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STRATEC SE
Earnings Release • Oct 25, 2024
416_10-q_2024-10-25_4d2c2663-3723-4876-9085-5994661dc6e5.pdf
Earnings Release
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stratec $\odot$
QUAHERUY STAJEMENY OXJEOR
January I to September 30, 2024
STRATEC REPORTS RESULTS FOR FIRST NINE MONTHS OF 2024
- Measures to enhance earnings show effect; at 8.4\%, adjusted EBIT margin for 9M/2024 almost matches previous year's level ( $9 \mathrm{M} / 2023: 8.6 \%$ ) despite negative scale effects
- Sales on a constant-currency basis $-6.0 \%$ to $€ 176.3$ million in 9M/2024 (9M/2023: $€ 187.7$ million)
- Significantly improved sales and earnings dynamics expected in fourth quarter of 2024 due to upcoming conclusion of additional orders
- 2024 guidance: Sales expected to remain stable or decrease slightly with adjusted EBIT margin of around 10.0\% to 12.0\%
Key figures'
| € 000s | 9M/2024 | 9M/2023 | Change | Q3/2024 | Q3/2023 | Change |
|---|---|---|---|---|---|---|
| Sales | 176,305 | 187,680 | $-6.1 \%$ (cc:-6.0\%) |
57,229 | 62,674 | $-8.7 \%$ (cc:-9.1\%) |
| Adjusted EBITDA | 26,329 | 27,267 | $-3.4 \%$ | 9,011 | 13,370 | $-32.6 \%$ |
| Adjusted EBITDA margin (\%) | 14.9 | 14.5 | $+40 \mathrm{bps}$ | 15.7 | 21.3 | $-560 \mathrm{bps}$ |
| Adjusted EBIT | 14,769 | 16,222 | $-9.0 \%$ | 5,054 | 9,257 | $-45.4 \%$ |
| Adjusted EBIT margin (\%) | 8.4 | 8.6 | $-20 \mathrm{bps}$ | 8.8 | 14.8 | $-600 \mathrm{bps}$ |
| Adjusted consolidated net income | 8,139 | 9,742 | $-16.5 \%$ | 2,660 | 5,682 | $-53.2 \%$ |
| Adjusted earnings per share (€) | 0.67 | 0.80 | $-16.3 \%$ | 0.22 | 0.47 | $-53.2 \%$ |
| Earnings per share (€) | 0.37 | 0.62 | $-40.3 \%$ | 0.05 | 0.42 | $-88.1 \%$ |
bps = basis points / cc = constant currency
[^0]
[^0]: * To facilitate comparison, figures have been adjusted to exclude amortization resulting from purchase price allocations in the context of acquisitions and other non-recurring items. These non-recurring items include advisory expenses relating to M\&A activities and one-off personnel expenses of $€ 1.7$ million in connection with the departure of a member of the Board of Management in the third quarter of 2024.
BUSINESS PERFORMANCE
STRATEC's consolidated sales in the first nine months of 2024 fell year-on-year by $6.1 \%$ (constant currency: $6.0 \%$; organic: $9.6 \%$ ) to $€ 176.3$ million (9M/2023: $€ 187.7$ million). This subdued sales momentum is attributable to a lower volume of Systems sales. Here, the sales performance continued to be held back by the sharp expansion in molecular diagnostics laboratory capacities during the pandemic, as well as by the start-up curve for a product newly launched onto the market turning out less dynamic than expected. Despite deliveries originally expected for the third quarter of 2024 being postponed, sales in Service parts and Consumables rose significantly. Sales in this business area were positively influenced by the significant extension in the installed systems base in recent years, as well as by rising utilization levels for systems in the market. Sales with Development and Services also showed moderate year-on-year growth in the first nine months of 2024.
It is pleasing to note that, despite negative scale effects and the product mix still not being optimal, STRATEC managed to significantly improve its gross margin in the first nine months of 2024. In this respect, the margin particularly benefited from earnings enhancement measures already initiated at the beginning of last year and since extended, as well as from associated steps to adjust capacities in line with the current market situation. The adjusted EBIT margin for the first nine months amounted to $8.4 \%$ and thus virtually matched the previous year's level (adjusted EBIT margin 9M/2023: 8.\%).
Adjusted consolidated net income amounted to $€ 8.1$ million in the first nine months of 2024, as against $€ 9.7$ million in the previous year. Adjusted earnings per share (basic) stood at $€ 0.67$ (9M/2023: $€ 0.80$ ).
For comparison purposes, the earnings figures for the first nine months of 2024 have been adjusted to exclude amortization resulting from purchase price allocations in the context of acquisitions and other non-recurring items (advisory expenses and restructuring expenses relating to M\&A activities, as well as one-off personnel expenses). A reconciliation of the adjusted figures with those reported in the consolidated statement of comprehensive income can be found in the Quarterly Statement 9M/2024 also published today.
| € 000s | 9M/2024 | 9M/2023 |
|---|---|---|
| Adjusted EBIT | 14,769 | 16,222 |
| Adjustments | ||
| - PPA amortization | $-2,772$ | $-1,713$ |
| - Other ${ }^{1}$ | $-2,052$ | $-1,217$ |
| EBIT | 9,945 | 13,292 |
| Including advisory expenses and restructuring expenses relating to M\&A activities, as well as one-off personnel expenses of $€ 1.7$ million in connection with the departure of a board member in the third quarter of 2024 | ||
| € 000s | 9M/2024 | 9M/2023 |
| Adjusted consolidated net income | 8,139 | 9,742 |
| Adjusted earnings per share in $€$ (basic) | 0.67 | 0.80 |
| Adjustments | ||
| - PPA amortization | $-2,772$ | $-1,713$ |
| - Other ${ }^{1}$ | $-2,052$ | $-1,217$ |
| - Taxes on income | 1,156 | 714 |
| Consolidated net income | 4,471 | 7,526 |
| Earnings per share in $€$ (basic) | 0.37 | 0.62 |
${ }^{1}$ Including advisory expenses and restructuring expenses relating to M\&A activities, as well as one-off personnel expenses of $€ 1.7$ million in connection with the departure of a board member in the third quarter of 2024
FINANCIAL GUIDANCE
STRATEC is shortly due to sign further additional orders with customers that are also expected to generate notable sales and earnings contributions in the remainder of the 2024 financial year. Furthermore, STRATEC expects that part of the deliveries postponed from the third quarter can now be realized in the fourth quarter of 2024. In view of this, sales and earnings are expected to improve significantly in the final quarter compared with the first nine months of 2024. STRATEC accordingly expects to be able to make up for most of the shortfall in sales by the end of the year. Overall, and in light of the ongoing volatility in the market climate, STRATEC expects its constant-currency sales to remain stable or decrease slightly compared with the previous year. The adjusted EBIT margin for 2024 is forecast at around $10.0 \%$ to $12.0 \%$.
For the 2024 financial year, STRATEC has planned investments in property, plant, and equipment and intangible assets corresponding to a total of $6.0 \%$ to $8.0 \%$ of sales (FY/2023: 6.7\%; 9M/2024: $7.0 \%$ ).
DEVELOPMENT IN PERSONNEL
Including personnel hired from employment agencies and trainees, the STRATEC Group had a total of 1,462 employees as of September 30, 2024 (previous year: 1,532 employees). This corresponds to a reduction of $4.6 \%$ compared with the previous year's reporting date, a development mainly attributable to the earnings enhancement program initiated in March 2023 and the adjustment in capacities in line with subdued customer demand.
PROJECTS AND OTHER DEVELOPMENTS
Together with its partners, STRATEC pressed ahead with numerous developments and projects in the first nine months of 2024, while also concluding new agreements for new cooperations. In the second quarter of 2024, for example, the final development milestone was reached for customer products in transfusion diagnostics.
Moreover, in recent months STRATEC has completed various initiatives and projects to boost its local presence in markets of particular strategic relevance and can already report its first major successes. Measures worth mentioning include the development of sales and production units in Asia, STRATEC is thus building an optimal position to continue benefiting in future as well from the wide variety of growth opportunities in the Asia-Pacific region. By successfully integrating the Natech Group and intensifying cooperation across the whole of the Group, STRATEC has also accessed new distribution channels and created significant potential for cross-selling activities in the US, the largest and most important market for laboratory solutions, and thus further significantly strengthened its market position. This is reflected in the successful conclusion of orders, for example to develop and subsequently manufacture a complex consumable in the US for an existing customer of the STRATEC Group.
Given promising negotiations concerning new cooperations and the well-filled development pipeline, which includes numerous projects in various stages of development, major market launches can be expected in future as well.
CONSOLIDATED BALANCE SHEET as of September 30, 2024
Assets
| 600bs | 09.30.2024 | 12.31.2023 |
|---|---|---|
| Non-current assets | ||
| Goodwill | 50,164 | 51,158 |
| Other intangible assets | 63,369 | 62,130 |
| Right-of-use assets | 15,746 | 16,490 |
| Property, plant and equipment | 65,885 | 67,513 |
| Non-current financial assets | 3,678 | 3,583 |
| Non-current contract assets | 13,183 | 13,381 |
| Deferred taxes | 3,321 | 4,347 |
| 215,346 | 218,602 | |
| Current assets | ||
| Inventories | 148,957 | 142,625 |
| Trade receivables | 38,554 | 58,059 |
| Current financial assets | 2,027 | 2,047 |
| Current other receivables and assets | 7,874 | 8,059 |
| Current contract assets | 2,824 | 1,880 |
| Income tax receivables | 2,147 | 1,774 |
| Cash | 33,108 | 33,532 |
| 235,491 | 247,976 | |
| Total assets | 450,837 | 466,578 |
| 000s | 09.30 .2024 | 12.31 .2023 |
|---|---|---|
| Shareholders' equity | ||
| Share capital | 12,158 | 12,158 |
| Capital reserve | 37,023 | 36,273 |
| Revenue reserves | 181,885 | 184,100 |
| Treasury stock | -35 | -35 |
| Other equity | -3,274 | 830 |
| 227,757 | 233,326 | |
| Non-current debt | ||
| Non-current financial liabilities | 93,635 | 98,248 |
| Non-current contract liabilities | 20,075 | 24,181 |
| Provisions for pensions | 4,286 | 4,317 |
| Deferred taxes | 11,728 | 10,076 |
| 129,724 | 136,822 | |
| Current debt | ||
| Current financial liabilities | 58,902 | 53,464 |
| Trade payables | 13,104 | 21,454 |
| Current other liabilities | 6,755 | 7,230 |
| Current contract liabilities | 7,501 | 5,936 |
| Provisions | 1,258 | 1,502 |
| Income tax liabilities | 5,836 | 6,844 |
| 93,356 | 96,430 | |
| Total shareholders' equity and debt | 450,837 | 466,578 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the period from January I to September 30, 2024
| € 000s | 01.01. -09.30.2024 | 01.01. -09.30.2023 |
|---|---|---|
| Sales | 176,305 | 187,680 |
| Cost of sales | $-129,399$ | $-143,683$ |
| Gross profit | 46,906 | 43,997 |
| Research and development expenses | $-8,123$ | $-6,573$ |
| Sales-related expenses | $-10,003$ | $-9,105$ |
| General administrative expenses | $-18,597$ | $-13,765$ |
| Other operating income and expenses | $-238$ | $-1,262$ |
| Earnings before interest and taxes (EBIT) | 9,945 | 13,292 |
| Net financial expenses | $-4,123$ | $-2,811$ |
| Earnings before taxes (EBT) | 5,822 | 10,481 |
| Taxes on income | $-1,351$ | $-2,955$ |
| Consolidated net income | 4,471 | 7,526 |
| Items that may be subsequently reclassified to profit or loss: | ||
| Currency translation differences from translation of foreign operations | $-4,104$ | 4,070 |
| Other comprehensive income (OCI) | $-4,104$ | 4,070 |
| Comprehensive income | 367 | 11,596 |
| Basic earnings per share in € | 0.37 | 0.62 |
| No. of shares used as basis (basic) | 12,155,942 | 12,155,942 |
| Diluted earnings per share in € | 0.37 | 0.62 |
| No. of shares used as basis (diluted) | 12,157,875 | 12,160,830 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the period from July I to September 30, 2024
| € 000s | $07.01 .-09.30 .2024$ | $07.01 .-09.30 .2023$ |
|---|---|---|
| Sales | 57,229 | 62,674 |
| Cost of sales | $-40,704$ | $-44,577$ |
| Gross profit | 16,525 | 18,097 |
| Research and development expenses | $-2,563$ | $-2,061$ |
| Sales-related expenses | $-3,160$ | $-2,958$ |
| General administrative expenses | $-7,337$ | $-3,970$ |
| Other operating income and expenses | $-1,244$ | $-588$ |
| Earnings before interest and taxes (EBIT) | 2,221 | 8,520 |
| Net financial expenses | $-1,389$ | $-1,308$ |
| Earnings before taxes (EBT) | 832 | 7,212 |
| Taxes on income | $-283$ | $-2,100$ |
| Consolidated net income | 549 | 5,112 |
| Items that may be subsequently reclassified to profit or loss: | ||
| Currency translation differences from translation of foreign operations | $-434$ | $-2,034$ |
| Other comprehensive income (OCI) | $-434$ | $-2,034$ |
| Comprehensive income | 115 | 3,078 |
| Basic earnings per share in $€$ | 0.05 | 0.42 |
| No. of shares used as basis (basic) | 12,155,942 | 12,155,942 |
| Diluted earnings per share in $€$ | 0.05 | 0.42 |
| No. of shares used as basis (diluted) | 12,157,686 | 12,155,944 |
CONSOLIDATED STATEMENT OF CASH FLOWS for the period from January I to September 30, 2024
| € 000s | 01.01.-09.30.2024 | 01.01.-09.30.2023 |
|---|---|---|
| I. Operations | ||
| Consolidated net income (after taxes) | 4,471 | 7,526 |
| Depreciation and amortization | 14,332 | 12,758 |
| Current income tax expenses | 1,513 | 2,664 |
| Income taxes paid less income taxes received | $-171$ | $-5,637$ |
| Financial income | $-275$ | $-79$ |
| Financial expenses | 4,486 | 2,567 |
| Interest paid | $-4,542$ | $-2,522$ |
| Interest received | 275 | 57 |
| Other non-cash expenses | 1,732 | 1,991 |
| Other non-cash income | $-1,195$ | $-795$ |
| Change in net pension provisions through profit or loss | $-23$ | $-72$ |
| Change in deferred taxes through profit or loss | $-162$ | 291 |
| Profit (-) / loss ( + ) on disposals of non-current assets | 74 | 70 |
| Increase (-) / decrease ( + ) in inventories, trade receivables and other assets | 9,920 | $-6,163$ |
| Increase ( + ) / decrease (-) in trade payables and other liabilities | $-5,005$ | $-1,947$ |
| Cash flow from operating activities | 25,430 | 10,709 |
| II. Investments | ||
| Incoming payments from disposals of non-current assets - Property, plant and equipment - Financial assets |
$\begin{array}{r} 9 \ 0 \end{array}$ | $\begin{array}{r} 17 \ 4 \end{array}$ |
| Outgoing payments for investments in non-current assets - Intangible assets - Property, plant and equipment - Financial assets |
$\begin{array}{r} -6,344 \ -5,997 \ -100 \end{array}$ | $\begin{array}{r} -6,685 \ -7,301 \ -4,000 \end{array}$ |
| Outgoing payments for acquisition of consolidated companies less cash acquired | 0 | $-27,701$ |
| Cash flow from investing activities | $-12,432$ | $-45,666$ |
| III. Financing | ||
| Incoming funds from taking up of financial liabilities | 12,000 | 48,374 |
| Outgoing payments for repayment of financial liabilities | $-18,795$ | $-9,949$ |
| Dividend payments | $-6,687$ | $-11,791$ |
| Cash flow from financing activities | $-13,482$ | 26,634 |
| IV. Cash-effective change in cash (net balance I - III) | $-484$ | $-8,323$ |
| Cash at start of period | 33,532 | 22,668 |
| Impact of exchange rate movements | 60 | $-30$ |
| Cash at end of period | 33,108 | 14,315 |
FINANCIAL CALENDAR
Subject to amendment.
Quarterly statements and half-year financial reports are neither audited nor subject to an audit review by the group auditor.
ABOUT STRATEC
STRATEC SE (www.stratec.com) designs and manufactures fully automated analyzer systems for its partners in the fields of clinical diagnostics and life sciences. Furthermore, the company offers complex consumables for diagnostic and medical applications. For its analyzer systems and consumables, STRATEC covers the entire value chain - from development to design and production through to quality assurance.
The partners market the systems, software and consumables, in general together with their own reagents, as system solutions to laboratories, blood banks and research institutes around the world. STRATEC develops its products on the basis of patented technologies.
Shares in the company (ISIN: DE000STRA555) are traded in the Prime Standard segment of the Frankfurt Stock Exchange and are listed in the SDAX select index of the German Stock Exchange.
IMPRINT AND CONTACT
Published by
STRATEC SE
Gewerbestr. 37
75217 Birkenfeld
Germany
Phone: +49 7082 7916-0
[email protected]
www.stratec.com
Head of Investor Relations, Sustainability \& Corporate Communications
Jan Keppeler
Phone: +49 7082 7916-6515
[email protected]
Notice
Forward-looking statements involve risks: This quarterly statement 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.
This quarterly statement contains various disclosures that from an economic point of view are not required by the relevant accounting standards. These disclosures should be regarded as a supplement, rather than a substitute for the IFRS disclosures.
Apparent discrepancies may arise throughout this quarterly statement on account of mathematical rounding up or down in the course of addition.
This quarterly statement is available in both German and English. Both versions can be downloaded from the company's website at www.stratec.com. In the event of any discrepancies between the two, the German report is the definitive version.