Investors Presentation October 2018

Transcription

1 Investors Presentation October 2018

2 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. This is because our assumptions harbor risks and uncertainties that could lead to actual results diverging substantially from the expected ones. It is not planned to update our forward-looking statements. Throughout this presentation, differences may be apparent as a result of rounding during addition.

3 Agenda Overview and Strategy Bioprocess Solutions Division Lab Products & Services Division FY 2018 Guidance H Results

4 Sartorius at a glance Industry focus Clear mission Attractive market Strong positioning Stable business model A leading partner of the biopharma industry Making R&D and production processes Clear mission of innovative biologics more efficient Biopharma market fueled by strong long-term growth drivers Double-digit market share in key technologies Diversified revenue base and high share of recurring revenues ~ 1.4bn Sales revenue ~13% Sales CAGR 1) % EBITDA margin 2) 30 Countries >7,500 Employees Based on FY 2017 figures 1) For continued operations, in constant currencies 2) Excluding extraordinary items 4

5 Strategic focus on the biopharma market Bioprocess Solutions Division Molecule development Cell line and process development Production upstream & downstream Quality Testing Validation Lab Products & Services Division 5

6 Strong market fundamentals Favorable demographics 9bn people by 2050; >2bn 60 yrs or older Rise of biosimilars ~25% CAGR biosimilar sales ~8% CAGR biopharma market Increasing healthcare spending +6.5% CAGR worldwide prescription drug sales Strong R&D pipeline; advances in gene and cell therapy >50% Share of biologics in pharma R&D pipeline 6

7 Sales revenue more than doubled over the last 6 years Sales CAGR ~ +13% EBITDA 1) margin +5.4pp +8.8% +13.6% +12.6% +16.0% +18.2% +9.3% 1.4bn m ~ 650m Sales revenue EBITDA 1) margin in % Intec Division; divested in Sales growth and CAGR for continued operations, in constant currencies 1) Excluding extraordinary items 7

8 Regional balance better reflecting end-markets Sales by region 2011 Sales by region 2017 Global pharmaceutical market ~ 650m CAGR ~ 1.4bn ~ 1.1tn Asia Pacific ~ 22% ~ +16% Asia Pacific ~ 25% Asia Pacific ~ 26% Americas ~ 25% ~ +15% Americas ~ 32% Americas ~ 51% EMEA ~ 53% ~ +11% EMEA ~ 43% EMEA ~ 23% CAGR for continued operations, in constant currencies 8

9 M&A strategy adding innovation, enhancing focus Divestment Intec Division IntelliCyt ViroCyt Essen BioScience Lonza Cell TAP Biosystems Culture Media AllPure Technologies BioOutsource Cellca ksep Umetrics Acquisition criteria Portfolio: Complementary products or technologies Market Position: Either among the Top 3 or unique selling point Integration: Management capacity; cultural fit Price: Fair valuation; reach Sartorius profitability level in 2-3 years 9

10 Infrastructure prepared for further organic growth Capex ratio in % ~ ) ) ) ) Incl. discontinued operation 2) Based on 2018 guidance 10 Capex composition 2018 ~x% ~7% ~3% ~2% ~3% Major projects Regular expansion Cap. R&D Maintenance Yauco, Puerto Rico Doubling of fluid management and filter capacities Goettingen, Germany Extension of headquarters Aubagne, France Capacity extension of bag production New ERP and extension of global IT infrastructure 10

11 Sartorius 2025 targets and initiatives Strategic initiatives Regional Participate in strong Chinese market growth Continue to outperform the important U.S. market 2025 targets ~ 4bn 1 Sales revenue Portfolio Add high-impact innovation, e.g. digital tools Enhance process development capabilities Expand into adjacent applications ~ 2 3 Organic ~ 1 3 Acquisitions Operations Accelerate workflows across the organization through digitalization Extend manufacturing base in Asia ~28% EBITDA margin 2025 targets are based on 2017 currency exchange rates; non-organic revenue growth is accounted for companies acquired from 2018 and onwards; EBITDA excluding extraordinary items 11

12 Sartorius 2025 ambition per division SSB BPS ~ 2.8bn Sales revenue LPS ~ 1.2bn Sales revenue Sartorius Group ~ 4bn 1 Sales revenue ~30% EBITDA margin ~25% EBITDA margin ~28% EBITDA margin 12

13 Agenda Overview and Strategy Bioprocess Solutions Division Lab Products & Services Division FY 2018 Guidance H Results

14 Snapshot of the Bioprocess Solutions Division Total solution provider for biomanufacturing Global footprint Americas ~ 35% Asia Pacific ~ 24% EMEA ~ 41% Division sales by region Track record of dynamic growth % p.a % CAGR +14.2% CAGR 1, Sales revenue, in millions; EBITDA margin 1) in % Based on FY 2017 figures; sales CAGR in constant currencies 1) Excluding extraordinary items High share of recurring revenues Single-use products ~ 75% Equipment ~ 25% Division sales by category 14

15 Covering all steps of the biopharma process chain Process development Upstream processing Downstream processing Quality Testing Validation 15

16 Leading positions in key technology platforms Sartorius Merck Millipore Danaher Pall Thermo Fisher GE Top 3 Players Filtration 1. Merck Millipore 2. Danaher Pall 3. Sartorius Fluid Management 1. Sartorius 2. Thermo Fisher 3. Merck Millipore Fermentation 1. Sartorius 2. Thermo Fisher 3. GE Purification 1. GE 2. Merck Millipore 3. Danaher Pall Cell Culture Media 1. Thermo Fisher 2. Merck Millipore 3. GE Pie charts indicate completeness of product offering 16

17 Target to lead Preclinical Phase 1 Phase 2 Phase 3 Registration Absolute survival rate % Cumulative investmt ( in millions) The biopharma market is not yet mature, but is maturing... not mature because Underpenetrated global market Strong flow of innovation Time-consuming product development Cumulative investment and absolute survival rate in drug development ,500 1, but maturing because Increasing importance of product costs and time to market Robustness and ease of use of tools are becoming more important Companies invest in market consolidation >10+ years Data adopted from: Paul (2010) Nature Rev DD & Association of the British Pharmaceutical Industry (2017) 17

18 Digitalization is arriving in biopharma Collect data Improve process Monitor & control Sartorius offers the leading software for bioprocess data analytics Analyze Enhanced process control and robustness Improved product quality Predictive process control Powerful solutions for modeling and optimizing development and manufacturing Help to gain insights from complex data sets Data analytics just at the beginning in biomanufacturing and shows high potential 18

19 U.S. remains most important market; China with highest growth rates Biologics market growth forecast CAGR 2018 to 2022, $ in billions U.S. ~ 115 U.S. ~ 163 Europe ~ 50 ~ +16% China Europe ~ 65 China ~ 33 ~ $250bn ~ +9% U.S. ~ $345bn China ~ 60 ROW ~ 51 ~ +7% Europe ROW ~ 57 Biologic market in China is at an early stage, but has strong growth potential Supportive regulatory environment and solid industry foundation; biopharma considered a priority sector Manufacturing capacity in China to triple by

20 Biosimilars: Strong growth, big opportunities Biosimilars will outperform the biologics market in billions ~ +25% CAGR ~ 58 ~ 10 ~ 230 ~ 402 Major blockbuster biologics are going off patent Lower prices will lead to higher production volumes Time-to-market is key as only the first few biosimilar providers are most likely to be profitable APAC penetration relatively high; U.S. at the beginning Other biologics Biosimilars 20

21 Leader in the growing single-use technology market Single use products offer advantages over conventional stainless-steel devices Capex Opex reduction over entire lifecycle Reduced risk of cross-contamination Higher flexibility; advantageous for biosimilars Single-use market penetration expected to increase from ~35% to ~75% % Construction cost Reference SU Reference % Time-tomarket SU Reference % Energy cost SU Reference % Water cost SU 21

22 Limited dependence on individual accounts Sales to Top 50 customers in 2017, in millions ~ 25% ~ 40% ~ 45% ~ 50% ~ 55% Cumulative share Top to to to to 50 Long-term business relationships with leading global (bio-)pharma companies Limited dependence on individual accounts More than half of 2017 BPS sales were generated with the Top 50 customers No individual customer accounts for more than 5% of BPS sales revenue No single drug accounts for more than 3% of BPS sales revenue 22

23 Four strong pillars drive above-average growth Pharma market CAGR 4-7% ~ +11% Organic CAGR 1) Biopharma market CAGR ~8% Single-use penetration Double-digit growth Market share gains Esp. in North America ) 1) CAGR 2013 to 2018e, excluding FX effects and acquisitions 2) Midpoint of 2018 guidance 23

24 Agenda Overview and Strategy Bioprocess Solutions Division Lab Products & Services Division FY 2018 Guidance H Results

25 Snapshot of the Lab Products & Services Division Premium vendor for laboratories Global footprint Americas ~ 25% Asia Pacific ~ 27% EMEA ~ 48% Division sales by region Division in transition to a new growth and profitability profile % +5.0% % Build-up of bioanalytics portfolio 15 since % ~ % 18.0 ~+1pp e 1) Sales revenue, in millions; EBITDA margin 2) in % Based on FY 2017 figures; sales growth and CAGR in constant currencies 1) Based on 2018 guidance 2) Excluding extraordinary items 25

26 Our ambition: Reduce costly trial & error in drug discovery Drug discovery 4 ½ years Testing & improving 1 year Clinical trials 5 ½ years Drug approval 1 ½ years 490m 110m 640m 60m ~ 500m Average costs of drug discovery 1 in 10,000 Chance for a candidate to make it to market ~10 years From drug discovery to approval Our approach Facilitate digitalization and automatization Lower likelihood of failure Reduce time and costs in molecule development Schematic example of biologic drug discovery with data from Association of the British Pharmaceutical Industry 26

27 Innovative platforms to increase biopharma R&D efficiency Acquisition of U.S. companies IntelliCyt (2016) and Essen BioScience (2017) Solutions for high-throughput and real-time quantitative cell analysis Automatization, acceleration and improvement of basic research steps Reduction of costs in drug discovery phase and clinical trials IncuCyte: Real-time cell analysis IntelliCyt: Innovative cell screening 27

28 Richness of data Bioanalytics portfolio with little competition and high value added Microscopy Flow cytometry 2) High content imaging 1) IncuCyte IntelliCyt IntelliCyt processes thousands of plates and generates large amounts of data for rapid and clear target identification IncuCyte delivers video-based insights and improved workflows for real-time quantitative analysis of living cells Plate readers 3) Works on cells in suspension Works on cells on 2D surface Independent of cell attachment Sample throughput per plate 1) Becton Dickinson, Merck Millipore, PerkinElmer, Thermo Fisher 2) Beckman Coulter, Becton Dickinson, Merck Millipore, Thermo Fisher 3) Agilent Technologies, Danaher, Merck Millipore, PerkinElmer 28

29 Bioanalytics increases addressable market and changes growth profile Addressable market of LPS in billions +10.0% CAGR ~ 1.4 ~ 0.8 Different growth rate of bioanalytics due to high exposure to biopharmaceutical R&D ~ % CAGR ~ 4.3 By 2025, two-thirds of the addressable market growth will come from bioanalytics Thus, growth and profitability profile of LPS is changing over time LPS ex bioanalytics Bioanalytics 29

30 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 #2 Pipettes #4 Lab Filtration #3 Microb. Analysis #2 (membrane based) 30

31 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 portfolio established Innovative technologies added through recent acquisitions Combination with Sartorius global reach provides significant growth potential 31

32 Agenda Overview and Strategy Bioprocess Solutions Division Lab Products & Services Division FY 2018 Guidance H Results

33 2018 revenue outlook confirmed for LPS, raised for BPS and Group FY 2018 Guidance 1) Previous New Sales revenue growth Sartorius Group ~ 9% - 12% Bioprocess Solutions ~ 8% - 11% Lab Products & Services ~ 12% - 15% 1) In constant currencies Underlying EBITDA margin ~ +0.5pp vs. FY17: 25.1% ~ +0.5pp vs. FY17: 28.0% ~ +1.0pp vs. FY17: 18.0% Sales revenue growth Underlying EBITDA margin ~ 12% - 15% ~ +0.5pp ~ 12% - 15% ~ +0.5pp ~ 12% - 15% ~ +1.0pp Growth guidance includes non-organic contribution by recent acquisitions: ~ 0.5pp for BPS and ~ 2.5pp for LPS, i.e. ~ 1.0pp for the Group Capex ratio ~ 15% (FY 2017: 14.9%) Due to the U.S. tax reform, SAG s tax rate is expected to decrease by 2pp to around 27% from 2018 onwards 33

34 Strong top-line growth; earnings margin 25.0% Sartorius Group in millions unless otherwise specified H ) H in % in % cc 2) Sales revenue Order intake Underlying EBITDA 3) Underlying EBITDA 3) margin in % pp Underlying EPS 4) (ord.) in Underlying EPS 4) (pref.) in Acquisitions contribute ~ 2pp of non-organic sales growth Restatement of H figures due to PPA finalization for Essen BioScience and Umetrics 1) Restated after PPA finalization 2) Constant currencies 3) Underlying = excluding extraordinary items 4) Underlying EPS = based on net profit after non-controlling interest; adjusted for extraordinary items as well as amortization and based on a normalized financial result and tax rate 34

35 Growth in all regions; highest momentum in the Americas Americas in millions EMEA in millions Asia Pacific in millions Sales by Region in % EMEA ~ 43% Americas ~ 33% ~ 758m Asia Pacific ~ 24% H1 17 H1 18 H1 17 H1 18 H117 H % +8.4 % % Acc. to customers location; growth in constant currencies Americas: BPS with high momentum versus moderate comps; LPS growth fueled by Essen acquisition EMEA: Robust performance driven by BPS growth; weaker markets for LPS Asia Pacific: Both divisions with solid growth rates against high comps 35

36 BPS: Strong performance in Q2 Order Intake in millions Sales Revenue in millions Underlying EBITDA & Margin in millions +12.6% cc +8.7% +11.9% cc +7.9% +10.0% % 28.0% H1 17 H1 18 H1 17 H1 18 H1 17 H1 18 Significant sales growth with single-use products; cell culture media business picking up Umetrics acquisition contributes close to 1pp of non-organic sales growth Order intake includes equipment projects; somewhat above expectations Underlying EBITDA margin rises against unfavorable FX due to economies of scale 36

37 LPS: Continued positive development in line with expectations Order Intake in millions Sales Revenue in millions Underlying EBITDA & Margin in millions +13.1% cc +9.2% +12.0% cc +8.1% +7.8% % 17.1% H1 17 H1 18 H1 17 H1 18 H1 17 H1 18 Essen BioScience acquisition contributes ~5pp of non-organic sales growth EBITDA margin reached prior-year level as positive economies of scale and less favorable FX leveled out 37

38 Cash flow influenced by higher earnings and lower taxes Sartorius Group in millions unless otherwise specified H ) H in % Underlying EBITDA Extraordinary items Financial result Underlying net profit 2),3) Reported net profit 3) Net operating cash flow considerably enhanced by higher earnings Net investing cash flow in previous year primarily reflects the Essen and Umetrics acquisitions Capital expenditures in line with expectations Net operating cash flow Net investing cash flow 4) n.m. Capex ratio (in %) pp 1) Restated after PPA finalization 2) Underlying net profit = net profit adjusted for extraordinary items, amortization and based on a normalized financial result and tax rate 3) After non-controlling interest 4) Net cash flow from investing activities and acquisitions 38

39 Key financial indicators remain at robust levels Key Financial Indicators Net Debt and Net Debt to Underlying EBITDA Sartorius Group Equity ratio in % Net debt in millions of Net debt underlying EBITDA Q1-Q Q1-Q Q1- Q Q1-Q Q Net debt in millions of (lhs) Net debt to underlying EBITDA (rhs) 39

40 Appendix

41 Sartorius shares an attractive investment Biopharma market fueled by long-term growth drivers Leading market positions in key technologies and high brand awareness Global presence with strong base in growth regions High entry barriers, low pricesensitivity and consolidated competitive landscape Diversified revenue base and high share of recurring revenues provide low volatility Proven growth track record: Sales CAGR of ~13% over the last five years 41

42 Ordinary shares Preference shares Sartorius legal & operational structure Sartorius Group Legal Setup Sartorius AG Stock market listed in Germany 1) > 50% Administered by executor ~ 34% Bio-Rad Laboratories ~ 9% Treasury shares ~ 5% Family owned ~ 2% Free float ~ 91% Free float ~ 9% Treasury shares ~ 74% 100% Sartorius Stedim Biotech S.A. Stock market listed in France ~ 74% Sartorius AG ~ 26% Free float Other Sartorius Subsidiaries Sartorius Group Operational Setup Bioprocess Solutions Division Lab Products & Services Division 1) Information on shareholdings and shares in free float pursuant to Sections 33 et seq. of the German Securities Trading Act (WpHG). Reporting obligations refer only to ordinary shares and not to non-voting preference shares. 42

43 Extract of the Bioprocess Solutions product portfolio Filtration Purification Fluid Management Fermentation & Cell Culture Media 43

44 Extract of the Lab Products & Services product portfolio Lab Balances Lab Water Systems Bioanalytics Filtration Lab Filtration Pipettes 44

45 Recap 2020 targets and initiatives Strategic initiatives Regional Gain share in North America Leverage strong market growth in Asia 2020 targets ~ 2bn Sales revenue Portfolio Complementary extensions through alliances and acquisitions Own product development ~ 3 4 Organic ~ 1 4 Acquisitions Infrastructure Expansion of production capacity Significant investments into IT infrastructure ~26-27% EBITDA margin 2020 targets are based on 2015 currency exchange rates; EBITDA excluding extraordinary items 45

46 Executive Board of Sartorius AG Joachim Kreuzburg, CEO since 2003 Corporate Strategy, Legal & Compliance, Operations, Communications, Human Resources Rainer Lehmann, CFO since 2017 Finance, IT, Business Processes Reinhard Vogt since 2009 Marketing, Sales & Services 46

47 Financial calendar and contacts October 11, 2018 SdK Private Investors Event Rendsburg October 31, 2018 Société Générale Roadshow Paris November 12, 2018 HSBC Healthcare Day Frankfurt January 10-11, 2018 Oddo Midcap Conference Lyon Petra Kirchhoff Head of Corporate Communications & IR Phone: Ben Orzelek Head of Investor Relations Phone: Sartorius Corporate Administration GmbH Otto-Brenner-Straße Goettingen, Germany 47