Grifols : Bioscience Division sales increase 15% to drive Grifols’ revenue growth by 11% to Euros 1,062 million Download (608.6 Kb)

• Grifols' market positioning amid a solid demand for the main plasma proteins leads to an outstanding 15.1% (11.9% cc1) increase in sales of its Bioscience Division to Euros 853.6 million.
• The Diagnostic Division increases revenues by 6.0% (3.3% cc), driven by the evolution of the NAT (Nucleic Acid Testing) technology business in its main markets.
• The adjusted EBITDA2 grows to Euros 322.9 million (a 14.3% increase) and the adjusted EBITDA margin is 30.4%.
• Net profits rise by 7.0% to Euros 134.0 million. The adjusted net profit 3 increases by 17.1% to reach Euros 164.2 million.
• Grifols is the world-leading company with nearly 180 plasma donation centers in the U.S. The group's investment plan aims to expand this network to 225.
• Grifols promotes the vertical integration of its Diagnostic Division with the acquisition of the Hologic's share of the NAT donor screening unit for USD 1,850 million in January 2017.
• Grifols successfully completes the refinancing of its debt by USD 7.300 million, notably improving all existing conditions: the average cost of debt drops by 120 basis points and falls below 3%. The average maturity exceeds 7 years.
• Total net investments in R&D+i increase by 22.9% to Euros 62.6 million, including resources allocated to both internal and external projects.
• Euros 1,200 million 2016-2020 Capital Investment Plan on track with Euros 62.5 million invested during the quarter.

• cc: at constant currency rates.

• Excludes the non-recurring costs related to the acquisition of Hologic's share of the NAT donor-screening unit.

• Excludes non-recurring costs and costs related to recent acquisitions, depreciation of deferred financial expenses associated with the refinancing process and depreciation of intangibles associated with acquisitions.

  Barcelona, May 3, 2017.- Grifols' (MCE: GRF, MCE: GRF.P and NASDAQ: GRFS) turnover increased significantly in the first quarter of 2017, growing by 10.7% (7.7% cc) to reach Euros 1,061.7 million. Revenues from the company's three main divisions all rose.

  The driver of growth was the Bioscience Division, whose sales increased by 15.1% (11.9% cc) to Euros 853.6 million compared to Euros 741.94 million in the same period last year. Global demand for plasma proteins continued its upward trend as anticipated in previous periods with a positive price impact. The company's forecasts of greater market demand led to a noteworthy increase in sales volumes of its main plasma-derived products, including specialty proteins.

  The Diagnostic Division reported revenues of Euros 170.6 million, which represents a 6.0% (3.3% cc) increase. The key catalyst for the rise in income was the division's NAT donor screening line (Procleix® NAT Solutions) in core markets, including the United States, China and Japan. Sales of the Hospital Division have remained stable at Euros 23.0 million, growing by 0.6% (-0.3% cc).

  Since January 2017, the company also has a new Bio Supplies Division that mainly comprises biological products for non-therapeutic use. The division reached sales of Euros 14.4 million in the first quarter of 2017.

  Grifols' adjusted EBITDA1 grew by 14.3% to Euros 322.9 million in the first quarter of the year, representing a margin over sales of 30.4%.

  Taking into account the non-recurring costs associated with the acquisition of Hologic's share of the NAT donor-screening unit, Grifols' EBITDA from January to March 2017 was Euros

  306.0 million, which represents a 28.8% margin over sales.

  In line with company forecasts, the acquisition of Hologic's share of the NAT donor-screening unit at the beginning of 2017 has had a positive impact on the group's margins. The EBITDA margin continues impacted by the cost of plasma related with the opening of new donation centers.

  At present, Grifols is the world leader in plasma donation centers, with a network of nearly 180 centers in the United States. The company considers guaranteeing access to its main raw material (plasma) as a strategic priority to meet the growing demand for plasma proteins. In alignment with this strategy, Grifols has continued its investment plans to open new centers during the first months of the year.

  Total R&D net investments also received a significant boost, increasing 22.9% in relation to the same period last year to Euros 62.6 million. The figure includes both internal and external R&D investments that are managed through Grifols Innovation and New Technology.

  Grifols' financial result was Euros 66.2 million, compared to Euros 68.6 million reported in the same period last year. Thanks to the refinancing process, the group has been able to optimize the financial expenses resultant from the increased levels of debt following its acquisition of Hologic's NAT donor screening unit.

  4 Comparable net revenues considering the reclassification of the biological products for non-therapeutic use sales that since January of 2017 are reported in the Bio Supplies Division.

  The effective tax rate increased to 27.0% due to higher profits in the United States through its Bioscience and Diagnostic Divisions.

  Grifols' net profits increased by 7.0% to reach Euros 134.0 million, which represents 12.6% of the company's net revenue. The adjusted net profit2 was Euros 164.2 million, representing a 17.1% increase compared to Euros 140.2 million reported in 2016.

  At the close of the first quarter of 2017, the company's net financial debt totaled Euros 5,754.6 million, including USD 1,700 million of financing for the acquisition of Hologic's NAT donor screening unit. Net financial debt to EBITDA ratio was 4.45x.

  Grifols' solid operating cash flow generation provides the necessary solvency to pursue its future expansion projects, as well as meet its objective of reducing its financial leverage, which remains a priority.

  As of March 31, 2017, Grifols' cash positions exceeded Euros 737 million. Moreover, the company maintained a strong operating cash flow generation that rose to Euros 145.4 million, compared to Euros 58.3 million during the same quarter in 2016. At the close of the quarter, Grifols had undrawn lines of credit totaling Euros 440 million, taking the company's liquidity position over Euros 1,150 million.

  Main financial data from the first quarter 2017:

  In millions of euros except % and EPS NET REVENUE (NR)	1Q 2017	1Q 2016	% Var
  	1,061.7	958.9	10.7%
  GROSS MARGIN	51.0%	49.4%
  EBITDA % NR	306.0 28.8%	282.5 29.5%	8.3%
  ADJUSTED EBITDA (1) % NR	322.9 30.4%	282.5 29.5%	14.3%
  EBIT % NR	252.7 23.8%	231.5 24.1%	9.2%
  GROUP PROFIT % NR	134.0 12.6%	125.2 13.1%	7.0%
  ADJUSTED(2) GROUP PROFIT % NR	164.2 15.5%	140.2 14.6%	17.1%

  CAPEX	62.5	57.5	8.7%
  R&D NET INVESTMENT	62.6	51.0	22.9%
  EARNINGS PER SHARE (EPS)	0.20	0.18	7.0%

  TOTAL ASSETS	March 2017	December 2016	% Var
  	11,708.4	10,129.8	15.6%
  TOTAL EQUITY	3,816.8	3,728.0	2.4%
  CASH & CASH EQUIVALENTS	737.3	895.0	(17.6%)
  LEVERAGE RATIO	4.45/(4.51cc)(3)	3.55/(3.45cc)(3)

  (1) Excludes non-recurring costs and associated with recent acquisitions

  (2) Excludes non-recurring costs and associated with recent acquisitions, amortization of deferred expenses associated to the refinancing and amortization of intangible assets related to acquisitions

  (3) Constant currency (cc) excludes the impact of exchange rate movements

  DEBT REFINANCING

  Grifols concluded the refinancing process of all of its debt after the first quarter, improving financing conditions and extending maturities. The total refinanced debt amounts to USD 7,300 million (Euros 7,000 million), including USD 1,000 million in bonds. The average cost of debt dropped by 120 basis points and falls below 3%, whereas the average maturity exceeds 7 years.

  Following the refinancing process, Grifols' debt structure now comprises long-term syndicated financing with financial institutions and institutional investors for a total of USD 6,300 million, which is divided into two tranches (Term Loan A and Term Loan B); a multi-currency revolving credit facility; and an unsecured bond issue of Euros 1,000 million.

  The refinancing of Grifols' debt was carried out in two phases. In February, the placement of Term Loan A and Term Loan B was completed, resulting in a significant over-subscription that enabled the company to reduce the differential by 200 basis points.

  Moreover, the unsecured bond issue completed after the close of the first quarter also offered the company very advantageous conditions. The new bonds accrue an annual coupon of 3.20% compared to the 5.25% of the bonds issued in March 2014.

  Grifols' financial structure and new conditions following the refinancing process are as follows:

  STRUCTURE	COST (In millions)	NEW CONDITIONS
  SENIOR SECURED DEBT
  Term Loan A (TLA)	USD 3,000	Interest rate: LIBOR + 175 basis points Maturity date: 2023
  Term Loan B (TLB)	USD 3,000	Interest rate: LIBOR + 225 basis points Maturity date: 2025
  Line of financing (multi-currency revolving credit)	USD 300	Interest rate: LIBOR + 175 basis points Maturity rate: 2023
  TOTAL SENIOR SECURED DEBT	USD 6,300
  Bonds (Senior Unsecured Notes)	EUR 1,000	Coupon: 3.20% Maturity date: 2025
  TOTAL SENIOR UNSECURED DEBT	EUR 1,000

  REVENUE PERFORMANCE OF GRIFOLS' MAIN DIVISIONS
• Bioscience Division: 80.4% of total revenues

The demand for plasma proteins continued to move upward as anticipated in previous periods. The company's planning to meet greater market demand led to a marked 15.1% (11.9% cc) upturn in revenues in the first quarter, to reach Euros 853.6 million. A notable increase in sales of the company's main plasma proteins, coupled with a positive price impact in key markets, were the main drivers of growth.