Interim report January – March 2019
New sales record and substantially increased operating profit
First quarter January - March 2019
- Net sales amounted to 248.0 MSEK (208.0), which is an increase by 19.2 percent compared to the corresponding quarter last year. At comparable exchange rates and adjusted for acquisitions, sales increased by 5.8 percent.
- Operating profit increased by 19.8 percent to 49.8 MSEK (41.6).
- Result after tax increased by 5.9 percent to 47.5 MSEK (44.9).
- Earnings per share increased to 0.73 SEK (0.69) before and after dilution.
- The cash flow from operating activities amounted to 11.5 MSEK (28.1).
- Net debt at March 31 amounted to 117.9 MSEK (-59.6). Cash and cash equivalents amounted to 142.6 MSEK (168.9). Liabilities to credit institutions amounted to 109.4 MSEK (109.3).
- On January 2 the Board of Directors announced that a recruitment process had been initiated to hire a new CEO and that Torben Jørgensen intends to continue as CEO until a replacement has been hired.
- The acquisition of PhyNexus Inc. was completed on January 15. The purchase price amounted to approx. 21.3 MUSD, corresponding to approx. 190.6 MSEK. Of this sum approx. 4.8 MUSD (approx. 43.2 MSEK) in cash payment and approx. 6.6 MUSD (approx. 58.6 MSEK) in newly issued shares was paid in connection with taking possession. The remaining 10.0 MUSD (approx. 89.3 MSEK) are expected future additional purchase price payments based on future results.
- On January 15 the Board of Directors decided to issue consideration shares for the acquisition of PhyNexus. The share issue means that the number of shares in Biotage has increased from 64,714,447 to 65,201,784, which has resulted in a dilution of 0.7 percent for existing shareholders.
1) See defintion on pp. 16-17
2) Based on an exchange rate SEK/USD of 8.93
Comments by CEO Torben Jörgensen
Biotage starts off 2019 with a strong first quarter. The sales during the quarter are the highest ever in the history of Biotage, also taking into account the business of PhyNexus, Inc. acquired during the year. We took possession of the acquisition on January 15 and the integration is proceeding according to plan. The transfer of PhyNexus’ instrument production to Biotage’s plant in Salem, New Hampshire, has been initiated. We are looking forward to continuing the development of PhyNexus’ operations in the rapidly growing area of small-scale purification of biomolecules. Biotage has traditionally primarily been focusing on purification of small molecules (synthetic) and we are now widening the operations to include also biomolecules (biologic). Biotage has not, however, been able to make progress in the discussions concerning an acquisition of the associated company Chreto A/S, which is also active in the area of purification of biomolecules.
Efficiency and profitability also increased during the quarter. The gross margin improved by 0.7 percentage points to 61.7 percent. Contributing factors are an improved mix in the sales of systems and aftermarket products, where we this quarter have a higher share of aftermarket products with 54 percent of sales. The operating margin for the quarter amounts to 20.1 percent, to be compared with Biotage’s new profitability target of an average of 20 percent over a three-year period. On a rolling 36 month basis the operating margin is now 17.7 percent. At comparable exchange rates and adjusted for acquisitions, sales increased by 5.8 percent in the period. In reported sales, we reach a growth of 19.2 percent. Biotage’s target is an annual sales growth averaging 8 percent over a three-year period.
The cash flow in the quarter is not entirely satisfactory. This is partly explained by the fact that we have chosen to tie up more capital in inventories by overproducing some of our products manufactured in Cardiff, Wales, in preparation for a possible Brexit. Another cause is that a comparatively large share of the sales took place late in the quarter, which contributed to a lower cash flow by increasing accounts receivable.
Biotage continues to show the strongest growth in Asia. The American sales are not quite where we want them to be. This is partly due to the timing of business, but we are also struggling to keep the sales organization intact as the good US economy results in fierce competition for employees.
Our single largest product area in organic chemistry, Purification, continues to grow and with global sales of more than 250 systems in the quarter we see the highest sales ever of our flash purification systems. China accounts for most of the growth but we also have hopes to gain market share in other parts of the world with the recently launched flash purification system Biotage® Selekt and the associated consumables Biotage® Sfär.
We continue to develop our product offering in analytical chemistry, with new products, applications and method development. A number of product launches will take place in analytical chemistry in the coming quarters, systems as well as consumables.
Sales of our Industrial products developed well in the quarter. Not the least sales of our largest flash purification systems with associated consumables. A contributing factor is the UV detector that was introduced last year, which facilitates the use of these products by the customers.
At the start of the year Biotage implemented a new business system. This has required extensive efforts during a longer period of time from many persons in the organization. We have now established a new platform for further global coordination and efficiency.
With the positive feeling from the first quarter of the year under our belt we are looking forward to the rest of 2019 with confidence.
Coming financial reports
The interim report for the second quarter 2019 will be published on July 16, 2019
The interim report for the third quarter 2019 will be published on November 5, 2019.
The year-end report for 2019 will be published on February 7, 2020.
All reports are available at Biotage’s website from the above dates.
This report has not been reviewed by the company’s auditors.
Uppsala April 24, 2019
President and CEO
For further information, please contact:
Torben Jörgensen, President and CEO, phone: +46 707 49 05 84
Erika Söderberg Johnson, CFO, phone: +46 707 20 48 20
This information is information that Biotage AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact persons set out above, at 15.00 CET on April 24, 2019.
Biotage offers efficient separation technologies from analysis to industrial scale and high quality solutions for analytical chemistry from research to commercial analysis laboratories. Biotage’s products are used by government authorities, academic institutions, pharmaceutical and food companies, among others. The company is headquartered in Uppsala and has offices in the US, UK, China, Japan, South Korea and India. Biotage has approx. 413 employees and had sales of 911 MSEK in 2018. Biotage is listed on NASDAQ Stockholm. Website: www.biotage.com