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Recordati Industria Chimica e Farmaceutica

Earnings Release Mar 19, 2024

4056_rns_2024-03-19_873aa35a-8792-42e7-8c4d-8f5445d45518.pdf

Earnings Release

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NEWS RELEASE

RECORDATI BOARD APPROVES THE 2023 ACCOUNTS, CONFIRMING STRONG PRELIMINARY RESULTS: REVENUE € 2,082.3M, EBITDA(1) € 769.6M, ADJUSTED NET INCOME(2) € 524.6M 2023 PROPOSED DIVIDEND € 1.20 (+4.3%)

  • 2023 Financial Year Results confirm the strong preliminary figures announced on 22nd February 2024: - Net revenue € 2,082.3 million, +12.4% or +14.0% on a like-for-like(3) basis at constant exchange rates (CER)
  • EBITDA(1) € 769.6 million, +14.4%, margin of 37.0%
  • Adjusted net income(2) € 524.6 million, +10.8%
  • Net Income € 389.2 million, +24.6%
  • Free cash flow(4) at € 456.0 million, + € 17.0 million versus prior year
  • Net debt(5) at € 1,579.4 million, approximately 1.96x EBITDA (pro-forma)
  • Shareholders' equity at € 1,686.4 million
  • Proposed dividend for 2023 € 1.20 per share, of which € 0.57 already paid
  • 2023 consolidated non-financial statements and 2024 ESG objectives approved
  • Ordinary Shareholders' Meeting convened for April 22, 2024 in a single call

Milan, 19th March 2024 – Recordati's Board of Directors approved the consolidated financial statements for the year 2023 as well as Recordati S.p.A.'s accounts and the 2023 corporate governance and ownership report as required by art. 123bis of the Consolidated Law on Financial Intermediation. The financial statements at, and for the year ended, 31st December 2023 and the aforesaid report as well as the reports issued by the independent external auditors and by the Board of Statutory Auditors will be made available, by 31 st March, in compliance with the terms of the law, at the company's head office and published on the company's website www.recordati.com and can also be viewed on the authorized storage system (). The Board of Directors also approved the consolidated non-financial statements, pursuant to Legislative Decree n. 254/2016, dated 31st December 2023 which will be made available in the same manner.

2023 consolidated financial results

The Board of Directors approved the consolidated financial statements for the year 2023, confirming the preliminary results published on 22 nd February.

As previously announced, consolidated net revenue in 2023 reached € 2,082.3 million, +12.4% compared to 2022 or +14.0% on a like-for-like(3) basis at CER (+9.6% excluding Türkiye), at the high end of the guidance range upgraded in May 2023. This was driven by strong business momentum across both business units, and includes net revenue of €25.6 million related to Avodart® and Combodart®/ Duodart®, following the finalization of the commercial agreement with GSK and subsequent integration of activities in all key markets(6) .

EBITDA rose to € 769.6 million, up 14.4% over 2022, with a margin of 37.0%, reflecting the strong revenue growth and efficiency initiatives already initiated in previous years. Net Income at € 389.2, at 18.7% of net revenue, was up 24.6% over the previous year, driven by the strong operating performance and lower non-recurring expenses versus 2022. Adjusted Net Income(2) reached € 524.6 million, growing

RECORDATI INDUSTRIA CHIMICA E FARMACEUTICA S.p.A.

Registered office VIA M. CIVITALI, 1 20148 MILAN, ITALY TEL. +39 0248787.1 FAX +39 0240073747 SHARE CAPITAL € 26,140,644.50 fully paid up BUSINESS REGISTER OF MILAN, MONZA, BRIANZA and LODI 00748210150 TAX CODE/VAT NO. 00748210150

Company subject to management and coordination by Rossini Luxembourg S.àr.l

10.8% over last year, benefitting from both the positive operating performance and a lower tax rate.

Thanks to the excellent operating results and strong free cash flow(4) of € 456.0 million, the Group's net debt(5) as of 31st December was € 1,579.4 million, or leverage of approximately 1.96x EBITDA (pro-forma, assuming the contribution of Avodart® and Combodart®/Duodart® for 12 months).

Dividend

Based on the results obtained and consistent with the Company dividend policy, which remains unchanged, the Board of Directors has proposed a dividend to shareholders of € 0.63 per share, in full balance of the interim 2023 dividend of € 0,57, for all shares outstanding at the ex-dividend date of 20 May 2024, excluding treasury shares in the portfolio at that date, against presentation of coupon no. 33 with payment on 22 May 2024 and record date 21 May 2024. The proposed full 2023 dividend is therefore € 1.20 per share (€ 1.15 per share in 2022).

Renewed ESG commitment

The Board of Directors also approved the consolidated non-financial statements dated 31st December 2023 and the Group's ESG objectives.

Key objectives include a commitment to creating an even more responsible and inclusive work environment, continued development of new drugs and new indications to meet the needs of patients, particularly those affected by rare diseases, installing new renewable energy generation systems, and expanding ESG monitoring activities in our supply chain. As previously announced and as a further demonstration of the willingness to pursue a sustainable growth model, the achievement of key goals in Environmental Protection (installed renewable energy capacity) and Responsible Sourcing (supplier sustainability audits) was linked to the € 400 million credit line signed in May 2023 with a pool of international relationship banks.

Recordati's focus and efforts in driving the group's ESG strategy continues to be recognized in 2023 by the main ESG indices and ratings. The inclusion in the FTSE4GOOD Index series was reconfirmed alongside the "Platinum" rating by EcoVadis. MSCI ESG Research confirmed Recordati's A rating and the Group was rated C+ with "Prime" status by ISS ESG, awarded to companies with a leading sustainability performance in their industry. In addition, Recordati received a "Robust" ESG Assessment from Moody's Analytics and is included in the MIB ESG Index, promoted by Euronext and Borsa Italiana.

Notice of Ordinary Meeting and Documentation

The Board of Directors also resolved to convene an Ordinary Shareholders' Meeting on April 22, 2024 at 9:30 a.m. in a single call - in the manner expressly stated in the notice of meeting to which reference is made - with the following agenda:

    1. Report of the Board of Directors; Report of the Board of Statutory Auditors; Financial Statements as of December 31, 2023; resolutions pertaining thereto: a) Financial Statements as of December 31, 2023;
  • b) Allocation of profit for the year 2023.
    1. Report on remuneration policy and compensation paid pursuant to Article 123-ter, paragraphs 3-bis and 6, of Legislative Decree No. 58 of February 24, 1998: a) binding deliberation on the first section on remuneration policy;
  • b) non-binding resolution on the second section on compensation paid for the year 2023.
    1. Proposal to authorize the purchase and disposal of treasury shares; related and consequent resolutions.

The full notice of call of the Shareholders' Meeting will be made available to the public today at the Company's registered office, on the Company's(7) website as well as on the authorized storage mechanism ().

It should be noted that Recordati(8) has decided to avail itself of the option to provide that Shareholders' attendance at the Shareholders' Meeting be exclusively through the Appointed Representative pursuant to Article 135-undecies of Legislative Decree No. 58/98, without physical participation by the Shareholders. Information on attending by proxy is available in the Notice of Meeting to which reference is made.

As for the proposed renewal the authorisation to purchase and dispose of treasury shares until the Shareholders' Meeting that will approve the financial statements as of 31 December 2024, it should be noted that this proposal, as in previous years, fulfils multiple purposes:

(i) fulfilling the obligations arising from the stock option and/or share-based plans (performance shares) already adopted by the Company and other incentive plans that may be approved in the future;

(ii) supporting business initiatives, since the authorisation to purchase treasury stock, if granted, will allow transactions such as the sale, contribution and exchange of treasury stock in order to acquire stakes in companies and/or to reach agreements with strategic partners within the Group's expansion objectives;

(iii) supporting Recordati's shares liquidity, in order to promote the regular performance of security trading operations and to avoid price fluctuations inconsistent with the market trends.

The maximum of number of shares available for purchase is 3,500,000 and, in any case, on the condition that, at any time, the total par value of the treasury shares held by the Company never exceeds one fifth of the share capital, also taking into account any shares owned by subsidiaries, for a potential maximum outlay of € 200,000,000, with a minimum price not less than the par value of one Recordati share (€

0.125) and a maximum price not greater than the average of the official stock exchange prices in the five sessions prior to the purchase, plus 5%. Purchases may be completed through the assignment of specific positions to specialised intermediaries and must be performed in compliance with applicable law and according to the practices permitted by Consob in line with the provisions of art. 13 of EU Regulation 596/2014, where applicable.

At 18 March 2024, the Company has 2,781,590 shares in treasury stock, which amounts to 1.3% of the current share capital.

Within the terms of current legal and regulatory provisions, the additional Directors' Reports supporting the Shareholders' Meeting agenda items and any additional documentation on those items will be made available on the Company website and on the authorised storage mechanism ().

(1) Net income before income taxes, financial income and expenses, depreciation, amortization and write-downs of property, plant and equipment, intangible assets and goodwill, non-recurring items and non-cash charges arising from the allocation of the purchase price of EUSA Pharma to the gross margin of acquired inventory according to IFRS 3.

(2) Net income excluding the amortization and write-down of intangible assets (except software) and goodwill, nonrecurring items, non-cash charges arising from the allocation of the purchase price of EUSA Pharma to the gross margin of acquired inventory pursuant to IFRS 3, and monetary net gains/losses from hyperinflation (IAS 29), net of tax effects.

(3) Pro-forma growth calculated adding Q1 2022 revenue of EUSA Pharma (RRD) and excluding FY 2023 revenue of Avodart® and Combodart®/ Duodart®(SPC).

(4) Operating cash flow excluding financing items, milestones, dividends, purchases of treasury shares net of proceeds from exercise of stock options.

(5) Cash and cash equivalents, less bank debts and loans, which include the measurement at fair value of hedging derivatives.

(6) Trademarks are owned by or licensed to the GSK group of companies. Transition to Recordati of commercialization of Avodart® and Combodart® / Duodart® has been effected in the following markets: Austria, Belgium, Czech R, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Poland, Portugal, Spain, Sweden, Switzerland, UK. (7) https://recordati.com/shareholder-information/

(8) In accordance with the provisions of Article 106 of Decree Law No. 18/2020 ("Decreto Cura Italia") converted with amendments by Law No. 27 of April 24, 2020, as amended and supplemented

Recordati (Reuters RECI.MI, Bloomberg REC IM) is an international pharmaceutical group listed on the Italian Stock Exchange (ISIN IT 0003828271) uniquely structured to bring treatment across specialty and primary care, consumer healthcare, and rare diseases. We believe that health, and the opportunity to live life to the fullest, is a right, not a privilege. We want to support people in unlocking the full potential of their lives. We have fully integrated operations across research & development, chemical and finished product manufacturing through to commercialisation and licensing. Established in 1926, Recordati operates in approximately 150 countries across EMEA, Americas and APAC regions. At the end of 2023, Recordati employed over 4,450 people and consolidated revenue of2,082.3 million. For more information, please visit www.recordati.com

Investor Relations Eugenia Litz +44 7824 394 750 [email protected] Investor Relations Lucia Abbatantuoni +39 337 1025645 [email protected] Media Relations Brunswick: Barbara Scalchi / Andrea Mormandi +39 02 9288 6200 [email protected]

This document contains forward-looking statements relating to future events and future operating, economic and financial results of the Recordati group. By their nature, forward-looking statements involve risk and uncertainty because they depend on the occurrence of future events and circumstances. Actual results may therefore differ materially from those forecast as a result of a variety of reasons, most of which are beyond the Recordati group's control. The information on the pharmaceutical specialties and other products of the Recordati group contained in this document is intended solely as information on the activities of the Recordati Group, and, as such, it is not intended as a medical scientific indication or recommendation, or as advertising.

Summary of consolidated results prepared in accordance with International Financial Reporting Standards (IFRS)

(thousands of €)
INCOME STATEMENT
2023 2022 Change %
NET REVENUE 2,082,331 1,853,307 12.4
Cost of sales (659,707) (566,737) 16.4
GROSS PROFIT 1,422,624 1,286,570 10.6
Selling expenses (472,857) (462,665) 2.2
Research and development expenses (255,747) (220,102) 16.2
General and administrative expenses (128,253) (109,493) 17.1
Other income/(expenses), net (7,759) (56,984) (86.4)
OPERATING INCOME 558,008 437,326 27.6
Financial income/(expenses), net (66,972) (35,891) 86.6
PRE-TAX INCOME 491,036 401,435 22.3
Income taxes (101,822) (89,099) 14.3
NET INCOME 389,214 312,336 24.6
Adjusted gross profit (1) 1,481,571 1,336,381 10.9
Adjusted operating income (2) 626,593 536,060 16.9
Adjusted net income (3) 524,591 473,306 10.8
EBITDA (4) 769,631 672,750 14.4
Net income attributable to:
Equity holders of the Parent 389,214 312,336 24.6
Non-controlling interests 0 0 0.0
EARNINGS PER SHARE (euro) 2023 2022 Change %
Basic € 1.893 € 1.519 24.6
Diluted € 1.861 € 1.494 24.6

(1) Gross profit adjusted by the impact of non-cash charges arising from the allocation of the purchase price of EUSA Pharma to the gross margin of acquired inventory according to IFRS 3.

(2) Net income before income taxes, financial income and expenses and non-recurring items, non-cash charges arising from the allocation of the purchase price of EUSA Pharma to the gross margin of acquired inventory according to IFRS 3.

(3) Net income excluding the amortization and write-downs of intangible assets (except software) and goodwill, non-recurring items, non-cash charges arising from the allocation of the purchase price of EUSA Pharma to the gross margin of acquired inventory pursuant to IFRS 3, and monetary net gains/losses from hyperinflation (IAS 29), net of tax effects.

(4) Net income before income taxes, financial income and expenses, depreciation, amortization and write-downs of property, plant and equipment, intangible assets and goodwill, non-recurring items and non-cash charges arising from the allocation of the purchase price of EUSA Pharma to the gross margin of acquired inventory according to IFRS 3.

COMPOSITION OF REVENUE 2023 2022 Change %
Total 2,082,331 1,853,307 12.4
Italy 317,144 277,322 14.4
International 1,765,187 1,575,985 12.0

(€ thousands)

Reconciliation of Net income to EBITDA(1)

2023 2022
Net income 389,214 312,336
Income taxes 101,822 89,099
Financial income/(expenses), net 66,972 35,891
Non-recurring operating expenses 9,638 48,923
Non-cash charges from PPA inventory uplift 58,947 49,811
Adjusted operating income (2) 626,593 536,060
Amortization and write-downs 143,038 136,690
EBITDA(1) 769,631 672,750

(1) Net income before income taxes, financial income and expenses, depreciation, amortization and write-downs of property, plant and equipment, intangible assets and goodwill, non-recurring items and non-cash charges arising from the allocation of the purchase price of EUSA Pharma to the gross margin of acquired inventory according to IFRS 3.

(2) Net income before income taxes, financial income and expenses and non-recurring items, non-cash charges arising from the allocation of the purchase price of EUSA Pharma to the gross margin of acquired inventory according to IFRS 3.

Reconciliation of Net income to Adjusted Net income(1)

2023 2022
Net income 389,214 312,336
Amortization and write-downs of intangible assets
(excluding software) and goodwill
112,227 107,415
Tax effect (24,341) (20,209)
Non-recurring operating expenses 9,638 48,923
Tax effect (2,433) (12,984)
Non-cash charges from PPA inventory uplift 58,947 49,811
Tax effect (14,749) (9,781)
Monetary net (gain)/losses from hyperinflation (1,546) (4,506)
Tax effect 371 2,301
Non-recurring tax income (2,737) 0
Adjusted net income(1) 524,591 473,306

(1) Net income excluding the amortization and write-downs of intangible assets (except software) and goodwill, non-recurring items, non-cash charges arising from the allocation of the purchase price of EUSA Pharma to the gross margin of acquired inventory pursuant to IFRS 3, and monetary net gains/losses from hyperinflation (IAS 29), net of tax effects.

Summary of consolidated results prepared in accordance with International Financial Reporting Standards (IFRS) (thousands of €)

ASSETS 31.12.2023 31.12.2022
Property, plant and equipment 178,657 159,184
Intangible assets 1,938,197 1,758,173
Goodwill 778,350 780,057
Other equity investments and securities 21,555 28,871
Other non-current assets 12,458 9,556
Deferred tax assets 76,674 76,895
TOTAL NON-CURRENT ASSETS 3,005,891 2,812,736
Inventories 404,831 424,080
Trade receivables 445,193 361,898
Other receivables 99,401 63,915
Other current assets 19,924 15,387
Derivative instruments measured at fair value 11,079 23,603
Cash and cash equivalents 221,812 284,734
TOTAL CURRENT ASSETS 1,202,240 1,173,617
Non-current assets held for sale 0 12,470
TOTAL ASSETS 4,208,131 3,998,823

Summary of consolidated results prepared in accordance with International Financial Reporting Standards (IFRS) (thousands of €)

EQUITY AND LIABILITIES 31.12.2023 31.12.2022
Share capital 26,141 26,141
Share premium reserve 83,719 83,719
Treasury shares (127,970) (149,559)
Reserve for derivative instruments (286) 5,249
Translation reserve (264,700) (205,018)
Other reserves 61,219 62,260
Profits carried forward 1,636,451 1,524,099
Net income 389,214 312,336
Interim dividend (117,396) (112,979)
Shareholders' equity attributable to equity holders of the Parent 1,686,392 1,546,248
Shareholders' equity attributable to non-controlling interests 0 0
TOTAL SHAREHOLDERS' EQUITY 1,686,392 1,546,248
Loans - due after one year 1,353,216 1,341,549
Provisions for employee benefits 21,239 19,418
Deferred tax liabilities 144,208 167,865
TOTAL NON-CURRENT LIABILITIES 1,518,663 1,528,832
Trade payables 263,979 224,703
Other payables 174,407 251,136
Tax liabilities 67,110 33,615
Other current liabilities 5,307 5,740
Provisions for risks and charges 16,596 16,209
Derivative instruments measured at fair value 19,993 17,369
Loans - due within one year 355,752 291,546
Short-term debts to banks and other lenders 99,932 83,425
TOTAL CURRENT LIABILITIES 1,003,076 923,743
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 4,208,131 3,998,823

Summary of consolidated results prepared in accordance with International Financial Reporting Standards (IFRS)

(thousands of €)
CASH FLOW 2023 2022
OPERATING ACTIVITIES
Net income 389,214 312,336
Income taxes 101,822 89,101
Net interest 67,879 30,679
Depreciation of property, plant and equipment 28,875 27,289
Amortization of intangible assets 113,795 98,467
Write-downs 368 10,934
Equity-settled share-based payment transactions 10,870 8,251
Other non-monetary components 61,970 70,751
Change in other assets and other liabilities (8,211) (16,811)
Cash flow generated/(used) by operating activities
before change in working capital 766,582 630,997
Change in:
- inventories (50,337) (65,801)
- trade receivables (100,565) (21,175)
- trade payables 40,269 25,589
Change in working capital (110,633) (61,387)
Interest received 5,103 1,938
Interest paid (70,339) (20,093)
Income taxes paid (105,394) (89,764)
Cash flow generated/(used) by operating activities 485,319 461,691
INVESTMENT ACTIVITIES
Investments in property, plant and equipment (29,687) (23,887)
Disposals of property, plant and equipment 329 1,156
Investments in intangible assets (353,577) (72,452)
Disposals of intangible assets 317 1,318
Acquisition of holdings in subsidiaries 0 (673,259)
Sale of non-current assets held for sale 3,000 0
Cash flow generated/(used) by investment activities (379,618) (767,124)
FINANCING ACTIVITIES
Opening of loans 347,611 1,356,970
Repayment of loans (280,234) (803,543)
Payment of lease liabilities (10,172) (10,225)
Change in short-term debts to banks and other lenders 12,452 67,296
Dividends paid (245,958) (230,602)
Purchase of treasury shares (22,710) (52,267)
Sale of treasury shares 30,097 13,648
Cash flow generated/(used) by financing activities (168,914) 341,277
Change in cash and cash equivalents (63,213) 35,844
Opening cash and cash equivalents 284,734 244,578
Currency translation effect 291 4,312
Closing cash and cash equivalents 221,812 284,734

RECORDATI S.P.A.

Summary of results prepared in accordance with International Financial Reporting Standards (IFRS) (thousands of €)

2023 2022 Change %
Revenue 554,021 512,310 8.1
Operating income 118,864 109,521 8.5
Pre-tax income 222,297 233,534 (4.8)
Net income 224,017 219,234 2.2
31.12.2023 31.12.2022
Non-current assets 2,551,152 2,395,113
Current assets 455,144 424,456
TOTAL ASSETS 3,006,296 2,819,569
Shareholders' equity 352,782 362,987
Non-current liabilities 1,366,466 1,283,440
Current liabilities 1,287,048 1,173,142
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 3,006,296 2,819,569

Pending completion of independent and statutory audits.

Declaration by the Manager responsible for preparing the company's financial reports

The manager responsible for preparing the company's financial reports, Luigi La Corte, declares, pursuant to paragraph 2 of Article 154-bis of the Consolidated Law on Finance, that the accounting information contained in this press release corresponds to the documentation evidence, books and accounting records.

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