Eurofins Scientific (ERF) Q2 2024 earnings summary

Executive summary

• Achieved record H1 2024 revenues of €3,419m, up 6.5% year-over-year, surpassing pre-pandemic levels without COVID-19 related revenues, driven by 5.6% organic growth and strong M&A activity despite FX headwinds.

• Adjusted EBITDA rose 18.3% to €757m (22.1% margin), with reported EBITDA margin improving 260bps to 20.9%.

• Net profit increased 46% to €220m; basic EPS rose 57% to €1.01; free cash flow before investment in owned sites surged 171% to €341m.

• All regions improved profitability, supported by pricing, volume growth, and disciplined cost management.

• Continued strong M&A activity, digitalisation, and infrastructure investments, including 15 acquisitions and 18 new start-up labs.

Financial highlights

• Revenues: €3,419m (+6.5% year-over-year); organic growth in Core Business at 5.6%; M&A contributed 1.1%; FX impact -0.5%.

• Adjusted EBITDA: €757m (22.1% margin, +220bps YoY); reported EBITDA: €714m (+21% YoY).

• Net profit: €220m (+46% YoY); adjusted net profit: €320m.

• Free cash flow to the firm: €279m (+276% YoY); free cash flow before investment in owned sites: €341m (+171% YoY); cash conversion at 39% of EBITDA.

• Net debt: €2,863m; leverage ratio: 1.9x, improved from 2.0x at end-2023.

Outlook and guidance

• FY 2024 revenue target: €7.075–7.175bn; adjusted EBITDA: €1.525–1.575bn; FCFF before investment in owned sites: €800–840m.

• FY 2027 objectives: revenues approaching €10bn, adjusted EBITDA margin ~24%, FCFF before investment in owned sites approaching €1.5bn.

• Organic growth target of 6.5% p.a. and €250m annual revenue from acquisitions through 2027.

• SDI at EBITDA level expected to remain elevated in 2024 due to start-up losses, declining towards 0.5% of revenues by 2027.

• Financial leverage targeted at <1.5x by FY 2027.