Evotec Q32024 $EVT (+1,61%)

Financial performance:

• Revenues: Group revenues decreased by 1 % to EUR 575.7 m in the first nine months of 2024 compared to EUR 580.1 m in the previous year. This was mainly due to a 12% decline in the Shared R&D segment, while Just-Evotec Biologics revenues increased by an impressive 74% to EUR 128.7 million.
• Net profit: Net loss increased to EUR 155.2 million, compared to EUR 67.8 million in the previous year, due to increased cost of sales and restructuring costs.
• Adjusted EBITDA: The Group's adjusted EBITDA fell to -6.0 million euros, compared to 50.2 million euros in the previous year. The main reasons for this were a discrepancy between sales and the cost base in the Shared R&D segment as well as costs for the expansion of Just-Evotec Biologics.

Balance sheet overview:

• Total assets: Total assets decreased by EUR 261.7 million to EUR 1,990.8 million as of September 30, 2024.
• Total liabilities: Current liabilities decreased to 333.6 million euros, compared to 464.6 million euros in the previous year. Non-current liabilities decreased slightly to 688.7 million euros, compared to 667.9 million euros.
• Equity: Equity decreased by 151.4 million euros to 968.5 million euros.

Profit and loss account:

• Gross profit: Gross profit fell to 68.8 million euros, with a gross margin of 11.9%, compared to 23.7% in the previous year.
• Operating expenses: Operating expenses increased to 218.1 million euros, compared to 173.3 million euros in the previous year.

Cash flow overview:

• Operating activities: Net cash flow from operating activities was negative at -56.0 million euros, compared to a positive cash flow of 16.5 million euros in the previous year.
• Investment activities: Net cash flow used in investing activities amounted to EUR -88.1 million, mainly due to investments in Just-Evotec Biologics.
• Financing activities: Net cash flow amounted to EUR -132.1 million due to repayments of loans and lease obligations.

Key figures and profitability metrics:

• Equity ratio: Down slightly to 48.6%, compared to 49.7% in the previous year.

Segment information:

• Shared R&D: Revenue decreased by 12 % to EUR 447.1 million, with a gross margin of 14.3 %.
• Just-Evotec Biologics: Revenues increased by 74 % to EUR 128.7 million, with an improved gross margin of 3.8 %.

Competitive position:

• Strategic partnerships: Successful expansions and new collaborations with Sandoz, BMS and a new partnership with Novo Nordisk in cell therapy.

Forecasts and management commentary:

• Outlook: Guidance confirmed despite challenging market conditions.

Risks and opportunities:

• Restructuring costs: These amounted to EUR 62.3 million, due to planned staff reductions and site closures.
• Market conditions: Persistently weak market and overcapacity adversely affect results.

Summary of results:

Positive aspects:

• Strong sales growth of 74 % at Just-Evotec Biologics.
• Successful strategic partnerships with Sandoz, BMS and Novo Nordisk.
• Expansion of operations with the opening of the J.POD facility in Toulouse, France.
• Cost reduction in R&D expenditure by 15 %.
• Improved gross margin of Just-Evotec Biologics to 3.8 %.

Negative aspects:

• Decrease in Group revenues by 1 %.
• Sharp increase in net loss to 155.2 million euros.
• Decrease in gross margin to 11.9%.
• 8% increase in operating expenses, in particular SG&A costs.
• Challenges in cash flow from operating and investing activities.