Full year 2016: Another year of double-digit sales growth for Tecan
Financial results: full-year and second half of 2016
- Order entry of CHF 503.2 million (2015: CHF 465.0 million)
- Full-year growth of 6.9% in local currencies or 8.2% in Swiss francs
- Strong H2 growth in Life Sciences Business, supported by new products
- H2 growth in Partnering Business impacted by one large order shifted to January 2017
- Sales of CHF 506.2 million (2015: CHF 440.3 million)
- Full-year growth of 13.5% in local currencies or 15.0% in Swiss francs
- Full-year organic growth of 8.2% in local currencies and 9.6% in Swiss francs
- H2 sales growth of 12.2% in local currencies or 12.7% in Swiss francs
- Full-year operating profit before depreciation and amortization (EBITDA) of CHF 89.0 million (2015: CHF 83.4 million)
- Reported EBITDA margin of 17.6% (2015: 18.9%), including acquisition-related costs and reduced margins associated with the acquisition of Sias AG
- Underlying EBITDA, excluding acquisition-related effects, of CHF 93.2 million
- Strong improvement in underlying EBITDA margin of 140 basis points to 19.5% (2015: 18.1%), driven by positive volume and price effects as well as substantial efficiency improvements
- Full-year net profit of CHF 54.5 million below prior year due to integration costs and non-operational effects (2015: CHF 57.1 million)
- Net profit margin including integration costs of 10.8% (2015: 13.0%)
- Earnings per share of CHF 4.74 (2015: CHF 5.05)
- Strong full-year cash flow from operating activities of CHF 118.8 million (2015: CHF 99.1 million) or 23.5% of sales (2015: 22.5%)
Operating highlights 2016 and other important information
- Significant increase in serial production of major platforms in the Partnering Business
- Successful integration of Sias AG, which was acquired in November 2015
- Acquisition of SPEware Corporation in September 2016, a leading provider for mass spectrometry sample preparation solutions
- Launch of additional important features for Fluent® next generation liquid handling platforms as well as a new variant of the Spark® reader platform
- Unchanged dividend of CHF 1.75 per share proposed
- Full-year sales are forecast to increase by at least 6% in local currencies
- Reported EBITDA margin expected to further expand to at least 18% of sales, including acquisition-related costs in a mid single-digit million Swiss franc amount
Männedorf, Switzerland, March 15, 2017 - The Tecan Group (SIX Swiss Exchange: TECN) today announced its financial results for full-year and second half of 2016.
Tecan CEO David Martyr commented: "I am pleased that we recorded another year of double-digit sales growth and a further improvement in underlying profitability during 2016. Importantly, we posted strong sales growth in both divisions and all regions, with China being a specific highlight. Once again, the high operating cash flow of over 23% of sales was particularly satisfactory.
Our new platforms had a strong market uptake, with Fluent quickly becoming the industry-leading automation solution and Spark setting new standards for multimode readers regarding sensitivity, speed and accuracy. In our Partnering Business, we saw a substantial increase in serial production of major platforms and we successfully concluded several new development agreements, providing the basis for continued growth. We fully integrated Sias AG, which we acquired at the end of 2015 and relocated our new colleagues and the production lines into the Tecan site in Maennedorf. In August, we were delighted to announce the acquisition of US-based SPEware Corporation, which further expands our solutions offering into the sample preparation for mass spectrometry market," Martyr continued.
Financial results full-year and second half of 2016
In the second half of 2016, order entry in the Life Science Business grew strongly, however Partnering Business was affected by a large order which was shifted by a corporate customer from December 2016 to January 2017. Despite this timing effect, order entry in the second half overall increased by 2.8% in local currencies and by 3.1% in Swiss francs against a strong base in the prior-year period. For the full year, order entry increased by 6.9% in local currencies to CHF 503.2 million (2015: CHF 465.0 million), corresponding to growth of 8.2%. On an organic basis, order entry increased by 1.8% in local currencies and by 3.1% in Swiss francs. Organic development only includes contributions from acquisitions from those months in the reporting period that were already included in the consolidated financial statements in the prior-year period.
Sales in the second half rose by 12.2% in local currencies and by 12.7% in Swiss francs. This corresponds to organic sales growth of 7.3% in local currencies and 7.8% in Swiss francs. Sales in financial year 2016 increased by 13.5% in local currencies and 15.0% in Swiss francs to CHF 506.2 million (2015: CHF 440.3 million), exceeding the CHF 500 million mark for the first time in the Company's history. On an organic basis, sales grew by 8.2% in local currencies and 9.6% in Swiss francs.
Operating profit before depreciation and amortization (earnings before interest, taxes, depreciation and amortization; EBITDA) rose by 6.8% to CHF 89.0 million in the fiscal year (2015: CHF 83.4 million). Including acquisition-related costs from two recent transactions and reduced margins associated with the acquisition of Sias AG, the EBITDA margin was 17.6% of sales (2015: 18.9%). By contrast, the underlying EBITDA margin, excluding acquisition-related effects, improved by 140 basis points to 19.5% of sales, thereby comfortably delivering on the margin commitment for the year of "at least 50 basis points". In 2015, the underlying EBITDA margin reached 18.1% and excludes a one-time positive net impact mainly from revised pension liabilities. The margin improvement in 2016 was driven by positive volume and price effects as well as substantial efficiency improvements in operations and in research and development.
Despite a higher operating result, net profit for the year 2016 was CHF 54.5 million and therefore below the prior-year period due to non-operational effects (2015: CHF 57.1 million). In addition to acquisition-related costs, the difference is due to the lack of the positive one-time effects from 2015, an increase of the tax rate in 2016 to an again more normalized level and a lower financial result due to currency hedging. The net profit margin therefore reached 10.8% of sales (2015: 13.0%), while earnings per share were CHF 4.74 (2015: CHF 5.05)
Cash flow from operating activities grew strongly to CHF 118.8 million (2015: CHF 99.1 million), including a further reimbursement of development costs by an OEM partner. Thus, cash flow from operating activities corresponded to 23.5% of sales.
Information by business segment
Life Sciences Business (end-customer business)
In the second half of the year, sales in the Life Sciences Business increased by 10.7% in local currencies and were 11.7% above the prior-year period in Swiss francs. On an organic basis, excluding sales from SPEware in the last quarter, sales in the second half grew by 7.5% in local currencies. Sales for the full year totaled CHF 280.2 million, representing an increase of 8.6% in local currencies and 10.7% in Swiss francs over the prior-year period (2015: CHF 253.0 million). On an organic basis, sales increased by 6.8% in local currencies in 2016. The new Fluent and Spark platforms as well as recurring sales of services, consumables and reagents made a considerable contribution to this growth. Order entry in the Life Sciences Business again exceeded sales for the full year and saw an acceleration in the second half, supported by a strong market uptake of new products.
Operating profit before interest and taxes (EBIT) in the segment was CHF 45.7 million in the year under review (2015: CHF 45.4 million), corresponding to an operating profit margin of 15.6% of sales (2015: 17.0%).
Partnering Business (OEM business)
Sales in the Partnering Business grew by 14.3% in local currencies as well as in Swiss francs in the second half of 2016. On an organic basis, revenue rose by 7.0% in local currencies.
The Partnering Business generated sales of CHF 226.0 million in financial year 2016 (2015: CHF 187.3 million), which corresponds to an increase of 20.1% in local currencies and 20.7% in Swiss francs. On an organic basis, sales increased by 10.1% in local currencies.
Instrument platforms launched in recent years made a significant contribution to the strong sales growth. Also, sales in China increased substantially, with several local components and instrument customers now successfully commercializing their respective platforms. Order entry in the Partnering Business also grew at a solid rate for the full year 2016, albeit slowing down in the second half as a large order was shifted by a corporate customer from December 2016 to January 2017.
The segment's operating profit rose to CHF 33.8 million (2015: CHF 30.2 million), despite integration costs related to the Sias acquisition reaching a mid single-digit million Swiss franc amount. Due to those acquisition-related costs, operating profit margin was down on the prior-year period at 14.8% of sales (2015: 16.0%).
In Europe, full-year sales in local currencies increased by 12.8% and by 13.3% in Swiss francs. This growth was driven primarily by the Partnering Business, both from the first-time contribution to sales from Sias products and strong organic growth by major platforms.
In North America, sales grew by 7.6% in local currencies and 9.6% in Swiss francs. The Life Sciences and Partnering Business recorded solid growth in this region.
In Asia, Tecan once again achieved a considerable increase in sales of 27.0% in local currencies and 30.2% in Swiss francs. Both segments posted a double-digit increase in organic sales, which was further supported by a first-time contribution to sales by Sias products. Growth in China, where sales grew with more than 50%, was particularly pleasing, bringing the total business to close to CHF 50 million in the year.
Recurring sales of services, consumables and reagents
In 2016, recurring sales of services and consumables increased by 12.5% in local currencies and 14.1% in Swiss francs, and therefore amounted to 37.6% of total sales (2015: 37.8%). Services (including spare parts) accounted for 20.7% of total sales, while consumables (plastic and reagents) accounted for 16.8%.
Research and development
Research and development expenses in 2016 amounted to 9.3% of sales (2015: 9.1%) or CHF 47.1 million (2015: CHF 39.9 million). All told, research and development activities were CHF 51.9 million gross (2015: CHF 56.7 million). The total figure also includes development programs for OEM instrument customers in the Partnering Business (CHF 9.8 million) and capitalized development costs (CHF 6.6 million). However, these costs were clearly exceeded by amortization amounting to CHF 11.6 million.
Strong balance sheet - dividend unchanged
Tecan's equity ratio reached 66.3% as of December 31, 2016 (December 31, 2015: 68.7%). Net liquidity (cash and cash equivalents minus bank liabilities and loans) increased to CHF 242.3 million (December 31, 2015: CHF 198.8 million). This figure includes the acquisition of SPEware Corporation with a base purchase consideration of USD 50.0 million (CHF 49.0 million), of which the net payable was fully paid in cash. The company's share capital was CHF 1,154,137 as at the reporting date of December 31, 2016 (December 31, 2015: CHF 1,146,758), consisting of 11,541,371 registered shares with a nominal value of CHF 0.10.
The Board of Directors will propose an unchanged dividend of CHF 1.75 per share to the shareholders at the Company's Annual General Meeting on April 11, 2017.
As previously communicated, Tecan expects in the mid-term to continue to organically outgrow the market average and increase this growth rate through acquisitions. For 2017, total Tecan Group sales are forecast to increase by at least 6% in local currencies. The reported EBITDA margin is expected to further expand to at least 18% of sales, including acquisition-related costs in a mid single-digit million Swiss franc amount.
These expectations regarding profitability are based on an average exchange rate forecast for full-year 2017 of one euro equaling CHF 1.07 and one US dollar equaling CHF 0.99 and exclude future acquisitions.
Financial Report and Webcast
The full 2016 Financial Report can be accessed on the Company's website www.tecan.com under Investor Relations. An iPad App for the Tecan Financial Reports is also available from the App Store.
Tecan will hold an analyst and press conference to discuss the 2016 annual results today at 9:00 a.m. (CET). The presentation will also be relayed by live audio webcast, which interested parties can access at www.tecan.com. A link to the webcast will be provided immediately prior to the event.
The dial-in numbers for the conference call are as follows:
For participants from Europe: +41 58 310 50 00 or +44 203 059 58 62 (UK)
For participants from the US: +1 631 570 5613
Participants should if possible dial in 15 minutes before the start of the event.
Key upcoming dates
- The Annual General Meeting of Tecan's shareholders will take place in Pfaeffikon, SZ, on April 11, 2017.
- The 2017 Interim Report will be published on August 16, 2017.
Tecan (www.tecan.com) is a leading global provider of laboratory instruments and solutions in biopharmaceuticals, forensics and clinical diagnostics. The company specializes in the development, production and distribution of automated workflow solutions for laboratories in the life sciences sector. Its clients include pharmaceutical and biotechnology companies, university research departments, and forensic and diagnostic laboratories. As an original equipment manufacturer (OEM), Tecan is also a leader in developing and manufacturing OEM instruments and components that are then distributed by partner companies. Founded in Switzerland in 1980, the company has manufacturing, research and development sites in both Europe and North America and maintains a sales and service network in 52 countries. Registered shares of Tecan Group are traded on the SIX Swiss Exchange (TECN; ISIN CH0012100191).
For further information:
|Dr. Rudolf Eugster||Martin Braendle|
|Chief Financial Officer||Vice President, Communications &|
|email@example.com||Tel. +41 (0) 44 922 84 30|
|www.tecan.com||Fax +41 (0) 44 922 88 89|