Evotec SE

Dear ladies and gentlemen, welcome to the conference call of Evotec SE. At a customer's request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulties hearing the conference, please press star key followed by zero on your telephone for operator assistance. May I now hand you over to Werner Landteller, CEO, who will lead you through this conference. Please go ahead.

Good afternoon, good morning, welcome to our Q1 reporting. It's a pleasure to have you on the phone, and it's a pleasure to guide you through our presentation, Acceleration on the Data-Driven Autobahn to Cures. When you go to this presentation, which we have uploaded on the web, and you go to page number two, let me warmly welcome you And given the fact that we just recently held a Capital Markets Day on April 20th, we also want to invite you to look at this presentation, which is also uploaded. At our Capital Markets Day, we presented extensively a deeper look into our drug discovery platforms and technology. This is why today we will focus more on our ongoing business and our strong outlook for our midterm view of the strategy. I'm here together with our CFO, Enos Vilner. If you go to page number four of this presentation, you will see that we have a very successful start into the year. Despite the still ongoing COVID-19 pandemic, we see a strong start. Actually, it is probably fair to say that we see a very strong start into the year, which also allows us upfront to confirm Our 2021 goals and also our strong long-term outlook. Page number four highlights some single events that are supporting our unique business model. The long-term view of our business strategy has been put together in an updated business model, which we also introduced recently, which we call Action Plan 2025, the data-driven R&D Autobahn to QoS. When you look at page number five of this presentation and you look at some of the highlighted numbers, you will see that we had a like-for-like compared record start into the year, and Enno will elaborate much more in detail on this. Let me guide you back for a second into our strategic outlook on page number six of the presentation. The data-driven R&D Autobahn to Cures has one key theme and the key theme for us is to achieve leadership in data, science, multimodality and access for many people to our drug discovery platforms. The key capability that we are building is to achieve our mission with more disease relevant, significantly earlier derived information about diseases. This is what we put into the drug discovery process much earlier than it was the case in the past. If you go to page number seven of your presentation, you should see and appreciate together with us that this is just the beginning of what Evotec is doing. Our action plans are linked to very clear investment and return strategies that deliver significant values. We have shown this in the past, But looking forward, we are still at the beginning of what values we can create and will create with essential innovation that we bring to this industry. We are building the essential innovation hub within research and development within the healthcare community. On page number eight of this presentation, You should see that we bring the power of data and platforms together. Linking our eight building blocks with disease-relevant data is essential. For this reason, you should see the symbolic importance here that we are linking these blocks with a stream of data. Many people say that data is the new oil. At Evotec, we know how to exploit This most important resource for healthcare in the future. We know how to use data for patients in the future. And we also know how to use data to exploit even better to potentially create prevention systems way earlier in the management process of diseases. Page 9 indicates to you that we do what the industry truly needs. If you look at our numbers in detail, you will see that our fee-for-service-based business, our Evotech Innovate projects, and also our JustEvotech Biologics platform are all in full swing. Why is this so important? Because this allows us from multiple sources to build our long-term vision to create a co-owned pipeline where we own royalties. And if you go to page number 10 of this presentation, you should see that we are especially happy that we can see and monitor that the cross-selling within our increasingly integrated projects is working very well along the value chain. Our better defined highest quality work packages are the key service to our partners which are highly appreciated and where you see In a deeper analysis of our numbers, even increased customer satisfaction than ever before. With this, let me hand over to Enno, who will guide you into more detail of our Q1 numbers.

Thank you, Werner, and a truly warm welcome to all of you today. I hope you have a good morning or good afternoon, and I'm very happy to introduce you to our financial performance Q1 2021 on our next slides. and starting on page 12, Q1 2021 numbers show a very good 11% increase on the revenue line, substantially pushed by the development of our base business. Adjusted for ethics effects, we even would recognize a 17% gain. I will come back to further analytics and composition of our growth factors on page 15. The gross margin amounted to 23.1% As anticipated, lower than last year, but in line with expectations. This is mainly due to the often mentioned fade out of the Sanofi subsidy for the site in Toulouse after Q1 2020 and a slightly lower level of milestone achievements. R&D expenses increased as anticipated by a strong 23% compared to last year's level. especially driven by further enhancing our multiple platforms and pushing our co-owned pipeline. The growth in the SG&A also stands at plus 23% and relates to the targeted further organic and inorganic growth like the added new business setup of Evotech GT, the integration of the acquired Biopark BBS by Sanofi, and ramping up our J-Pod 1 in the US, and so on. The other operating income turns out to be slightly above last year's level and contains two main components, basically as in all the last quarters, R&D tax credits and the Sanofi recharges for ID Lyon. All in all, this development results in an increase of our other operating results. With a total of 21.1 million, our adjusted EBITDA lands well within our expectations. And I will give you a more in-depth overview on the EBITDA development on page 16. The net income amounted to 52.7 million and benefits substantially from a one-off effect in the non-operating income resulting from a fair value adjustment of our Accenture Evo Equity engagement. Accenture successfully closed the financing round in March, which also changed the value of our shares, resulting in a significant upgrade of the total valuation of our interest in our books. Moving to page 13. This slide depicts our strong base business development that leads to an overall sales growth of plus 11% versus prior year. and this despite negative counter effects such as the termination of the previous mentioned Sanofi Toulouse payments, a slightly lower milestone upfront and license level and adverse FX effects. Therefore, it is in particular worth looking at the strong growth of our base revenues, which adjusted for portfolio and FX effects even grew by 28%, confirming the solid expansion of our base business. Margin-wise, We arrived within expectations. The decrease versus last year is explained by the same effect as just described for the revenues. Adjusted for the Sanofi effect, actual margin would be virtually on the same level as in the prior year. Looking at the two segments on page 14, both continue to grow and perform well as planned and as anticipated. Year to date, Execute revenues, including intersegment revenues, amounted to 137 million, coming from 118 in Q1 2020. This is driven by two factors, an increasing demand for integrated offering and a strong base business. The execute gross margin for Q1 2020 was at 21.4%, and thus below last year's level of 29.3%, which benefits from the last which benefited from the last Sanofi to lose payments and the Bayer milestone recognized under execute at that point in time. The adjusted EBITDA came in at 28.3 million significantly below last year's level for the same reasons as just described for the gross margin line plus recognizing higher SG&E costs obviously. Innovate Q1 revenues amounted to 28.2 million, which is an excellent 21% above last year due to higher demand for precision medicine reflected by expanded existing as well as new partnerships. Innovate's total R&D amounted to 18 million euros, which is 12% above last year, once again confirming our continued investment into innovation projects and sustainability. The Innovate adjusted EBITDA was negative but within expected ranges and amounted to minus 7.2 million versus last year's minus 5.4 million. Main reasons were the anticipated increase in R&D and SG&A investments. Looking at the year-on-year revenue development on page 15, the increase is completely driven by our very strong plus 26% organic growth of the base business reflected in a 28 million euros step up versus last year. This is another proof of our continuously high revenue quality coming from our sustainable repeat business and together with our long-term partners. The portfolio development is solely driven by negative effects from the end of the Sanofi Toulouse payments after March 2020. Mostly due to the weakening US dollar against the euro in Q1 2021, revenues were also negatively affected by a currency effect of minus 6 million euros, meaning that the overall sales development at constant 2020 FX rates would have been even better, namely ending approximately at 139 million euros. Moving on to page 16. This EBITDA bridge once again visualizes that its development was negatively impacted by the anticipated portfolio effect. Also, and same as with the revenues, a negative FX effect coming from a weaker US dollar in Q1 2020 compared to Q1 2020. Sorry, coming from 2021 compared to Q1 2020. And netting out these two factors, Evotec shows once again an organic increase compared to 2020. despite ongoing corona challenges and a slightly lower contribution from milestones. In the end, the achieved 21.1 million lies within our estimate as expected. Page 17. This slide summarizes Evotec's very solid and sustainable non-P&L related financial KPIs in an unsteady market environment. Higher CapEx is one main reason for the balance sheet going up 8%. and another reason for the step-up results from the aforementioned valuation increase of our Excientia holding. In addition to the balance sheet increase, the equity ratio steps up to slightly more than 50% and the net debt position including IFRS 16 shows an excellent ratio below a factor of 1. These factors together indicate sufficient headroom and flexibility to further invest into organic and strategic growth also with additional debt capital in case required or needed. Total liquidity decreased to 460.6 million at the end of Q1, mainly driven by expected capex investments to support and secure growth projects such as the J-port 1, as well as general expansion of our capacities across most sites and countries. Further engagements into new and existing equity holdings also require additional liquidity. Overall, these numbers reflect a stable and very solid position which we feel very comfortable with to meet and fulfill our ambitions and our ambitious goals and targets for 2021. And with this, I complete the financial overview and hand back over to Werner who will guide you to other operational insight. Thank you all.