IR COMPANY PRESENTATIONir.stratec.com/stratec/pdf/pdf_id/510537.pdf · • Organic sales decline of...

IR COMPANY PRESENTATION

San Francisco – January 2019

SAFE HARBOR STATEMENT

Forward-looking statements involve risks.

This company presentation contains various statements concerning the future

performance of STRATEC. These statements are based on both assumptions and

estimates. Although we are convinced that these forward-looking statements are

realistic, we can provide no guarantee of this. This is because our assumptions involve

risks and uncertainties which could result in a substantial divergence between actual

results and those expected.

It is not planned to update these forward-looking statements.

SAN FRANCISCO – JANUARY 2019 2

AGENDA

3SAN FRANCISCO – JANUARY 2019

1. OVERVIEW AND BUSINESS MODEL

2. THE IVD MARKET

3. FINANCIALS

4. FUTURE GROWTH


OVERVIEW AND

BUSINESS MODEL

OVERVIEW AND BUSINESS MODEL

STRATEC AT A GLANCE


Market leader in automation solutions for the

diagnostics industry and translational research

~ 1.100 employees worldwide

More than 13,000 systems with medium to high

throughput installed globally (e.g. DiaSorin’s LIAISON XL |

Hologic/Gen-Probe’s PANTHER | Siemens’ ADVIA Centaur | bioMérieux’s

new VIDAS)

More than 25,000 low throughput systems installed

globally

Revenue € 209.8 million in 2017(CAGR revenues since IPO in 1998: ~17%)

Dividend payments raised over 14 consecutive years


UNIQUE MARKET POSITION

STRATEC IN THE IVD VALUE CHAIN


Diagnostic

CompaniesBlood Banks,

LaboratoriesPatients

STRATEC develops

and manufactures

fully automated

analyzer systems

and disposables

focusing on the high

growth segments in

diagnostics

Partners market

systems together

with reagents and

consumables to

laboratories, blood

banks and

hospitals

worldwide

Laboratories

performing tests

and offering service

to doctors and

patients using

reagents from

diagnostic

companies

Growth drivers:

• Aging population

• Developing

healthcare systems

world wide

• High volume of

new tests


BUSINESS MODEL


STRATEC provides instrumentation, consumables, software and automation solutions

– OEM development and manufacturing

– More than 7,000 fully automated analyzer systems manufactured annually

– Wide range of intellectual property rights

Extensive collaboration with partner during design phase

– STRATEC: Engineering / automation, software, QM

– Partner: System / reagent / market requirements

Systems have long market lifecycles

– Leads to longstanding partnerships

– Expanding installed base of systems

– Product enhancement and extension drives value

“Simoa HD-1” for QuanterixConsumable for “Simoa HD-1”


SECURING RETURN ON INVESTMENT


Long-term agreements with partners

– Milestone payments during development stage

– Operating sales during series production stage

– Continuous revenues from consumable sales

Minimum volume commitment

– Firm purchase orders

– STRATEC an integral part of partners’ plans

Reliable partnership

– Shortened development time

– Integration of analyzer system and reagents

– Agreed development budget & transfer price

– High commitment by both partners “LIAISON XL” for DiaSorin

“PANTHER FUSION” for Hologic

9

THE IVD MARKET

SAN FRANCISCO – JANUARY 2019

THE IVD MARKET

IVD MARKET SEGMENTS / IVD MARKET: ~ 60 BILLION USD IN 2016


High Throughput

Low Throughput

Total instrumentation

~ 8.3 billion USD

Number of systems

CAGR 2016 - 2021:

IVD Market: CAGR 2016-21 of 4-6%

CAGRs 2016-21 submarkets:

Molecular Diagnostic: ~ 8% Immunodiagnostics: ~ 4%

Hematology: ~ 2-4%

Source: Kalorama: “The worldwide market for In Vitro Diagnostic Tests, 10th Edition”, Aug 2016

MarketsandMarkets: “In Vitro Diagnostics/IVD Market - Forecast to 2021”, Dec 2016

80%

14%

4%2%

Reagents / Chemistry

Instrumentation

Services

Software

High Throughput

Market by product type

THE IVD MARKET

OUTSOURCED VS IN HOUSE INSTRUMENTATION MARKET


Total

instrumentation

~ 8.3 billion

USD

In House

64 %

Outsourced

36 %

In House

73 %

Outsourced

27 %

2010 2015 2020

In House

56 %

Outsourced

44 %

Source: Own estimates based on

historical market data and recent

industry trends

THE IVD MARKET

A SELECTION OF STRATEC CUSTOMERS


Source: IVD News / non-public companies estimated / non-reported sector revenues estimated

… AND OTHER

GAME-CHANGING COMPANIES

(acquired by Bio-Rad in

January 2017)

STRATEC customer

Not a STRATEC customer

GLOBAL TOP 20 IVD COMPANIES Revenues 2017 (USD billion)

1. Roche Diagnostics 10.2

2. Abbott Diagnostics 7.3

3. Danaher 5.8

4. Siemens 5.0

5. ThermoFisher 3.5

6. Sysmex 2.4

7. bioMerieux 2.1

8. Ortho Clinical Diagnostics 1.8

9. BECTON DICKINSON 1.4

10. BIO-RAD 1.4

11. Hologic 1.2

12. CH Werfen 1.0

13. Grifols 0.8

14. Agilent 0.8

15. Diagnostica Stago 0.7

16. Qiagen 0.7

17. DiaSorin 0.7

18. Perkin Elmer 0.6

19. Fujirebio 0.4

20. Immucor ~0.4


FINANCIALS

FINANCIALS


KEY FIGURES - TRACK RECORD

Sales in € million

CAGR ~12%EBIT in € million

CAGR ~10%

1 Figures adjusted for comparison; adjusted for depreciation and amortization from purchase price allocation for acquisitions, related integration expenses

and other extraordinary effects. Reconciliation to IFRS figures can be found in the respective annual report.

67.561

76

102116.6 122.7 128

144.9 146.9

184.9

209.8

0

50

100

150

200

250

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

14.3

11.2

14.7

17.6

21.8

15.6

19.5

24.1

26.9

32.3

35.5

0

5

10

15

20

25

30

35

40

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

1

1

FINANCIALS


KEY FIGURES - TRACK RECORD

Net income in € million

CAGR ~11%Dividend per share in €

CAGR ~14%

10.0

8.2

11.713.0

15.3

12.4

15.5

19.8

22.1

25.4

27.9

0.0

5.0

10.0

15.0

20.0

25.0

30.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

0.22

0.35

0.450.50

0.55 0.560.60

0.700.75 0.77

0.80

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

1

1

1 Figures adjusted for comparison; adjusted for depreciation and amortization from purchase price allocation for acquisitions, related integration expenses


FINANCIALS


SALES BY OPERATING DIVISIONS

56% 55% 49%

26% 29%33%

18% 15% 18%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015 2016 2017

Systems Service parts & consumables

Developement & services Others

Continued growth in service parts &

consumables sales

- Growth driven by increased

installed base, higher system

complexity and acquisitions

- At 33% of total sales in 2017 versus

26% in 2015

In % of total sales

Annual sales by operating division as of Dec 31

FINANCIALS


SUMMARY FIRST NINE MONTHS OF 2018

• Organic sales decline of 4.8% to € 134.6 million; nominal: -9.9% (9M 2017: € 149.4 million):

- Negative effects from first time adoption of IFRS 15 and foreign exchange rates

- Reduced systems sales, weaker Diatron business and temporary slowdown in the demand for

service parts & consumables

• Assumption of significant upturn in growth momentum in Q4 2018 and 2019 as a whole

confirmed by latest developments

• Adjusted EBIT margin down by 370 bps yoy to 12.7% due to missing economies of scale and

increased expenses related to strong project pipeline

• Further contract wins and several promising negotiations in advanced stage

• Identified annual pre-tax cost savings potential of € 2.0 million to € 3.0 million from 2021

onwards

• Number of employees up by 12.4% to 1,208 in the light of full project pipeline

FINANCIALS 9M 2018 AT A GLANCE1

FINANCIALS


bps = basis points

1 For comparison purposes, adjusted figures exclude amortization resulting from purchase price allocations in the context of acquisitions and the associated reorganization

expenses, as well as other non-recurring effects.

2 In accordance with IFRS 9 and IFRS 15.

3 Not retrospectively restated to reflect IFRS 9 and IFRS 15 (modified retrospective approach). Retrospectively restated to reflect the classification of the nucleic acid

preparation business as a discontinued operation in accordance with IFRS 5 and correction in accordance with IAS 8.41.

4 Results from continuing operations.

18

FINANCIALS


Consolidated net incomeEBIT

ADJUSTMENTS 9M 2018

19

FINANCIALS


SALES

As of September 30

90.4

105.3 107.2

126.3

149.4

134.6

0

20

40

60

80

100

120

140

160

9M/13 9M/14 9M/15 9M/16 9M/17 9M/18

In € million

20

9M 2018 sales decline:

• Negative effects from foreign exchange

rates (-2.2 ppts) and first-time adoption

of IFRS 15 (-2.9 ppts)

organic sales decline of 4.8%

• Lower systems and service parts &

consumables sales as well as weaker

Diatron business

• Current customer forecasts imply

significant recovery for Q4 2018 and

beyond

ppts = Percentage points

FINANCIALS


9M 2018 adjusted EBIT margin at 12.7%

• Adjusted EBIT down 30.5% yoy to € 17.0

million

- Negative effect of € 0.9 million due to

first-time adoption of IFRS 15

• Margin decline of 370 bps yoy

- Negative scale effects

- Increased expenses related to strong

project pipeline

9M EBIT EBIT margin

EBIT in € million EBIT margin in %

13.4

17.719.2

18.4

24.5

17.0

4%

6%

8%

10%

12%

14%

16%

18%

20%

0

2

4

6

8

10

12

14

16

18

20

22

24

26

9M/13 9M/14 9M/15 9M/16 9M/17 9M18

As of September 30

ADJUSTED EBIT AND EBIT MARGIN

21

FINANCIALS


CASH FLOW AND NET DEBT

22

IFRS (€ million) 9M

2018

9M

2017

yoy

Cash flow – operating

activities15.4 25.8 -40.3%

Cash flow – investment

activities-3.9 -9.7 -59.8%

Cash flow – financing

activities-9.9 -16.1 -38.5%

Free cash flow 11.5 16.1 -28.6%

• 9M 2018 operating cash flow down

by 40.3% yoy due to lower earnings

levels and higher inventories

• Higher capex spending due to

significant capacity expansion in

Birkenfeld partly offset by disposal

of financial assetsIFRS (€ million) 9M

2018

FY

2017

Change

Cash and cash equivalents

at end of period25.1 24.1 4.1%

Net debt 44.2 48.8 -9.4%

FINANCIALS

23

Operational Efficiency

• Increase volume of insourced subassemblies

• Streamlining geographical R&D and production footprint

• Implementation of group wide ERP-system

Portfolio Optimizations

• Disposal of nucleic acid sample preparation business (sales of € 2.5 million and EBIT-loss of

€ 0.9 million in 2017)

• Selective discontinuation of some smaller/end-of-life cycle and less profitable product lines

• Optimizing R&D opportunity costs

• Optimizing risk reward profile of development pipeline

1) versus 2018 cost base

Expected annual pre-tax cost savings of € 2.0

million to € 3.0 million from 20211) onwards

Focused Allocation of Development Resources


EARNINGS IMPROVEMENT INITIATIVE


FUTURE GROWTH

FUTURE GROWTH


FINANCIAL GUIDANCE

Outlook for 2018

• Sales expected to decline organically in the low- to mid-single digit percentage range

• Adjusted EBIT margin of around 11% to 13%

First indication for 2019

• Significantly positive organic sales growth expected in 2019

- Numerous upcoming product launches and ongoing ramp-up phases

- Partial postponement of sales originally expected for 2018

• Adjusted EBIT margin to be significantly higher than the level of 2018

- Positive scale effects

- First positive impact from already defined earnings improvement measures

25

FUTURE GROWTH


FOCUS IN 2018 AND BEYOND

• Reaccelerate top-line growth from Q4 2018 onwards and reduce earnings volatility across

business units

• Further realize synergies through development activities across STRATEC businesses

• Leverage expanded platform offering

• Achieve milestones and market launches within foreseen timeframe

- Expected launches within the next couple of months among others include instruments for DiaSorin, Becton

Dickinson, Quotient and the KleeYa Analyzer platform

• Drive results from defined earnings improvement initiative

• Implementation of a group-wide ERP system to further drive process efficiency

• Expand development capacities including significant extension of buildings in Birkenfeld

27

APPENDIX


APPENDIX

28

KEY FIGURES AT A GLANCE

IFRS (€ million) 2013 2014 2015 2016 2017

Sales 128.0 144.9 146.9 184.9 209.8

Adjusted EBIT 19.5 24.1 26.9 32.2 35.5

Adjusted EBIT margin (%) 15.2 16.6 18.3 17.4 16.9

Adjusted Consolidated net income 15.5 19.8 22.1 25.3 27.9

Adjusted Earnings per share (€) 1.32 1.68 1.87 2.14 2.35

Dividend per share (€) 0.60 0.70 0.75 0.77 0.80

No. of employees 546 544 583 976 1,086

Total assets 117.8 137.8 158.9 258 264

Equity ratio (%) 82.5 81.3 82.0 55.7 59.8

Free cash flow 13.5 32.9 17.3 -70.4 14.4

Figures adjusted for comparison; adjusted for depreciation and amortization from purchase price allocation for acquisitions, related integration expenses



APPENDIX


SHAREHOLDER STRUCTURE(AS OF: MAY 2018)

SHARE

IPO Aug. 1998

Number of shares 11,969,245

Share price (12/11/2018) € 55.50

Market capitalization € 664 million

Fixed and family ownership

(incl. investment companies)

Treasury shares

Retail investors incl. not

identified institutional investors

Institutional investors

Institutional investors > 3%:

OppenheimerFunds

Columbia Threadneedle Investments

Allianz

BNP Paribas Investment Partners

NN Group

41.2%

0.1%

37.0%

21.7%

STRATEC SE

Gewerbestr. 37

75217 Birkenfeld

Germany

Phone +49 7082 7916-991

Fax +49 7082 7916-9190

www.stratec.com

CONTACT

THANK YOU

FOR YOUR

ATTENTION

CONTACT

Marcus Wolfinger, CEO

Jan Keppeler, Head of IR & CC

Phone +49 7082 7916-6515

[email protected]


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