Sartorius Aktiengesellschaft (DE0007165631)
 
 

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17.04.25 07:00:37 Sartorius AG (SARTF) Q1 2025 Earnings Call Highlights: Strong Start with Robust Growth in ...
Group Sales Revenue Growth: 6.5% in constant currencies. Bioprocess Solutions Sales Revenue Growth: 10% in constant currencies to EUR718 million. Lab Products & Services Sales Revenue Decline: 5.5% in constant currencies. Group Underlying EBITDA: EUR263 million, up 12.2%. Group Underlying EBITDA Margin: Increased by 120 basis points to 29.8%. Bioprocess Solutions Underlying EBITDA Margin: Increased by 170 basis points to 31.5%. Lab Products & Services Underlying EBITDA Margin: Decreased to 22.6% from 24%. Net Operating Cash Flow: Increased by EUR94 million. Free Cash Flow: Grew by EUR151 million to EUR61 million. Net Debt to Underlying EBITDA Ratio: Improved from 4.0 times to 3.9 times. 2025 Group Sales Revenue Growth Guidance: Approximately 6% with a plus-minus 2% bandwidth. 2025 Group EBITDA Margin Guidance: 29% to 30%. 2025 CapEx Ratio Guidance: Around 12.5%.

Warning! GuruFocus has detected 7 Warning Signs with SARTF.

Release Date: April 16, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Sartorius AG (SARTF) reported a strong start to 2025 with a 6.5% sales revenue growth in constant currencies. The Bioprocess Solutions division experienced a 10% increase in sales revenue, driven by strong double-digit growth in consumables. The company achieved a substantial margin expansion, with underlying EBITDA growing by 12.2% to EUR263 million. The acquisition of MatTek is expected to enhance Sartorius AG's portfolio, aligning with their innovation strategy and reducing reliance on animal testing. Strong cash flow and reduced leverage ratio were reported, indicating financial stability and effective management of resources.

Negative Points

The Lab Products & Services (LPS) division faced challenges with a 5.5% decline in sales in constant currencies due to a soft equipment business. There is a continued reluctance from customers to make larger investments in equipment, impacting the LPS division. The company faces potential impacts from tariffs, although they do not expect it to affect their competitive positioning. China's business performance was slightly below the previous year, indicating regional challenges. The guidance for 2025 includes a cautious outlook with a sales revenue growth expectation of approximately 6%, reflecting market volatilities.

Q & A Highlights

Q: Was there any pull forward of orders observed in the quarter due to tariff dynamics or macro uncertainty, particularly in the Americas? A: Joachim Kreuzburg, CEO, stated that they did not see any pull forward of orders playing a relevant role during Q1. The growth in the Americas was not higher than expected and was attributed to temporary effects rather than an underlying trend.

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Q: Could you provide more details on the discussions about instruments despite the pressure on revenue? Where is the most activity seen, and what type of customers and instruments are involved? A: Rene Faber, Head of Bioprocess Solutions Division, noted ongoing high activity levels with customers preparing for equipment purchases, particularly for expansion projects. However, this has not yet resulted in increased order levels, though they are optimistic about recovery starting this year.

Q: Can you comment on the order intake and whether the book-to-bill ratio is better than historical trends? A: Joachim Kreuzburg, CEO, explained that while the book-to-bill ratio is moving upwards, it is important to consider it on an annual basis rather than quarterly. The moving annual total book-to-bill ratio has been above 1 for more than a quarter, indicating positive trends.

Q: How are you thinking about the seasonality in Bioprocess Solutions given the strong Q1 growth? A: Rene Faber, Head of Bioprocess Solutions Division, stated that they expect no significant differences in seasonality compared to previous years, with Q4 typically being the strongest quarter followed by Q1.

Q: Regarding tariffs, do you think customers will absorb higher prices due to the importance of your products in therapeutic manufacturing? A: Joachim Kreuzburg, CEO, emphasized that they plan to pass on only the additional costs from tariffs to customers transparently, and they believe customers will accept this due to the essential nature of their products.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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31.01.25 07:04:07 Sartorius AG (SARTF) Q4 2024 Earnings Call Highlights: Strong Order Intake and Efficiency Gains ...
Revenue: EUR3.4 billion, with a slight increase of 0.1% in constant currencies. Order Intake: Double-digit increase, particularly strong in consumables. Underlying EBITDA Margin: 28.0%, with EUR945 million in absolute terms. Regional Performance: EMEA growth of 5.5%, Americas impacted by temporary industry trends, Asia Pacific growth of 1.4%. Free Cash Flow: Doubled to EUR550 million from EUR271 million in the prior year. CapEx: Reduced to 12.1% of sales from 16.5% in the prior year. Net Debt: EUR3.746 billion, with a leverage ratio of 4.0. Bioprocess Solutions Sales: EUR2.7 billion, with recurring business showing mid-single-digit growth. Lab Products & Services Sales: Down 3% in constant currencies, with challenges in China. Net Operating Cash Flow: Increased by 9.2% to EUR850 million. CapEx for R&D and Infrastructure: EUR340 million, with a CapEx ratio of 12.2%.

Warning! GuruFocus has detected 4 Warning Signs with SARTF.

Release Date: January 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Sartorius AG (SARTF) achieved its reverse guidance for 2024, with both top-line and profitability meeting expectations. The Bioprocess Solutions division saw a slight sales increase, driven by strong growth in the consumables business. Order intake for the group was double digits ahead of the prior year, indicating strong demand recovery. The company successfully implemented an efficiency program, saving over EUR 100 million and maintaining a robust EBITDA margin. Sartorius AG (SARTF) expects to outperform the market with moderate profitable growth in 2025, driven by fundamental growth drivers in the biopharma industry.

Negative Points

Sales for the Lab Products & Services (LPS) division were slightly below the previous year's level, impacted by a soft market in China. The equipment business remained muted, with negative double-digit growth in 2024. Profitability was slightly below 2023 levels due to lower capacity utilization and inventory reduction efforts. The company remains cautious about the market outlook for 2025, expecting growth below midterm average rates. The financial results were impacted by increased depreciation and higher financial expenditures, leading to a lower underlying net profit compared to the prior year.

Q & A Highlights

Q: How did consumable orders develop in Q4, and do they reflect any catch-up from low inventory levels? A: Joachim Kreuzburg, CEO: The book-to-bill ratio for bioprocessing was close to 1.2 in Q4, with consumables above that. We don't have indications that customers ran their inventory levels too low, so we don't expect volatility from catch-up orders. Order levels were low in previous quarters, picking up slightly in Q3, and the year-on-year order growth has been encouraging.

Story Continues

Q: Can you provide insights into the typical seasonality of orders and the status of your South Korea expansion? A: Joachim Kreuzburg, CEO: Seasonality is difficult to pinpoint as there has always been some fluctuation. Q4 might be slightly stronger on average, but it's not a clear pattern. Regarding South Korea, we are on track with our facility in Songdo, expecting to start qualification in 2026, which will enhance our capacity in the region.

Q: Why wouldn't a 12.7% order intake increase translate to double-digit sales growth in 2025 for bioprocessing? A: Joachim Kreuzburg, CEO: While the order intake growth is healthy, we should consider the low order levels in 2023. We maintain a cautious outlook and do not recommend speculating on double-digit growth rates at this point.

Q: What are the potential drivers of upside and downside to the 2025 sales guidance? A: Joachim Kreuzburg, CEO: Upside and downside variables include the timing of customer projects, approvals, and manufacturing campaigns. The destocking impact should be minimal, but the biotech funding environment and China's market conditions could introduce some uncertainty.

Q: Can you confirm the mix of equipment versus consumables and its impact on future growth? A: Rene Faber, Head of Bioprocess Solutions Division: Currently, the mix is about 75% consumables and 25% equipment. We are moving towards a higher recurring revenue portion, potentially reaching 80-20. Equipment sales are important as they often lead to consumable sales.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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16.02.24 13:05:33 Q4 2023 Bio Rad Laboratories Inc Earnings Call
Participants

Andrew J. Last; Executive VP & COO; Bio-Rad Laboratories, Inc.

Norman D. Schwartz; Chairman, CEO, President & Interim CFO; Bio-Rad Laboratories, Inc.

Simon May; Executive VP & President of the Life Science Group; Bio-Rad Laboratories, Inc.

Yong Chung; VP of IR; Bio-Rad Laboratories, Inc.

Conor Noel McNamara; Analyst; RBC Capital Markets, Research Division

Daniel Louis Leonard; Research Analyst; UBS Investment Bank, Research Division

Jack Meehan; Partner; Nephron Research LLC

Patrick Bernard Donnelly; Senior Analyst; Citigroup Inc., Research Division

Presentation

Operator

Good afternoon, ladies and gentlemen, and welcome to the Bio-Rad Fourth Quarter and Full Year 2023 Earnings Results Conference Call. (Operator Instructions)
I would now like to turn the conference over to Edward Chung. Please go ahead.

Yong Chung

Thanks, Jenny. Good afternoon, everyone, and thank you for joining us. Today, we will review the fourth quarter and full year 2023 financial results and provide an update on key business trends for Bio-Rad. With me on the call today are Norman Schwartz, our Chief Executive Officer; Andy Last, Executive Vice President and Chief Operating Officer; and Simon May, President of the Life Science Group.
Before we begin our review, I would like to caution everyone that we will be making forward-looking statements about management's goals, plans and expectations, our future financial performance and other matters. These statements are based on assumptions and expectations of future events that are subject to risks and uncertainties. Our actual results may differ materially from these plans, goals and expectations.
You should not place undue reliance on these forward-looking statements, and I encourage you to review our filings with the SEC where we discuss in detail the risk factors in our business. The company does not intend to update any forward-looking statements made during the call today. Finally, our remarks today will include references to non-GAAP financials, including net income and diluted earnings per share which are financial measures that are not defined under generally accepted accounting principles. Investors should review the reconciliation of these non-GAAP measures to the comparable GAAP results contained in our earnings release.
With that, I will now turn over the call to Andy Last, our Executive Vice President and Chief Operating Officer, to provide an update on Bio-Rad's global operations.

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Andrew J. Last

Okay. Many thanks, Ed, and good afternoon to everybody. Thank you for joining us. For the fourth quarter of 2023 performed largely as expected, reflecting a continuation of the macroeconomic trends started earlier this year in the biotech and BioPharma segments, China and geopolitical challenges related to Russia. However, revenue picked up nicely compared to Q3 in both Life Science and Diagnostics. Although as expected, we saw a little in the way of budget flush in the fourth quarter of this year for the Life Science business.
During the quarter, we smoothed out the remaining operational challenges associated with our SAP go live in Q3 in Asia Pacific. And we are now operating on a single global instance of SAP across all our operations. In Life Science, we experienced a double-digit core business decline compared to Q4 prior year where we had challenging compares due to strong budget flush, backorder burn down, and we benefited from the launch of the QX600 ddPCR platform. We were pleased with the growth of our clinical diagnostics business in Q4, especially in Asia Pacific, where we prioritize placements to capture some strong growth trends, particularly in our diabetes testing franchise. We are now past our supply chain challenges and finished the quarter with a more normalized year-end backlog.
Overall, our ddPCR franchise had a soft 2023 with sales flat when excluding COVID as compared to the high growth we had previously been experiencing from our focus in biotech and BioPharma. However, we remain very positive on maintaining our leading market share in the markets we serve and are looking forward to the impact of the QX Continuum launch as we expand our focus on the lower end market later this year. In addition, we continue to prioritize investment on application and assay expansion for the platform overall with further launches coming during the year.
Further, we are excited about the launch of several other new Life Science products this year, which include our new -- next-generation ChemiDoc Go western blot platform and single-cell DDC sample preparation solution. We were pleased with the Q4 finish for our clinical diagnostics business especially double-digit year-end growth in Asia Pacific as a function of demand and priority placements, which helped us to deliver mid-single-digit growth overall for the quarter.
During 2023, our teams worked hard on reducing our backorders in the clinical business, while bringing up Singapore to full production for the products transferred from France. We were pleased with the progress we made on our core franchises and quality controls, immunohematology, diabetes and autoimmune, net of the challenges in Russia and China. In Q4, inventory levels remained high and similar to Q3, continuing to reflect some impacts of our manufacturing transfer of clinical instruments from France to Singapore and also lower demand impacting inventory consumption and Life Sciences. We continue to exercise tight cost control in Q4 and this included lower employee-related costs, reflecting reduced incentive compensation accruals. Looking towards 2024 for our clinical diagnostics business, we anticipate a more normalized year for customer demand. However, we remain cautious on the pace and dynamics of recovery in our Life Science business.
We expect the first half of the year to be a decline due to ongoing softness in BioPharma and biotech and prior year compares, but anticipate improvement in the second half of the year as funding improves along with stabilization in the broader BioPharma market. The pace and shape of recovery in China remains uncertain, but China remains a priority market for future growth for the company. Overall, we see 2024 as a recovery transition year with higher levels of uncertainty than usual for our Life Science business due to the anticipated second half improvements in biotech and BioPharma and the bioprocessing destocking recovery.
On the latter point, we entered 2024 with a softer order book for process chromatography than the last few years, mostly related to a couple of large customers with at least one of our large customers still working off elevated inventory throughout the year. On a positive note, our process chromatography resins are included in 5 of the novel therapeutics approved by the FDA during 2023. In addition, we are excited about the go-live of our new Singapore DC towards the last part of the year, which supports ongoing logistics improvements in the Asia Pacific region and globally for both businesses. On the operating cost front, we have continued to make improvements in our cost structure.
However, we will see a material step-up in cost in 2024 for employee incentive compensation accruals, which along with annual merit increases, will create a meaningful cost headwinds. We also expect to see ongoing tightening of sanctions against Russia, making conditions from meeting demand for our clinical business increasingly more challenging there. In closing, we continue to drive forward on our strategy with focus on execution on our priority market segments and platforms, investing in process and efficiency gains around our single global SAP instance and maintaining our investment levels to drive innovation for our core platforms.
Thank you, and I'll now pass you to Norman to review the financial results.

Norman D. Schwartz

Okay. Thank you, Andy. So first, I'd like to review the results of the fourth quarter and the full year. So net sales for the fourth quarter of 2023 were $681.2 million. It's a 6.7% decline on a reported basis versus $730.3 million in Q4 of 2022 and a 7.7% decline on a currency-neutral basis. Similar to the prior quarter, the fourth quarter year-over-year revenue decline was primarily the result of ongoing weakness in the biotech and BioPharma end markets, again, primarily impacting sales of our Life Science segment products. In addition, we continue to experience weak demand for Life Science products in China. I think both as a result of the macroeconomic environment as well as to some extent, the local Made in China initiatives.
COVID-related sales in the prior year were $13.4 million and immaterial in the fourth quarter of 2023. Therefore, core revenue, which excludes COVID-related sales, decreased 6.0% currency neutral. And then on a geographic basis, currency-neutral revenue decreased year-over-year in the Americas and Europe and was relatively flat in Asia. So sales for Life Science group in the fourth quarter of 2023 were $291.1 million compared to $359.7 million in Q4 of 2022, which is a 19.1% decline on a reported basis and 19.9% on a currency-neutral basis. Excluding COVID-related sales, Life Science year-over-year currency-neutral core revenue experienced a broad-based decline of approximately 17%.
In addition to the challenging biotech, BioPharma and markets and soft macroeconomic conditions in China during the quarter, ddPCR, and qPCR sales faced difficult compares due to the backorder burn-down and other factors, Andy mentioned in the year ago period. And when excluding process chromatography sales, the underlying Life Science business decreased 22.1% on a currency-neutral basis versus Q4 of 2022. And finally, the Life Science group revenue, excluding process chromatography and COVID-related sales decreased 18.7% currency neutral.
On a geographic basis, Life Science year-over-year core revenue decreased across all 3 regions. Conversely, we saw broad-based growth for the Clinical Diagnostics Group. Fourth quarter sales of the Clinical Diagnostics Group were $389 million, compared to $369.6 million in Q4 of 2022. This represents a growth of 5.3% on a reported basis and 4.2% growth on a currency-neutral basis. And then core Clinical Diagnostics year-over-year revenue, which excludes COVID-related sales increased 4.3%. The Clinical Diagnostics group benefited from particular strength in diabetes product sales as well as from the reduction of elevated backorders. On a geographic basis, the Diagnostics Group revenue was primarily driven by strong growth in Asia.
For the company, Q4 reported gross margin was 53.8% on a GAAP basis and compares to 54.4% in the fourth quarter of 2022. The year-over-year gross margin decline was due to a number of factors, including lower manufacturing volume, the impacts of inflation and inventory reserves. Amortization related to prior acquisitions recorded in cost of goods was $4.5 million as compared to $4.4 million in Q4 of 2022. SG&A expenses for the fourth quarter of 2023 were $207.1 million or 30.4% of sales compared to $212.2 million or 29.1% in Q4 of 2022. The lower SG&A in the quarter was mainly due to lower employee-related expenses partially offset by a weaker dollar and a facility lease impairment. And total amortization expense related to acquisitions recorded in SG&A for the quarter was $1.2 million versus $1.7 million in Q4 of '22.
Research and development expense in the fourth quarter was $63.9 million or 9.4% of sales compared to $66.2 million or 9.1% of sales in Q4 of 2022. The lower expense levels reflect both lower employee-related and project expenses. Fourth quarter operating income was $95.3 million or 14% of sales compared to $118.7 million or 16.2% of sales in Q4 of 2022. And looking below the operating line, the change in fair market value of equity security holdings, which are substantially related to Bio-Rad's ownership of Sartorius AG shares added $324.3 million of income to the reported results.
During the quarter, interest and other income resulted in net other income of $8.8 million compared to net other expense of $6.1 million last year primarily driven by increased interest income from investments. The effective tax rate for the fourth quarter of 2023 was 18.4% compared to 24.2% for the same period in 2022. Tax rates for both years were driven by unrealized gains in equity securities and the lower rate in 2023 was primarily a result of changes in the geographical mix of earnings.
Fourth quarter reported net income was $349.7 million or $12.14 diluted earnings per share compared to net income of $827.7 million or diluted earnings per share of $27.78 in Q4 of 2022. This change from last year is, again, largely related to changes in the valuation of Sartorius Holdings.
So moving on to the non-GAAP results. On a non-GAAP basis, we have excluded certain atypical and unique items that impacted both gross and operating margins as well as other income. These items are detailed in the reconciliation table in the press release. So looking at the non-GAAP results for the fourth quarter. In cost of goods, we have excluded $4.5 million of amortization of purchased intangibles and a small restructuring benefit. These exclusions moved the gross margin for the fourth quarter of 2023 to a non-GAAP gross margin of 54.4% versus 54.9% in Q4 of 2022.
Non-GAAP SG&A in the fourth quarter of 2023 was 29.8% versus 28.5% in Q4 of 2022. In SG&A, on a non-GAAP basis, we have excluded amortization of purchased intangibles of $1.2 million; an in vitro diagnostics registration fee in Europe for previously approved products of $1.8 million and $851,000 of restructuring-related expenses. Non-GAAP R&D expense in the fourth quarter of 2023 was 9.1%, basically the same as 2022. R&D on a non-GAAP basis, we have excluded $1.3 million in restructuring expenses and $400,000 in acquisition-related costs. And accumulated -- the cumulative sum of these non-GAAP adjustments result in moving the quarterly operating margin from 14% on a GAAP basis to 15.5% on a non-GAAP basis. And this non-GAAP operating margin compares to a non-GAAP operating margin of 17.4% in Q4 of 2022. We've also excluded certain items below the operating line, which are the increase in the value of Sartorius equity holdings and loan receivable of $324.3 million and a $965,000 loss on venture investments.
The non-GAAP effective tax rate for the fourth quarter of 2023 was 22.4% compared to 28.1% for the same period in 2022. The lower tax rate in 2023 was primarily driven by the geographical mix of earnings and a release of reserves related to resolution of certain tax positions. And finally, non-GAAP net income for the fourth quarter of 2023 was $89.3 million or $3.10 diluted earnings per share compared to $98.5 million or diluted earnings per share of $3.31 in Q4 of 2022.
So now for the full year results. Net sales for the full year of 2023 were $2.671 billion, which is a 4.7% decline on a reported basis as compared to $2.802 billion in 2022. On a currency-neutral basis, full year 2023 net sales decreased 4.1%. COVID-related sales for the full year were about $4 million compared to $109 million in 2023 -- 2022 so that core year-over-year revenue, which excludes COVID-related sales decreased 0.4% or effectively flat on a currency-neutral basis.
Now looking at full year sales results by segment. Sales of the Life Science Group for 2023 were $1.178 billion, a year-over-year decline of 12% on a currency-neutral basis. When excluding COVID-related sales, Life Science year-over-year currency-neutral core revenue declined 4.9%. The majority of the year-over-year decline was driven by process chromatography, qPCR products and western blot.
On a geographic basis, Life Science currency-neutral full year core revenue, which as a reminder excludes COVID sales, declined in Asia and Europe while the Americas posted modest growth. Sales of the Clinical Diagnostics products for 2023 were $1.489 billion, which represents a 3.2% growth on a currency-neutral basis.
When excluding COVID-related sales, the Clinical Diagnostics year-over-year currency-neutral core revenue growth was 3.4% and was driven by our diabetes, quality control and blood typing products, partially offset by a decline in infectious disease products. On a geographic basis, clinical diagnostics, currency-neutral full year core revenue growth grew across all 3 regions. Overall, company full year non-GAAP gross margin was 54.2% compared to 56.6% in 2022. The year-over-year margin decline was driven mainly by product mix, lower COVID sales, inventory reserves and lower fixed cost leverage. Full year non-GAAP SG&A expense was $814.6 million or 30.5% of sales compared to $805.4 million or 28.7% of sales in 2022. The higher SG&A was related to SAP implementation in Asia, legal fees, lease impairment and higher discretionary spend, partially offset by lower employee-related costs.
Full year non-GAAP R&D was $254.8 million or 9.5% of sales versus $256.7 million or 9.2% of sales in 2022 and full year non-GAAP operating income was 14.2% compared to 18.7% in 2022, which reflects the effects of revenue decline, shifts in mix and lower fixed cost absorption. And lastly, the non-GAAP effective tax rate for the full year of 2023 was 22.3% consistent with our guidance range and compares to 22% in 2022.
So moving on to the balance sheet. Total cash and short-term investments at the end of 2023 was $1.613 billion compared to $1.796 billion at the end of 2022 and $1.765 billion at the end of the third quarter of 2023. The change in cash and short-term investments from the third quarter of 2023 was primarily due to share repurchases, working capital and the timing of tax payments.
Yesterday, just to mention, we concluded a new $200 million credit agreement maturing in -- now in February of 2029, which provides additional liquidity and enhances Bio-Rad's financial flexibility. And this new credit line replaces a prior $200 million facility that was maturing in April of this year.
Inventory at the end of Q4 increased slightly to $780.5 million from $775.8 million in the prior quarter and was primarily due to a higher level of finished goods. As we move on from the supply chain challenges of the past 2 years, we continue to anticipate inventory decreasing to more normal levels over the next 6 to 8 quarters. For the fourth quarter of 2023, net cash generated from operating activities was $81 million, which compares to $79.7 million in Q4 of 2022. This increase mainly reflects changes in working capital, offset by the timing of tax payment.
For the full year of 2023, net cash generated from operations was $374.9 million versus $194.4 million in 2022. This increase mainly reflects changes in working capital. During the fourth quarter, we purchased 659,000 shares of our stock for a total cost of $200 million or an average purchase price of approximately $303 per share as we continue to be optimistic with our buyback program. Probably useful to note we still have nearly $280 million available for share repurchases under the current Board authorized program. And further, just so you understand full year share buybacks totaled 1,268,000 shares for approximately $429 million. Again, that's for the year. As a comparison, we purchased about 479,000 shares of our stock for $216 million in 2022. Adjusted EBITDA for the fourth quarter of 2023 was $136.8 million, or 20.1% of sales and adjusted EBITDA in the fourth quarter of 2022 was 21.4%.
Full year adjusted EBITDA, including the Sartorius dividend, was $535.9 million or about 20.1% compared to 23.8% in 2022. Net capital expenditures for the fourth quarter of 2023 were $42.1 million and full year CapEx spend was $156.5 million. And finally, depreciation and amortization for the fourth quarter was $37.2 million and $145.9 million for the full year.
So moving on to the non-GAAP guidance for 2024. As Andy alluded to earlier, we do see 2024 as a recovery transition year with higher levels of uncertainty than usual for our Life Science business, and a steady growth outlook for Diagnostics. Given the operating expense headwinds and muted revenue growth, I think it's fair to say that margin expansion will be difficult this year. Keep in mind that employee-related expenses impacting our P&L represents somewhere between a 250 to 300 basis point headwind that we need to overcome in 2024. And we have continuing geopolitical issues, especially as it relates to China and Russia. However, we remain -- as we remain focused on improving our cost structure, we are well positioned for operating margin leverage and -- as revenue growth returns.
Again, I think 2024 is certainly very different to a normal year. This year revenue is expected to be a bit more back-end loaded than usual based on the anticipated recovery in biotech and BioPharma. Consequently, we do expect soft gross and operating margins in the first half of the year, particularly in the first quarter, with improvements in the second half kind of in line with the market recovery and revenue normalization. So with all that is kind of a preamble, here's how we see the year rolling out. We're guiding a currency-neutral revenue growth in 2024 to be between 1% and 2.5% overall. The Life Science group year-over-year currency-neutral revenue growth is expected to be between 0% and 2%. And for the Diagnostics group, we estimate currency-neutral revenue growth to be between 2.5% and 3%.
With the backdrop of working through elevated back quarters in the last year, we realized a little over 1% from price improvement at the corporate level, which was below inflationary trends to our overall cost. We are targeting to achieve a similar level of price realization this year, mainly through the Life Science group. We'd also like to call out the sale of a non-core contract manufacturing business in December that was part of a prior acquisition. This business is reported under other operations contributed revenue of $3 million to $4 million annually, but had really an immaterial impact on our overall financial results.
Full year non-GAAP gross margin is projected to be between 54% and 54.5% with steady improvement anticipated throughout the year. Gross margin for the first half of the year is expected to be below the full year range with the second half anticipated gross margin recovery driven by improved sales volume. Full year non-GAAP operating margin is projected to be between 13.5% and 14%. We estimate the non-GAAP full year tax rate to be between 22% and 23%, and CapEx is projected to be approximately $160 million to $180 million as we continue to invest in our infrastructure to support our multiyear growth strategy.
And finally, full year non-GAAP EBITDA, excluding the Sartorius divined is expected to be between 18.5% and 19%. And when we include the recently announced reduced Sartorius dividend, the adjusted EBITDA is expected to be between 19% and 19.5%. So in concluding today's prepared remarks, just a few comments about -- on Bio-Rad's ongoing corporate transformation, in key accomplishments, maybe a little bit as a baseline for 2024. I would say in spite of all the macro variables, we feel we have a good realistic outlook for 2024. We're clear of the pandemic. We've resolved our supply chain constraints, we successfully transitioned key diagnostics platforms to our Singapore manufacturing facility. We completed our global SAP implementation. And I think most important, we continue to make progress on our journey of transformation.
In addition, as Andy mentioned, we have a number of exciting products in our pipeline to help us drive 2024 as we look forward to our Life Science markets recovering later in the year. Certainly, looking back over the last 4 years, I think it's important to note that our underlying business has grown at a currency-neutral compound rate of 4.6%, including, I might mention, Life Science, which has grown at over 8%. Overall, I think we feel good that we're making solid progress. And I do think we have a lot to look forward to.

Yong Chung

That concludes our prepared remarks, and we will now open the line to take your questions. Operator?

Question and Answer Session

Operator

(Operator Instructions) Your first question is from Patrick Donnelly from Citi.

Patrick Bernard Donnelly

Great. Norman, I guess this will be for you on the margins. Just in terms of the ramp throughout the year, can you just talk about the moving pieces? It sounds like the incentive comp is obviously going to hit pretty hard here in the first half. Is it a bit of the Singapore ramp picking up steam in the second half? Is it volume leverage? Maybe just talk about the cadence and the ramp of that margin story throughout the year here and just kind of how we should think about the base.

Norman D. Schwartz

Yes. I think it really has the most to do with the sales volumes. We get a lot of leverage from the sales and I think we should see the margins ramp with sales.

Patrick Bernard Donnelly

Okay. Understood. And then just on the CFO search, maybe can you provide an update of where we stand, timing when that could happen? I have got a few questions on -- just a little bit of an update there would be helpful.

Norman D. Schwartz

Yes. We're really making good progress. And candidly, we're hoping to have a new CFO on board by the next earnings call.

Patrick Bernard Donnelly

Okay. All right, for the next few months. And then maybe one last one. Just in terms of the outlook on China, just how you guys are thinking about that region, both in the Life Science and Diagnostics, I know it's 2 -- maybe 2 different stories there. So yes, just kind of let us know what you're seeing there currently in each segment and the expectations for '24 would be helpful.

Norman D. Schwartz

Yes. Yes, I'd say near term, it seems to be a kind of a tough market. Not many signs of immediate recovery and a little bit of uncertainty, I think, as to when we will see that. I think that the good old days of double-digit growth in China are -- I don't see that in the foreseeable future. For our Life Science business, I think we've seen the impact of combined effect of the -- in China for China anticorruption and in general, kind of a tough funding environment affecting the business.
For Diagnostics, I think the -- we're continuing to see steady growth, but we do continually -- also continue to kind of carefully monitor the situation with these value-based pricing tenders, wondering if that may spread to some of our platforms or some of our more specialty products from the kind of higher volume products that have seen that in the short term.

Operator

Your next question is from Jack Meehan from Nephron Research.

Jack Meehan

First question I wanted to ask about the Life Science business. Can you talk about -- so in the script, you talked about how the PCR and ddPCR businesses kind of saw some backlog burn down. Could you talk about like how long you expect this to persist in 2024? And when that might start to turn the corner?

Simon May

Yes, this is Simon. I think we're really largely through the backlog burn down compares as we head into '24. I think the short answer is the slide is pretty clean now. We've obviously got a bunch of other macro conditions impacts in the business as we referred to in the script and the H1 versus H2 contrast. But as we're sitting here today, we don't see backlog burn down as an issue going forward.

Andrew J. Last

Yes. The call out -- sorry, just to add on, Simon, the call out was against the '22 Q4 compares where Life Science had a meaningful contribution from backlog burn down.

Jack Meehan

Got it. Okay. And then I was curious how process chrome played out in the quarter versus your expectations? I know you talked about starting the year with lower backlog there. Were there some larger than expected shipments in the quarter?

Simon May

It's Simon again. I think at a macro level, we saw the conditions that we've been talking about all year with destocking continue to persist. And again, as I think Andy called out in the script as we enter Q1 our order book remains softer than we've seen in previous years. I guess the follow-on question there is about are we seeing any green shoots and there's certainly a lot of tentatively encouraging data starting to emerge as we look at our customer base, I think we're seeing that a number of our customers were really anticipating are going to be through the destocking impact in 2024, and we'll see something like a return to normality. But at the same time, we've got some larger customers who all the indications are, they're not going to be through it. And so I think that's going to net out to be -- tentatively we'll see some recovery in the second half, but there's still a fair amount of uncertainty around it.

Jack Meehan

Great. Okay. And then last one. Just was curious for any color on kind of below the line items within the guide for this year. Just anything you would call out there? I think Sartorius announced their dividend for the year? Just any color on that would be helpful.

Norman D. Schwartz

Yes, they did cut the dividend. We baked that into our guidance. And it's understandable given the kind of cash constraints that they have.

Operator

Your next question is from Dan Leonard from UBS.

Daniel Louis Leonard

I had another question about phasing for 2024. You mentioned that the year will be more back-end loaded. Could you elaborate on that a how more back-end loaded than typical?

Norman D. Schwartz

Yes. It's a really good question. Normally, it's something like kind of more like 49-51 when we think of a normal year, and I think we're going to see a much wider spread than that for 2024. I think it's anybody's guess exactly what it's going to be. But I think we'll see kind of a bigger delta between the first half and the second half.

Daniel Louis Leonard

Much wider than the 2-point spread typically?

Andrew J. Last

Yes.

Norman D. Schwartz

Yes.

Andrew J. Last

Think more closer towards 4, 5 points spread between first and second half than ...

Daniel Louis Leonard

Appreciate that. And can you share what are your growth assumptions for process chromatography, Droplet Digital PCR and comment on whether a couple of these new product launches you talked about, the continuum and the DDC, whether they'll be launched in time to contribute to the year?

Simon May

Yes, Simon, again. I think for process chromatography, as I mentioned previously, we've got these competing forces of accounts that are destocked and account status still destocking and I think the net of that is going to be negative because the accounts that are destocking are our larger accounts. I think there's still some ongoing uncertainty around that as we keep saying, but the best read of the tea leaves that we've got right now is as mentioned.
For digital PCR, we had a challenging Q4 for reasons that have been mentioned and that, in the end, made it a challenging year as well. As we look to 2024, I think we're certainly seeing nice growth potential in digital PCR. Again, that's predicated to some degree on recovery of the BioPharma markets, where we've been here, we've got a very strong existing position there. And also, we've got some good new product launches coming out. So the way I think about it, it's BioPharma market recovery and its new product introductions, they're both when, not if, events, and so for the full year, I think we're looking at growth in digital PCR.

Operator

Your next question is from Conor McNamara from RBC Capital Markets.

Conor Noel McNamara

Just on ddPCR, can you talk about the growth in the quarter or the negative growth on equipment versus consumables? Obviously, you had a tough comp on equipment placements last year. But is there -- was there any consumable growth? And how should we think about kind of the consumables as a percentage of total ddPCR from here and where does it go?

Simon May

Yes. I think the short answer there is, again, primarily driven by BioPharma headwinds. We saw challenges in both instruments and consumables, I'd say with approximately equal weighting. I think we've got a healthy mix now overall in terms of consumables and instruments. And again, as the markets recover, we think we're going to be the beneficiaries of that.

Conor Noel McNamara

Okay. Great. And then on capital deployment, obviously, you've still got some room on buybacks. Is buyback still the priority? Or is there anything on M&A that you've seen opportunities open up? Or should we just think primarily about buybacks for 2024?

Norman D. Schwartz

Yes. We certainly -- as we mentioned, we've got still several hundred million dollars authorized by the Board and we'll continue to be opportunistic with share repurchases. But we still have a focus to kind of continue to look for kind of good complementary business opportunities to tuck-ins, things that are complementary to the business probably no change in our thinking around acquisitions. So it's kind of a two-pronged approach. It could be buybacks, could be some tuck-in acquisitions, combination of both.

Operator

There are no further questions at this time. I will now hand the call back to Edward Chung for the closing remarks.

Yong Chung

Thank you for joining today's call. We will be at the Citi Unplug Life Science Access Day in New York at the end of February and hope to see some of you there. As always, we appreciate your interest, and we look forward to connecting soon. Bye-bye.

Operator

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect.
13.10.23 08:27:00 Sartorius’s Shares Drop on Outlook Cut, Preliminary 3Q Declines
Sartorius shares plunged after it downgraded its 2023 outlook, now expecting weaker earnings and for sales to fall around 17%, after it reported lower preliminary figures in the first nine months.

Continue reading
11.09.23 05:30:00 Booming Europe Bond Market Welcomes Trio of First-Time Borrowers
(Bloomberg) -- Companies that typically borrow via a German credit instrument are branching out to the bond market for the first time, as they look to take advantage of its wider investor base to raise larger amounts.

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German retailer Rewe Group, biopharmaceutical firm Sartorius AG, and Netherlands’ equipment leasing company Boels Topholding BV tapped the bond market for the first time last week — a period that saw the highest issuance since June as borrowers rushed in ahead of further potential interest rate increases by central banks.

This represents something of a shift for the firms in terms of them favoring bonds over their usual channels of loans and Schuldschein notes — an instrument seen to offer a stable liquidity pool where lenders tend to hold their debt till maturity. Schuldschein aren’t publicly traded.

Larger sums can be raised from the bond market with similar maturities and sometimes pricing to the Schuldschein market. Sartorius, which produces precision scales for laboratory and industrial uses, sold a €3 billion ($3.2 billion) bond — larger than the biggest Schuldschein on record.

Read more: How Quirky German Debt Is Winning Followers Abroad: QuickTake

Rewe and Sartorius may have chosen to sell bonds as “right now a Schuldschein with such volumes, pricing and maturity mix would have been a stretch,” said Heiko Möhringer, managing director for debt market EMEA with BNP Paribas.

Sartorius sees itself as a regular bond issuer in the future after blowout demand of more than €18.7 billion for its offering, said spokesperson Timo Lindemann in an email.

Supermarket giant Rewe wants to diversify its funding and investor base through its €900 million bond, which is tied to the firm’s aim of reducing greenhouse gas emissions, according to a company spokesperson. The seven-year transaction attracted more than €3.3 billion of demand.

Story continues

Boels meanwhile sold a €400 million bond to repay its term loan and revolving facility. Rewe will also use bond proceeds to replace some of its Schuldschein debt, while Sartorius is refinancing a bridge loan that backed its acquisition of Polyplus.

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05.04.23 10:30:00 Warburg Pincus Cashes Out of Polyplus in Lucrative Exit
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26.01.23 06:00:00 Sartorius with clear double-digit growth in fiscal 2022
Preliminary figures for 2022: Sales revenue up 15.0 percent in constant currencies, underlying EBITDA up 20.0 percent, underlying EBITDA margin at 33.8 percent Both divisions with double-digit growth; strong performance of Lab Products & Services; as expected noticeable normalization of demand in the Bioprocess Solutions division Outlook for 2023: Sales revenue growth in the low single-digit percentage range, excluding Covid-19-related business in the high single-digit range; underlying EBITDA margin around prior-year level Uncertainties due to the global political and economic situation remain high Outlook for 2025 fundamentally confirmed, sales revenue target raised to around 5.5 billion euros due to inflation-based changes in price levels; profitability target unchanged at around 34 percent

GÖTTINGEN, Germany, Jan. 26, 2023 /PRNewswire/ -- Following extraordinary growth in 2020 and 2021, the life science group Sartorius again outperformed the market in fiscal 2022, achieving its targets for sales revenue and profitability. Both divisions contributed to this development and, according to preliminary figures, recorded double-digit percentage growth in sales revenue and earnings year-over-year. For fiscal 2023, the company projects further growth and continued high profitability. Sartorius Logo (PRNewsfoto/Sartorius)

"After two exceptionally dynamic years, we delivered another year of strong results. Despite the challenging operating environment, our growth was broad-based across the portfolio and the geographies, and we see us a good year ahead of our mid-term plan. While growth in the lab division was even slightly stronger than forecast, the bioprocess division was influenced by the expected normalization of demand, a process that is expected to continue for several quarters. For 2023, we therefore anticipate moderate sales revenue growth and a profit margin around the high prior-year level. As we look ahead, we see that the strong fundamental growth drivers in our markets remain unchanged. Demand for biopharmaceuticals is on the rise in all indication areas and regions, and at the same time the biotech industry is in an extraordinarily innovative phase. We are excellently positioned to support our customers in their endeavors and to seize the opportunities that arise from this. Substantial investments into capacities and acquisitions that expand our capabilities will therefore remain part of our growth strategy. While our basic assessment of mid-term market trends has not changed, we are raising our 2025 sales revenue forecast to around 5.5 billion euros to reflect changes in price levels caused by inflation. At the same time, we confirm our mid-term profitability target of an EBITDA margin of around 34 percent," said CEO Joachim Kreuzburg.

Business development of the Group1

Driven by significant organic growth in both divisions, sales revenue of the Sartorius Group rose by 15.0 percent in constant currencies (reported: +21.0 percent) year-over-year to 4,175 million euros in fiscal 2022. As expected, acquisitions2 contributed close to 2 percentage points to growth. All three business regions – EMEA3, the Americas, and Asia | Pacific – expanded significantly, with the Americas region posting the strongest gain. The restrictions in China caused by the pandemic as well as the strong reduction of the business in Russia impacted growth to a relatively minor extent.

Following two exceptionally strong years due to the pandemic, order intake as expected recorded a year-over-year decline against the backdrop of demand normalization and a significantly lower Covid-19-related business, reaching 4,007 million euros (in constant currencies: -10.1 percent, reported: -6.1 percent). Excluding the Covid-19-related business, order intake would have grown slightly. In the Bioprocess Solutions division, in particular, the development of the previous two years had been positively influenced by high demand from coronavirus vaccine manufacturers and changed ordering patterns by some customers, who had placed orders larger in size and further in advance than usual.

Underlying EBITDA rose by 20.0 percent to 1,410 million euros in 2022. At 33.8 percent, the resulting margin was close to the high prior-year figure of 34.1 percent. The 2021 margin had been positively influenced by a partially delayed cost development, for example as a result of deferred new hires in relation to sales revenue growth because of the pandemic and low business travel activity. As planned, these cost positions normalized in 2022 and, in addition to a slight dilution caused by currency effects, had a dampening effect on profitability. Price effects on the procurement and customer sides largely offset each other.

Relevant net profit reached 655 million euros, representing an increase of 18.4 percent from the prior year. Underlying earnings were 9.57 euros (prior year: 8.08 euros) per ordinary share and 9.58 euros (prior year: 8.09 euros) per preferred share.

Key financial indicators

The Sartorius Group continues to have a very sound balance sheet and financial base. As of December 31, 2022, the equity ratio increased to 38.1 percent (December 31, 2021: 30.2 percent), and the ratio of net debt to underlying EBITDA was 1.7 (December 31, 2021: 1.5). Cash flow from investing activities stood at - 594 million euros, compared with -428 million euros in 2021. The ratio of capital expenditures (CAPEX) to sales revenue was 12.5 percent (prior year: 11.8 percent).

Increase in the number of employees

As of December 31, 2022, Sartorius had a total of 15,942 employees worldwide, 2,110 more than at the end of 2021. Following a significant increase in the first six months of 2022, the pace of new hires slowed down as the second half of the year began, as planned.

Business development of the Bioprocess Solutions division

The Bioprocess Solutions division, which offers a wide array of innovative technologies for the manufacture
of biopharmaceuticals and vaccines, achieved sales revenue of 3,326 million euros in 2022. This corresponds to a year-over-year increase of 15.9 percent in constant currencies (reported: +22.0 percent) and includes around 2 percentage points of non-organic growth from acquisitions. All product areas contributed to growth, while the Covid-19-related business declined significantly from the prior year.

As expected, order intake declined year-over-year against the backdrop of demand normalization and a significantly lower Covid-19-related business, reaching 3,123 million euros (in constant currencies: - 14.0 percent; reported: -10.4 percent). Excluding the Covid-19-related business, order intake would have grown slightly. In the two previous years, the division had recorded exceptionally high growth rates due to changed ordering patterns and strong demand from coronavirus vaccine manufacturers.

The Bioprocess Solutions division's underlying EBITDA rose by 20.5 percent to 1,188 million euros. The resulting margin of 35.7 percent was close to the high prior-year level of 36.2 percent and was dampened by higher costs, as planned, for example due to the growth in the number of employees as well as other normalized cost positions.

Business development of the Lab Products & Services division

Sales revenue of the Lab Products & Services division, which specializes in life science research and pharmaceutical laboratories, recorded a very dynamic development, rising by 11.5 percent in constant currencies (reported: +17.4 percent) to 848 million euros. Around 1 percentage point came from non-organic growth. The bioanalytical instruments business showed a particularly strong expansion. Order intake increased by 7.4 percent in constant currencies (reported: +12.8 percent) to 885 million euros.

The division's underlying EBITDA rose by 17.6 percent to 222 million euros, with the resulting margin widening slightly to 26.2 percent (prior year: 26.1 percent). A positive product mix and economies of scale compensated for negative currency effects and planned higher costs.

Outlook for fiscal 2023

Following the exceptionally strong previous years, Sartorius expects further growth in 2023 despite demand normalization and anticipated further declines in the Covid-19-related business. Consolidated sales revenue is expected to increase by an amount in the low single-digit percentage range. Excluding the Covid-19-related business, the increase would be in the high single-digit percentage range. Acquisitions are anticipated to contribute around 1 percentage point to growth. The Group's underlying EBITDA margin should be around the level of the prior year (33.8 percent).

For the Bioprocess Solutions division, the company anticipates sales revenue growth in the low single-digit percentage range. Excluding the Covid-19-related business, the increase would be in the high single-digit percentage range. Acquisitions are expected to contribute around 1 percentage point to growth. The division's underlying EBITDA margin is anticipated to be around the level reached in 2022 (35.7 percent).

Sales revenue growth in the Lab Products & Services division is expected to be in the mid single-digit percentage range. Excluding the Covid-19-related business, the increase would be in the high single-digit percentage range. This division's underlying EBITDA margin is also expected to be around the level of the prior year (26.2 percent).

The company will continue its comprehensive capacity expansion program in 2023. The CAPEX ratio should be at roughly 12.5 percent and the ratio of net debt to underlying EBITDA at about 1.5. Possible acquisitions are not included in this projection.

Medium-term sales revenue target for fiscal 2025 updated

Based on the unchanged strong fundamental growth trends in its markets and the resulting positive prospects for the company, Sartorius confirms its fundamental growth projections. In light of increased inflation and associated price adjustments, the company therefore is making a mathematical adjustment to its medium-term sales revenue forecast and now expects sales revenue of around 5.5 billion euros in 2025 (previously around 5 billion euros). Sartorius plans to achieve this sales revenue increase primarily through organic growth and additionally by acquisitions. For the Bioprocess Solutions division, the company now projects sales revenue of around 4.2 billion euros in 2025 (previously around 3.8 billion euros) and for Lab Products & Services of around 1.3 billion euros (previously around 1.2 billion euros).

The forecast for the Group's underlying EBITDA margin in 2025 remains unchanged at around 34 percent. For the Bioprocess Solutions division, the company continues to expect an underlying EBITDA margin of around 36 percent in 2025. The margin forecast for Lab Products & Services also remains unchanged at around 28 percent. The margin targets include expenses of around 1 percent of Group sales revenue for measures to reduce the company's CO2 emission intensity.

All forecasts are based on constant currencies, as in the past years. In addition, management points out that the dynamics and volatilities in the life science and biopharma sectors have increased over the past years and the coronavirus pandemic has further amplified these trends. Moreover, the forecasts are based on the assumption of no deterioration in the geopolitical and global economic situation, supply chains, inflation and energy supply, and no new relevant restrictions in connection with the coronavirus pandemic. Accordingly, current forecasts show higher uncertainties than usual.

1 Sartorius publishes alternative performance measures that are not defined by international accounting standards. These are determined with the aim of improving the comparability of business performance over time and within the industry.

Order intake: all customer orders contractually concluded and booked during the respective reporting period Underlying EBITDA: earnings before interest, taxes, depreciation and amortization and adjusted for extraordinary items Relevant net profit: profit for the period after non-controlling interest, adjusted for extraordinary items and amortization, as well as based on the normalized financial result and the normalized tax rate Ratio of net debt to underlying EBITDA: Quotient of net debt and underlying EBITDA over the past 12 months, including the pro forma amount contributed by acquisitions for this period

2 Acquisition of CellGenix, Xell, the Novasep chromatography division, ALS Automated Lab Solutions and Albumedix

3 EMEA = Europe, Middle East, Africa

This press release contains forward-looking statements about the future development of the Sartorius Group. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such statements. Sartorius assumes no liability for updating such statements in light of new information or future events.

Conference call

The Executive Board Chairman and CEO of Sartorius AG, Joachim Kreuzburg, and Executive Board member and CFO, Rainer Lehmann, will discuss the company's results with analysts and investors during an earnings call at 3:30 p.m. CET on January 26, 2023. You may register via the following link: https://media.choruscall.eu/mediaframe/webcast.html?webcastid=CeBr4sGd

Further information

https://www.sartorius.com/en/company-de/newsroom-de

Financial calendar

April 20, 2023:   Publication of the first-quarter figures (January to March 2023)

July 21, 2023:   Publication of the first-half figures (January to June 2023)

October 19, 2023:   Publication of the nine-month figures (January to September 2023)

Preliminary key performance indicators for fiscal year 2022

Sartorius Group Bioprocess Solutions Lab Products & Services In millions of €, unless otherwise specified 2022 2021 Δ in % Reported Δ in % cc1 2022 2021 Δ in % Reported Δ in % cc1 2022 2021 Δ in % Reported Δ in % cc1 Sales Revenue and Order Intake Order intake 4,007.3 4,267.9 -6.1 -10.1 3,122.7 3,483.5 -10.4 -14.0 884.6 784.4 12.8 7.4 Sales revenue 4,174.7 3,449.2 21.0 15.0 3,326.5 2,727.0 22.0 15.9 848.2 722.2 17.4 11.5 - EMEA2 1,550.6 1,411.0 9.9 9.0 1,260.5 1,130.5 11.5 10.6 290.1 280.5 3.4 2.5 - Americas2 1,543.8 1,141.2 35.3 21.4 1,240.8 913.1 35.9 22.0 303.0 228.2 32.8 19.0 - Asia | Pacific2 1,080.3 897.0 20.4 16.2 825.2 683.5 20.7 16.5 255.1 213.5 19.5 15.5 Earnings EBITDA3 1,410.4 1.175,0 20.0 1,188.4 986.3 20.5 222.0 188.8 17.6 EBITDA margin3 in % 33.8 34.1 -0.3pp 35.7 36.2 -0.5pp 26.2 26.1 0.1pp Relevant net profit4 655.4 553.4 18.4 Financial Data per Share Earnings per
ordinary share4 in € 9.57 8.08 18.4 Earnings per preference share4 in € 9.58 8.09 18.4 1 In constant currencies abbreviated as "cc" 2 Acc. to the customer's location 3 Relevant/underlying EBITDA: earnings before interest, taxes, depreciation and amortization and adjusted for extraordinary items

4 After non-controlling interest, adjusted for extraordinary items and amortization, as well as based on the normalized financial result and the normalized tax rate

A profile of Sartorius

The Sartorius Group is a leading international partner of life sciences research and the biopharmaceutical industry. With innovative laboratory instruments and consumables, the group's Lab Products & Services division concentrates on serving the needs of laboratories performing research and quality control at pharmaceutical and biopharmaceutical companies and those of academic research institutes. The Bioprocess Solutions division, with its broad product portfolio focusing on single-use solutions, helps customers manufacture biotech medications and vaccines safely and efficiently. The company is growing at double-digit rates on average per year and regularly expands its portfolio through the acquisition of complementary technologies. In fiscal 2022, the company generated sales revenues of around 4.2 billion euros according to preliminary figures. At the end of 2022, around 16,000 employees were working for customers around the globe at the group's 60 or so production and sales sites. Follow Sartorius on Twitter @Sartorius_Group and on LinkedIn.

Contacts

Petra Kirchhoff
Head of Corporate Communications & Investor Relations
+49 551 308 1686
petra.kirchhoff@sartorius.com

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SOURCE Sartorius AG
19.10.22 05:00:00 Sartorius with continued growth in a challenging environment
Figures for the first nine months of 2022: Sales revenue up 16.6 percent in constant currencies, underlying EBITDA up 21.4 percent, underlying EBITDA margin at 33.8 percent Both divisions with double-digit growth; as expected, swift normalization of demand in the Bioprocess Solutions division Overall market situation characterized by innovations and strong growth drivers Outlook for 2022 specified: Sales revenue growth now expected to be in the lower half of the previous range of 15 to 19 percent; projection for underlying EBITDA margin unchanged at about 34 percent Uncertainties due to the global political and economic situation currently remain high

GÖTTINGEN, Germany, Oct. 19, 2022 /PRNewswire/ -- The life science group Sartorius closed the first nine months of 2022 in both divisions with double-digit sales revenue and earnings growth and specified its outlook for the current fiscal year. Sartorius (PRNewsfoto/Sartorius AG)

"In the first nine months, Sartorius achieved significant growth in a challenging environment. Both divisions recorded double-digit sales revenue increases and, despite unfavorable trends on the cost and currency side, very good profit margins. The lab division developed very dynamically, with a particularly positive performance of the bioanalytics business. The development of the bioprocessing business was characterized by significant sales revenue growth and at the same time, as expected, a swift normalization of demand following two years influenced by strong special effects due to the pandemic. We expanded the division's portfolio with the acquisition of Albumedix, adding an important component for the manufacture of innovative biopharmaceuticals, particularly regarding modalities such as cell therapies, viral therapies and vaccines. We are specifying our full-year outlook for 2022 within the range projected so far, but the global political and economic uncertainties remain high," said Executive Board Chairman and CEO Joachim Kreuzburg.

Business development of the Group1 In the first nine months, Group sales revenue recorded a year-over-year increase of 16.6 percent in constant currencies (reported: +23.2 percent) to 3,113 million euros. This performance was driven by organic growth in both divisions, while acquisitions,2 as expected, contributed close to 2 percentage points to growth. All three business regions – EMEA,3 the Americas, and Asia | Pacific – recorded significant growth, with the Americas region posting the strongest gain. The restrictions in China caused by the pandemic as well as business limitations in Russia dampened growth to a limited extend.

Following an exceptionally strong prior-year figure due to the pandemic, order intake, as expected, declined in the first nine months and reached 3,121 million euros (in constant currencies: -9.5 percent, reported: -5.0 percent). In the Bioprocess Solutions division, in particular, the first nine months of 2021 had been influenced by high demand from vaccine manufacturers and changed ordering patterns by some customers, who had placed orders larger in size and further in advance than usual.

Underlying EBITDA increased by 21.4 percent to 1,051 million euros in the first nine months. The corresponding margin of 33.8 percent was close to the high level of the prior-year period (34.3 percent). This development was positively influenced by economies of scale from sales revenue growth, but diluted by currency effects and, as planned, higher costs resulting from the recruitment of new employees as well as other normalized cost positions. Price effects on the procurement and customer sides largely offset each other.

Relevant net profit reached 501 million euros, representing a significant increase of 23.1 percent from the first nine months of 2021. Underlying earnings were 7.32 euros (prior-year period: 5.94 euros) per ordinary share and 7.33 euros (prior-year period: 5.95 euros) per preferred share.

Key financial indicators The Sartorius Group continues to have a very sound balance sheet and financial base. Its equity ratio stood at a robust level of 35.4 percent as of September 30, 2022 (December 31, 2021: 30.2 percent), despite the acquisition of Albumedix, which was completed at the end of September 2022. The ratio of net debt to underlying EBITDA was 1.7 as of the reporting date, compared with 1.5 at the end of 2021. Cash flow from investing activities stood at -362 million euros, compared with -254 million euros in the first nine months of 2021. The ratio of capital expenditures (CAPEX) to sales revenue reached 11.3 percent (prior-year period: 9.6 percent).

Increase in the number of employees As of September 30, 2022, Sartorius had a total of 16,038 employees worldwide, representing a rise in headcount of 2,206 from the end of 2021. Following a significant increase in the first six months of the year, the number of new hires slowed down considerably with the beginning of the second half of 2022, as planned.

Business development of the Bioprocess Solutions division The Bioprocess Solutions division, which offers a wide array of innovative technologies for the manufacture of biopharmaceuticals and vaccines, achieved sales revenue of 2,471 million euros in the first nine months. This corresponds to a year-over-year increase of 17.7 percent in constant currencies (reported: +24.3 percent) and includes about 2 percentage points of non-organic growth from acquisitions. All business areas recorded double-digit growth, while coronavirus-related business declined significantly from the prior-year period.

Following an exceptionally strong prior-year figure due to the pandemic, order intake, as expected, declined in the first nine months, reaching 2,452 million euros (in constant currencies: -14.4 percent, reported: -10.3 percent). The first nine months of 2021 had been influenced by high demand from vaccine manufacturers and changed ordering patterns by some customers, who had increased the size of their orders and placed them further in advance than usual.

The division's underlying EBITDA rose by 21.7 percent to 881 million euros. Despite negative currency effects and planned increased costs, the resulting margin of 35.7 percent almost reached the high level of the previous year (36.5 percent) due to positive economies of scale.

Business development of the Lab Products & Services division Sales revenue of the Lab Products & Services division, which specializes in technologies for life science research and pharmaceutical laboratories, recorded a very dynamic development in the first nine months, climbing by 12.5 percent in constant currencies (reported: +19.0 percent) to 642 million euros. Close to 1 percentage point came from non-organic growth. The bioanalytics product segment expanded particularly strongly. Order intake posted even higher growth than sales revenue, increasing by 14.6 percent in constant currencies (reported: +21.0 percent) to 669 million euros.

The division's underlying EBITDA rose by 19.8 percent to 170 million euros, and the corresponding margin expanded to 26.5 percent (prior-year period: 26.3 percent). A positive product mix and economies of scale more than compensated for negative currency effects and planned higher costs.

Outlook for fiscal 2022 specified Based on the results of the first nine months, management specifies its outlook for the current fiscal year. Consolidated sales revenue growth is now expected to be in the lower half of the range of around 15 percent to 19 percent projected so far, with non-organic growth from acquisitions anticipated to contribute about 2 percentage points. Regarding profitability, Sartorius continues to expect its underlying EBITDA margin to reach about 34 percent.

For the Bioprocess Solutions division, the company forecasts sales revenue growth to be in the lower half of the range of about 17 percent to 21 percent projected so far. This includes a non-organic growth contribution from acquisitions of about 2 percentage points. The division's underlying EBITDA margin is still projected to reach about 36 percent. Lab Products & Services is now expected to achieve revenue growth in the upper half of the range of about 6 percent to 10 percent projected so far in 2022, with about 1 percentage point of this coming from the non-organic growth contribution from acquisitions. The division's underlying EBITDA margin is still expected to be about 26 percent.

The CAPEX ratio is anticipated to be about 14 percent and net debt to underlying EBITDA is now anticipated to be about 1.6 at year end (previously about 1.1) following the closing of the Albumedix acquisition. Possible further acquisitions are not included in this projection.

All forecasts are based on constant currencies, as in the past years. In addition, management points out that the dynamics and volatilities in the life science and biopharma sectors have increased over the past years and the coronavirus pandemic has further amplified these trends. Moreover, the forecasts are based on the assumption of no further deterioration in the geopolitical and global economic situation, supply chains, inflation and energy supply, and no new relevant restrictions in connection with the coronavirus pandemic. Accordingly, current forecasts show higher uncertainties than usual.

1 Sartorius publishes alternative performance measures that are not defined by international accounting standards. These are determined with the aim of improving the comparability of business performance over time and within the industry.

Order intake: all customer orders contractually concluded and booked during the respective reporting period Underlying EBITDA: earnings before interest, taxes, depreciation and amortization and adjusted for extraordinary items Relevant net profit: profit for the period after non-controlling interest, adjusted for extraordinary items and non-cash amortization, as well as based on the normalized financial result and the normalized tax rate Ratio of net debt to underlying EBITDA: quotient of net debt and underlying EBITDA over the past 12 months, including the pro forma amount contributed by acquisitions for this period

2 Acquisition of CellGenix, Xell, the Novasep chromatography division, and ALS Automated Lab Solutions 3 EMEA = Europe, Middle East, Africa

This press release contains forward-looking statements about the future development of the Sartorius Group. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such statements. Sartorius assumes no liability for updating such statements in light of new information or future events.

Conference call The Executive Board Chairman and CEO of Sartorius AG, Joachim Kreuzburg, and Executive Board member and CFO, Rainer Lehmann, will discuss the company's results with analysts and investors during an earnings call at 3:30 p.m. CEST on October 19, 2022. You may register via the following link:

https://media.choruscall.eu/mediaframe/webcast.html?webcastid=z5CKkF4u

Further information https://www.sartorius.com/en/company/newsroom

Financial calendar January, 26, 2023        Publication of preliminary figures (January to December 2022)
April, 20, 2023             Publication of the first-quarter figures (January to March 2023)
July 21, 2023               Publication of the first-half figures (January to June 2023)
October 19, 2023         Publication of nine-month figures (January to September 2023)

Key figures for the first Nine Months 2022

Sartorius Group Bioprocess Solutions Lab Products & Services In millions of € (unless otherwise specified) 9-mo.
2022 9-mo. 20211 Δ in % Reported Δ in % cc2 9-mo.
2022 9-mo. 20211 Δ in %Reported Δ in %cc2 9-mo.
2022 9-mo. 20211 Δ in %Reported Δ in %cc2 Order Intake and Sales Revenue Order intake 3,121.1 3,286.2 -5.0 -9.5 2,451.8 2,733.0 -10.3 -14.4 669.4 553.2 21.0 14.6 Sales revenue 3,112.9 2,526.9 23.2 16.6 2,470.9 1,987.4 24.3 17.7 642.1 539.4 19.0 12.5 § EMEA3 1,157.9 1,038.8 11.5 10.4 943.3 829.6 13.7 12.7 214.7 209.2 2.6 1.4 § Americas3 1,130.1 825.4 36.9 22.5 896.8 654.1 37.1 22.7 233.3 171.3 36.2 21.8 § Asia | Pacific3 824.9 662.7 24.5 18.7 630.8 503.8 25.2 19.2 194.1 158.9 22.1 16.9 Earnings EBITDA4 1,051.5 866.4 21.4 881.5 724.4 21.7 170.0 141.9 19.8 EBITDA margin4 in % 33.8 34.3 35.7 36.5 26.5 26.3 Relevant net profit5 501.2 407.0 23.1 Net profit6 525.7 307.8 70.8 Financial Data per Share Earnings per
ordinary share5 in € 7.32 5.94 23.2 Earnings per preference share5 in € 7.33 5.95 23.1 1 The previous year's figures have been restated due to finalization of the purchase price allocation for the acquisition of BIA Separations

2 In constant currencies abbreviated as "cc" 3 According to the customer's location 4 Underlying EBITDA: earnings before interest, taxes, depreciation and amortization and adjusted for extraordinary items 5 After non-controlling interest, adjusted for extraordinary items and non-cash amortization, as well as based on the normalized financial result and the normalized tax rate

6 After non-controlling interest

A profile of Sartorius The Sartorius Group is a leading international partner of life sciences research and the biopharmaceutical industry. With innovative laboratory instruments and consumables, the group's Lab Products & Services division concentrates on serving the needs of laboratories performing research and quality control at pharmaceutical and biopharmaceutical companies and those of academic research institutes. The Bioprocess Solutions division, with its broad product portfolio focusing on single-use solutions, helps customers manufacture biotech medications and vaccines safely and efficiently. The company is growing at double-digit rates on average per year and regularly expands its portfolio through the acquisition of complementary technologies. In fiscal 2021, the company generated sales revenues of around 3.45 billion euros. At the end of 2021, nearly 14,000 employees were working for customers around the globe at the group's 60 or so production and sales sites.

Contacts Petra Kirchhoff
Head of Corporate Communications & Investor Relations
+49-551-308-1686
petra.kirchhoff@sartorius.com

Follow Sartorius on Twitter @Sartorius_Group and on LinkedIn. Cision

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SOURCE Sartorius AG
08.08.22 16:30:00 Sartorius to acquire Albumedix, strengthening its portfolio of innovative advanced therapy solutions
- UK-based Albumedix Ltd. is a leader in the field of recombinant albumin-based solutions and a highly innovative and profitable company

- Recombinant human albumin is a critical component in the manufacture of innovative biopharmaceuticals, particularly for modalities such as cell therapies, viral therapies and vaccines

- Sartorius will acquire all outstanding shares of Albumedix Ltd. for approximately £415 million

GÖTTINGEN, Germany, Aug. 8, 2022 /PRNewswire/ -- The life science group Sartorius, through its French listed subgroup Sartorius Stedim Biotech, has agreed to acquire 100 percent of Albumedix Ltd. from private investors. The Nottingham, UK-based company provides best-in-class recombinant albumin-based solutions. Recombinant human albumin is an important component for the biopharmaceutical industry required for various applications, for example as an animal-free additive to cell culture media and for the stabilization of vaccines and viral therapies. The business, founded in 1984, has more than 100 employees and is expected to generate revenue of approximately £33 million in 2022 with a significant double-digit EBITDA margin. The agreed purchase price amounts to approximately £415 million. The transaction is subject to regulatory approval and is expected to close before the end of the third quarter of 2022. Sartorius (PRNewsfoto/Sartorius AG)

"Albumedix will be an important addition to Sartorius' advanced therapy solutions, particularly regarding our cell culture media business, as it will enable us to strengthen our position as a relevant supplier of innovative chemically defined media and critical ancillary materials. This market offers high growth potential due to the increasing regulatory requirements as well as rising demand for the use of recombinant human albumin in near-patient applications. Albumedix will also add important formulation excipients to our vaccine production solutions, allowing us to expand our existing customer relationships and forge new ones," said René Fáber, member of the Executive Board for the Bioprocess Solutions Division of Sartorius.

"We are delighted to be joining forces with Sartorius and look forward to accelerating our ambitious growth plans in delivering critical solutions to our global customers. We have been highly impressed with Sartorius' knowledge and capabilities in the bioprocessing markets, and we are excited to join this purposeful journey. We believe Sartorius will bring tremendous value in strengthening our market reach and broadening our innovation capacity, as well as significantly scaling up our existing platform. We remain focused on our promise of empowering excellence in the life science industry," said Jonas S. Møller, CEO of Albumedix.

Albumedix will be part of the Bioprocess Solutions Division, and the existing 72,000-square-foot site in Nottingham will be established as a center of excellence for innovation and GMP-compliant production of critical raw materials.

Milbank LLP provided legal counsel to Sartorius in this transaction. William Blair acted as financial advisor to Albumedix, and Eversheds Sutherland provided legal counsel.

This press release contains forward-looking statements about the future development of the Sartorius Group. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such statements. Sartorius assumes no liability for updating such statements in light of new information or future events. This is a translation of the original German-language press release. Sartorius shall not assume any liability for the correctness of this translation. The original German press release is the legally binding version.

A profile of Sartorius

The Sartorius Group is a leading international partner of life science research and the biopharmaceutical industry. With innovative laboratory instruments and consumables, the Group's Lab Products & Services Division concentrates on serving the needs of laboratories performing research and quality control at pharma and biopharma companies and those of academic research institutes. The Bioprocess Solutions Division with its broad product portfolio focusing on single-use solutions helps customers to manufacture biotech medications and vaccines safely and efficiently. The Group has been annually growing by double digits on average and has been regularly expanding its portfolio by acquisitions of complementary technologies. In fiscal 2021, the company earned sales revenue of some 3.45 billion euros. At the end of 2021, nearly 14,000 people were employed at the Group's approximately 60 manufacturing and sales sites, serving customers around the globe.

Follow Sartorius on Twitter @Sartorius_Group and on LinkedIn.

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Contact Media Relations Philipp Grontzki
Head of External Communications
+49 (0)551.308.5581
philipp.grontzki@sartorius.com

Contact Investor Relations Petra Müller
Head of Investor Relations
+49 (0)551.308.6035
petra.mueller2@sartorius.com Cision

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SOURCE Sartorius AG
21.04.22 06:25:56 UPDATE 1-Sartorius sticks to 2022 outlook despite rising costs, Ukraine
(Adds detail, background)

FRANKFURT, April 21 (Reuters) - Franco-German lab supplies group Sartorius AG stuck to its 2022 outlook on Thursday as demand remained strong in the first quarter despite uncertainties from the war in Ukraine.

Sartorius, which competes in bioreactor gear with Merck KGaA and Thermo Fisher, said underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) had increased by nearly a third from the same quarter last year to reach 349 million euros ($378.28 million).

The corresponding underlying EBITDA margin improved to 34.1%, said the company which last year entered Germany's blue-chip index DAX.

Despite rising costs for logistics and raw materials, Sartorius reiterated guidance for 2022 group sales to increase by about 15% to 19% at constant foreign exchange rates, and for the underlying EBITDA margin to match last year's level of about 34%

"Demand for our products is high in all segments, and our investments in the expansion of production capacities are making good progress," CEO Joachim Kreuzburg said.

"However, the global political and economic uncertainties have increased substantially with the outbreak of war in Ukraine, further increasing the strain on supply chains and the risks arising from significantly higher inflation rates."

Sartorius shares have slumped by about 60% from a record high in September on concern that pandemic-related demand will wane.

Investors also took a dim view of the German company's takeover interest in U.S. group Maravai LifeSciences, reported by Reuters in February.

Last year, sales surged 48% to 3.45 billion euros as the coronavirus pandemic fuelled demand from biotech businesses.

Sartorius has said it plans to invest between 550 million and 600 million euros in 2022 to meet the high demand.

The company has warned of strained supply chains, saying that microchips, specialty plastics and freight capacity were more difficult to obtain, forcing it to order earlier, at times to switch suppliers, and to accept higher costs.

"The pandemic-related effects and the development of order intake are normalising, as expected," it said on Thursday.

($1 = 0.9226 euros) (Reporting by Ludwig Burger; writing by Miranda Murray; editing by Muralikumar Anantharaman and Jason Neely)