favorable 9bn people by 2050; demographics >2bn 60 yrs or older Rise of ~30% CAGR for biosimilar ~8% CAGR for biopharma biosimilars sales 2019–2022 market 2019–2025 Strong R&D pipeline; advances in gene and >40% share of biologics in cel

8. Slide 8: Sales revenue has more than doubled over the last 5 years

   Sales revenue has more than doubled over the last 5 years +14.8% Sales CAGR ~+13% +13.2% ~€1.8bn 39.5 EBITDA-margin1 +7.4pp 1900 +9.3% 37.5 1700 +18.2% 35.5 1500 +16.0% 33.5 1300 +12.6% 31.5 +8.8% 29.5 1100 +13.6% 27.5 900 27.1 25.5 €733m 25.0 25.1 25.9 23.5 700 23.6 ~€650m 21.5 500 19.7 20.5 21.0 1

9. Slide 9: Regional balance better reflecting end-markets

   Regional balance better reflecting end-markets ~€650m ~€1.8bn ~€240bn CAGR 22% ~+16% 25% 27% 25% Asia | Pacific ~+16% 35% Americas 51% EMEA 53% ~+11% 40% 22% Sales 2011 by region Sales 2019 by region Global biopharma 2019 market 2011 2019 2019 CAGR for continued operations, in constant currencies 9

10. Slide 10: Infrastructure prepared for further organic growth

    Infrastructure prepared for further organic growth CAPEX ratio CAPEX composition 2020 in % 14.9 15.2 11.7 12.3 8.8 9.1 10.1 ~10.0 ~X% Major projects 7.7 ~3% Regular expansion ~2% Capitalized R&D 1 1 2 2012 2013 2014 2015 2016 2017 2018 2019 2020 ~3% Maintenance 1 Incl. discontinued operation 2 Based

11. Slide 11: M&A strategy – adding innovation, enhancing focus

    M&A strategy – adding innovation, enhancing focus Divestment Essen Acquisition of selected Intec Division Intellicyt ViroCyt BioScience assets from Danaher 2013 2014 2015 2016 2017 2018 2019 2020 TAP AllPure Bio Cellca kSep Umetrics Biological Biosystems Technologies Outsource Industries Portfolio:

12. Slide 12: Acquisition of Biological Industries in Q4 2019

    Acquisition of Biological Industries in Q4 2019  Developer and manufacturer of cell culture media  Specializes in media for advanced therapies (cell and gene therapies)  ~130 employees; headquartered in Beit Haemek, near Haifa (Israel)  2019 revenue €20m to €25m with healthy growth profile; slig

13. Slide 13: Acquisition of selected life science assets from Danaher

    Acquisition of selected life science assets from Danaher  Acquisition includes bioanalytical tools for LPS; upstream and downstream technologies for BPS  2019 sales amounted to c. $170m; allocation of approx. $70m to LPS and approx. $100m to BPS; neutral impact on Group margin  ~300 employees wit

14. Slide 14: Acquisitions significantly strengthen positioning of both divisions

    Acquisitions significantly strengthen positioning of both divisions LPS: FortéBio highly synergetic with the bioanalytics BPS: Acquisitions fit perfectly into the portfolio portfolio; expands spectrum to include protein analysis iQue Screener (Sartorius) Filtration Identification of antibodies based

15. Slide 15: Sartorius 2025 targets and initiatives

    Sartorius 2025 targets and initiatives Strategic initiatives 2025 targets Regional  Participate in strong Chinese market growth ~€4bn  Continue to outperform the important U.S. market Sales revenue Portfolio  Add high-impact innovation, e.g. digital tools ~ 2/3 ~ 1/3  Enhance process development

16. Slide 16: Sartorius 2025 ambition per division

    Sartorius 2025 ambition per division SSB | BPS LPS Sartorius Group ~€2.8bn ~€1.2bn ~€4bn Sales revenue Sales revenue Sales revenue ~30% ~25% ~28% EBITDA margin EBITDA margin EBITDA margin 2025 targets are based on 2017 currency exchange rates; EBITDA excluding extraordinary items 16 Overview | Strat

17. Slide 17: Agenda

    Agenda Overview | Strategy Bioprocess Solutions Division Lab Products & Services Division FY 2020 Guidance | Q1 2020 Results 17

18. Slide 18: Snapshot of the Bioprocess Solutions Division

    Snapshot of the Bioprocess Solutions Division Total solution provider for biomanufacturing Track record of dynamic growth Sales revenue, € in millions; EBITDA margin1 in % +15.7% 1,350.5 1500 1300 CAGR 35 33 1100 29.1 31 900 700 615.6 29 27 500 23.0 25 300 23 2014 2015 2016 2017 2018 2019 Global foo

19. Slide 19: Covering most steps of the biopharma process chain

    Covering most steps of the biopharma process chain  Production process design is inalterable for the lifetime of most drugs  Individually customized production process Culture media Seed Scale-up Fermentation required for all drugs preparation cultivation  Decisions for process UPSTREAM design, a

20. Slide 20: Leading positions in key technology platforms

    Leading positions in key technology platforms Sartorius1 Merck | Danaher Thermo Top 3 Players Millipore Pall Cytiva2 Fisher 1. Merck | Millipore Filtration 2. Danaher | Pall 3. Sartorius 1. Sartorius Fluid 2. Thermo Fisher Management 3. Merck | Millipore 1. Sartorius Fermentation 2. Thermo Fisher 3.

21. Slide 21: U.S. remains most important market; China with highest growth rates

    U.S. remains most important market; China with highest growth rates Biologics market growth forecast CAGR 2019 to 2023, € in billions U.S. U.S. ~110 ~155 Europe ~+9% U.S. Europe ~48 ~61 China ~+6% Europe China ~35 ~€240bn ~€335bn ~62 ROW ~+15% China ROW ~47 ~57  Biologics market in China is at an e

22. Slide 22: Biosimilars: Strong growth, big opportunities

    Biosimilars: Strong growth, big opportunities  Major blockbuster biologics are going off-patent  Time-to-market is key as only the first providers are most likely profitable  Several approvals in Asia and Europe; U.S. at the beginning  For now, relatively small market but with strong growth  Si

23. Slide 23: Leader in the growing single-use technology market

    Leader in the growing single-use technology market Single-use market penetration expected to increase from ~35% to ~75% Single-use products offer advantages over conventional stainless-steel devices  Capex|Opex reduction over entire lifecycle  Reduced risk of cross-contamination  Higher flexibili

24. Slide 24: The biopharma market is not yet mature, but is maturing

    The biopharma market is not yet mature, but is maturing ... not mature because Cumulative investment and absolute survival rate in drug development  Underpenetrated global market >10+ years 100 1500  Strong flow of innovation Absolute survival  Time-consuming product 80 1200 rate (in %; lhs) Cumu

25. Slide 25: Digitalization is arriving in biopharma

    Digitalization is arriving in biopharma Data Sartorius offers the leading software for bioprocess aggregation data analytics  Enhanced process control and robustness  Improved product quality  Predictive process control Process Monitoring optimization and control  Powerful solutions for modeling

26. Slide 26: Limited dependence on individual accounts

    Limited dependence on individual accounts Long-term business relationships with leading global Limited dependence on individual accounts (bio-) pharma companies Sales to Top 50 customers in 2019, € in millions 350 300 ~50% ~55% ~45% 250 ~40% 200 Cumulative ~25% 150 share 100 50 0 Top 10 11 to 20 21

27. Slide 27: Four strong pillars drive above-average growth

    Four strong pillars drive above-average growth Pharma market CAGR 4-7% ~+14% Organic CAGR 1 Biopharma CAGR ~8% market Single-use Double-digit penetration growth Market Esp. in North 2 share gains America 2014 2015 2016 2017 2018 2019 2020 1 CAGR 2013 to 2020e, excluding FX effects and acquisitions 2

28. Slide 28: Agenda

    Agenda Overview | Strategy Bioprocess Solutions Division Lab Products & Services Division FY 2020 Guidance | Q1 2020 Results 28

29. Slide 29: Snapshot of the Lab Products & Services Division

    Snapshot of the Lab Products & Services Division Premium vendor for laboratories Division in transition to a new growth and profitability profile Sales revenue, € in millions; EBITDA margin1 in % Build-up of CAGR 600 600 30 bioanalytics +11.8% 29 550 550 portfolio 28 since 27 500 500 2016 476.5 CAGR

30. Slide 30: Our ambition: Reduce costly trial & error in drug discovery

    Our ambition: Reduce costly trial & error in drug discovery Drug discovery Testing & Clinical trials Drug approval Our approach improving  Facilitate digitalization 4 ½ years 1 year 5 ½ years 1 ½ years and automatization €490m €110m €640m €60m  Decrease likelihood of failure  Reduce time and cost

31. Slide 31: Innovative bioanalytics for accelerated molecule development

    Innovative bioanalytics for accelerated molecule development Automated imaging for live cell analysis  Analysis of cell health, morphology and movement by images and videos  Deep insights into biological processes Considerable acceleration of the development of High-throughput screening and select

32. Slide 32: Bioanalytics portfolio with little competition and high value added

    Bioanalytics portfolio with little competition and high value added  IntelliCyt processes thousands of plates and generates large amounts of data for rapid and clear target identification High content Microscopy imaging1)  IncuCyte delivers video-based insights and Richness of data IntelliCyt impr

33. Slide 33: FortéBio acquisition further strengthens positioning in bioanalytics

    FortéBio acquisition further strengthens positioning in bioanalytics Innovative product portfolio with strong market position Application example: Cell line development  Instruments, consumables and software for real-time, label-free measurement of biomolecular interactions Octet  Octet as the key

34. Slide 34: Bioanalytics increases addressable market and changes growth profile

    Bioanalytics increases addressable market and changes growth profile Addressable market of LPS € in billions +8%  Different growth rate of bioanalytics CAGR due to high exposure to ~1.9 biopharmaceutical R&D  By 2025, two-thirds of the addressable ~1.2 +3.5% Bioanalytics market growth will come fr

35. Slide 35: Strong market position in key product categories

    Strong market position in key product categories  Leading positions in laboratory products used for research and quality control  Average global market share of >10%  High gross margins offer potential for economies of scale  Growth potential especially in the U.S. and Asia Lab balances Microb.

36. Slide 36: Scalable business with considerable growth and margin potential

    Scalable business with considerable growth and margin potential Well established sample prep. portfolio  Premium instruments and consumables offering with strong global positions  Market share opportunities in certain regions to be addressed primarily by direct sales force Unique bioanalytics port

37. Slide 37: Agenda

    Agenda Overview | Strategy Bioprocess Solutions Division Lab Products & Services Division FY 2020 Guidance | Q1 2020 Results 37

38. Slide 38: Dynamic top-line growth; further margin increase

    Dynamic top-line growth; further margin increase Sartorius Group Q1 2019 Q1 2020 in % in % cc1 in millions of € unless otherwise specified Sales revenue 435.7 509.9 +17.0 +16.5 Order intake 482.8 629.4 +30.4 +29.7 Underlying EBITDA2 114.0 137.9 +20.9 Underlying EBITDA2 margin in % 26.2 27.0 +0.8pp U

39. Slide 39: Double-digit growth in all geographies

    Double-digit growth in all geographies Americas EMEA Asia|Pacific Sales by Region € in millions € in millions € in millions in % +17.1 % +16.1 % +16.3 % EMEA 207.0 ~ 41% Americas 180.7 178.0 ~ 35% 152.4 122.2 105.3 €509.9m Q1 2019 Q1 2020 Q1 2019 Q1 2020 Q1 2019 Q1 2020 Asia|Pacific  Americas: Stro

40. Slide 40: BPS: Strong demand across all product categories and regions

    BPS: Strong demand across all product categories and regions Order Intake Sales Revenue Underlying EBITDA & Margin € in millions € in millions € in millions +39.6% cc +22.4% cc +40.3% +23.0% +31.9% 506.2 394.3 119.9 360.7 320.7 90.9 30.4% 28.3% 1 Q1 2019 Q1 2020 Q1 2019 1 Q1 2020 Q1 2019 1 Q1 2020 

41. Slide 41: LPS: Strongly reduced demand in China

    LPS: Strongly reduced demand in China Order Intake Sales Revenue Underlying EBITDA & Margin € in millions € in millions € in millions +0.5% cc +0.1% cc -22.3% +0.9% +0.5% 122.1 123.3 23.2 115.0 115.6 18.0 20.1% 15.6% 1 1 Q1 2019 Q1 2020 Q1 2019 Q1 2020 Q1 20191 Q1 2020  Soft demand, especially for

42. Slide 42: Operating cash flow increases

    Operating cash flow increases Sartorius Group Q1 2019 Q1 2020 in % in millions of € unless otherwise specified Underlying EBITDA 114.0 137.9 +20.9  Net operating cash flow mostly driven by higher earnings and factoring of receivables Extraordinary items -5.0 -13.0 -159.9 in the amount of ~€75m Fina

43. Slide 43: Very sound balance sheet and financial base

    Very sound balance sheet and financial base Key Financial Indicators Net Debt and Net Debt to Underlying EBITDA Dec. 31, Mar. 31, Sartorius Group 1,500 3.0 2019 2020 1,200 2.4 Equity ratio in % 38.0 39.0 900 1.8 600 1.2 Net debt in millions of € 1,011.3 951.9 300 0.6 0 0.0 Net debt | underlying 2.0

44. Slide 44: Outlook for 2020, higher uncertainty than usual

    Outlook for 2020, higher uncertainty than usual  Given the pandemic situation, forecast is subject to higher uncertainty than usual concerning both the development of existing businesses and the integration of acquisitions  Guidance is based on the macroeconomic assumptions that China will continu

45. Slide 45: Outlook for 2020

    Outlook for 2020 FY 2020 Guidance1 Previous New Sales Revenue Underlying Sales Revenue Underlying Growth EBITDA Margin Growth EBITDA Margin Sartorius Group ~ 10% - 13% ~ 27.5% ~ 15% - 19% ~ 27.5% - thereof Biological Industries 1.5pp slightly dilutive 1.5pp slightly dilutive - thereof Danaher portfo

46. Slide 46: Appendix

    Appendix 46

47. Slide 47: Sartorius shares – an attractive investment

    Sartorius shares – an attractive investment 1 2 3 Biopharma market fueled Leading market positions Global presence with by long-term growth in key technologies and strong base in growth drivers high brand awareness regions High entry barriers, low price- Diversified revenue base Proven growth track

48. Slide 48: Sartorius legal & operational structure

    Sartorius legal & operational structure Sartorius Group Legal Setup Sartorius AG Preference shares >50% Administered by executor ~91% Free float Ordinary shares Stock market listed in Germany1 ~34% Bio-Rad Laboratories ~9% Treasury shares ~9% Treasury shares ~5% Family owned ~2% Free float ~74% 100%

49. Slide 49: Share price performance

    Share price performance 450% 400% 350% Sartorius (prefs.) 300% Sartorius (ord.) 250% Sartorius Stedim Biotech 200% DAX 150% MDAX 100% NASDAQ Biotech 50% Jan-20 Mar-17 Mar-20 Mar-16 May-16 Jan-17 May-17 Jul-17 Mar-18 May-18 Mar-19 May-19 Jan-16 Jul-16 Sep-17 Jan-18 Jul-18 Jan-19 Jul-19 Sep-16 Nov-17

50. Slide 50: A sampling of the Bioprocess Solutions' product portfolio

    A sampling of the Bioprocess Solutions’ product portfolio Filtration Purification Fermentation Fluid management 50 Appendix

51. Slide 51: A sampling of the Lab Products and Services' product portfolio

    A sampling of the Lab Products and Services’ product portfolio Lab balances | Lab water systems Bioanalytics Lab filtration | Microb. analysis Pipettes 51 Appendix

52. Slide 52: Recap 2020 targets and initiatives

    Recap 2020 targets and initiatives Strategic initiatives 2020 targets Regional  Gain share in North America ~€2bn  Leverage strong market growth in Asia Sales revenue Portfolio  Complementary extensions through ~ 3/4 ~ 1/4 alliances and acquisitions Organic Acquisitions  Own product development

53. Slide 53: Executive Board of Sartorius AG

    Executive Board of Sartorius AG Joachim Kreuzburg, CEO René Fáber Rainer Lehmann, CFO Gerry Mackay Joined Sartorius in 1999 Joined Sartorius in 2002 Joined Sartorius in 2005 Joined Sartorius in 2015 Member of the Board since 2003 Member of the Board since 2019 Member of the Board since 2017 Member o

54. Slide 54: Financial calendar and contacts

    Financial calendar and contacts  July 21, 2020 Petra Kirchhoff Publication Half-Year Report 2020 | Göttingen Head of Corporate Communications & IR  October 20, 2020 Phone: +49.551.308.1686 Publication Nine-Month Results 2020 | Göttingen E-mail: petra.kirchhoff@sartorius.com Ben Orzelek Head of Inv

55. Slide 55: Visit our IR website

    SARTORILS a Visit our IR website

Sartorius — Q1 2020 Earnings Presentation on 6ix