Gerresheimer : Financial Foundation for our Growth Strategy (Dr. Bernd Metzner, CFO)

Financial Foundation for our Growth Strategy

Dr. Bernd Metzner, CFO

December 8, 2020

Agenda

• Presentation of new Guidance
• Efficient Capital Allocation at Gerresheimer
• Evolution of Reporting
• Areas of Further EPS Improvement

12/8/2020	Capital Market Day

Profitable Growth Accelerating
3
Guidance for FY 2021 and Beyond

For Core

Business1

(FXN)

		FY 2021		Mid-term
Accelerate		Mid-single		High-single
Revenue Growth		digit growth		digit growth

Further expand		~ 22 to 23%		~ 23%
adj. EBITDA Margin

Drive adj. EPS growth		≥ 10% p.a.
and shareholder value

1. The core business consists of the P&D and the PPG divisions; for adj. EBITDA and adj. EPS purposes also including head office/consolidation.

12/8/2020

Capital Market Day

New Guidance Reflects Transformation Process
4
Deep-dive Into Guidance

Current Guidance					At Group
		FY 2020		Mid-term		level
						(FXN)
Revenue		Mid-single		Mid-single
Growth (in %)		digit growth		digit growth
Adjusted		~21%1		~ 23%
EBITDA
Capex		~ 12%		8 to 10%
(% of revenues)

EPS Key Performance Indicator for "New"

Gerresheimer:

• Focus on shareholder value and return
• Agility to invest into growth and business opportunities
• Evolution to innovation leader and solution provider with increasing non-capitalized R&D

Adj. EPS as Dividend Base

1. Including a positive effect of EUR 9m to EUR 11m from the transition to IFRS 16.

12/8/2020

Capital Market Day

Focus on Core Business

Speeding up Revenue Growth

New Guidance				For Core
		FY 2021		Mid-term	Business
					(FXN)
Revenue		Mid-single		High-single
Growth (in %)		digit growth		digit growth
Adjusted		~22 to 23%		~ 23%
EBITDA

Adj. EPS		≥ 10% p.a.
growth

Advanced Technologies as Potential Game Changer
5
for Gerresheimer
Cash Flow Profile Advanced Technologies

Expected Cash Flow Profile

GAT

Investment period

Today		2022-2024		2025 &
					beyond
− Evolution from a	−	Market launch	−	Ramping up
contract developer		new pump		revenue
to a revenue-		technology		sharing model
sharing partner of	−	Significant revenue		and
PharmaCo	−
	contribution	Smart devices
		starting in 2022		platform

• Gerresheimer Advanced Technologies (GAT) is our innovation hub
• • Bringing our pump technology to the market
  • Finding further dedicated and therapy optimized solutions
  • Internal value of GAT is around EUR 300 m
• GAT is our nucleus for smart devices
• Due to a different risk profile, GAT is not included in our guidance
• Advanced Technologies as a call option

12/8/2020

Capital Market Day

Agenda

• Presentation of new Guidance
• Efficient Capital Allocation at Gerresheimer
• Evolution of Reporting
• Areas of Further EPS Improvement

12/8/2020	Capital Market Day

Rigorous Capital Allocation, 15% ROCE Target
7
Investment Guidelines and Principles

ROCE1 before tax: 15%

ROCE1

after tax:

~11%

~

• Holistic capital allocation approach across divisions and geographies
• Mid-termROCE before tax target 15%
• KPIs for Capex decisions: IRR, payback period and NPV
• With IRR after tax ≥ 15%, all foreseen growth capex projects are accretive to our ROCE

Avg.IRR after tax

≥11%

Capex2

1. Gx ROCE

• Tight monitoring of milestones and project budgets

2. Includes Replacement/Maintenance, Capex Rationalization Capex and Growth Capex

12/8/2020

Capital Market Day

We are Seizing Unique Business Opportunities
8
Investing Into Value-enhancing Future Growth

Investment Scenario during 2021 and 2022

• In order to benefit from foreseeable market dynamics, we are investing ahead of the curve
• We are seizing attractive business opportunities to accelerate our profitable growth performance

Base Capex	4%
Growth Capex	5%

Unique

Business ~3% Opportunities

Total

Cash Capex1

~12%

Growth Accelerator Projects

Unique Business

Opportunities:

Capacity Extension for Injectables2

Capex: ~70 m

IRR: ~25%

Contract Manufacturing:

Auto Injector Contract

Capex: ~30 m

IRR: >25%

1. Capex spend in percentage of sales in 2021 and 2022 respectively
2. Total Capex spend until 2026 EUR ~140 m

12/8/2020

Capital Market Day

Contract Manufacturing: Limited Downside Risk
9
Capital Risk Exposure in Contract Manufacturing

Tangible

Asset Base

Core Business

2020

EUR ~720 m

Contract Manufacturing ~27%

• Contract Manufacturing investments are projects with very limited downside risk and only upside return:
• • Long-termcustomer retention of at least 4 to 5 years
  • Customer is compensating for assembly machines and tools
  • In case of termination of contract: Customer indemnifies for the incurred investment
• Practically no risk for capital employed in case of contract manufacturing

12/8/2020

Capital Market Day

Value Creation Through Accretive Growth Projects
10
ROCE, WACC and Growth in Core Business

• Various growth opportunities despite capital discipline (15% pre-tax ROCE; ~11% post-tax ROCE)
• Economic value creation through (a) higher ROCE-WACC spread and (b) more accretive growth opportunities

Return on Capital

ROCE after tax1

+ 3 ppt

	~11%
~8%
2020	Mid-term

• High capital discipline
• 15% pre-tax target
• New projects highly accretive

Cost of Capital

WACC after tax

~5%2
2020	Mid-term

• High revenue predictability
• Lower earning volatility
• Contract manufacturing part

Growth Perspectives

	High-single
	digit
Mid-single	growth
digit
growth
2020	Mid-term

• Clear long-term growth opportunities
• Increase of higher-value solutions

1. Mid-termtarget ROCE of 15% before tax; mid-term tax rate of 25%; average capital employed defined as total assets less non-interest bearing liabilities, cash and cash equivalents; EUR ~ 1.8 bn in 2020
2. Post tax WACC of ~5% is average of theoretical WACC calculation of 3.6% (based on Axioma beta) and broker median WACC of 6.3%

12/8/2020

Capital Market Day

Agenda

• Presentation of new Guidance
• Efficient Capital Allocation at Gerresheimer
• Evolution of Reporting
• Areas of Further EPS Improvement

12/8/2020	Capital Market Day

Different Perspective on Gerresheimer
12
Illustrating our Growth Story in the Financial Presentation

• Gerresheimer is issuing its quarterly financial statements including a segmentation for the KPIs Revenue Growth and Adj. EBITDA into
• • P&D
  • PPG
  • GAT
  • Central/Other
• To identify the value drivers, we will provide insight on the growth dynamic of
• • Product segments
  • Customer application segments

12/8/2020

Capital Market Day

Core Business Grows High-single Digit	13

Core Business: Revenue by Segment

Micropumps not included

7%

13%

Core business growing at

6%

high-single digit rate	14%
All segments contributing to
the growth trajectory

2020	2025

80%

81%

Pharma Cosmetic Other

12/8/2020

Capital Market Day

In Pharma Overproportionate Growth with High-
14
value Solutions
Core Business: Pharma Revenue by Segment
Micropumps not included

15%

31%

2020

54%

Pharma business growing
at high-single digit rate,		24%
with high-value solutions	29%

by far out-performing

2025

47%

High-value Solutions 1

Standard Packaging

Contract-Manufactured Devices

1. High-value Solutions comprises innovative products (e.g. ELITE glass), solutions for biologic drugs and products with a high production complexity (e.g. RTF solutions)

12/8/2020

Capital Market Day

Outstanding Growth with Biologics Customers	15

Core Business: Pharma Proprietary Revenue by Customer Application

Micropumps not included

13%

2020

Pharma business growing

at high-single digit rate,17% with Biologic Solutions by

far out-performing

2025

87%	83%

Biologics Non-Biologics

12/8/2020

Capital Market Day

Share Shifting to High-value Cosmetic Packaging
16
Core Business: Cosmetics Revenue by Segment

51%	44%
49%	56%
2020	2021

Standard Cosmetic Packaging

High-value Cosmetic Packaging 1

• Focus on growth in high-value cosmetic packaging i.e., decorated glass packaging with high PCR glass share, the "Selective" segment and cosmetic pipettes
• Share-shiftingfrom standard cosmetic packaging towards high-value cosmetic packaging solutions
• In a growth trend for cosmetic packaging overall, further increase in share of high- value cosmetics projected

1. High-value Cosmetic Packaging comprises all decorated cosmetic packaging, PCR glass ranges, the "Selective" segment and cosmetic pipettes

12/8/2020

Capital Market Day

Agenda

• Presentation of new Guidance
• Efficient Capital Allocation at Gerresheimer
• Evolution of Reporting
• Areas of Further EPS Improvement

12/8/2020	Capital Market Day

Profitable Growth Accelerating
18
Guidance for FY 2021 and Beyond

For Core

Business1

(FXN)

		FY 2021		Mid-term
Accelerate		Mid-single		High-single
Revenue Growth		digit growth		digit growth

Further expand		~ 22 to 23%		~ 23%
adj. EBITDA Margin

Drive adj. EPS growth		≥ 10% p.a.
and shareholder value

1. The core business consists of the P&D and the PPG divisions; for adj. EBITDA and adj. EPS purposes also including head office/consolidation.

12/8/2020

Capital Market Day

Longer Useful Life of Assets due to Leaps in
19
Technology and Maintenance Efforts
Useful Life of Assets in Core Business

• During the past years, technology made significant progress allowing for longer useful life of technical equipment and machinery of e.g., latest generation vial lines and modern melting furnaces
• Updated useful lives will be applied starting with fiscal year 2021 with an estimated reduction effect of around 10% on total (normal) depreciation

12/8/2020

Capital Market Day

Gradual Reduction of Tax Rate to 25%
20
Development of Tax Rate in Core Business

	-7 ppt
32%
	25%
2020	Mid-term

• Higher share of group profits will arise from entities with a lower tax rate

12/8/2020

Capital Market Day

Executive Summary	21

• Guidance for 2021 going forward will be based on the Gerresheimer Core Business, highlighting the high-single digit sales growth mid-term and EPS growing at least of 10% pa starting 2021
• Gerresheimer is seizing unique business opportunities including the expansion of capacity for injectables and contract manufacturing projects
• We are thriving for growth with all divisions contributing; high-value solutions in pharma being the outstanding value growth driver

12/8/2020

Capital Market Day