24 Nov

AGM Presentation

Probiotec (ASX: PBP) AGM Update NOVEMBER 2021 1 Disclaimer 2 This presentation is provided for general information purposes only. The information contained in this presentation is not in ten ded to be relied upon as personal advice to investors and does not take into account the investment objectives, financial situation or needs of any pa rti cular investor. Investors should assess their own individual financial circumstances and consider talking to a financial adviser or consultant before m aki ng any investment decision. This presentation is not a prospectus, investment statement or disclosure document, or an offer of shares for subscription, o r s ale, in any jurisdiction. Certain statements in this presentation constitute forward looking statements. Such forward looking statements involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of the Company and which may cau se actual results, performance or achievements to differ materially from those expressed or implied by such statements. While all reasonable care has been taken in relation to the preparation of this presentation, none of the Company, its subsid iar ies, or their respective directors, officers, employees, contractors or agents accepts responsibility for any loss or damage resulting from the use of or reliance on this presentation by any person. Past performance is not indicative of future performance and no guarantee of future returns is implied or given. Some of the information in this presentation is based on unaudited financial data which may be subject to change. All values are expressed in Australian Dollars unless otherwise stated. 3 ? With the ongoing uncertainty and consistent with our previous statements we do not intend to provide formal guidance at this tim e. ? Q1’21 trading performance is ahead of management expectations and trading conditions continue to improve as we emerge from Co vid restrictions. Based on this, we expect to deliver growth in FY22 earnings compared to FY21 proforma results 2 . ? Traditionally, the business is seasonally weighted to the second half of the financial year. ? Cough, cold and flu categories are showing early signs of recovery (revenue declined by c. $20m in FY21) and are expected to pro gressively recover as COVID - restrictions are eased and we head into the peak season for supply in 2HY22. ? We continue to win new business, which will be introduced to the group on a 6 - 24 month timeline (reflecting relative complexity and the regulatory category). Results for 4 months ended 31 Oct 2021 $’m 1 Sales Revenue 56.7 EBITDA 10.1 1 Based on unaudited management accounts 2 FY21 Proforma EBITDA of $29.6m Commentary Trading performance for the first four months of FY22 ahead of management expectations FY21 Trading Update 4 Our Strategy Drive profitable growth through organic and inorganic opportunities Inorganic upside Organic growth Strong track record of profitable growth with organic and inorganic upside Highlights 5 Probiotec provides a unique platform for expansion in the contract manufacturing and packaging space. The business’ growth objectives a re reinforced by a committed & highly experienced management team that has rapidly enlarged the size of business in the last 3 – 4 years 2 3 4 5 7 8 Onshoring and localisation of manufacturing Committed and highly experienced management team Upside potential from recovery of cough & cold and pharmacy sales Realisation of benefits from previous acquisitions – site consolidation & cross fertilisation Core capabilities can be leveraged into new sectors & regulated products M&A opportunities provides a unique platform for a buy & build strategy 1 Strong track record of profitable growth (Revenue CAGR of 48% and EBITDA CAGR of 77% since FY19) 6 Cost - out, margin optimisation and benefits of operating leverage to be realised - 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% May-14 Jun-14 Jul-14 Aug-14 Aug-14 Sep-14 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 May-17 Jun-17 Jul-17 Jul-17 Aug-17 Sep-17 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Mar-20 Apr-20 May-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 May-21 Jun-21 Jul-21 Easing of COVID restrictions is expected to recover prevalence of cough, cold and flu Recovery of cough & cold and pharmacy sales 6 Prevalence of fever & cough in Australia (%) 2014 – 2019 Average: 2.1% 2020 – 2021 Average: 0.4% Following the vaccine roll - out and subsequent easing of restrictions, the prevalence of cough, cold and flu is expected to recov er within the Australian population. Source: FluTracking Capitalising on the disruption of global supply chains Onshoring and localisation of manufacturing 7 • The COVID - 19 pandemic reinforced the need for protectionist measures towards supply chains, thus encouraging multinational compa nies to diversify supply chains and localise their production operations • Probiotec is in a strong position to continue attracting opportunities to capture market share from customers onshoring their productio n to Australia and can be supported by its existing manufacturing capacity • In FY22, the company has already secured $15m+ from two key clients. The trend in onshoring contract wins is expected to cont inu e over the next 3 years Commentary Domestic Pharmaceutical Manufacturing Employees (‘000s) An estimated c.85% of pharmaceutical products are currently manufactured offshore, representing a significant ‘onshoring’ opp ort unity. Probiotec is well - positioned to use its strong industry relationships and manufacturing capacity to capture some this opportunity. 15.4 15.3 15.4 14.5 15.1 16.6 17.3 2014 2015 2016 2017 2018 2019 2020 Source: ABS Executive Summary 8 Company & Industry Overview Financial Overview • Probiotec is an ASX - listed manufacturer, packer and distributor of third - party pharmaceuticals, complementary medicines, consumer health, food & beverage, FMCG and veterinary products • Probiotec’s focus is on servicing pharmaceutical, cosmetic, consumer healthcare and FMCG clients selling into large & stable end markets (pharmacies, grocery and cosmetic retailers) • Probiotec aims to service highly regulated industries with growing end markets. In addition to the health - conscious consumer sentiment, Australia’s ageing population and increasing prevalence of chronic disease supports the growth of the pharmaceuticals industry FY21 Results (Pro Forma 1 ) • 50% Revenue growth to $160.5m (FY20: $107.2m) • 76% EBITDA growth to $29.6m (FY20: $16.9m) • 62% EPS growth to 17.9c (FY20: 11.1c) • 11% dividend growth to 5.0c per share (FY20: 4.5c per share) • 0.7x Net Bank Debt / EBITDA (FY20: 1.4x) FY21 Underlying Results FY20 Underlying Results Underlying vs PCP FY21 Pro Forma FY20 Underlying Results Pro Forma vs PCP Revenue 120.5 107.2 ? 12% 160.5 107.2 ? 50% EBITDA 21.6 16.9 ? 28% 29.6 16.9 ? 76% EBIT 15.2 12.6 ? 21% 20.8 12.6 ? 66% NPAT 9.1 7.8 ? 17% 13.7 7.8 ? 76% EPS 11.9c 11.1c ? 8% 17.9c 11.1c ? 62% Underlying 1 Pro Forma 2 1. Excludes non - recurring transaction costs associated primarily with the acquisition of the Multipack - LJM businesses and amorti sation of customer relationship related intangible assets 2. Pro Forma includes H1 FY21 Multipack Earnings (acquired December 2020) Strong financial profile with national platform to support growing end - markets Value Chain Company Overview 9 Probiotec has mainly focussed on servicing pharmaceutical, cosmetic, consumer healthcare and FMCG clients selling into large & stable e nd markets (pharmacies, grocery and cosmetic retailers). Global FMCG Global Pharmaceutical Companies Consumer Healthcare Brand Owners Cosmetics Brand Owners Other Pharmacies Supermarket & Grocery Retailers Cosmetics Specialty Retailers Online Retail Platforms Types of Clients Types of End Markets / Channels Probiotec’s Core Capabilities in Manufacturing & Packing Lotions & Gels Creams Sachets Powder Blends Liquids Powders Solid Dose Sprays Tablet Coating Tub Fillings Blister Packaging Tablets & Capsules Develop Product & Brand Generic Medicine Manufacturing & Quality Control S ourcing Materials Design, Packaging & Logistics Mass Marketing Consumer Sales Value Chain Value Chain Value Chain Tier 1 Customer Base with low concentration risk (largest customer is ~10% of revenue) Our Customers 10 Our Licensing 11 Significant barriers to entry Leading Probiotec to becoming the largest contract manufacturer & packager in Australia Committed and highly experienced management team 12 Probiotec’s executive management team are highly skilled and committed to executing its growth plans. Wesley Stringer Chief Executive Officer Wesley has been the CEO of Probiotec since July 2015 . Prior to this role, Wesley was the Chief Operating Officer at Probiotec for 12 years . Before this, Wesley was employed by KPMG in Taxation and Finance. He has also worked internationally for Deutsche Bank and BNP Paribas Investment Bank in London. Jared Stringer Chief Financial Officer Jared has been the CFO of Probiotec since July 2012 . Prior to this role, Jared was a Financial Accountant at Probiotec for 6 years . Before this, he worked as an Investment Analyst at CVC. Also holds the role of Company Secretary with experience and qualifications in Corporate Governance. Julie McIntosh Chief Operating Officer Julie has been the COO of Probitoec since May 2017 . Prior to this role, Julie was the General Manager of Supply Chain at Probiotec . Before joining the Probiotec team, Julie had over 20 years experience in a global chemical company, where she focussed on supply chain management, global project management and quality management. Experienced financial and commercial leaders Board of Directors 13 Probiotec’s Board of Directors are highly skilled and experienced in growing & advising various businesses Wesley Stringer Chief Executive Officer Wesley has been the CEO of Probiotec since July 2015. Prior to this role, Wesley was the Chief Operating Officer at Probiotec for 12 years. Before this, Wesley was employed by KPMG in Taxation and Finance. He has also worked internationally for Deutsche Bank and BNP Paribas Investment Bank in London. Jonathan Wenig Non - Executive Chairman Jonathan became Chairman of Probiotec in July 2021. Jonathan initially joined the Board as a Non - Executive Director in June 2020. Jonathan is currently a partner at Arnold Bloch Leibler . His practice and expertise lies in commercial & corporate law, including mergers and acquisitions, corporate work, technology and financing. Simon Gray Non - Executive Director Simon joined the Board in July 2021 as a Non - Executive Director. Mr Gray was previously a director on the boards of Morgans Financial and before that Shaw and Partners where he was at various times its Deputy CEO, General Counsel and Chief Compliance Officer. 14
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