Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an...

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Investor and Analyst Presentation Q3 2016 October 2016

Transcript of Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an...

Page 1: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

Investor and Analyst Presentation

Q3 2016 October 2016

Page 2: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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

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Page 3: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

Agenda

1. At a glance

2. Financials

3. Backup

Page 4: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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

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Page 5: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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

Page 6: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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

Page 7: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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

Page 8: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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

Page 9: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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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Page 10: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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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Page 11: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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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Page 12: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

Agenda

1. At a glance

2. Financials

3. Backup

Page 13: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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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Page 14: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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%

Page 15: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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

Page 16: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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)

Page 17: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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

Page 18: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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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Page 19: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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

Page 20: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

Agenda

1. At a glance

2. Financials

3. Backup

Page 21: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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

Page 22: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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

Page 23: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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

Page 24: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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

Page 25: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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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Page 26: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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.

Page 27: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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

Page 28: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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

Page 29: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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

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Page 30: Investor and Analyst Presentation Q3 2016...Review Q3 2016: again excellent earnings with an adjusted EPS increase by 40 percent 14 344.0 373.1 Category 1Q3 2015 Revenues Adjusted

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.