DGAP-News: Evotec AG / Key word(s): Quarter Results EVOTEC REPORTS FIRST QUARTER 2018 RESULTS AND PROVIDES CORPORATE UPDATE 09.05.2018 / 07:01 The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- - 55% INCREASE IN GROUP REVENUES - STRONG UNDERLYING OPERATIONAL PERFORMANCE WITH NEW BUSINESS MIX AFTER APTUIT ACQUISITION - "3X30" OUTLOOK FOR 2018 CONFIRMED - WEBCAST AND CONFERENCE CALL TODAY AT 02.00 PM CEST Hamburg, Germany, 09 May 2018: Evotec AG (Frankfurt Stock Exchange: EVT, TecDAX, ISIN: DE0005664809) today reported financial results and provided corporate updates for the first quarter of 2018. GOOD FINANCIAL PERFORMANCE WITH NEW BUSINESS MIX - Group revenues: 55% increase to EUR 79.0 m (Q1 2017: EUR 50.9 m); EVT Execute revenues of EUR 78.5 m (Q1 2017: EUR 48.6 m); EVT Innovate revenues of EUR 10.4 m (Q1 2017: EUR 12.5 m) - Adjusted Group EBITDA up 4% to EUR 14.0 m (Q1 2017: EUR 13.4 m); Adjusted EBITDA for EVT Execute of EUR 17.2 m (Q1 2017: EUR 12.4 m); Adjusted EBITDA for EVT Innovate of EUR (3.2) m (Q1 2017: EUR 1.0 m) - Group R&D expenses at EUR 4.6 m (Q1 2017: EUR 4.7 m) - Solid liquidity position of EUR 78.5 m EVT EXECUTE - HIGH QUALITY AND EFFICIENCY IN R&D - Significant progress within ongoing alliances (e.g. start of third clinical Phase I study in endometriosis with Bayer (after period-end)) - Aptuit integration according to plan - Launch of INDiGO solution to accelerate drug candidate delivery; first alliances established (e.g. Petra Pharma, Japanese company Carna Biosciences (after period-end)) - New and extended integrated drug discovery and development agreements - Expansion of CRISPR-based technology offering with licence from ERS Genomics (after period-end) EVT INNOVATE - FOCUS ON ACCELERATING INNOVATION - In Q1 2018, as expected, no noteworthy milestones, but all key projects on track - Continued focus on expansion of iPSC platform and patient-centric approaches - Academic BRIDGE model gaining momentum: First project identified in LAB150 with MaRS Innovation, further three projects identified in LAB282 with Oxford University - Alliance with Sanofi to accelerate infectious disease R&D (close of transaction expected in H1 2018) CORPORATE - Preparation to convert into European Company (SE) FINANCIAL GUIDANCE 2018 CONFIRMED 1. GOOD FINANCIAL PERFORMANCE WITH NEW BUSINESS MIX In the first quarter of 2018, Evotec's Group revenues grew to EUR 79.0 m, an increase of 55% compared to the same period of the previous year (Q1 2017: EUR 50.9 m). This increase resulted primarily from the strong performance in the base business and the Aptuit contribution (EUR 25.3 m). Due to the timing of milestones, revenues from milestones, upfronts and licences in Q1 2018 decreased to EUR 2.7 m (Q1 2017: EUR 6.2 m). Q1 2017 revenues were driven by significant milestone achievements. The gross margin amounted to 23.4% in the first three months of 2018 (Q1 2017: 37.3%). This margin decrease compared to the prior-year period primarily reflects a new business mix following the most recent acquisition of Aptuit, amortisation, adverse FX effects and the timing of milestones. Gross margin excluding amortisation from M&A would be at 27.3%. In the first quarter of 2018, Evotec's R&D expenses amounted to EUR 4.6 m (Q1 2017: EUR 4.7 m) and were focused on first-in-class innovation mainly in CNS, metabolic disease, oncology and academic BRIDGE initiatives. Selling, general and administrative (SG&A) expenses increased as expected by 82% in the first quarter of 2018 to EUR 13.3 m (Q1 2017: EUR 7.3 m) and are on a similar level as in Q4 2017. This increase mainly results from expenses of Aptuit for three months as well as an increase in headcount in response to Company growth. Adjusted Group EBITDA in the first quarter of 2018 increased to EUR 14.0 m (Q1 2017: EUR 13.4 m). Evotec's operating result in the first quarter of 2018 amounted to EUR 6.5 m (Q1 2017: EUR 9.9 m). The Company's net result in Q1 2018 amounted to EUR 3.5 m (Q1 2017: EUR 7.1 m) and decreased compared to the prior year mainly due to increased amortisation resulting from the purchase price allocations of recent acquisitions, adverse foreign currency effects, milestone timing and the higher share of the loss of associates accounted for using the equity method. Liquidity, which includes cash and cash equivalents (EUR 57.3 m) and investments (EUR 21.2 m) amounted to EUR 78.5 m as of 31 March 2018 (31 December 2017: EUR 91.2 m). This decrease reflects the repayment of loans, increased capital expenditure, equity investments and bonus payments. Revenues from the EVT Execute segment were EUR 78.5 m in Q1 2018 and significantly increased compared to the prior-year period (Q1 2017: EUR 48.6 m). This increase is primarily attributable to growth in the base business and a full three months Aptuit contribution. Also included in this amount are EUR 9.9 m of intersegment revenues (Q1 2017: EUR 10.3 m). The gross margin for EVT Execute was 20.8% and was affected, against the prior-year period, by amortisation, the new business mix with a different margin expectation in the Aptuit business, adverse FX effects and the timing of milestones. In Q1 2018, the adjusted EBITDA of the EVT Execute segment was very strong at EUR 17.2 m and significantly improved compared to the prior year (Q1 2017: EUR 12.4 m). Revenues from the EVT Innovate segment amounted to EUR 10.4 m (Q1 2017: EUR 12.5 m) and consist entirely of third-party revenues. EVT Innovate revenues in Q1 2018 include lower milestone revenues than revenues in the prior-year period. EVT Innovate generated a gross margin of 31.1%, which was affected by adverse FX effects and the timing of milestones. R&D expenses for the EVT Innovate segment were EUR 5.6 m in Q1 2018 (Q1 2017: EUR 5.8 m). The EVT Innovate segment reported an adjusted EBITDA of EUR (3.2) m (Q1 2017: EUR 1.0 m). Adjusted EBITDA of EVT Innovate in Q1 2017 was driven by significant milestone achievements of EUR 4.5 m, which were not expected in Q1 2018. All key projects to achieve significant milestones in 2018 are on track. 2. EVT EXECUTE & EVT INNOVATE EVT EXECUTE - HIGH QUALITY AND EFFICIENCY IN R&D The first quarter of 2018 saw a strong operational performance by the EVT Execute segment. The Aptuit integration into the Evotec Group is proceeding according to plan. In March 2018, Evotec launched the INDiGO offering, which was part of the strategic rationale behind the Aptuit acquisition. INDiGO is the market-leading integrated drug development solution that accelerates drug candidate delivery from candidate selection through to IND submission. Shortly afterwards, Evotec entered into new INDiGO alliances, e.g. with Petra Pharma and Carna Biosciences (Japan) (after period-end). Furthermore, Evotec made significant progress within its ongoing alliances. Another promising small molecule was advanced into Phase I for the treatment of endometriosis in Evotec's strategic Bayer endometriosis alliance (after period-end). Since the beginning of this collaboration, six first-in-class/best-in-class non-hormonal pre-clinical candidates have been generated, three of which have now advanced into Phase I clinical trials. In addition and amongst other highlights, Evotec entered into new and extended integrated drug discovery and development agreements in the first quarter of 2018 and extended its CRISPR-based technology offering with a licence from ERS Genomics after period-end. EVT INNOVATE - FOCUS ON ACCELERATING INNOVATION EVT Innovate also had a very good start into 2018. Evotec continues to place a strong focus on its iPSC platform and the development of patient-centric approaches. The academic BRIDGE model is also gaining momentum. A first project was selected in LAB150 with MaRS Innovation, which was only initiated in September 2017, and three additional projects were selected in LAB282 with Oxford University (initiated in November 2016). Furthermore, on 08 March 2018, Evotec announced that Evotec and Sanofi entered into exclusive negotiations to accelerate infectious disease research and development through a new open innovation platform led by Evotec. This transaction is expected to close in the first half of 2018, subject to finalisation of definitive agreements and completion of the appropriate social process. 3. CORPORATE PREPARATION TO CONVERT INTO EUROPEAN COMPANY (SE) At the end of the first quarter 2018, Evotec announced its preparations for legal conversion of the Company into a European Company (Societas Europaea, SE). The proposal, which has already been approved by the Supervisory Board, will be put to a vote at this year's Annual General Meeting on 20 June 2018. The conversion reflects the continuing European and international focus of the Evotec Group, which has grown considerably in recent years with subsidiaries in France, Germany, Italy, Switzerland, the United Kingdom and the USA. 4. FINANCIAL GUIDANCE 2018 CONFIRMED Guidance 2018 Actual 2017 Group revenues More than 30% growth EUR 257.6 m Adjusted Group Improve by approx. 30% compared to EUR 58.0 EBITDA1) 2017 m R&D expenses Approx. EUR 20-30 m EUR 17.6 m 1) EBITDA is defined as earnings before interest, taxes, depreciation, and amortisation of intangibles. Adjusted EBITDA excludes contingent considerations, income from bargain purchase and impairments on goodwill, other intangible and tangible assets as well as the total non-operating result Webcast/Conference Call The Company will hold a conference call to discuss the results as well as to provide an update on its performance. Furthermore, the Management Board will present an outlook for the fiscal year 2018. The conference call will be in English. Conference call details Date: Wednesday, 09 May 2018 Time: 02.00 pm CEST (01.00 pm BST/08.00 am EDT) From Germany: +49 69 22 22 29 043 From France: +33 170 750 705 From Italy: +39 023 601 3806 From UK: +44 20 3009 2452 From USA: +1 855 402 7766 Access Code: 37969784# A simultaneous slide presentation for participants dialling in via phone is available at http://www.audio-webcast.com/, password: evotec0518. Webcast details To join the audio webcast and to access the presentation slides you will find a link on our home page www.evotec.com shortly before the event. A replay of the conference call will be available for 24 hours and can be accessed in Europe by dialling +49 69 22 22 33 985 (Germany) or +44 20 3426 2807 (UK) and in the USA by dialling +1 866 535 8030. The access code is 654573#. The on-demand version of the webcast will be available on our website: https://www.evotec.com/financial-reports. NOTE The 2017 and 2018 results are not fully comparable. The difference stems from the acquisition of Aptuit, effective 11 August 2017. The results from Aptuit are only included from 11 August 2017 onwards. The accounting policies used to prepare the interim information are the same as those used to prepare the audited consolidated financial statements for the year ended 31 December 2017. From 01 January 2018 onwards, Evotec applies IFRS 15 in the financial year 2018. The comparison period in 2017 is also presented according to IFRS 15 in the quarterly statement, affecting data in the consolidated interim statement of financial positions as well as in the consolidated interim income statement. ABOUT EVOTEC AG Evotec is a drug discovery alliance and development partnership company focused on rapidly progressing innovative product approaches with leading pharmaceutical and biotechnology companies, academics, patient advocacy groups and venture capitalists. We operate worldwide providing the highest quality stand-alone and integrated drug discovery solutions, covering all activities from target-to-clinic to meet the industry's need for innovation and efficiency in drug discovery (EVT Execute). The Company has established a unique position by assembling top-class scientific experts and integrating state-of-the-art technologies as well as substantial experience and expertise in key therapeutic areas including neuroscience, diabetes and complications of diabetes, pain and inflammation, oncology and infectious diseases. On this basis, Evotec has built a broad and deep pipeline of more than 80 partnered product opportunities at clinical, pre-clinical and discovery stages (EVT Innovate). Evotec has established multiple long-term discovery alliances with partners including Bayer, CHDI, Sanofi or UCB and development partnerships with Sanofi in the field of diabetes, with Pfizer in the field of tissue fibrosis and with Celgene in the field of neurodegenerative diseases. For additional information please go to www.evotec.com and follow us on Twitter @EvotecAG. FORWARD LOOKING STATEMENTS Information set forth in this press release contains forward-looking statements, which involve a number of risks and uncertainties. The forward-looking statements contained herein represent the judgement of Evotec as of the date of this press release. Such forward-looking statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond our control, and which could cause actual results to differ materially from those contemplated in these forward-looking statements. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statement is based. Key figures first quarter 2018 Key figures of consolidated interim income statement Evotec AG and subsidiaries In TEUR except share data and per share data January to March Chang- e 2018 20171) in % Revenues 78,984 50,911 55 Gross margin in % 23.4 37.3 Research and development expenses (4,616) (4,651) (1) Selling, general and administrative (13,294) (7,314) 82 expenses Other operating income (expenses), net 5,953 2,893 Operating result 6,531 9,922 34 Adjusted Group EBITDA2) 14,015 13,445 4 Net income 3,455 7,096 (51) Weighted average shares outstanding 147,292,602 139,717,125 Net income per share (basic/diluted) 0.02 0.05 1) Prior-year data adjusted according to IFRS 15 2) Before contingent considerations, income from bargain purchase and excluding impairments on goodwill, other intangible and tangible assets as well as the total non-operating result Segment information: First quarter 2018 First quarter of 2018 In TEUR EVT EVT Intersegment Evotec Execute Innovate eliminations Group External revenues 68,565 10,419 - 78,984 Intersegment revenues 9,979 - (9,979) - Gross margin in % 20.8 31.1 23.4 R&D expenses (142) (5,587) 1,113 (4,616) SG&A expenses (11,524) (1,770) - (13,294) Other operating income 5,275 678 - 5,953 (expenses), net Operating result 9,968 (3,437) - 6,531 Adjusted EBITDA1) 17,163 (3,148) 14,015 1) Before contingent considerations, income from bargain purchase and excluding impairments on goodwill, other intangible and tangible assets as well as the total non-operating result First quarter of 20171) In TEUR EVT EVT Intersegment Evotec Execute Innovate eliminations Group External revenues 38,364 12,547 - 50,911 Intersegment revenues 10,270 - (10,270) - Gross margin in % 27.2 56.9 37.3 R&D expenses (222) (5,789) 1,360 (4,651) SG&A expenses (5,816) (1,498) - (7,314) Other operating income 1,987 906 - 2,893 (expenses), net Operating result 9,158 764 - 9,922 Adjusted EBITDA2) 12,397 1,048 13,445 1) Prior-year data adjusted according to IFRS 15 2) Before contingent considerations, income from bargain purchase and excluding impairments on goodwill, other intangible and tangible assets as well as the total non-operating result Key figures of consolidated interim statement of financial position Evotec AG and subsidiaries In TEUR 31 March 31 Dec Change 2018 20171) in % Cash, cash equivalents and investments 78,510 91,156 (14) Working capital 17,664 12,716 39 Current and non-current loan liabilities 182,802 189,928 (4) Total stockholders' equity 339,285 332,674 2 Total assets 665,300 663,819 1) Prior-year data adjusted according to IFRS 15 Contact Evotec AG: Gabriele Hansen, VP Corporate Communications & Investor Relations, Phone: +49.(0)40.56081-255, [email protected] --------------------------------------------------------------------------- 09.05.2018 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de --------------------------------------------------------------------------- Language: English Company: Evotec AG Manfred Eigen Campus / Essener Bogen 7 22419 Hamburg Germany Phone: +49 (0)40 560 81-0 Fax: +49 (0)40 560 81-222 E-mail: [email protected] Internet: www.evotec.com ISIN: DE0005664809 WKN: 566480 Indices: TecDAX Listed: Regulated Market in Berlin, Frankfurt (Prime Standard); Regulated Unofficial Market in Dusseldorf, Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange End of News DGAP News Service --------------------------------------------------------------------------- 684019 09.05.2018