Eurofins Scientific Sa

Ladies and gentlemen, welcome and thank you for joining Eurofins' nine-month 2025 trading. I believe that this call is being recorded and will later be available for replay on the Eurofins Investor Relations website. Throughout today's presentation, all participants will be in a listen-only mode. The presentation will be followed by a question and answer session. If you would like to ask a question, you may press star followed by zero to register for questions. For operator assistance, please press the star key followed by zero. During this call, Eurofins management may make forward-looking statements including, but not limited to, statements with respect to outlook and the related assumptions. Management will also discuss alternative performance measures such as organic growth and EBITDA, which are defined in the footnotes of our press releases. Actual results may differ materially from objectives discussed. Risks and uncertainties that may affect Eurofins' future results include, but are not limited to, those described in the risk factors section of the most recent Eurofins annual and half-year reports. Please also read the disclaimer on page two of this presentation, subject to which this call and Q&A session are made. I would now like to turn the conference over to Dr. Gilles Martin, Eurofins CEO. Please go ahead.

Hello, everybody, and thank you for joining our quarterly call. We have posted a small presentation. For those who are interested, I will refer to some of those slides. I will start on slide three. So I'm happy to report on a good quarter, which is in line with our plans. We've made good progress on all our initiatives. As you know, we are in the middle of our five years plan to build a world-class network of laboratories in our core market. We continue to build laboratories to finalize our hub and spoke network. This is continuing to make good progress. We will be over the next few quarters finalizing a number of labs, for example in CDMO, in our large campus in Toronto in Canada, in Leiden in the Netherlands for our BPT. We're expanding our Lancaster campus. So we see a strong outlook overall for the next few years. Because biopharma, some parts of biopharma have been a bit soft following the COVID peak, but we are bullish about their future expansion. We are getting ready for that. The other big areas where we are investing is our digitalization programs, where we aim at standardizing all the digital solutions for... And we're also making good progress on that. We plan to complete this by 2027, which would make us much more efficient, leaner, faster, and differentiate further the level of service we can offer to our clients compared to what our competition is doing. So this is also making good progress. Of course, when it will be finalized, we will have also a reduction of cost in addition to the benefits we will get operationally from those systems. Throughout the course of this year, things are developing as planned. We have a solid margin progress as planned. And overall, we are looking forward to delivering on our objectives for this year when we report in the beginning of 2026. So overall, things are in line. And we can give a bit more color during questions if you want. The different segments are growing in line with the previous quarters. We have a very significant base effect that is going to flip in Q4 of this year, as we announced, because we had a number of activities that we have in our ancillary biopharma activities, especially the clinical areas or central lab or bioanalysis. where very significant studies ended in Q3 of last year. So we have that in the base until this quarter, and next quarter this should fade away. We also have a similar effect in pricing reduction in the French routine clinical business that will also fade in Q4, so we're looking forward to a strong Q4. The rest of our business is developing well. We continue to acquire businesses. In actuality, we are a bit above our objectives for this year. We will continue over the next few years to add about 250 million revenues each year from acquisition. We continue our startup programs. We have opened a number of startups and the blood collection points, where blood collection points is because we find the cost of that is more attractive than buying existing businesses. We are of course reviewing constantly our portfolio of businesses and may make some decisions on some limited divestments of non-core assets. This is something we are working on and evaluating. On page 7 we have a summary of how we see the outlook. So we simply confirm the objectives we set at the beginning of this year. Of course, we've had a little bit of dilutions on SYNLAB, but there also the restructuring is going as planned. We will remove significant costs in the last quarter of this year and the beginning of next year. We, of course, incur some costs for that, and it creates some dilution, but this dilution will fade in 2026 and 2027, and we believe we will create a lot of value with this acquisition and to the company we already had in Spain in clinical diagnostics. So I'm happy to report that this is developing as planned. We have a small FX effect. Of course, nobody can predict the FX and it could go the other way at some point. Nobody really knows. But since it seems that the US dollar to euro exchange rate is stabilizing somehow at the current level, we gave an indication of what the impact on the full year result of Eurofins would be. And as you can see, it is not much. And the type of margin improvement we can do in our operational business is many times this impact. So we are confident that this will not affect our objectives for 2027 and our objectives for this year. So overall, things are progressing as planned. It's a lot of work. And we are making our business even more competitive, even more effective. And we're very bullish for what we will achieve over the next two years and beyond. As we enter a phase where we are much more cash flow generative, we own our buildings. We will have also less cash to spend for those buildings because we know them. So we are very bullish with the cash we will generate. And we continue to take opportunity of opportunities. Basically, undervaluation, what we believe is undervaluation of our shares to buy back within the range of our leverage commitment, which we intend to keep between 1.5 and 2.5 since we generate a lot of cash and we think we'll generate a lot more cash. We have quite a bit of headroom for that in addition to potential asset divestments if we see opportunities for things that are not necessarily 100% fit for what we do. So this is an overview of the progress of the business and Laura and I will be happy to answer questions if you have some.

Thank you. Ladies and gentlemen, at this time we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by 2. If you are using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by 1 at this time.