Q1 PRESENTATION 27 APRIL 2017 1
RECORD SALES BUT WEAK EBITDA Net sales SEKm 1 328, up 37% EBITDA SEKm 159, up 17% EBITDA margin 12% vs 14% Profit after tax SEKm 1 (25) Operating CF SEKm -25 (-60) Net debt/equity 0.6 (0.5) 1 400 1 200 1 000 NET SALES PER QUARTER (SEKM) EBITDA (SEKM), EBITDA MARGIN PER QUARTER AND LTM EBITDA MARGIN 300 250 24,0% 20,0% 800 600 400 200 0 200 150 100 50 0 16,0% 12,0% 8,0% 4,0% 0,0% EBITDA EBITDA % EBITDA%, R12 2
Q1 EBITDA MARGIN 16 % Overall objective 12 % Q1 2017 Actual + Favourable sales development Erdosteine Other APIs + Good demand Sterile Liquids - Non-recurring costs Start-up costs Replacement free of charge Acquisition integration and effects - Phasing Raw material availability Inventory reduction - Weaker demand Solids&Others - Establishing US base Note. Not drawn to scale 3
Q1 STRONG PERFORMANCE IN D&T CONTINUED GOOD DEMAND IN STERILE LIQUIDS, SOFT IN SOLIDS & OTHERS Manufacturing Services Sterile Liquids Sales 1 Growth EBITDA 2 Margin Sek 534 m 45 % Sek 90 m 17 % Manufacturing Services Solids & Others Sales 1 Growth EBITDA 2 Margin Sek 598 m 29 % Sek 44 m 7 % Development Technology Sales 1 Growth EBITDA 2 Margin Sek 228 m 26 % Sek 43 m 19 % 1/ Segment Net Sales includes Sek 32 m of inter-group sales 2/ Segment EBITDA does not include Sek 18 m of group overhead 4
STERILE LIQUIDS Continued strong demand Net Sales and % of Total Lyophilisation Blow-fill-seal Expansion projects Finalising Wasserburg, DE Lyophilisation, packaging Ongoing Masate, IT Lyophilisation Ongoing Kaysersberg, FR Blow-Fill-Seal Growth 45% 534 SEKm 39% EBITDA and % of Total Organic growth 5% EBITDA Delays in supply of raw materials Inventory reduction effects Start-up costs in Germany 90 SEKm 51% 5
SOLIDS & OTHERS Competitive market conditions Net Sales and % of Total Discontinuation of less profitable contracts Weak demand Cost saving and efficiency program Swedish operations Customer contract renegotiations Growth 29% Organic growth negative 598 SEKm 44% EBITDA EBITDA and % of Total Inventory revaluation Weaker demand of highly profitable products Recipharm Pharmaservices Pvt Ltd (Kemwell India) Completion announced February 20 44 SEKm 25% 6
DEVELOPMENT & TECHNOLOGY Product rights Strong demand for erdosteine and other APIs Expansion projects implemented Bioanalysis capability, SE New GMP suite for clinical materials, US Net Sales and % of Total 228 SEKm 17% Growth 26% Organic growth 15% EBITDA Favourable sales development Global development integration North America, Europe, India Increasing the service offering and enhancing the position in the value chain EBITDA and % of Total 43 SEKm 24% Recipharm Pharmaservices Pvt Ltd Minor impact 7
ACQUISITIONS UPDATE Net Sales and % of total Integration ongoing Mitim Srl (IT), Feb 2016 Nitin Lifesciences Ltd (IN), Apr 2016 Cirrus Pharmaceuticals (US), May 2016 Kemwell AB (SE), May 2016 Recipharm Pharmaservices Pvt Ltd (Kemwell India), Feb 2017 Performance 296 SEKm 22% Nitin pro forma Q1 growth of 35 percent in local currencies Material delays in customer provided raw materials Inventory reductions with negative impact Recipharm Pharmaservices only part of the quarter Opportunities Technology Market Relationship EBITDA and % of total 45 SEKm 28% 8
FINANCIALS HENRIK STENQVIST (CURRENCY SEK MILLION) 9
Q1 P&L DEVELOPMENT Q1 2017 Q1 2016 Net Sales 1 328 973 EBITDA 159 136 EBITDA margin 12.0% 14.0% D&A -113-67 EBIT 46 69 Financial Items -28-22 Profit before Tax 18 47 Tax -17-22 Net Profit 1 25 10
MANUFACTURING SERVICES STERILE LIQUIDS SALES BRIDGE, JAN MAR Sales SEK million Sales, % 2016 367.8 100.0 Currency +7.6 +2.1 Acquisitions 141.2 +38.4 Organic +17.5 +4.7 Total +166.3 +45.2 2017 534.1 145.2 Healthy growth EBITDA BRIDGE, JAN MAR EBITDA SEK million 2016 Currency Acquisitions Other Total 2017 69.0 +1.1 +28.1-8.5 +20.7 89.7 11
MANUFACTURING SERVICES SOLIDS & OTHERS SALES BRIDGE, JAN MAR Sales SEK million Sales, % 2016 462.4 100.0 Currency +2.0 +0.4 Acquisitions +141.5 +30.6 Organic -7.6-1.6 Total +135.9 +29.4 2017 598.3 129.4 EBITDA BRIDGE, JAN MAR EBITDA SEK million 2016 Currency Acquisitions Inventory revaluation Other Total 2017 59.4 +2.8 +18.3-18.7-18.2-15.8 43.6
DEVELOPMENT & TECHNOLOGY SALES BRIDGE, JAN MAR Sales, SEK million Sales, % 2016 181.2 100.0 Currency +3.3 +1.8 Acquisitions +16.2 +9.0 Organic +27.1 +14.9 Total +46.6 +25.7 2017 227.8 125.7 Healthy growth EBITDA BRIDGE, JAN MAR EBITDA SEK million 2016 Currency Acquisitions Other Total 2017 28.3 +0.6-1.6 +16.1 +15.1 43.4 13
+37% INCREASE IN Q1 NET SALES +30.4% +4.7% 1 328 (MSEK) 973 (MSEK) +1.4% Q1 2016 FX 1/ Acquisitions Organic Q1 2017 1/ Currency translation effect 14
CONCLUDING REMARKS THOMAS ELDERED 15
BECOMING A GLOBAL LEADER Sek 5.0 bn 2017Q1 LTM Sales ~30% CAGR 1 since 2013 Sek 772 m 2017Q1 LTM EBITDA 2 ~38% CAGR 1 since 2013 8 Acquisitions 2 Asset/portfolio 1 Green-field since 2013 500+ Products 400+ Customers 5000 Employees 20+ Locations 100+ Markets Attractive value proposition 1/ As reported 2/ EBIT + depreciations + amortizations 16
DRIVING ABOVE-MARKET PERFORMANCE IN 2017 Integration of completed acquisitions Benefit from commercial and cost synergies Start supply serialised products to the US Start commercial supply from expanded lyophilisation capacity in Germany Create a global comprehensive development services offering Leverage our new sales and business development organisation, in the US, Europe and India Execute on accretive acquistion opportunities 17
ON TRACK TO REACH OUR LONG-TERM TARGETS Financial targets Status 8,0 7,0 8.0bn At least SEK 8bn in sales by 2020 +37% Q1 +44% LTM 6,0 5,0 4,0 +32% +38% +44% EBITDA margin more than 16% 12% Q1 15% LTM 3,0 2,0 2.1bn +21% Net debt to equity ratio of less than 0.8 0.6 end of Q1 1,0 0,0 2013 2014 2015 2016 Q1LTM 2020 Dividend 30-50% of net profit Board proposal 18
Q&A 19
CONTACT INFORMATION Thomas Eldered CEO & Managing Director +46 (0)8 602 52 00 Henrik Stenqvist CFO & EVP Finance, Control & Investor Relations +46 (0)8 602 52 00, ir@recipharm.com 20