Qiagen N.V.

Please stand by, we're about to begin. Ladies and gentlemen, thank you for standing by. I am Jessica, your PGI call operator. Welcome and thank you for joining QIAGEN's Q4 2021 earnings conference call and webcast. At this time, all participants are in a listen-only mode. Please be advised that this call is being recorded at QIAGEN's request and will be made available on their internet site. The prepared remarks will be followed by a question and answer session. If you would like to ask a question, you may press star Followed by one on your touchtone telephone. Please press the star key followed by zero for operator assistance. At this time, I would like to introduce your host, Mr. John Gilardi, Vice President, Head of Corporate Communications and Investor Relations at QIAGEN. Please go ahead.

Thank you very much, operator, and welcome all of you to our call. The speakers today are Thierry Bernard, our Chief Executive Officer, and Roland Sackers, our Chief Financial Officer. Also joining us today is Phoebe Lowe from the Investor Relations team. Please note that this call is being webcast live and will be archived on the investor section of our website at www.kaizen.com. Today we will first have some remarks from Thierry and Roland and then move into the Q&A session. A presentation with the details on our performance is available in the IR section of our website along with the Q4 release. We will not be showing the slides during the call. Before we begin, let me cover the traditional safe harbor statement. This conference call and discussion of responses to your questions reflect the views of management as of today, February 9, 2022. We will be making statements and providing responses to your questions that state our intentions, beliefs, expectations, or predictions of the future. These constitute forward-looking statements for the purpose of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause actual results to differ materially from those projected. Kaijin disclaims any intention or obligations to revise any forward-looking statements. For more information, please refer to our filings with the U.S. Securities and Exchange Commission, which are also available on our website. We will also be making reference to certain financial measures not prepared in accordance with generally accepted accounting principles or GAAP. All references to EPS refer to diluted EPS. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures is available in our press release, as well as the presentation. And again, both of these are on the website. I would like to now turn over the call to Thierry.

Thank you, John, and good morning, good afternoon, everybody. Welcome to our conference call today, and thank you everyone for joining. It's always a pleasure to have those regular exchanges and meetings. Our very solid results in the fourth quarter of 2021 capped a tremendous year for QIAGEN. The highlight was clearly the 22% growth at constant exchange rates or CER in our non-COVID product portfolio. And this really underpins our confidence in double digit growth for 2022 in these areas of our portfolio. We also achieved a very important milestone with over $2 billion of sales for the year. I would like to take opportunity of this call to thank our for their tireless execution to continue showing, as I've been saying very often, that QIAGEN is COVID-relevant but not COVID-dependent. So what are our key messages for today? First, we exceeded the outlook set for net sales growth and adjusted EPS, both for the fourth quarter and for the full year. Net sales for the fourth quarter of 2021 grew 4% CER to $582 million over the same period in 2020. This was well above the outlook for a decline of 9% CER. Our non-COVID product sales advanced 10% CER, which was ahead of our expectations. COVID-19 product sales were also better than expected, due to the surge in testing related to the Omicron variant. These COVID-19 cells, however, were down 7% CER from the fourth quarter of 2020. For the full year, we also exceeded our outlook with net sales rising 19% CER to $2.25 billion against the outlook for at least 15% CER growth. Our non-COVID business again delivered outstanding results ahead of our goal for 20% CER growth, and those products represented about 70% of our total sales. The strong business expansion led to earnings growing at a faster pace. Adjusted earnings per share for the fourth quarter rose 10% to 75 cents CER, and this was again above the outlook for at least 60 cents CER. For the full year 2021, adjusted EPS grew 22% over 2020 to $2.63 CER and this was well above the outlook for at least $2.48 per share at CER. Another very key highlight was that the strong business performance led to a record year of cash flow. Operating cash flow for 2021 rose 40% to $639 million, while free cash flow increased 38% to $449 million over 2020. Those results highlight once again our ability to generate strong cash flow from the business, while investing to support our growth ambitions as part of a very disciplined capital allocation strategy. This leads to our third message. QIAGEN enters 2022 as a stronger, more focused and balanced company. The last two years have been a period of implementing our strategy as a new management team. That strategy is focused on helping customers around the world gain access to valuable molecular insights from molecular research to clinical healthcare. We are targeting segments in the market with promising growth opportunities while making sure we execute quarter after quarter. At the core of this new strategy is a focus on our five pillars of growth. Those are opportunities to maintain and create top-three leadership positions in highly attractive markets. The five pillars built on our absolute leadership in sample technologies, the first step in any laboratory process. Against this backdrop, our focus translates into two key words, recurrence and balance. What do I mean by recurrence? Recurrence means our razor blade business model building up the revenues coming from our highly recurring business involving consumable and associated services. This reached 88% of sales in 2021. This also means building revenue streams from the significant increase of our install base of instruments. We saw indeed a dramatic acceleration in the install base for COVID-19 over the last two years. As we move into 2022, we want to focus on transforming this install base into new sources of growth. And for this, we are obviously developing new tests and applications across our portfolio. We made significant progress in 2021 on this front, especially with QIA-STAT diagnostic for syndromic testing and the QIA-QUITY digital PCR system. This focus is reflected in the fact that more than 65% of our R&D investments are dedicated to our five pillars of growth. We also continue to step up our manufacturing capacity for consumables that are essential for future growth of our systems. which also include Kaya Symphony for automated sample prep and Pneumodix for integrated PCR clinical healthcare testing. The second keyword is balance. It means balance in serving customers in both the life sciences and molecular diagnostics. As a reminder, and the point that I believe is often overlooked, about half of our sales involve life science customers. These are attractive end markets given the very robust funding environment and our differentiated offering, as well as long-tail customers. As a second reminder, balance also across our geographic regions. About half of our sales in the Americas, about a third in Europe, and the remaining 20% in the Asia-Pacific region. is also ensuring we operate sustainably and responsibly with commitments towards important ESG goals. For example, reducing our carbon footprint to reach net zero carbon emissions by 2050. We have strengthened our dedication by setting targets in areas such as improving access to healthcare, increasing diversity and inclusion, maintaining responsible governance, just to name a few. Our focus in 2022 is clearly on continuing those important ESG investments. This is how we become a stronger Kyogen in 2022 and in the coming years continuing our clear focus on execution. As a last message, our outlook for 2022 calls for a strong growth in sales of our non-COVID portfolio. For the full year, we expect sales of at least $2.07 billion and led by double-digit CER growth in our non-COVID portfolio. We also expect at least $2.05 CER for adjusted EPS. As we have done in 2021, we take a conservative view on COVID-19 testing demand trends. Given the volatile trends expected for 2022, we anticipate a significant decline in those sales compared to 2021. Our focus in 2022, as said before, is clearly on the non-COVID portfolio to deliver solid mid-term growth trends, while again remaining ready, as ever, to support the global response to the pandemic, however it may develop. We will provide more details on the outlook later on this call, But now I would like to hand over to Roland for a financial update.