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VIRTUAL BERENBERG CONFERENCE USA 2020May 18, 2020
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.
MAY 18, 2020 2
AGENDA
MAY 18, 2020
1. OVERVIEW AND BUSINESS MODEL2. THE IVD MARKET3. FINANCIALS4. OUTLOOK AND STRATEGY
3
MAY 18, 2020
OVERVIEW AND
BUSINESS MODEL
4
• Leading OEM player for automation solutions for the diagnostics industry and translational research
• Three decades of experience in highly regulated healthcare markets and growing technology pool
• Around 1.300 employees worldwide
More than 50% allocable to R&D
• Production sites in Germany (HQ), Switzerland, Hungary and Austria
• High number of systems installed globally
More than 13,000 medium to high throughput systems
More than 25,000 low throughput systems
• Sales of € 221.6 million in 2019
CAGR sales since IPO in 1998: ~15%
• Dividend payments raised over 15 consecutive years
OVERVIEW AND BUSINESS MODEL
STRATEC AT A GLANCE
MAY 18, 2020
SELECTED PRODUCTS
5
OVERVIEW AND BUSINESS MODEL
UNIQUE MARKET POSITION STRATEC IN THE IVD VALUE CHAIN
MAY 18, 2020
DiagnosticCompanies
Blood Banks,Laboratories
Patients
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 worldwide
• Rising prevalence of chronic diseases
• High volume of new tests
6
OVERVIEW AND BUSINESS MODEL
BUSINESS MODEL
MAY 18, 2020
STRATEC provides instrumentation, consumables, software and automation solutions
OEM development and manufacturing
Around 8,000 fully automated analyzer systems and modules 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
Product lifecycles typically in an area of 12 to 15 years
Leads to longstanding partnerships
Expanding installed base of systems
Product enhancement and extension drives value
7
Dev
elopm
ent
and m
arke
t la
unch
of su
cces
sor
pro
duct
OVERVIEW AND BUSINESS MODEL
MAY 18, 2020
Long-term agreements with partners Milestone payments during development stage
Operating sales during series production stage
Recurring sales from service parts & consumables 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
SECURING RETURN ON INVESTMENT
INDICATIVE SALES CHARACTERISTICS OF AN ANALYZER OEM PROJECT
2 to 4 yearsDevelopment
phase
12 to 15 yearsMarketing phase of the analyzer system
Another 5 yearsof service parts & consumables
Service part & consumables
Sale
s
8
THE IVD MARKET
MAY 18, 2020 9
THE IVD MARKET
IVD MARKET SEGMENTS / IVD MARKET: ~ 70 BILLION USD IN 2019
MAY 18, 2020
Market growth CAGR 2018/19 - 2023/24
Total IVD-Market: 4 - 5% p.a.
Molecular Diagnostics: 7 - 9% p.a.
Immunodiagnostics: 4 - 6% p.a.
Point of Care: ~ 8% p.a.
Growth drivers
Aging world population
Rising prevalence of chronic diseases
Expansion in healthcare systems, especially in emerging markets
New technologies broadening scope of IVD applications (e.g. oncology, personalized medicine or non-invasive prenatal testing)
Increasing automation
Source: Kalorama: “The worldwide market for In Vitro Diagnostic Tests, 12th Edition”, Aug 2019MarketsandMarkets: “In vitro diagnostics market – forecast to 2023”, Dec 2018
Total instrumentation market ~ 9 billion USD
10
THE IVD MARKET
OUTSOURCED VS IN HOUSE INSTRUMENTATION MARKET
MAY 18, 2020
Total instrumentation
market~ 9 billion USD
In House~ 60 %
Outsourced~ 40 %
In House73 %
Outsourced27 %
2010 2018
Source: Own estimates based on historical market data and recent industry trends
Trend of outsourcing towards specialized players set to continue, due to:
Engineering of automation solutions often not core competence of diagnostics companies
Shorter development timeframes due to already existent technology pools
Guaranteed project budget and firm transfer prices
Keeping up with regulatory developments easier for specialized players
Structured processes in order to address end customer needs, such as ease of use, user experience, workflow efficiencies, remote access, serviceability and preventive maintenance
11
THE IVD MARKET
A SELECTION OF STRATEC CUSTOMERS
MAY 18, 2020
Source: IVD News / non-public companies estimated / non-reported sector sales estimated
… AND OTHER GAME-CHANGING COMPANIES
(acquired by Bio-Rad in January 2017)
STRATEC customer
Not a STRATEC customer
GLOBAL TOP 20 IVD COMPANIES Sales 2018 (USD billion)
1. Roche 11.1
2. Abbott 7.5
3. Danaher 6.3
4. Siemens Healthineers 4.7
5. Thermo Fisher 3.7
6. Sysmex 2.8
7. bioMerieux 2.3
8. Ortho Clinical Diagnostics 2.0
9. BECTON DICKINSON 1.5
10. BIO-RAD 1.4
11. CH Werfen 1.4
12. Hologic 1.2
13. Perkin Elmer 1.0
14. Agilent Tech 0.9
15. Grifols 0.8
16. Diagnostica Stago 0.8
17. Qiagen 0.8
18. DiaSorin 0.8
19. Quidel 0.5
20. Fujirebio 0.4
12
MAY 18, 2020
FINANCIALS
13
FINANCIALS
MAY 18, 2020
KEY FIGURES - TRACK RECORD
Sales in € millionCAGR ~11%
EBIT in € millionCAGR ~8%
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.
1
1
1
14
76
102116.6 122.7 128
144.9 146.9
184.9
207.5
187.8
221.6
0
50
100
150
200
250
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
14.7
17.6
21.8
15.6
19.5
24.1
26.9
32.3
36.4
26.2
31.2
0
5
10
15
20
25
30
35
40
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
1
FINANCIALS
MAY 18, 2020
KEY FIGURES - TRACK RECORD
Net income in € millionCAGR ~8%
Dividend per share in € CAGR ~6%
1
1
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.2 Planned and subject to approval by the Annual General Meeting.
1
15
11.713.0
15.3
12.4
15.5
19.8
22.1
25.4
27.9
20.2
25.9
0.0
5.0
10.0
15.0
20.0
25.0
30.0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
1
0.450.50
0.55 0.560.60
0.700.75 0.77
0.80 0.82 0.84
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
2
FINANCIALS
MAY 18, 2020 16
Q1 2020 AT A GLANCE
• Sales up 21.3% yoy to € 56.5 million (Q1 2019: € 46.6 million) organic growth of 20.1%
- Strong performance in all segments
- To date COVID-19 pandemic had a very minor impact on Q1 sales performance
• Adjusted EBIT margin up by 290 bps yoy to 13.6% (Q1 2019: 10.7%)
• New product launches and achievement of several development milestones
- Software and hardware extensions for a molecular diagnostics analyzer system
- KleeYa instrument (proprietary next-generation analyzer platform) achieves CE conformity
• Further progress with numerous negotiations for promising future projects
Q1 2020 FINANCIALS AT A GLANCE1
FINANCIALS
MAY 18, 2020
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.
2 To facilitate comparison, adjusted to account for the disposal of the Data Solutions business unit, which has been reported as a discontinued operation.
3 Results from continuing operations.
17
€ 000s Q1 20202 Q1 20192 Change
Sales 56,504 46,569 +21.3%
Adjusted EBITDA 10,142 7,177 +41.3%
Adjusted EBITDA margin (%) 17.9 15.4 +250 bps
Adjusted EBIT 7,658 4,975 +53.9%
Adjusted EBIT margin (%) 13.6 10.7 +290 bps
Adjusted consolidated net income3 6,246 3,756 +66.3%
Adjusted basic earnings per share (in €)3 0.52 0.31 +67.7%
Basic earnings per share IFRS (in €)3 0.37 0.11 +236.4%
FINANCIALS
MAY 18, 2020
SALES Q1 2020
Q1 2020 sales up 21.3% yoy to € 56.5 million
organic growth of 20.1%
(+) Strong service parts and consumables business
(+) Higher call up numbers for several systems
(+) Dynamic growth with veterinary diagnostics products in the Diatronsegment
As of March 31
In € million
18
34.531.2
49.5
39.6
46.6
56.5
0
10
20
30
40
50
60
Q1/15 Q1/16 Q1/17 Q1/18 Q1/19 Q1/20
FINANCIALS
MAY 18, 2020
Q1 2020 adjusted EBIT up 53.9% yoyto € 7.7 million
Q1 2020 adjusted EBIT margin up 290 bps yoy to 13.6%
(+) Economies of scale
(+) Sales/product mix
EBIT EBIT margin
EBIT in € million EBIT margin in %
As of March 31
ADJUSTED EBIT AND EBIT MARGIN Q1 2020
19
5.8
4.5
6.9
4.0
5.0
7.7
4%
6%
8%
10%
12%
14%
16%
18%
20%
0
2
4
6
8
10
Q1/15 Q1/16 Q1/17 Q1/18 Q1/19 Q1/2020
FINANCIALS
MAY 18, 2020
CASH FLOW AND NET DEBT Q1 2020
• Cash flow from operating activities down by 66.3% to € 3.2 million
- Temporary and intended increase in inventories (due to significant upcoming volume ramp-up) due to COVID-19 pandemic
- Higher receivables position (timing effects)
- Significant improvement in Q2 expected
• Investment spending still on a high level due to ongoing construction work for expansion of building capacity at HQ
• Higher net debt position driven by temporary increase of working capital and financing of capex investments
20
€ 000s Q1 2020 Q1 2019 Change
Cash flow – operating activities 3.2 9.5 -66.3%
Cash flow – investment activities -7.1 -7.8 nm
Cash flow – financing activities 14.5 -0.5 nm
Free cash flow -3.9 1.7 nm
€ 000s Q1 2020 FY 2019 Change
Cash and cash equivalentsat end of period
32.9 22.7 44.9%
Equity ratio (%) 49.7 53.1 -340 bps
Net debt 84.1 77.3 +8.8%
FINANCIALS
21MAY 18, 2020
SALES BY OPERATING DIVISIONS FY 2019
0
20
40
60
80
100
120
Systems Service partsand
consumables
Developmentand services
Others
2018 2019
+6.9%
+76.6%
-70.0%
Sales in € million
16% 24%
33%30%
49% 45%
0%
20%
40%
60%
80%
100%
2018 2019
Systems Service parts and consumables
Development and services Others
In % of total sales
+10.5%
As of December 31
MAY 18, 2020
OUTLOOK AND STRATEGY
22
OUTLOOK
MAY 18, 2020
FINANCIAL GUIDANCE FOR FISCAL YEAR 20201
• Group sales expected to increase organically in a low double-digit percentage range2
• Adjusted EBIT margin of around 15%
Positive scale effects; improving sales and product mix; defined earnings improvement measures
• Investments in tangible and intangible assets of around 10% to 12% of sales
Ongoing construction measures for significant capacity expansion
After completion of construction projects for capacity expansion, investment ratio is likely to decline in 2021
23
1 In connection with the COVID-19 pandemic, STRATEC is currently observing significantly positive and slightly negative effects in terms of customer orders and order forecasts. Overall, the company currently expects to see a notably positive impact on demand in the current financial year.All in all, the implications of the pandemic, such as those referred to above and also any potential interruptions within the supply chain, are still not fully visible. Apart from those effects that had already materialized by the end of April 2020, the above guidance therefore does not account for the effects of the pandemic.
2 Based on the restated 2019 sales figure of € 214.2 million (restated for the disposal of STRATEC’s Data Solutions business unit)
OUTLOOK
MAY 18, 2020 24
FOCUS IN 2020 AND BEYOND
• Manage challenges arising from COVID-19 pandemic
Health of our employees has highest priority
Deliver on received extra orders and support customers in making their contribution in the fight against the pandemic
Mitigate and manage supply chain risks
• Improve EBIT contribution of Smart Consumables segment
• Drive working capital efficiency and improve cash flow dynamics from Q2 onwards
• Achievement of development targets
• Sign new development and supply agreements (execute deal pipeline)
• Realize further efficiency gains (earnings improvement initiative, ERP system implementation)
• Enable customers and STRATEC to grow sustainably above the long-term market average
Focus on high growth areas of application within in-vitro diagnostics and healthcare research
Secure and further boost expertise and technology portfolio with intellectual property rights
• Broadening of product/value offering without entering into competition to partners
Organically and via selective M&A transactions
Widen offering in areas not perceived as core for/by our customers
• Increase proportion of service parts & consumables
Utilize tailwind from increasing system complexity
Further expand smart consumables business (microfluidic chips, cartridges, etc.)
Utilize combined product offering of instruments, software and consumablesto increase proportion of recurring sales
• Drive customer diversification
Utilize extended platform offering
Extend components business
Accelerate diversification (e.g. veterinary, translational research)
OUTLOOK AND STRATEGY
MAY 18, 2020
STRATEGIC PRIORITIES
25
APPENDIX
MAY 18, 2020 26
APPENDIX
KEY FIGURES AT A GLANCE1
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.
2 From continuing operations3 Planned and subject to approval by the Annual General Meeting.
MAY 18, 2020
IFRS (€ million) 2015 2016 2017 2018 2019
Sales 146.9 184.9 207.5 187.8 221,6
Adjusted EBIT 26.9 32.2 36.4 26.2 31,2
Adjusted EBIT margin (%) 18.3 17.4 17.5 13.9 14.1
Adjusted Consolidated net income2 22.1 25.3 28.9 20.2 25.9
Adjusted Earnings per share (€) 2 1.87 2.14 2.43 1.70 2.16
Dividend per share (€) 0.75 0.77 0.80 0.82 0,843
No. of employees 583 976 1,086 1,228 1,302
Total assets 158.9 258 264 275 299
Equity ratio (%) 82.0 55.7 59.8 55.3 53,1
Free cash flow 17.3 -70.4 14.4 1.2 -6.4
27
APPENDIX
MAY 18, 2020
Consolidated net incomeEBIT
ADJUSTMENTS
28
€ 000s Q1 2020 Q1 2019
Adjusted EBIT 7,658 4,975
Adjustments:
PPA amortization -2,062 -2,277
Transaction-related expenses and associated restructuring expenses
0 -723
EBIT 5,596 1,975
€ 000s Q1 2020 Q1 2019
Adjusted consolidated net income from continuing operations
6,246 3,756
Adjusted earnings per share from continuing operations in €(basic)
0.52 0.31
Adjustments:
PPA amortization -2,062 -2.277
Transaction-related expenses and associated restructuring expenses
0 -723
Taxes on income 320 556
Consolidated net income fromcontinuing operations
4,503 1,312
Earnings per share from continuingoperations in € (basic)
0.37 0.11
APPENDIX
MAY 18, 2020
SHAREHOLDER STRUCTURE(AS OF: DECEMBER 2019)
SHARE
IPO Aug. 1998Number of shares 12,030,295Share price (05/13/2020) € 86.60Market capitalization € 1.0 billon
Fixed and family ownership(incl. their investment companies)
Free float
Institutional investors > 3%:Allianz Global InvestorsAmeriprise FinancialBNP Paribas Investment PartnersInvesco
41.1%
58.9%
29
STRATEC SEGewerbestr. 3775217 BirkenfeldGermany
Phone +49 7082 7916-991Fax +49 7082 7916-9190www.stratec.com
CONTACT
THANK YOU
FOR YOUR
ATTENTION
CONTACT
Marcus WolfingerCEO
Jan Keppeler, CFAHead of IR & CC
Phone +49 7082 [email protected]
MAY 18, 2020 30
