Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an...
Transcript of Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an...
Investor and Analyst Presentation
Q3 2016 October 2016
1. This presentation may contain certain forward-looking statements, including assumptions, opinions
and views of the Company or cited from third party sources. Various known and unknown risks,
uncertainties and other factors could cause the actual results, financial position, development or
performance of the Company to differ materially from the estimations expressed or implied herein.
2. The Company does not guarantee that the assumptions underlying such forward-looking statements
are free from errors nor does the Company accept any responsibility for the future accuracy of the
opinions expressed in this presentation or the actual occurrence of the forecast development.
3. No representation or warranty (express or implied) is made as to, and no reliance should be placed
on, any information, including projections, estimates, targets and opinions, contained herein, and no
liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and,
accordingly, none of the Company or any of its parent or subsidiary undertakings or any of such
person„s officers, directors or employees accepts any liability whatsoever arising directly or indirectly
from the use of this document.
Disclaimer
2
Agenda
1. At a glance
2. Financials
3. Backup
Key facts:
Leading international manufacturer for the global pharma and healthcare industry
Pharmaceutical packaging solutions made of glass and plastics
Primary packaging products as well as medical devices for storage,
dosage and safe administration of drugs
Our product portfolio for pharma and healthcare
4
Customer-focused organization
Group revenues in FY 2015: EUR 1,377.2m
Life Science
Research Rainer Beaujean
Primary Packaging Glass Uwe Röhrhoff
Plastics & Devices Andreas Schütte
Revenues 2015: EUR 645.3m
adj. EBITDA: EUR 141.6m
Margin: 21.9%
Revenues: EUR 651.0m
adj. EBITDA: EUR 143.7m
Margin: 22.1%
Rev.: EUR 100.7m
adj. EBITDA: 15.3
Margin: 15.2%
5
Discontinued
operation
Megatrends in pharma & healthcare support our profitable and
sustained growth
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By 2020, 50% of world
population consumes more
than one medication dose
per day; up from 33%
in 2005; driven by India,
China, Brazil and Indonesia1
U.S. remains biggest market
in spending on medicines:
+34% from 2015-20201
415 million adults
today have diabetes.
By 2040, this is forecast to
rise to 642 million2
1. IMS Health, Market Prognosis, September 2015
2. International Diabetes Federation, 2015
Production volume: Centor acquisition boosts output from 14bn
to 15.5bn products every year – nearly 500 per second
~ 400m pieces
Inhalers
Plastic bottles
(incl. Centor)
Ampoules
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Pharma glass bottles Cosmetics
Cartridges Injection vials
Syringes
~ 5.5bn pcs ~ 2.5bn pcs ~ 1bn pcs
~ 1bn pcs ~ 100m pcs ~ 2bn pcs ~ 3bn pcs
Even better regional diversification – Americas including Centor
now approaching one third of revenues
Q1-Q3 2015 revenues by region Q1-Q3 2016 revenues by region including Centor
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Europe 55%
Americas incl. Centor
29%
Emerging
markets
14%
Other regions
2%
Total revenues:
EUR 1,085.9m
Europe 58%
Americas 22%
Emerging
markets
17%
Other regions
3%
Total revenues:
EUR 1,002.2m
Leading market positions in attractive niche markets
1. North America: plastic vials for oral prescription drugs
2. DPI = Dry Powder Inhaler (World market)
3. Lancets and lancing devices
Primary Packaging Glass
Life Science Research
Plastics & Devices Division
Product
Europe #1 #1 #2 #2 #2 #2 #3
Plastic Packaging1
Inhalation (DPI)2
Diabetes Diagnostics3 Pens
Syringe Systems
MG Pharma (Type I)
Ampoules, vials,
cartridges
Glass Consumables & Equipment
North America
#1
#1 #2 #1 #1 #1
Emerging Markets
#1 (South America
and India)
#1 (South
America)
#2 (India)
#1 (China)
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We provide solutions across all key product categories
1. Public company // 2. DPI = Dry Powder Inhaler (World market) // 3. Lancets and lancing devices
Source: Company estimates
Division Primary Packaging Glass Life
Science Research
Plastics & Devices
Plastic Packaging
Inhalation (DPI)2
Diabetes Diagnostics3 Pens
Syringe Systems
MG Pharma (Type I)
OTC Liquids and Syrups
(Type II & III)
TG Injectables
Glass Consumables & Equipment
Product
Desjonquères
Consort Medical1
Becton Dickinson1
Rocco Bormioli
Nipro1
Schott
Nemera
Corning1
West Pharma1
Duran
Ompi
Ypsomed1
Facet
Jabil Circuit (Nypro)1
Gerresheimer
Berry Plastics1
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Gerresheimer has close long-term
relationships with leading global accounts…
…with limited dependence on individual
customers.
Well diversified blue-chip customer base
Pharma & Healthcare Other Revenues generated with
TOP 50 customers (FY 2015) in EUR m
534
165
90 58
41
39%
51%
57%
62% 65%
0%
10%
20%
30%
40%
50%
60%
70%
0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 210 220 230 240 250 260 270 280 290 300 310 320 330 340 350 360 370 380 390 400 410 420 430 440 450 460 470 480 490 500 510 520 530 540 550 560 570
Top 10 11-20 21-30 31-40 41-50
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Agenda
1. At a glance
2. Financials
3. Backup
Kimble Chase, the joint venture (51/49%) between Gerresheimer and
Chase Scientific Glass, Inc., is to be sold to Duran Group, a portfolio
company of One Equity Partners
Total enterprise value is USD 131m, the transaction will be all-cash
Key figures of Life Science Research division (FY 2015):
Revenues: EUR 100.7m
EBITDA margin: 15.2%
We focus on our core competence: primary packaging products and
drug delivery devices for the pharmaceutical, healthcare and cosmetics
industry
Disposal of Life Science Research for an enterprise value of
USD 131m to further focus on our core business
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Key Group figures in EUR m, adj. EPS in EUR
Review Q3 2016: again excellent earnings with an adjusted EPS
increase by 40 percent
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344.0 373.1
Category 1
Revenues
Organic FXN: +1.4%
+8.4%
Q3 2015 Q3 2016
0.85
1.19
Category 1
Adjusted EPS
+40.0%
Q3 2015 Q3 2016
48.5 45.5
Category 1
Operating cash flow
-6.3%
Q3 2015 Q3 2016
68.0 84.4
Category 1
Adjusted EBITDA
Q3 2016 FXN: EUR 81.2m
+24.2%
Q3 2015 Q3 2016
Margin 19.8% 22.6%
125.1 105.4 20.7 15.9
250.6 264.5
300.0 300.0
425.0
871.2
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Net financial debt slightly improved
Comparison of debt/cash positions in EUR m
2.8x 2.9x Adjusted EBITDA leverage:1
Net financial debt:
Bonded loans (Schuldschein):
fixed/variable interest rates,
currently between ~1% and ~2%;
(maturity in 2020, 2022 and 2025)
1. The relation of net financial debt to adjusted EBITDA of the last twelve months, according to the credit line agreement currently in force.
Aug 31, 2016 May 31, 2016
900.0
Revolving bank debt:
total capacity EUR 450m;
variable interest rate, at end of
Q3 2016 ~1.5% incl. fees
(maturity in 2020) Local borrowings and leasing
Cashh
Bond: Fixed annual coupon of
5.0% (matures in 2018)
425.0
Adjustment of Guidance FY 2016 as a consequence of Life
Science Research divestment
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Life Science Research divestment has to be reported as discontinued operation according to
IFRS 5
All income and expense positions are retroactively adjusted for FY 2015 and FY 2016 and
reported as net income from discontinued operations
Starting September 1, 2016, all assets and liabilities are recognized in the separate balance
sheet positions assets and liabilities held for sale
Guidance
Sales and adjusted EBITDA of Life Science Research are excluded both from FY 2015 and
FY 2016
FY 2015 (EUR m) FY 2016
Group Adjustment
LSR
Group ex.
LSR Guidance1)
Revenues 1,377.2 -100.7 1,276.5 EUR 1.4bn (plus/minus EUR 25m)
Adjusted EBITDA 277.9 -15.3 262.6 EUR 305m (plus/minus EUR 10m)
1. Present Guidance: Sales approx. EUR 1.5bn (plus/minus EUR 25m); adjusted EBITDA approx. EUR 320m (plus/minus EUR10m)
Revenues (FXN)1
FXN growth1,2
Organic growth1,3
Approx. EUR 1.4bn (plus/minus EUR 25m)
Approx. +10%
Approx. +4% to +5%
+4% to +5% CAGR (organic)
Adjusted EBITDA (FXN)1
Approx. EUR 305m (plus/minus EUR 10m) Adjusted EBITDA margin
over 22% by FY 2018
Capex (FXN)1
Approx. 8% of revenues Approx. 8% of revenues
1. Average budgeted exchange rate assumption: EUR 1.00 = USD 1.12
2. FXN growth: At const. FX rates, based on FY 2015 reported numbers
3. Organic growth: At const. FX rates, FY 2015 including Centor on a pro-forma basis for 12 months, excluding the disposed Glass Tubing business in FY 2015 and
based on the assumption that measures to optimize the business portfolio had already been implemented in FY 2015.
Adjusted Guidance for FY 2016 due to the classification of the
segment LSR as discontinued operation
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Guidance FY 2016 Indication FY 2016-2018
We have stable and highly diversified growth prospects based on long-term megatrends
Profitability significantly improved – Q3 2016 figures make this visible once again
The disposal of our Life Science Research division as a consequent step to strengthen our core
business
We focus on deleveraging while continuing to invest in the future of the business, to generate
high shareholder returns also in the future
Key takeaways
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Financial calendar and contact details
February 15, 2017 Annual Report Financial Year 2016
April 6, 2017 Interim Report 1st Quarter 2017
April 26, 2017 Annual General Meeting 2017
July 13, 2017 Interim Report 2nd Quarter 2017
October 11, 2017 Interim Report 3rd Quarter 2017
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Name Investor Relations
Phone +49 211 6181 257
Fax +49 211 6181 121
E-mail [email protected]
IR website www.gerresheimer.com/ir
Agenda
1. At a glance
2. Financials
3. Backup
Q3 2016 revenues show 8.4% growth driven by Plastics &
Devices
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Q3 2016
EUR m
Q3 2015
EUR m
Growth
in %
Total Group 373.1 344.0 +8.4
Plastics & Devices 195.2 153.1 +27.5
Primary Packaging Glass 155.2 170.5 -8.9
Life Science Research 24.1 25.8 -6.5
Revenues by division
1. Earnings before income taxes, net finance expense, amortization of fair value adjustments, depreciation and amortization, impairments, restructuring expenses and
one-off income and expenses.
Adjusted EBITDA in Q3 2016: excellent earnings performance
driven by Centor and productivity improvements
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Q3 2016 Q3 2015
EUR m Margin in % EUR m Margin in %
Total Group 84.4 22.6 68.0 19.8
Plastics & Devices 54.4 27.9 31.6 20.6
Primary Packaging Glass 32.0 20.6 38.4 22.5
Life Science Research 3.3 13.5 3.7 14.3
Adjusted EBITDA1 by division
in EUR m Q3 2016 Q3 2015 Change in %
Adjusted EBITDA 84.4 68.0 +24.2
Depreciation -22.0 -19.8 -
Adjusted EBITA 62.4 48.2 +29.3
Total one-off effects -0.9 -8.4 -
Amortization of fair value adjustments -9.5 -3.6 -
Result from operations (EBIT) 52.0 36.2 +43.9
Net finance expense2 -8.8 -7.3 -
Result before income taxes 43.2 28.9 +50.0
Income taxes -11.2 -8.7 -
Income tax rate 26.0% 30.1% -
Net income 32.0 20.2 +58.7
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1. The one-off income/expenses item consists of one-off items that cannot be taken as an indicator of ongoing business. These comprise, for example, various
reorganization and restructuring measures that are not included in restructuring expenses under IFRS.
2. Net finance expense comprises interest income and expenses in relation to the net financial debt of the Gerresheimer Group. It also includes net interest expenses for
pension provisions together with exchange rate effects from financing activities and from related derivative hedges.
Q3 2016 shows strong improvements in EBIT and net income
1. Adjusted net income: Consolidated net income before non-cash amortization of fair value adjustments, non-recurring effects of restructuring expenses, impairments,
the balance of one-off income and expenses (including significant non-cash expenses) and related tax effects.
Q3 2016: 40% increase in adjusted EPS
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Reconciliation from net income to adjusted EPS
in EUR m Q3 2016 Q3 2015 Change in %
Net income 32.0 20.2 +58.7
Total one-off effects (net of related tax effects) +0.4 +6.4 -
Amortization of fair value adjustments (net of related tax effect) +6.3 +2.6 -
Adjusted net income1 38.7 29.2 +33.1
Adjusted net income attributable to non-controlling interests 1.4 2.6 -
Adjusted net income (attributable to GXI shareholders) 37.3 26.6 +40.5
Adjusted EPS in EUR 1.19 0.85 +40.0
Aug 31, 2016
EUR m
Aug 31, 2015
EUR m
Inventories
thereof prepayments made
188.0
4.6
202.5
6.5
Trade receivables 238.4 202.1
Trade payables 136.3 114.6
Payments received on account
of orders
46.4
35.7
Net working capital
in % of LTM revenues
average NWC in % of
LTM revenues
243.7
16.7%
16.6%
254.3
19.0%
19.9%
1. Inventories (incl. prepayments made) and trade receivables, less trade payables and payments received on account of orders.
Favorable development of net working capital1
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Average NWC in % of LTM revenues on our target level of 17%
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Aug 31, 2016
EUR m
May 31, 2016
EUR m Change in %
Total assets 2,398.9 2,359.4 +1.7
Equity
Equity ratio
725.1
30.2%
687.8
29.2%
+5.4
-
Net working capital1
NWC in % of LTM revenues
average NWC in % of
LTM revenues
243.7
16.7%
16.6%
230.7
16.1%
17.2%
+5.6
-
-
Q3 2016 Q3 2015 Change in %
Operating cash flow2 45.5 48.5 -6.3
Free cash flow before
financing
34.1 29.3 +16.1
Capital expenditure 32.4 37.9 -14.4
1. Inventories (incl. prepayments made) and trade receivables, less trade payables and payments received on account of orders.
2. Adjusted EBITDA plus/minus change in net working capital, minus capex.
Compelling strategic rationale for Centor acquisition
Deal closed on September 1, 2015
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Clear market
leader, high
barriers
Focused
product
portfolio
Business fit
with Gerres-
heimer
Strong
financial
performance
Clear #1 player in the US prescription retail plastic vials market
Blue chip customer base with long-term relationships
Strong management team with excellent track record
Niche market with high barriers to entry
Clear focus on primary pharmaceutical packaging for oral drugs
Almost 100% US business
Lean production setup with excellent cost position
Group EBITDA margin expected to go up by 2 percentage points
Group adj. EPS accretion expected by a low double digits percentage
Higher revenue base from 2016 on (Centor pro-forma rev. FY 2015: EUR 143m)
Stable and resilient economic performance
Primary Plastic Packaging is one of our core competences:
High expertise with primary pharma packaging in the US
Very familiar with production processes and material
Only difference is new sales channel
Fit with our strategic
acquisition criteria
General Information
Berlin plant (OH), USA, established 1968
Headquarter: Perrysburg (OH), USA
100% owned by Nemera, stand-alone business unit
~220 employees
Centor business overview
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Markets
~85% of sales is achieved with 1-Clic and Screw-Loc
products
Almost 100% US business; “pour & count system” unique to
US&CAN
Clear #1 player in the market
Most dispensing robots in pharmacies are calibrated to
Centor
54 of the top 60 retailers are exclusively supplied by Centor
Designed for solid
medicine
2 caps available: child
resistant and non child
resistant
Description % of sales 2014
1-Clic
Screw-Loc
Bottles and
other
products
Ovals
~40%
Designed for solid
medicine
2 caps available: child
resistant and non child
resistant
Products
~45%
Prescription bottles
Applicator bottles
Dropper bottles
Ointment jars
~10%
Bottles used for liquid
prescriptions
~5%
Key financials (FY2015 pro forma)
Sales: EUR 143m
in EUR per share
2008
2009
2010
2011
2012
2013
2014
2015
EPS 0.02 0.18 1.38 1.61 1.98 1.98 2.11 3.32
Adjusted EPS 1.83 1.34 1.95 2.44 2.62 3.08 2.89 3.41
Cash flow from operations
per share 5.26 3.74 5.09 4.13 5.53 4.67 5.04 6.49
Dividend 0.40 ----- 0.50 0.60 0.65 0.70 0.75 0.85
Dividend yield 1.5% ----- 1.8% 1.9% 1.7% 1.4% 1.7% 1.2%
Payout ratio 22% ----- 26% 25% 25%1 23% 26% 25%
Share price high 38.20 27.05 29.85 36.62 41.34 50.14 56.42 76.32
Share price low 23.99 13.24 22.09 28.30 31.00 37.60 42.31 41.99
Share price at FY end 27.10 23.05 28.20 31.17 39.41 49.67 44.44 73.90
Book value per share 15.26 15.29 16.86 17.59 17.14 17.94 19.25 22.23
P/E ratio 14.81 17.20 14.46 12.77 15.04 16.13 15.38 21.67
Market cap in EUR m 851 724 886 979 1,238 1,560 1,395 2,321
MDAX weighting year end 11.48%2 1.33% 1.24% 1.40% 1.47% 1.33% 1.01% 1.42%
Number of shares in million 31.4 31.4 31.4 31.4 31.4 31.4 31.4 31.4
1. Retrospective restatement due to the early adoption of IAS 19 (amended in 2011) from December 1, 2012
2. SDAX weighting at year end
GXI Key Data
29
Our Vision
Gerresheimer will become the leading global partner
for enabling solutions that improve health and well-being.
Our success is driven by the passion of our people.