Quarterly Report • Oct 27, 2016
Quarterly Report
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January 1 to September 30, 2016
The 2016 financial year to date has in many ways been shaped by the consistent implementation of strategic measures, including the acquisitions of Diatron and STRATEC Consumables. In the past quarters, we have further expanded our development teams to enable us to handle the growing numbers of development projects and still accept new, high-potential development orders. As a result, the workforce at our main location in Birkenfeld alone has grown by 10%, with disproportionate growth in our development departments. Even though these measures to expand capacities are impacting our profitability in the short term, they nevertheless form the basis for the growth achievable with recurring sales from the production of instruments and consumables once the respective development phases have been successfully completed. Consistent with the objective of boosting these areas, we acquired two companies in the second and third quarters of the current year. We can already point to the initial positive impact of these measures on our performance in the current financial year, particularly in the form of project negotiations and contract agreements. Our aim here is to extend our product portfolio and customer base and thus strengthen our installation base.
Although the integration of these companies currently forms one key focus of our M & A activities, we are continuing to examine a wide range of options and cannot exclude the possibility of further activities.
In their reporting, our partners have regularly referred to the ongoing stable growth trend in in-vitro diagnostics (IVD). Alongside this, special topics have repeatedly played a significant role in the healthcare industry. The Zika virus detection test offered by our partner Hologic, for example, has recently been very positively received. We are delighted when our systems can make a valuable contribution to addressing highly relevant global issues in the field of diagnostics.
On behalf of the Board of Management of STRATEC Biomedical AG
Marcus Wolfinger Chairman of the Board of Management
| in € thousand | 01.01. – 09.30.2016 | 01.01. – 09.30.2015 | Change |
|---|---|---|---|
| Sales | 126,334 | 107,200 | +17.8% |
| EBITDA1 | 22,671 | 23,368 | -3.0% |
| EBITDA margin (%) 1 | 17.9 | 21.8 | -390 bps |
| EBIT 1 | 18,391 | 19,235 | -4.4% |
| EBIT margin (%) 1 | 14.6 | 17.9 | -330 bps |
| Consolidated net income 2 | 15,251 | 15,916 | -4.2% |
| Earnings per share (€) 2 | 1.29 | 1.35 | -4.4% |
bps = base points
1 2016 figure adjusted for one-off items resulting from transaction activities and related reorganization expenses
2 2016 figure additionally adjusted for financing expenses and tax expenses in connection with the acquisitions of the Diatron Group and STRATEC Consumables, for one-off items resulting from the tax audit for the 2009 to 2013 assessment periods, and for tax effects relating to reorganization expenses
The Group increased its sales for the first nine months of 2016 by 17.8% to € 126.3 million (previous year: € 107.2 million). This substantial growth was mostly attributable to the sales contributed by the Diatron Group and STRATEC Consumables, which have been consolidated for the first time since April 1, 2016 and July 1, 2016 respectively. The negative impact of regulatory procedures taking longer than planned and persistent turnover weakness at one customer since the beginning of the year was offset by positive call-up figures for various systems.
The Group generated adjusted EBIT of € 18.4 million. The adjustment includes expenses for the two acquisitions made in 2016 and the integration of the companies involved. To enhance efficiency, this integration also involved merging the activities of three operating units in the US at two locations on the East Coast. The EBIT margin was adjusted to exclude the associated one-off expenses and came to 14.6% at the end of the first nine months.
The temporary reduction in the margin is mainly due to lower profitability at the new subsidiaries and to the hiring of new staff in connection with numerous product developments.
The positive impact these product development measures are expected to have in the medium term is currently being impeded. This is because the delays in product approvals already mentioned have held back growth momentum, leading to a temporary delay in the materialization of the resultant benefits of scale.
The backlog of investments in the infrastructure of the new subsidiaries will be rapidly remedied through targeted capital expenditures.
The bridge financing taken up in the context of the acquisitions is planned to be exchanged for long-term follow-up financing as the fourth quarter progresses.
Including the newly acquired company divisions, personnel hired from temporary employment agencies, and trainees, the STRATEC Group had a total of 981 employees as of September 30, 2016. This corresponds to an increase of 71.2% compared with the previous year's reporting date.
Of the total workforce as of September 30, 2016, 364 employees were attributable to the two new companies. In the previous year, these companies had a total of 332 employees. Taking into account the 573 employees at STRATEC in Q3 2015, and factoring in the 332 employees from the two new companies, workforce grew by 8.3% over the twelve month period. Excluding acquisitions, the number of employees at the STRATEC Group rose by 7.6%, an increase driven in particular by the build-up of additional development capacities at the Birkenfeld location.
To deal with the large number of development projects, STRATEC remains on the lookout for well-qualified personnel and expects to report rising employee totals in the quarters ahead as well.
Number of employees (09.30.)
In the period under report, STRATEC reported new contracts for development projects, including a contract with a further leading company in the IVD industry. Further development contracts have reached promising negotiating stages.
Hologic, one of STRATEC's largest customers, has reported that the market launch of its "Panther Fusion" in Europe will take place in 2017. The US market launch of this system is scheduled for 2018. The "Fusion" system represents a further expansion to the established "Panther" line. Furthermore, Hologic has also reported on increased "Panther" placement volumes in connection with its Zika virus detection test.
Consistent with the agreed project planning, the development work on an immunoassay system for small and medium-sized laboratories is progressing very successfully. Initial milestones have been reached and the partner aims to launch the system onto the market in 2018.
Alongside these projects, our partners are also preparing several market launches scheduled for the coming quarters.
Development work on proprietary platforms is also progressing successfully. In cooperation with various partners, initial diagnostics tests are already being tried out and applications are being tested for a wide variety of fields. Initial sales with these platform-based systems are expected during the second half of 2017, while the first market launch with a partner is expected to take place in the first half of 2018.
STRATEC is continuing to focus on achieving key development milestones and market launches.
Production of a smart consumable
The updated version of the financial forecast issued on July 23, 2016 to account for the Group's acquisitions, which foresees sales growth to between € 175 million and € 182 million for the 2016 financial year and sales of between € 205 million and € 220 million in 2017, is hereby confirmed. Excluding the impact of the companies acquired in 2016, the average organic sales growth of around 6% originally expected for 2016 and 2017 (CAGR of around 6% for sales from 2014 to 2017 based on sales in the 2013 financial year) will largely be generated in 2017. This is because several market launches are scheduled for the 2017 financial year.
The EBIT margin is expected to develop positively upon the materialization of benefits of scale resulting from growth in the traditional business and at acquired units.
View inside an analyzer system
| in € thousand | 09.30.2016 | 12.31.2015 |
|---|---|---|
| Non-current assets | ||
| Goodwill | 34,480 | 5,125 |
| Other intangible assets | 87,834 | 25,867 |
| Property, plant and equipment | 32,639 | 19,595 |
| Financial assets | 404 | 184 |
| Deferred taxes | 155 | 21 |
| 155,512 | 50,792 | |
| Current assets | ||
| Inventories | ||
| Raw materials and supplies | 16,059 | 9,375 |
| Unfinished products, unfinished services | 6,064 | 3,853 |
| Finished products and merchandise | 4,329 | 2,791 |
| 26,451 | 16,019 | |
| Receivables and other assets | ||
| Trade receivables | 28,994 | 24,045 |
| Future receivables from construction contracts | 2,249 | 1,470 |
| Receivables from associates | 21 | 23 |
| Other financial assets | 5,209 | 2,779 |
| Other receivables and other assets | 4,370 | 2,358 |
| Income tax receivables | 4,695 | 5,038 |
| 45,537 | 35,713 | |
| Cash and cash equivalents | 24,569 | 56,415 |
| 96,557 | 108,147 | |
| Total assets | 252,069 | 158,939 |
| in € thousand | 09.30.2016 | 12.31.2015 |
|---|---|---|
| Shareholders' equity | ||
| Share capital | 11,859 | 11,853 |
| Capital reserve | 20,346 | 20,061 |
| Revenue reserves | 93,305 | 94,307 |
| Treasury stock | -118 | -172 |
| Other equity | 6,532 | 4,231 |
| 131,924 | 130,280 | |
| Non-current debt | ||
| Non-current financial liabilities | 3,914 | 4,328 |
| Other non-current liabilities | 552 | 22 |
| Provisions for pensions | 2,095 | 63 |
| Deferred taxes | 18,899 | 5,579 |
| 25,460 | 9,992 | |
| Current debt | ||
| Current financial liabilities | 71,570 | 3,816 |
| Trade payables | 9,262 | 3,436 |
| Liabilities to associates | 40 | 14 |
| Other current liabilities | 12,390 | 8,391 |
| Current provisions | 951 | 1,508 |
| Income tax liabilities | 472 | 1,502 |
| 94,685 | 18,667 | |
| Total shareholders' equity and debt | 252,069 | 158,939 |
| in € thousand | 01.01. – 09.30.2016 | 01.01. – 09.30.2015 |
|---|---|---|
| Sales | 126,334 | 107,200 |
| Cost of sales | -80,447 | -67,573 |
| Gross profit | 45,886 | 39,627 |
| Research and development expenses | -6,911 | -5,598 |
| Sales-related expenses | -8,581 | -4,972 |
| General administrative expenses | -11,708 | -8,196 |
| Other operating income and expenses | -6,971 | -1,626 |
| Earnings before interest and taxes (EBIT) | 11,716 | 19,235 |
| Net financial expenses | -932 | 186 |
| Earnings before taxes (EBT) | 10,784 | 19,421 |
| Current tax expenses | -3,927 | -2,328 |
| Deferred tax income / expenses | 1,026 | -1,177 |
| Consolidated net income | 7,883 | 15,916 |
| Items that may not be subsequently reclassified to profit or loss: | ||
| Currency translation differences from translation of foreign business operations | 275 | 2,309 |
| Change in value of financial investments | 2,027 | 0 |
| Comprehensive income | 10,184 | 18,225 |
| Basic earnings per share in € | 0.67 | 1.35 |
| No. of shares used as basis (basic) | 11,849,634 | 11,796,415 |
| Diluted earnings per share in € | 0.66 | 1.34 |
| No. of shares used as basis (diluted) | 11,937,704 | 11,906,174 |
| in € thousand | 01.01. – 09.30.2016 | 01.01. – 09.30.2015 | |
|---|---|---|---|
| I. | Operations | ||
| Consolidated net income (after taxes) | 7,883 | 15,916 | |
| Depreciation and amortization | 7,884 | 4,133 | |
| Current income tax expenses | 3,927 | 2,328 | |
| Income taxes paid less income taxes received | -4,487 | -5,291 | |
| Financial income | -138 | -273 | |
| Financial expenses | 756 | 134 | |
| Interest paid | -336 | -113 | |
| Interest received | 138 | 270 | |
| Other non-cash expenses | 849 | 763 | |
| Other non-cash income | -723 | -94 | |
| Change in net pension provisions through profit or loss | 15 | 0 | |
| Change in deferred taxes through profit or loss | -1,026 | 1,177 | |
| - Profit / + loss on disposals of non-current assets | 484 | -18 | |
| - Increase / + reduction in inventories, trade receivables and other assets | -1,863 | -2,069 | |
| + Increase / - reduction in trade payables and other liabilities | -891 | 4,595 | |
| Inflow of funds from operating activities | 12,473 | 21,458 | |
| II. | Investments | ||
| Incoming payments from disposals of non-current assets | |||
| Property, plant and equipment | 54 | 143 | |
| Outgoing payments for investments in non-current assets | |||
| Intangible assets | -2,144 | -2,480 | |
| Property, plant and equipment | -5,715 | -2,994 | |
| Incoming / outgoing payments from granting / repayment of financial liabilities | 3 | 0 | |
| Payments for acquisition of consolidated companies less acquired cash | -94,428 | 0 | |
| Outflow of funds for investing activities | -102,230 | -5,331 | |
| III. | Financing | ||
| Incoming funds from taking up of financial liabilities | 67,550 | 2,000 | |
| Proceeds / payments for granting / redeeming financial liabilities | -1,215 | -3,948 | |
| Incoming payments from issue of shares for employee stock option programs | 194 | 1,475 | |
| Dividend payments | -8,885 | -8,248 | |
| Outflow of funds for financing activities | 57,644 | -8,721 | |
| IV. | Cash-effective change in cash and cash equivalents | -32,114 | 7,406 |
| Cash and cash equivalents at start of period | 56,415 | 46,636 | |
| Change in scope of consolidation | 25 | 79 | |
| Impact of exchange rate movements | 243 | 604 | |
| Cash and cash equivalents at end of period | 24,569 | 54,725 |
| October 27, 2016 | Quarterly Statement 9M 2016 |
|---|---|
| November 22, 2016 | German Equity Forum, Frankfurt am Main, Germany (Analysts' Conference) |
| April 11, 2017 | 2016 Annual Report |
| May 03, 2017 | Quarterly Statement Q1 2017 |
| May 24, 2017 | Annual General Meeting, Pforzheim, Germany |
| July 25, 2017 | Half-yearly Financial Report H1 2017 |
| October 26, 2017 | Quarterly Statement 9M 2017 |
Subject to amendment. The latest version of the financial calendar can be found on the company's website at: www.stratec.com > STRATEC Group > Investors > Financial Calendar
Quarterly statements and half-yearly financial reports are neither audited, nor subject to an audit review by the group auditor, Ebner Stolz GmbH & Co. KG Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft, Stuttgart.
STRATEC Biomedical AG (www.stratec.com) designs and manufactures fully automated analyzer systems for its partners in the fields of clinical diagnostics and biotechnology. Furthermore, the company offers sample preparation solutions, integrated laboratory software, and complex consumables for diagnostic and medical applications. 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 its own 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 TecDAX select index of the German Stock Exchange.
STRATEC Biomedical AG Gewerbestr. 37 75217 Birkenfeld Germany Phone: +49 7082 7916-0 Fax: +49 7082 7916-999 [email protected] www.stratec.com
André Loy Phone: +49 7082 7916-190 Fax: +49 7082 7916-999 [email protected]
Sandra Eberle Phone: +49 7082 7916-197 Fax: +49 7082 7916-999 [email protected]
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