SOLEBURYTROUT ANNUAL MANAGEMENT …ir.stratec.com/stratec/pdf/pdf_id/526725.pdfTHE IVD MARKET IVD MARKET SEGMENTS / IVD MARKET: ~ 68 BILLIONUSD IN 2018 SAN FRANCISCO -JANUARY 13-15,

SOLEBURY TROUT ANNUAL MANAGEMENT ACCESS EVENT

San Francisco – January 13-15, 2020

SAFE HARBOR STATEMENT

Forward-looking statements involve risks.

This company presentation contains various statements concerning the future performance of STRATEC. These statements are based on both assumptions and estimates. Although we are convinced that these forward-looking statements are realistic, we can provide no guarantee of this. This is because our assumptions involve risks and uncertainties which could result in a substantial divergence between actual results and those expected.

It is not planned to update these forward-looking statements.

SAN FRANCISCO - JANUARY 13-15, 2020 2

AGENDA

SAN FRANCISCO - JANUARY 13-15, 2020

1. OVERVIEW AND BUSINESS MODEL2. THE IVD MARKET3. FINANCIALS4. OUTLOOK AND STRATEGY

3


OVERVIEW AND

BUSINESS MODEL

4

• Leading OEM player for automation solutions for the diagnostics industry and translational research

• Three decades of experience in highly regulated healthcare markets and growing technology pool

• More than1.200 employees worldwide

More than 50% allocable to R&D

• Production sites in Germany (HQ), Switzerland, Hungary and Austria

• High number of systems installed globally

More than 13,000 medium to high throughput systems

More than 25,000 low throughput systems

• Sales of € 187.8 million in 2018

CAGR sales since IPO in 1998: ~15%

• Dividend payments raised over 15 consecutive years

OVERVIEW AND BUSINESS MODEL

STRATEC AT A GLANCE


SELECTED PRODUCTS

5


UNIQUE MARKET POSITION STRATEC IN THE IVD VALUE CHAIN


DiagnosticCompanies

Blood Banks,Laboratories

Patients

STRATEC develops and manufactures fully automated analyzer systems and disposables focusing on the high growth segments in diagnostics

Partners market systems together with reagents and consumables to laboratories, blood banks and hospitals worldwide

Laboratories performing tests and offering service to doctors and patients using reagents from diagnostic companies

Growth drivers:

• Aging population

• Developing healthcare systems worldwide

• Rising prevalence of chronic diseases

• High volume of new tests

6


BUSINESS MODEL


STRATEC provides instrumentation, consumables, software and automation solutions

OEM development and manufacturing

Around 8,000 fully automated analyzer systems and modules manufactured annually

Wide range of intellectual property rights

Extensive collaboration with partner during design phase

STRATEC: Engineering / automation, software, QM

Partner: System / reagent / market requirements

Systems have long market lifecycles

Product lifecycles typically in an area of 12 to 15 years

Leads to longstanding partnerships

Expanding installed base of systems

Product enhancement and extension drives value

7

Dev

elopm

ent

and m

arke

t la

unch

of su

cces

sor

pro

duct



Long-term agreements with partners Milestone payments during development stage

Operating sales during series production stage

Recurring sales from service parts & consumables sales

Minimum volume commitment Firm purchase orders

STRATEC an integral part of partners’ plans

Reliable partnership Shortened development time

Integration of analyzer system and reagents

Agreed development budget & transfer price

High commitment by both partners

SECURING RETURN ON INVESTMENT

INDICATIVE SALES CHARACTERISTICS OF AN ANALYZER OEM PROJECT

2 to 4 yearsDevelopment

phase

12 to 15 yearsMarketing phase of the analyzer system

Another 5 yearsof service parts & consumables

Service part & consumables

Sale

s

8

THE IVD MARKET


THE IVD MARKET

IVD MARKET SEGMENTS / IVD MARKET: ~ 68 BILLION USD IN 2018


Market growth CAGR 2018-2023

Total IVD-Market: ~5% p.a.

Molecular Diagnostics: ~9% p.a.

Immunodiagnostics: ~6% p.a.

Point of Care: ~8% p.a.

Growth drivers

Aging world population

Rising prevalence of chronic diseases

Expansion in healthcare systems, especially in emerging markets

New technologies broadening scope of IVD applications (e.g. oncology, personalized medicine or non-invasive prenatal testing)

Increasing automation

Source: Kalorama: “The worldwide market for In Vitro Diagnostic Tests, 10th Edition”, Aug 2016MarketsandMarkets: “In vitro diagnostics market – forecast to 2023”, Dec 2018

Total instrumentation market ~ 8.9 billion USD

10

THE IVD MARKET

OUTSOURCED VS IN HOUSE INSTRUMENTATION MARKET


Total instrumentation

market~ 8.9 billion

USD

In House~ 60 %

Outsourced~ 40 %

In House73 %

Outsourced27 %

2010 2018

Source: Own estimates based on historical market data and recent industry trends

Trend of outsourcing towards specialized players set to continue, due to:

Engineering of automation solutions often not core competence of diagnostics companies

Shorter development timeframes due to already existent technology pools

Guaranteed project budget and firm transfer prices

Keeping up with regulatory developments easier for specialized players

Structured processes in order to address end customer needs, such as ease of use, user experience, workflow efficiencies, remote access, serviceability and preventive maintenance

11

THE IVD MARKET

A SELECTION OF STRATEC CUSTOMERS


Source: IVD News / non-public companies estimated / non-reported sector sales estimated

… AND OTHER GAME-CHANGING COMPANIES

(acquired by Bio-Rad in January 2017)

STRATEC customer

Not a STRATEC customer

GLOBAL TOP 20 IVD COMPANIES Sales 2018 (USD billion)

1. Roche 11.1

2. Abbott 7.5

3. Danaher 6.3

4. Siemens Healthineers 4.7

5. Thermo Fisher 3.7

6. Sysmex 2.8

7. bioMerieux 2.3

8. Ortho Clinical Diagnostics 2.0

9. BECTON DICKINSON 1.5

10. BIO-RAD 1.4

11. CH Werfen 1.4

12. Hologic 1.2

13. Perkin Elmer 1.0

14. Agilent Tech 0.9

15. Grifols 0.8

16. Diagnostica Stago 0.8

17. Qiagen 0.8

18. DiaSorin 0.8

19. Quidel 0.5

20. Fujirebio 0.4

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FINANCIALS

13

FINANCIALS


KEY FIGURES - TRACK RECORD

Sales in € millionCAGR ~12%

EBIT in € millionCAGR ~9%

1 Figures adjusted for comparison; adjusted for depreciation and amortization from purchase price allocation for acquisitions, related integration expenses and other extraordinary effects. Reconciliation to IFRS figures can be found in the respective annual report.

6176

102116.6 122.7 128

144.9 146.9

184.9

207.5

187.8

0

50

100

150

200

250

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

11.2

14.7

17.6

21.8

15.6

19.5

24.1

26.9

32.3

36.4

26.2

0

5

10

15

20

25

30

35

40

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

1

1

1

14

FINANCIALS


KEY FIGURES - TRACK RECORD

Net income in € millionCAGR ~9%

Dividend per share in € CAGR ~9%

8.2

11.713.0

15.3

12.4

15.5

19.8

22.1

25.4

28.9

20.2

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

0.35

0.450.50

0.55 0.560.60

0.700.75 0.77

0.80 0.82

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

1

1


1

15

FINANCIALS


SALES BY OPERATING DIVISIONS

56% 55% 49% 49%

26% 29%32% 33%

18% 15% 18% 16%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015 2016 2017 2018

Systems Service parts and consumables

Developement & services Others

In % of total sales

As of December 31

Continuously growing share of service parts and consumables sales

• At 33% of total sales in 2018 versus 26% in 2015

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FINANCIALS


9M/2019 AT A GLANCE

• Dynamic sales growth of 19.6% yoy to € 161.1 million (9M/2018: € 134.6 million)

Growth of 17.3% yoy at constant currency

• Adjusted EBIT up 17.8% to € 20.1 million (9M/2018: € 17.0 million)

Adjusted EBIT margin at 12.5% (9M/2018: 12.7%)

• Successful market launches by our partners

LIAISON® XS by DiaSorin and FACSDUET™ by Becton Dickinson

• Significant progress within major development projects

• Number of employees increases by 8.5% yoy organically to 1,282 in the light of strong project pipeline

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9M/2019 FINANCIALS AT A GLANCE1

FINANCIALS


bps = basis points

1 For comparison purposes, adjusted figures exclude amortization resulting from purchase price allocations in the context of acquisitions and the associated reorganization expenses, as well as other non-recurring effects.

2 Not retrospectively restated for IFRS 16.3 Results from continuing operations.

€ 000s 9M/2019 9M/20182 Change

Sales 161,058 134,627 +19.6%

Adjusted EBITDA 27,021 21,960 +23.0%

Adjusted EBITDA margin (%) 16.8 16.3 +50 bps

Adjusted EBIT 20,080 17,044 +17.8%

Adjusted EBIT margin (%) 12.5 12.7 -20 bps

Adjusted consolidated net income3 15,872 13,598 +16.7%

Adjusted basic earnings per share (in €)3 1.32 1.14 +15.8%

Basic earnings per share IFRS (in €)3 0.71 0.51 +39.2%

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FINANCIALS


SALES

Sales in € million

As of September 30

9M/2019 sales up 19.6% yoy to € 161.1 million; +17.3% at constant currency

• Strong call-up numbers for established as well as recently launched systems

• Double-digit growth rates of service parts and consumables as well as development and services sales

105.3 107.2

126.3

149.4

134.6

161.1

0

20

40

60

80

100

120

140

160

180

9M/14 9M/15 9M/16 9M/17 9M/18 9M/19

19

FINANCIALS


EBIT EBIT margin

EBIT in € million EBIT margin in %

As of September 30

ADJUSTED EBIT AND EBIT MARGIN

13.4

17.719.2

18.4

24.5

17.0

20.1

4%

6%

8%

10%

12%

14%

16%

18%

20%

0

2

4

6

8

10

12

14

16

18

20

22

24

26

9M/13 9M/14 9M/15 9M/16 9M/17 9M/18 9M/19

9M/2019 EBIT up 17.8% yoy to € 20.1 million

9M/2019 adjusted EBIT margin down by 20 bps yoy to 12.5%

(-) Stock appreciation rights (negative margin effect of 90 bps)

(-) Product/sales mix

(+) First positive results from earnings improvement initiative

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FINANCIALS


CASH FLOW AND NET DEBT

€ 000s 9M/2019 9M/2018 Change

Cash flow – operating activities 11.1 15.4 -27.9%

Cash flow – investment activities -21.1 -3.9 nm

Cash flow – financing activities 2.8 -9.9 nm

Free cash flow -10.0 11.5 nm

€ 000s 9M/2019 FY/2018 Change

Cash and cash equivalentsat end of period

16.3 23.8 -31.5%

Equity ratio (%) 50.3 55.3 -500 bps

Net debt 86.1 53.1 +62.1%

1 Total investments in intangible and tangible assets in % of sales

• Cash flow from operating activities down 27.9% yoyto € 11.1 million

- adverse effects from higher cash tax payments

- timing issues within inventories and receivables

• Higher investment spending due to significant capacity expansion at HQ (construction projects) and high development activities

• Investment ratio1 of 12.6% for the first nine months within full year target corridor of 12% to14%

• Higher net debt position attributable to financing of capex investments and first time adoption of IFRS 16

21


OUTLOOK AND STRATEGY

22



FINANCIAL GUIDANCE 2019

• Group sales are expected to increase by at least 12% (at constant exchange rates)

• Adjusted EBIT margin of around 14% to 15% (2018: 13.9%)

Positive scale effects

First positive impact from already defined earnings improvement measures

Adverse effects from continuing high development activities

Q4 margin expected to benefit from product mix, development sales with above-average margins and earnings improvement initiative

• Investments in tangible and intangible assets of around 12% to 14% of sales

Ongoing construction measures for significant capacity expansion

Investments due to high number of development projects

After significant increase in 2018 and 2019 investment ratio will likely decline considerably from 2020 onwards once construction projects for capacity expansion have been completed

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FOCUS IN 2020 AND BEYOND

• Reduce earnings volatility across business units and improve EBIT contribution of Smart Consumables business

• Achieve significant number of product launches

Two systems for partners were launched in 2019

Further expected launches among others include a blood banking instrument, a proprietary analyzer platform and various stand-alone modules

• Sign several new development and supply agreements

• Drive results from defined earnings improvement initiative

• Expand development capacities including significant expansion of buildings

• Prepare path to efficiency gains following successful ERP system implementation

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• Enable customers and STRATEC to grow sustainably above the long-term market average

Focus on high growth areas of application within in-vitro diagnostics and healthcare research

Secure and further boost expertise and technology portfolio with intellectual property rights

• Broadening of product/value offering without entering into competition to partners

Organically and via selective M&A transactions

Widen offering in areas not perceived as core for/by our customers

• Increase proportion of service parts & consumables

Utilize tailwind from increasing system complexity

Further expand smart consumables business (microfluidic chips, cartridges, etc.)

Utilize combined product offering of instruments, software and consumablesto increase proportion of recurring sales

• Drive customer diversification

Utilize extended platform offering

Extend components business

Accelerate diversification (e.g. veterinary, translational research)



STRATEGIC PRIORITIES

25

APPENDIX


APPENDIX

KEY FIGURES AT A GLANCE1


2 From continuing operations


IFRS (€ million) 2014 2015 2016 2017 2018

Sales 144.9 146.9 184.9 207.5 187.8

Adjusted EBIT 24.1 26.9 32.2 36.4 26.2

Adjusted EBIT margin (%) 16.6 18.3 17.4 17.5 13.9

Adjusted Consolidated net income2 19.8 22.1 25.3 28.9 20.2

Adjusted Earnings per share (€) 2 1.68 1.87 2.14 2.43 1.70

Dividend per share (€) 0.70 0.75 0.77 0.80 0.82

No. of employees 544 583 976 1,086 1,228

Total assets 137.8 158.9 258 264 275

Equity ratio (%) 81.3 82.0 55.7 59.8 55.3

Free cash flow 32.9 17.3 -70.4 14.4 1.2

27

APPENDIX


Consolidated net incomeEBIT

ADJUSTMENTS

€ 000s 9M/2019

Adjusted EBIT 20,080

Adjustments:

Transaction-related expenses and associated restructuring expenses

-2,230

PPA amortization -6,773

EBIT 11,077

€ 000s 9M/2019

Adjusted consolidated net income from continuing operations

15,872

Adjusted earnings per share from continuing operations in € (basic)

1.32

Adjustments:

Transaction-related expenses and associated restructuring expenses

-2,230

PPA amortization -6,773

Current tax expenses 600

Deferred tax income 1,074

Consolidated net income from continuing operations

8,544

Earnings per share from continuingoperations in € (basic)

0.71

28

APPENDIX


SHAREHOLDER STRUCTURE(AS OF: JUNE 2019)

SHARE

IPO Aug. 1998Number of shares 12,030,295Share price (12/19/2019) € 69.90Market capitalization € 788 million

Fixed and family ownership(incl. their investment companies)

Free float

Institutional investors > 3%:Allianz Global InvestorsAmeriprise FinancialBNP Paribas Investment PartnersInvesco

41.1%

58.9%

29

STRATEC SEGewerbestr. 3775217 BirkenfeldGermany

Phone +49 7082 7916-0Fax +49 7082 7916-9190www.stratec.com

CONTACT

THANK YOU

FOR YOUR

ATTENTION

CONTACT

Marcus WolfingerCEO

Jan Keppeler, CFAHead of IR & CC

Phone +49 7082 [email protected]


Documents

SOLEBURYTROUT ANNUAL MANAGEMENT …ir.stratec.com/stratec/pdf/pdf_id/526725.pdfTHE IVD MARKET IVD MARKET SEGMENTS / IVD MARKET: ~ 68 BILLIONUSD IN 2018 SAN FRANCISCO -JANUARY 13-15,