Tecan closes transformative year with substantial growth in sales and net profit
Ad hoc announcement pursuant to Article 53 of the SIX Exchange Regulation Listing Rules
Financial results for the full year 2021 – Highlights
Sales of CHF 946.6 million (2020: CHF 730.9 million)
Growth of 29.5% in Swiss francs or 29.6% in local currencies
Organic growth of 14.0% in Swiss francs or 14.1% in local currencies
Reported operating profit before depreciation and amortization (EBITDA) of CHF 204.6 million (2020: CHF 159.1 million), including transaction and acquisition-related costs
Reported EBITDA margin of 21.6% (2020: 21.8%)
Excluding Paramit, the EBITDA margin increased to 23.1%, in line with communicated outlook for 2021
Adjusted EBITDA of CHF 214.5 million (2020: CHF 156.5 million), excluding transaction and acquisition-related costs and one-time pension plan effects
Adjusted EBITDA margin of 22.7% (2020: 21.4%)
Reported net profit of CHF 121.7 million (2020: CHF 103.7 million), including transaction and acquisition-related costs
Reported earnings per share increased by 14.5% to CHF 9.95 (2020: CHF 8.69)
Increase in the dividend proposed from CHF 2.30 to CHF 2.80 per share
Operating highlights 2021
Acquisition of Paramit Corporation, the largest transaction in the company’s history, expanding Tecan’s commercial reach, its capabilities and its US and Asia presence
Market introductions of new lab automation solutions and reagents in key research and diagnostic applications, again substantially expanded digital offering
Tecan one of the first companies to meet the new requirements of the European Union’s In Vitro Diagnostic Regulation (IVDR); successfully concluded US FDA audit at Paramit
Tecan ranked among Switzerland’s Best Large Workplaces™ by Great Place to Work® Switzerland, employee participation and scores further increased in latest survey
Full-year 2022 sales forecast to increase in the mid-teens percentage range in local currencies
Adjusted EBITDA margin 2022, excluding acquisition and integration-related costs, expected at around 20% of sales
Beyond 2022, average organic growth rate expected in the mid to high single-digit percentage range in local currencies, while continuously improving profitability
Männedorf, Switzerland, March 15, 2022 – The Tecan Group (SIX Swiss Exchange: TECN) once again posted double-digit sales growth and a substantial increase in net profit in the past year.
The acquisition of US-based Paramit Corporation, the largest transaction in the company's history, also made 2021 a transformative year and laid the foundation for future growth.
Tecan CEO Dr. Achim von Leoprechting commented: “I am very pleased to be able to report another highly successful year with double-digit sales growth and a significant increase in net profit. In many ways, it was also a year of transformation for the company. With the acquisition of Paramit Corporation, the largest transaction in the company's history, we added around USD 300 million annualized revenues, additional capabilities and end markets, new sites in the USA and Asia, and more than 1,000 new associates. This business combination provides us with an excellent platform for future growth. I would like to cordially thank our exceptional teams at Tecan for bringing us to this significant point in our history, and to say a warm welcome to our new colleagues at Paramit. We are in a stronger position today than ever before, which gives us confidence that we will continue to be able to outperform the average growth rate of our underlying end markets.
Tecan is very much a purpose-driven company and with our expanded scope after the Paramit acquisition, we have revised our purpose statement. It clearly defines why we all come to work: At Tecan we are driven to improve people’s lives and health by empowering our customers to scale healthcare innovation globally. We also have a broad focus on sustainability. It is a mindset for us and our goal is that we can rightly say that our products add value to society and our business practices do too.”
Financial results full-year and second half of 2021
Full-year order entry increased by 12.9% to CHF 965.4 million (2020: CHF 855.2 million), or by 13.0% in local currencies. Following a surge in orders for product lines supporting the global fight against the coronavirus pandemic in 2020, orders were only down 1.5% in Swiss francs and 1.4% in local currencies year-on-year on an organic basis, i.e. excluding Paramit's order entry in the last five months of the year. The effect of the high COVID-related orders in the prior-year period was particularly visible in the second half of 2021. Here, organic order entry was 18.4% below the prior-year figure in Swiss francs and 18.6% in local currencies. Including Paramit, however, order entry grew by 7.2% in Swiss francs and by 6.9% in local currencies in the second half of the year.
As order entry exceeded realized sales also on an organic basis, the order backlog excluding Paramit increased in the low single-digit percentage range to reach a record high as of December 31, 2021. Including orders from Paramit, order backlog even grew at a substantial double-digit rate.
Sales for fiscal year 2021 climbed by 29.5% to CHF 946.6 million (2020: CHF 730.9 million), corresponding to a growth of 29.6% in local currencies. On an organic basis, sales grew by 14.0% to CHF 833.3 million, or by 14.1% in local currencies. Organic sales growth was also driven by a rebound and some pent-up demand for products for non-COVID research and clinical applications. COVID-19-related product lines contributed mainly to sales in the first half of the year, with no meaningful contribution from COVID-related systems and instrument components in the second half of the year. Demand for pipette tips continued at elevated levels throughout the year based on a larger installed base of instruments with broad test menus, including usage for ongoing COVID-19 testing. With a first-time revenue contribution of CHF 113.3 million from Paramit (CHF 105.6 million, excluding a one-off restatement in revenue recognition), sales in the second half rose by 17.0% in local currencies and by 16.6% in Swiss francs. As expected, organic sales in the second half of the year declined by 9.9% in Swiss francs and 10.2% in local currencies against the strong base in the prior-year period.
Reported operating profit before depreciation and amortization (earnings before interest, taxes, depreciation and amortization; EBITDA) rose by 28.6% to CHF 204.6 million in the fiscal year 2021 (2020: CHF 159.1 million). Reported EBITDA includes all transaction and acquisition-related costs in connection with the Paramit acquisition (CHF 7.3 million). The reported EBITDA margin accordingly reached 21.6% of sales (2020: 21.8%). Adjusted EBITDA increased by 37.0% to CHF 214.5 million (2020: CHF 156.5 million) and excludes all transaction and acquisition-related costs and one-time pension plan effects. The adjusted EBITDA margin increased by 130 basis points to 22.7% of sales (2020: 21.4%). This increase was mainly driven by benefits of scale due to the significantly increased volumes and total operating costs that grew at a lower rate than sales, a favorable product mix of instruments as well as a higher contribution from consumables and spare parts.
Excluding Paramit, i.e. on a comparable basis with the updated outlook of August 18, 2021, the EBITDA margin increased to 23.1% (also excludes the Paramit revenue contribution). Tecan thus met its communicated outlook of expanding the EBITDA margin to “at least 23% of sales” on a like-for-like basis.
Reported net profit for the year 2021 rose by 17.3% to CHF 121.7 million (2020: CHF 103.7 million). This figure includes all transaction and acquisition-related costs in connection with the Paramit acquisition (CHF 7.3 million) as well as the accumulated amortization of acquired intangible assets (CHF 24.6 million). Reported net profit increased less than operating profit (earnings before interest and taxes; EBIT) as a lower financial result was recorded due to currency hedging losses that were partly related to the Paramit acquisition. Reported basic earnings per share increased by 14.5% to CHF 9.95 (2020: CHF 8.69). Adjusted earnings per share1 reached CHF 12.89 and excludes transaction and acquisition-related costs, one-time pension plan effects as well as the accumulated amortization of acquired intangible assets.
Including effects from the Paramit acquisition, cash flow from operating activities reached CHF 169.9 million (2020: CHF 208.3 million), corresponding to 17.9% of sales (2020: 28.5%).
Information by business segment
Life Sciences Business (end-customer business)
Sales in the Life Sciences Business increased by 18.7% to CHF 485.1 million (2020: CHF 408.8 million) and were 19.0% above the prior-year period in local currencies. In the first half of the year, the Life Sciences Business continued to see a strong revenue contribution from products supporting the COVID-19 response, mainly liquid handling and automation workstations. Demand for the associated disposable pipette tips continued at an elevated level throughout the year. The coronavirus pandemic has structurally reshaped many laboratory processes, leading to higher overall demand for automation in other application areas as well. As a result, segment sales also benefited significantly from a recovery in other areas, including liquid handling and automation workstations for various life science research applications, detection instruments and research reagents for next-generation sequencing (NGS). This trend was most evident in the second half of the year, as sales in other areas nearly offset the significant COVID-related sales in the second half of 2020. Thanks to this strong underlying performance, sales in the second half of the year decreased by only 2.0% in Swiss francs and 2.2% in local currencies.
Order entry in the Life Sciences Business was slightly below the prior-year period, but still exceeded reported segment sales in the fiscal year 2021.
Reported operating profit in this segment (earnings before interest and taxes; EBIT) rose by 32.7% to CHF 103.7 million (2020: CHF 78.2 million). The operating profit margin increased to 19.9% of sales (2020: 17.4%). This positive performance is primarily a result of sales growth, a favorable product mix and the operating costs that grew at a lower rate than sales.
Partnering Business (OEM business)
The Partnering Business generated sales of CHF 461.6 million during the year under review (2020: CHF 322.1 million), which corresponds to an increase of 43.3% in Swiss francs and 43.1% in local currencies. On an organic basis, i.e. excluding Paramit's sales in the last five months of the year, sales rose by 8.1% in Swiss francs and 8.0% in local currencies. Similar patterns to the Life Sciences Business were observed in the Partnering Business, with automation platforms and OEM components supporting COVID-19 testing contributing strongly to sales in the first half of the year, and disposable pipette tips throughout the year. In the course of the year, the demand for automation systems in other areas of in-vitro diagnostics recovered markedly and helped to offset the strong sales contribution from COVID-19-related systems in the prior-year period. As expected, the base effect for the Partnering Business was more pronounced compared to the Life Sciences Business in the second half of the year and organic sales decreased by 20.3% in Swiss francs and 20.6% in local currencies. Including the first-time sales contribution from Paramit, total segment sales increased by 42.1% in Swiss francs and 41.6% in local currencies in the second half of the year.
Operating profit in this segment (earnings before interest and taxes; EBIT) remained unchanged at CHF 59.2 million (2020: CHF 59.1 million), while the operating profit margin reached 12.8% of sales (2020: 18.3%). The integration costs and amortization of acquired intangible assets recognized for the Group in connection with the acquisition of Paramit were recognized in the Partnering Business segment and had a lasting effect on the reported operating result for the segment. Excluding these acquisition-related effects, the underlying increase in profitability was due to economies of scale resulting from higher volumes and a favorable product mix.
In Europe, Tecan’s full-year sales increased by 27.1% in Swiss francs and by 25.9% in local currencies. Organic sales grew by 16.6% in Swiss francs and by 15.5% in local currencies. The organic sales performance was driven by the Life Sciences Business, which recorded growth of 26.9% in local currencies, while sales in the Partnering Business grew by 1.7% in local currencies.
In the second half of the year, sales in Europe increased by 17.5% in Swiss francs and by 17.2% in local currencies. Excluding Paramit, sales declined by 2.0% in Swiss francs and 2.1% in local currencies in the second half year. Despite a strong base in the prior-year period, the Life Sciences Business achieved sales growth of 3.8% in local currencies in the last six months of the year, while organic sales in Partnering Business declined by 10.7%.
In North America, sales grew by 35.9% in Swiss francs and by 38.5% in local currencies in 2021. On an organic basis, full-year sales increased by 11.1% in Swiss francs and by 13.2% in local currencies. Similar to Europe, the organic sales development was driven by strong growth of 22.4% in local currencies in the Life Sciences Business, while the Partnering Business grew by 2.4%. In both business segments, sales development in the second half of the year was significantly impacted by a pandemic-related surge in demand in the prior-year period. Due to the high basis of comparison, sales in the Life Science business declined by 3.6% in local currencies, while organic sales of the Partnering Business segment fell by 39.3%. Including Paramit, sales in the second half grew by 19.6% in Swiss francs and 19.8% in local currencies.
In Asia, Tecan recorded an increase in sales of 23.0% in Swiss francs and 20.6% in local currencies. On an organic basis, sales grew by 19.1% in Swiss francs and by 16.8% in local currencies. Sales development in Japan was particularly strong, while organic sales in China were lower than in the prior-year period due to the high basis of comparison. This was also reflected in the fact that the Life Sciences Business only grew at a rate of 1.1% in local currencies, while the Partnering Business reported strong organic sales growth of 39.5%.
In the second half of the year, total sales in Asia increased by 14.1% in Swiss francs and 12.2% in local currencies, while organic sales grew by 7.0% in Swiss francs and 5.2% in local currencies. Organic sales development in the second half was driven by the Partnering Business with growth of 20.9% in local currencies, while sales in the Life Sciences Business declined by 4.6%.
Operating highlights 2021
On June 23, Tecan announced that it had entered into a definitive agreement to acquire US-based Paramit Corporation and its affiliates for a total purchase consideration of USD 1.0 billion (CHF 920 million), the largest transaction in the company’s history. Paramit, headquartered in Morgan Hill (CA), US, is a leading OEM developer and manufacturer of medical devices and life sciences instruments. The acquisition further extends Tecan’s position in solutions for life sciences and in-vitro diagnostics (IVD). It also adds a new business vertical in the attractive and fast-growing market for medical devices. The acquisition brings significant engineering as well as cost-competitive manufacturing capabilities, both in North America and in the APAC region. The acquisition of Paramit was successfully completed on August 2, 2021.
The year 2021 saw market introductions of new lab automation solutions and reagents in key research and diagnostic applications. To further drive its application-focused strategy, Tecan for example continued to launch new variants of the leading Fluent Automation Workstation, including a dedicated platform for whole blood pipetting in clinical environments and a solution for nucleic acid purification (NAP) that completely avoids sample loss when working with rare and precious samples. Tecan also introduced new important reagent and digital offerings. New reagent kits for example enable end-to-end processing of human samples to allow complete viral RNA-Seq library preparation in a single day. New offerings in Tecan’s growing digital ecosystem include the development of a fully integrated, sample-to-result solution for PCR workflows and the FluentControl Scheduler, a new software that offers a number of features designed to simplify day-to-day laboratory automation for significantly increased throughput and workflow efficiency.
Tecan continued to invest substantially in research and development to position the business for sustained accelerated growth. By applying new digital tools such as advanced 3D simulation, Tecan was able to keep development projects on track, despite challenging global work conditions due to the pandemic. With several projects nearing market launch, Tecan anticipates important product introductions, including the imminent launches of major new advanced genomics platforms with significant revenue potential in both business segments.
At the beginning of 2021, Tecan became one of the first companies to meet the requirements of the European Union’s In Vitro Diagnostic Regulation (IVDR) 2017/746 (Annex IX, Chapter I and III), successfully completing certification of its IBL International DHEA Saliva ELISA diagnostic assay kit through BSI Notified Body 2797. The valuable insights gained from this process will now be applied to the registration of Tecan’s complete portfolio of specialty IVD products – as well as to help its OEM partners ensure they are ‘IVDR ready’. The new IVDR represents a major regulatory overhaul, requiring reclassification and certification of all EU-registered IVD assays and devices.
In the second half of 2021, Tecan’s newly acquired Paramit Corporation received an US Food and Drug Administration (FDA) pre-approval inspection for manufacturing activities for a Class 3 medical device. This was the first time Paramit had been audited by the FDA and the audit was successfully concluded with zero formal observations.
After the acquisition of Paramit, Tecan revised its purpose statement to:
“At Tecan we are driven to improve people’s lives and health by empowering our customers to scale healthcare innovation globally.” Tecan firmly believes that a trust-based, purpose-driven, diverse and inclusive workplace culture makes a crucial difference in helping the company become an even more successful business in the long term. In order to continue to improve in a targeted manner, for the first time in 2020 Tecan conducted the TrustIndex™ employee survey by the international research and consulting company Great Place to Work®. As a result of this survey and an additional in-depth Culture Audit™, Tecan was officially certified as a Great Place to Work in January 2021. Moreover, Tecan was ranked one of Switzerland’s Best Workplaces in the Large Company category (more than 250 employees) in May.
The second survey that Tecan conducted in 2021 saw both higher participation rates and an improved “Trust Index™” score compared to the first survey in 2020, despite challenging global work conditions due to the pandemic.
Proposals to the Annual General Meeting to increase dividend and elect new board member
On the basis of the further increase of net profit in 2021 and an ongoing positive business perspective, the Board of Directors will propose at the Company’s Annual General Meeting on April 12, 2022 an increase in the dividend from CHF 2.30 to CHF 2.80 per share. Half of the dividend, i.e. CHF 1.40, will be paid out from the available capital contribution reserve and is therefore not subject to withholding tax.
As announced on December 16, 2021, Tecan’s Board of Directors will also propose the election of Myra Eskes as a new independent member of the Board at Tecan’s next Annual General Meeting. With more than 20 years’ experience on three continents in the medical devices and life sciences industries, Myra Eskes’ appointment would deepen the Board’s strong technical and cultural expertise.
The Board will also propose the reelection of all current members.
Current developments in the various end markets indicate a healthy market environment. Tecan expects a continued recovery of non-COVID areas and no meaningful contribution from additional COVID-related systems and instrument components as already seen in the second half of 2021. Consumables are expected to stay at elevated levels of demand based on a larger installed base of instruments with broad test menus, including usage for ongoing COVID-19 testing.
Tecan is confident of organically offsetting most of the COVID-related sales from 2021, with a range of outcomes possible. Together with the good underlying growth expected for Paramit, Tecan therefore forecasts sales growth in the mid-teens percentage range in local currencies for the full year 2022.
These projections are based on the assumptions that supply chains remain undisrupted and all production sites stay fully operational.
After two years of substantial EBITDA margin improvements, including exceptional tailwind, some extraordinary effects and volume leverage, many of those effects are expected to normalize again in 2022. For 2022, Tecan expects an adjusted EBITDA margin, excluding acquisition and integration-related costs, at around 20% of sales (includes Paramit at an EBITDA margin of around 18% of sales). The underlying EBITDA margin will thus still be well above the pre-pandemic level (2019: 19.3%).
Integration and acquisition-related costs are expected to be in the mid-teens of millions in Swiss francs in 2022, the accumulated amortization of all acquired intangible assets is expected to amount to CHF 20-25 million.
Beyond 2022, based on a strengthened market position and the combined business with Paramit, Tecan expects to continue to outpace the average growth rate of the underlying end markets with an average organic growth rate in the mid to high single-digit percentage range in local currencies, while continuously improving profitability.
The expectations regarding profitability are based on an average exchange rate forecast for full year 2022 of one euro equaling CHF 1.08 and one US dollar equaling CHF 0.92.
The outlook 2022 does not take account of potential acquisitions during the course of the year.
Financial Report and Webcast
The full 2021 Annual Report can be accessed on the company’s website www.tecan.com under Investor Relations.
Tecan will hold an analyst and media conference to discuss the 2021 annual results today at 09:00 (CET). The presentation will also be relayed by live audio webcast, which interested parties can access at www.tecan.com. A link to the webcast will be provided immediately prior to the event.
The dial-in numbers for the conference call are as follows:
For participants from Europe: +41 (0)58 310 50 00 or +44 (0)207 107 0613 (UK)
For participants from the US: +1 (1) 631 570 5613
Participants should if possible dial in 15 minutes before the start of the event.
Key upcoming dates
The Annual General Meeting of Tecan’s shareholders will take place on April 12, 2022.
The 2022 Interim Report will be published on August 17, 2022.
1 Adjusted earnings per share excludes transaction and acquisition-related costs (+7.3 million), one-time pension plan effects (+2.7 million) as well as the accumulated amortization of acquired intangible assets (+24.6 million) and was calculated with the reported Group tax rate of 11.8%.
Tecan (www.tecan.com) helps to improve people’s lives and health by empowering customers to scale healthcare innovation globally from life science to the clinic. Tecan is a pioneer and global leader in laboratory automation. As an original equipment manufacturer (OEM), Tecan is also a leader in developing and manufacturing OEM instruments, components and medical devices that are then distributed by partner companies. Founded in Switzerland in 1980, the company has more than 3,000 employees, with manufacturing, research and development sites in Europe, North America and Asia, and maintains a sales and service network in over 70 countries. In 2021, Tecan generated sales of CHF 947 million (USD 1,041 million; EUR 877 million). Registered shares of Tecan Group are traded on the SIX Swiss Exchange (TECN; ISIN CH0012100191).
For further information:
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