Sartorius AG

Thank you very much. Welcome everybody, and good day.

I welcome you to our today's conference call on our Q1 results for Sartorius and the Sartorius Stedim Biotech Group as well. As always, I'm running this call together with our CFO, Rainer Lehmann, who would present on all the details of the numbers for Sartorius.

I will just kick it off by commenting the most important highlights for Q1 of this year. First of all, those divisions have achieved a 60%-plus top line growth, and at the same time a very substantial margin expansion.

We will comment on that in much more detail in a minute.

Thanks, Joachim. Hello everybody, and also welcome from my side to today's call.

As Joachim mentioned already, Q1 has been extraordinary. If you have a look at the numbers, on slide five in the presentation, revenues surged to €791 million, that's an increase in constant currencies of 61.6%.

Thereof, mergers and acquisitions basically contributed 12 percentage points, and the corona net impact around 20 percentage points. When we look at the order intake, that one even increased even more dramatically, by almost 90%, to €1.14 billion.

Here, the corona effect is around 30 percentage points. I will actually dissect that number a little bit later when I talk about the divisional performance.

Of course those strong revenue numbers translated to an underlying EBITDA €263.5 million, which is an increase of 91%, that's in percentage points 6.3% increase -- percentage point increase to 33.3. Clearly, we have to point out as we did throughout the last quarters, especially last three quarters in 2020, that we still see an under-proportionate cost development.

That of course leads to economies of scale specifically on the functional expenses that are not sustainable, we can't point that out enough, because as you can see here, Q1 margin is above what our year-end guidance, is what also Joachim had mentioned at the end of the call. How does it translate to the result to the underlying earnings per share?

For the ordinaries, it's €1.77, increase of 112.5%, and for the it's €1.78, same increase as the other one. So, if we looked how is the development throughout the regions, on the next slide, and if we move from left to right, in the Americas we see a very good performance in constant currencies, an increase of 53.5% to €253 million, which was a very solid performance on the Bioprocessing side.

On the LPS side, this is clearly driven by the acquisition. Remember that we acquired the Octet portfolio from Danaher, in May, so basically the whole Q1 is here, of course in an organic contribution.

In the EMEA region, we see an increase of 63%, from €207 to €334 million, really on the BPS side. We know the tailwinds from the vaccine developers; I'll talk about that a little bit later when we talk about the BPS figures, as well as the fantastic order intake growth.

And also the LPS side improved considerably, and we have to say here, and also from an organic point of view, very nice development in EMEA.

Yes, thank you very much Rainer. So, I would like to finish our presentation on the Sartorius Group's numbers for Q1 by talking a little bit about the outlook for full-year 2021.

On page 11, you see that for Bioprocess Solutions, which is in the middle of this little table, we do expect now 40% of top line growth. Of which, approximately six percentage points should come from acquisitions and 18% approximately from the additional Corona demand for the underlying EBITDA, we expect a margin of 34%.

For LPS, these figures are approx 20% top line and around five percentage points impact from acquisitions and corona demand respectively. Underlying EBITDA margin expectation here is 24% and then for the group this translates or adds up to 35% top line, 5.5% by acquisitions, around 16 percentage points Corona demand and underlying EBITDA margin of around 32%.

In comparison to the guidance that we have given at the beginning of the year, these numbers are substantially higher particularly for Bioprocess Solutions where

Perfect, thank you very much. I hope everyone is doing well.

I have two questions, please. The first is, obviously you guys have kindly given some drivers of the base business.

But even stripping out COVID from BPS and LPS, the underlying business seems in very good shape. So, I guess my question is could you help us have a little bit more of a sense of some of the drivers there?

You mentioned, obviously, some of the order patterns within BPS. Do you have any sense of how material that was?

I know you've obviously talked as well on that division about China accelerating in the past, ex-COVID. I'm just curious, is that still a trend that's going on?

Any color there would be very helpful. And then the second question, for BPS primarily, really, but I suppose it could apply to LPS as well.

It's really about production limits. Obviously, the growth here is absolutely fantastic, but it must be quite a strain on the supply chains, on our manufacturing teams, on everybody involved, including yourselves.

And so I guess what is the capacity over the coming quarters to retain, particularly in BPS, this level of absolute sales going forward, how realistic is that? Thank you.

Yes, thank you very much for these questions. Yes, you're absolutely right.

We are also pleased with the, yes, underlying growth of all business. And with -- even, of course this is on different levels, but this holds true for both divisions actually, but of course it's more apparent for the BPS division.

And here, as always, it's very difficult to give very detailed and differentiated information on that because customers don't provide that much information on the applications, the production lines that they intend to use the product in that they order from us. And of course, always customers don't order on the very last minute.

So, it's anyhow not that easy for us, and customers wouldn't be willing, partially even not be able to give a very precise information on that. So, we see it pretty much a different ordering pattern, I would say, across the board.

We see it pretty much by numerous customers that they order quite a but, and more than usually. So I wouldn't be able to be honest to say, well, it seems to be for that of indication or what have you.

So, you were also asking, I guess if I got you right, for a quantification of this effect. Well, I mean I said that for SSB and for BPS these numbers are pretty much similar, that we're talking about at least 40-plus-something percentage points of growth that would not be attributable to acquisitions or corona effect.

Order intake I'm saying now. So, and this is, let's say, around 20% above phase revenue, and even phase revenue is higher than we would expect to be a sustainable market growth at the moment, because that is not 25%-plus, but rather maybe something around 15%, I can be maybe 20% in a quarter.

So, everything, every number that is higher than around 20%, we would say could be subject -- should be rather, I should say, subject to some shift in time. So, and for us, as always, it's really very important to help you and all other investors to navigate as well as possible through those numbers.

So, what we want to bring across here is that we definitely are, without any change, without any notion, very optimistic about our business going forward, our 2025 year's guidance, which based on our 2020 numbers, which has been a year of strong growth as well, translate into an average of 16% annual growth. That is no change in that regard.

But, of course, that means after a year, where we expect 35% growth, there will be years with lower growth rates. And that most likely won't be a straight line curve with identical growth numbers.

So we think it would be fair to assume that our 2025 targets are very realistic, but yet, following two years of very high growth, 2020 and 2021, that there will probably be at least one year with a different set of numbers. Very difficult though to say how and when that exactly will look like.

And what we can say is all this within a framework of a high level of confidence regarding the health of the overall market, the sustainability of all those trends, et cetera. Yes, but that is maybe the best navigation that we can give at this point in time.

And again, that there is no much difference, because you were asking for China, et cetera. I think it will definitely too early to say that any shift and change regarding underlying trends has been materialized in any geography at this point.

Production limits BPS, you were asking for. So, when we are talking about this, and when we are making our comments at this time, then of course this includes all supply chain aspects obviously.

And I think we had talked about that before. Well, we have to manage, as everybody else in these days as well, is our own manufacturing capacities as well as all our suppliers, service providers, whatever is needed to finally deliver a product to -- and at a customer.

So, and here we feel, because I guess that was your question or how I got it, we feel relatively comfortable -- very comfortable I would even say, that we can continue to maintain an output level on the level that we have seen for Q1. So there, we do not see too much of a risk as long as supply chains remain stable.

So far, we have been able to manage that quite well. We are working on numerous capacity expansions.

And here most of them are of a nature that won't have any impact on 2021. As we -- like the buildup of our manufacturing in Puerto Rico, for example, expansion of our membrane capacities in Germany and some others.

However, we are working also numerous smaller initiatives to expand our capacities. And here we will see in how far we will be able to add some chunks of capacities along the way through this year.

So, therefore, I would say, we feel quite comfortable regarding the level that we have delivered on in Q1. No doubt about that, and working definitely hard maybe to add a little bit more through 2021.

Very clear. Thank you for taking my question.

Hi, thanks for taking my question. Just a follow-up question just on the order book, and it's clear that there's been some pull-forward, but maybe you could talk about the composition of the order book between consumables and equipment, and certainly heard the idea that that might stretch into a realization of the order book and revenues might stretch into '22, but just the bulk of the order book, we looking at that being realized in sort of six and seven months as a sort of normal or, or is it significantly pushed out?

Second question, just, if you could give us an update on the outlook for BI separations and how that's going, how the integrations going and the growth potential there and the contribution from that acquisition and also the potential for the closure of Novasep, how's that progressing? And then, just finally just a housekeeping issue around FX.

The CEO operates and the wasquite a wide difference this quarter. So it just what's going on there?

Is there some hedging there? How should we think about this, and how should we think about this going forward for the rest of the year?

Thanks very much.

Yes. Thank you for these questions.

So composition of the order book is not much different from how it looks like usually and how our current business is though. I would say when we talk about the different ordering patterns, then this attributes this comment regarding the difference in ordering pattern to consumables to a larger extent, because particularly when it comes to a larger systems and a bigger orders regarding equipment, then here it is very often the case that customers placed them one year in advance before installation, et cetera, because it takes some time to possibly sometimes design them and dissemble them, et cetera, et cetera.

What we see here now is that that because of the high level of demand, the high level of orders that delivery dates for consumables are longer than they usually are. And I'm talking about market average.

Now, I'm not just talking about Satorius, I'm talking about what we see in the markets, customers accept that, and we are now reaching or have reached pretty much depending on the product we are talking about, have reached the stage where some of the consumables that are ordered also from us. We confirm delivery dates in early 2022.

So, and that is of course a little bit the difference now that even parts of our order book are reaching already regarding confirmed delivery dates into 2022 just as Rainer indicated earlier. So, and again, that the fact that, that customers pretty much in most cases, except that this is the case indicates this change in order behavior.

So, separations of course, it's still within the context of all BPS division, a relatively small business, we are early in the integration phase. We think very positively about the pipeline that is building up now on opportunities for this business.

We are very enthusiastic about the performance of this technology and about the uniqueness of this technology customers are -- so the existing customers are pretty much the best ambassadors for this business, because they always have been very satisfied by the products. And particularly also by the support and implicational, how that the BS operation team always has provided to customers.

Of course it doesn't change our numbers or has an impact on our numbers very much so, but we are very positive about how this started and will develop going forward. Closing of Novasep, no use on that at this point, we have provided all the required information to the antitrust authorities.

We do expect and do hope that even though such institutions also are not working maybe at full speed in these days because of maybe some restrictions that they might have because of whatever home, office, et cetera, but we do hope and expect the decision to come in around mid of this year. And yes, cannot give any additional information at this point.

And on FX, Rainer, do you want to comment, or shall I comment?

I think it's of course on the revenue side. We quantify the impact on the profitability.

It's really not a major impact compared to previous year that we're seeing for both divisions in Q1.

Slightly accretive, I would say.

Yes.

Okay, good.

Perhaps the first question is for Rainer. The question is on capital expenditures, will the €400 million be spent in 2021?

And then, Joachim, the question is what were the particular products you were seeing in high demand in the quarter, and then give you confidence that the COVID demand continues even into 2020, where are your thoughts on 2022 COVID demand? It might be unfair, but I'll try.

So, quickly to the first one, yes, we expect our investments CapEx division as is cash out. So therefore we expect that the €400 million will be cash relevant happening in 2021.

So yes, maybe on the other questions, I think the first one, if I got you right was the, whether there's a certain pattern regarding products that are particularly in demand because of the vaccine manufacturing. Yes.

I would say we see for sure, a lot of impact on in fluid management, but also in filtration. And we definitely also have additional demand in technologies.

So in particular or by direct. So, I would say, our main product segments pretty much almost evenly impact that we see very strong top-line growth, pretty much across the board.

So, very significant double-digit growth rate all across our segments know that, that particular pattern. And then for 2022, I believe you asked in how far we were expecting any impact here.

Honestly, a bit too early. I think the best guests, the best estimation today would be that we, people will be in need for continuous vaccination against the Corona virus, maybe as we know it from the flu since many decades, but what that will mean for our business that is very difficult to tell.

I think it's not very unlikely to expect that going forward in at least some years, people would expect one combined against the ordinary flu and the coronavirus. And therefore, we would rather work on the assumption that there will be some normalization going forward, whether that will and what effect that might have in 2022, also in light of those effects that we would expect some normalization regarding ordering pattern demand etc regarding the non-corona related business makes it really very difficult with any meaningful quantification at this point in time.

Thank you.

Thanks so much, Michael Leuchten from UBS. Two questions please.

I was wondering if he had any views on why we see the change in the order pattern now, what's triggered that given that the dynamics instead of visibility and shortages has been there for awhile. So what do you think has pivoted the situation?

Second question is on the changes in attitudes towards vaccines. If indeed the European Union does not renew the orders for recombinant vaccines like the Oxford/AstraZeneca one and the world pivots to MRNA.

Does that matter in your outlook does it impact how you think about 2021, 2022? And then the third question given the AstraZeneca vaccine rollout hasn't quite worked according to plan as that triggered any order cancellations, but have you seen anything in response to that particular situation or is it impossible to tell?

Thank you.

Yes. To your first question, you are absolutely right in maybe pointing out this aspect and asking maybe for a little bit broader picture.

So I believe we have commented that all through last year already, and particularly in Q2 last year, we already said, well, we do see some additional demand because people are building up some inventory in BPS that started to some extent in Q2 last year already, and then when you look on the numbers that we have reported last year, you see that order intake was substantially running a buff, saves revenue in BPS. What we have expected and that you can read very well from our guidance that we have given in January then for the year 2021 that this would kind of normalize and that there would not be this continuous, and even more amplified behavior and defect now that customers instead of normalizing the order behavior would even put more long-term orders than they have done before.

I guess that's the way how one should look on it. We already have finished last year with a quite a strong order book.

We commented on that also. We also commented on the fact when you read the numbers that we have provided for full-year 2020, and the outlook that we were given that not all of this order book was related to vaccine manufacturing, as we set back to them and what we then experience at the beginning of the year.

And as we set end of March that we were a bit surprised by the very strong order intake during the first 10 weeks of this year. And a good portion was coming from this because not all of the uplift of our guidance was attributed to Corona quite a bit, but not all.

And therefore, I guess that's basically the effect and when you ask, okay, why now, why is this, I would say, and as I pointed out a minute ago, customers are quite positive in most cases about the delivery times that we can confirm to them. And that tells I would say that there is quite that delivery times are much longer across the market, it's not logically not only us, also our competitors, and that customers are relatively easy with such long delivery times, because they are not in urgent need for this product at this point in time.

And then this, for a certain time, this can be like I wouldn't say a self-fulfilling prophecy, but you just say, "Look, delivery times are long, so I better order earlier." So, and then you have this new normal for a certain period in time, until that point in time when delivery times come down again, and that will happen at some point.

And then of course, you adjust your order behavior again, and then you have a certain self accelerating process again, into the other direction. So therefore, I would say, I guess, I made this comment quite numerous times already over all those years.

It all depends how you look on this market and how you look, and how your engagement is framed on the timescale. If you are in this market, in the long run, you shouldn't bother at all because if this doesn't have an impact on the long-term development of this market and the long-term development of Sartorius in that respect, this is pretty much a shift of some orders from one quarter to the other.

And that's basically all what we see here. And we just get very explicit information on that so that you can read and understand these numbers.

But this is nothing fundamental in that sense. It's just a shift in time.

So and then your other question is in regards to maybe the shift between different vaccine modalities, different types of vaccines, as everybody gains additional experiences with these different vaccines, you mentioned AstraZeneca. And of course, there are also others.

Well, I think your second question in that regard was whether we have seen order cancellations here yet? No, we didn't.

And the other one would be, if we would expect some shift in orders. I think clearly if for if, indeed, it would materialize that going forward mRNA vaccines would dominate markets very much versus viral vector based vaccines for example, then there would be some shift, but that wouldn't have much of an impact on our numbers.

That is, let's not much of a difference, as we always have pointed out, we have business with all manufacturers of the approved vaccines. And of course, then we have different levels of business, maybe with the different manufacturers, and also with different products at different manufacturers within those networks, but it's not much of a difference.

And it's pretty much levels out in the end.

Thank you.

Yes, thanks very much for taking the questions. So, first question again, just following up on this change in order patterns from your customers.

I wonder whether you have any views on whether this is now done, all of the flush through has happened or is this a little bit of a self perpetuating phenomenon where anyone that hasn't put in long duration orders is now increasingly fearful and does so? I guess the nature of the question is, are you expecting similar sort of order dynamic or robust order dynamic in the next quarter or so?

And then, some negative or flattish development in the back half, some sense of that would be helpful please. And the second question please, obviously a tremendous start to the year for both top line and bottom line.

I'd like to understand within your margin guidance this year when you start to build out some of those normalized hiring costs, travel costs, conference costs so forth and following on from that question, I think you now guide for group level or divisional EBITDA margins, which are kind of at your '20, '25 margin already. And I think you're expecting even next year to continue to grow.

So I wonder if you can give us some sense, I mean, will you expect then for '20, '22 margins to contract and then recover to these sorts of levels? I mean, some sort of perspective here would be helpful, please.

Maybe last small question just in the definition of coronavirus revenues, so to say is this including the bio-reactors that you sell to these customers or you treating that differently? I know bio-reactors can be used for other things.

So I just wanted you to understand that. And lastly, I'm sorry.

I think already, within the next weeks, you'll probably at the situation of lapping, the coronavirus orders that you received for the entire of last year. I wonder if you could share some thoughts as to in your opinion, are we at the relative high in terms of the, the revenues coming from Corona this year in bioprocess?

I appreciate it. This will be going on for a long time, but is the positive impact to the P&L most notable in 2021, in your opinion, and set to fall away over time, any feeling that would be helpful.

Thank you.

Sure. So, yes, on the order pattern going forward.

I think if I got your right, you're saying there is some kind of self-fulfilling prophecy or self-emphasizing process going on at the moment. And yes, I guess that's how I try to bring that across also that this is the case, but not so much in just for us and vis-à-vis I think that's a bit how companies behave at the moment and place those orders in the moment.

Frankly, I mean, as you know, we don't give any information about half months or something. So I cannot answer now whether that has changed or it still ongoing now in April.

And even that would maybe not a good proxy for any longer-term projection, but as I try to bring across before we not expect the gap between safe revenue and order intake to stay at the same level as it has been now for Q1. I mean we have built up an order book for BPS.

Now let me, once again look it up €340 million, which is obviously a bit more than half of the sales revenue of the quarter. And that's clear that that wouldn't work.

So in that sense, we do expect some normalization and how that exactly will look like it's really too early to tell. But be sure we will continue to comment on that as transparently as we are always doing, yes.

And always have been doing. So margin, margin at 2025 level, if we achieve our guidance for this year LPS, we got 24% versus 25% for 2025.

But for Q1 '21, we already have achieved that absolutely. So again cost levels are way -- are have developed really very differently from the top-line.

You can read that from our numbers. And that is what we definitely do not expect to be yes, sustainable in that sense.

Furthermore, our 2025 guidance includes acquisitions that we are projecting to rather be dilutive to our EBITDA margin. This is an assumption whether that exactly looks like that and in the case of a specific acquisition, we will see.

And then of course we will have to talk about our margin guidance in that very momentum and hope that very detail of our expectation was right. We definitely do not expect to see price pressure going forward that is stronger than any economies of scale or whatsoever.

That's not our expectation. But I mean when you think about it we have added now at I mean 600 people -- a bit more than 600 people in Q1.

If we continue that pace, then we might add around 20% to the number of employees. But, we are expecting 35% top line growth.

So, there is a productivity gain of 15%. And that, of course, is not realistically possible in all the functions that we have, particularly not in sales and marketing.

So that is what we are talking about when we talk about margins. Definition of our corona-related business, so we definitely include bioreactors this year, when it's clearly linked to a -- in the end we are talking about vaccine manufacturing programs.

So, yes, it's included then there. And are we at the relative high of this overall development when it comes to the Corona related business?

I would say at least we should be quite close to it. When you see the number of vaccines that are manufactured in these days, we would have to translate this now to annual run rate.

Then, I believe we globally I would reckon somewhere close or around 5 million doses run rate by mid of this year. That would be my estimation run rate.

And I do not believe that would be realistic to assume much more demand going forward when you anticipate second generation vaccination or at least one way or the other only the need for one jab per person. And that doesn't include any further productivity gains in regard to the manufacturing or combination with ordinary flu vaccines and so on and so forth.

So, yes, definitely our view might be wrong, but our view is very extraordinary situation and a tremendous not onetime effect in the sense that it would go away completely maybe. But, in regard to the extent and then also the second round factors like additional orders that we were talking about extensively here today, absolutely extraordinary.

That's very helpful. Thank you.

Hi, thanks for taking my questions and congrats on the results. A quick follow-up from Richard's question earlier on order intake.

Could you maybe give us some color under the geographic split for the ordering intake in Q1? And second, you mentioned the COVID peak potentially expected in 2021 and then the need for boosters from 2022 or probably even as soon as 2021.

So, just wondering should we assume that let's say all fourth or third of that COVID revenue contribution in 2021 is expected to be recurring? And lastly, on M&A, you mentioned some M&A that could be in your 2025 guidance, given the recent transactions in the CRO space, do you see a presence in the CRO space maybe as a prerequisite to be best positioned to benefit from the rise of cell and gene therapies?

Thank you.

So, thank you very much for those questions. So, order pattern by region is not so much different from the sales growth pattern.

We do see here a little bit higher difference. I mean, once again, order intake is overall higher than sales revenue.

That is the case for all geographies and the hires difference is for the Americas. And then also next one would be Europe and it's a bit lower for Asia-Pacific, but it's not a fundamentally different pattern also.

So, these additional orders, longer term orders, we see a bit more in the Americas and Europe. Yes, I think your second question was about what we anticipate as to be corona business in 2022, and I can only tell you my crystal ball is very foggy here.

I really, I have to say, I only can repeat these more qualitative comments that I've made before. We do expect that there will be business with Corona vaccines going forward, because I think that's the most realistic expectations that one has to apply in these days given the pandemic situation, there is no reason to assume that the coronavirus will completely disappear.

I think it's also most likely to anticipate that there will be only one jet per year, one way or the other. And then it becomes now a bit tricky, will it be combined with ordinary flu vaccination from a customer/patient's point of view that will be desirable?

And then the other very too early to answer question is, okay, and what about productivity gains? All those processes, particularly mRNA are completely new, innovative manufacturing processes.

Second generation, third generation processes should be more productive. What does it mean for suppliers as we are?

Honestly, too early to say, but be sure we will be very transparent about that as soon as we see this a little bit clearer, I would expect that in the course of the second-half of this year, we will get much more insight where the respective programs of our customers stand, because I would definitely anticipate that all of them has worked has started to work on that very extensively. And then, I guess you have asked whether one needs to build up some CRO activities to be a relevant player in the gene and cell therapy market.

That's a very good question. And I would, I would say, and maybe you meant even something similar.

And I believe we talked about that in some calls before that we would say the CDMO space and it's a space that is obviously relatively close to our business model, particularly when it comes to the deep, and that stands for process development, not for research, but process development. And another question is, do we really have to be CDMO because of that?

And very often, this is exactly the combined business model to manufacturer such products also to some extent for our customers by ourselves or how would a strong positioning in process development look like without the no manufacturing arm or through realizing that by entering certain corporations and so on and partnerships. So I think this is a question that probably cannot be answered black and white and by yes and no at this point, but I definitely would say process development is an important ability to have and we have that already today in a number of critical applications.

CRO in a sense of really molecule research, we do not think to be active by ourselves there.

Good afternoon and thanks for taking my questions. I have only two left and hope they're not too specific.

Both are related to your Corona test kits business unit. So firstly, could you share with us whether your Coronavirus Test Kit components are also used for these rapid antigen tests or purely for PCR tests?

And this rapid antigen test requires a higher or lower quantity of your product per unit? My second question is on the demand pattern for your Corona test kit components.

I believe demand from the public and private sector is represented in tests picked up significantly over towards mid to end of Q1. Hence, is it fair to assume that sales volumes increased going into Q2 or the second-half of the year, or have you already seen demand here in Q1?

Thank you.

Yes, thank you very much for these questions. So, indeed, when we say, for our LPS division, that we do have seen some additional demand, for such components we basically meant pipette tips or liquid handling devices.

And then they're of course with some emphasis on the pipette tips and diagnostic membranes, as we call them here internally. The latter are used in these rapid test kits, as they are used in many of such rapid test kits, whatever it might be pregnancy or whatever, whereas the pipette tips are very much used in the PCR testing.

So, it's really these are different products, used to different extent in these different type of test procedures. And overall, overall our diagnostic membrane business is larger than the one for pipette tips.

Corona effect might be also a little bit larger so far for the membranes. And as you rightly pointed out, there is now a big boost for these rapid tests.

So that should maybe rather stay to be this ratio between these two different product lines. And now regarding peak or so, I would to be honest, hesitate to give much of a guidance, because if I now assume maybe this is wishful thinking that in the course of an accelerated execution of vaccination programs, and that they show results as we have seen them now in Israel, for example then I would reckon that there will then soon be less demand for such test kits again, but bear with me, let's talk about that in July again.

Okay, thank you for sharing this with us.

Yes, good afternoon, and thanks for taking my questions. Three, if I may.

The first one is I'd like to go back actually on the underlying growth you saw in BPS in Q1. So excluding acquisitions and excluding the Corona vaccine effect and that was 29%.

In Q1, get the full-year guidance is only looking for 16%. Maybe can you explain the thinking behind this deviation?

Again, that will be helpful. My second question is on the development of your cost line.

And how should we think about the pick up there is that straight line so every quarter, the margin will be a bit weaker, or will that be a jump in the second-half of the year and the development of costs impacting the margins. Any more color you can provide here then I would appreciate.

And the last question is on the CapEx program. And given that you have now put forward a number of projects.

How should we think about CapEx development as of you current point of view obviously CapEx development in 2022? Thank you.

Yes. Thank you for these questions.

So absolutely right, this, yes, let's say underlying growth has been around 29%. Sales revenue for Q1 versus around 60% projected for the full-year.

Main effects here are basically two effects. One is definitely comps.

When you compare the Q1 for BPS last year with the average of last year then these are very different comps. So that is, that is one strong effect.

And the other one is that as pointed out before a good portion or an increasing portion of these orders that we are getting for this business is now already are projected to be delivered in 2022. So these are basically these two effects.

The first one already plays quite some role as the -- yes as I said, the base is quite different from quarter-to-quarter. And then cost development, yes, I try to give some color to that a minute ago, when I said, when we look on the hiring's and how they relate to our top-line development and we are currently hiring very much or increasing our hiring activities very much particularly for sales and marketing people very much globally.

You -- we won't be, even if we would like to able to hire all those people that we might be willing to hire within one or two months or even within a quarter. So these additional costs will rather build up relatively in a straight line.

I also would expect traveling and therefore travel costs to build up rather gradually over time then in a jump as you said. And therefore, this is how we -- how we would project that as of today to be more gradual effect.

CapEx development next year I think as we said, when we talked about that first time already, I think at least two or maybe three quarters ago that the big pieces here are projects that will run for longer than a year, particularly the expansion of our membrane casting capacities in Germany and the cell culture media production in ElCo. So, and therefore, I mean, it's a bit too early to give you a precise numbers, but we would expect a, quite a substantial CapEx volume also for 2022.

The ratio into which this will translate, it's really too early to say, but it will be a substantial CapEx next year as well.

Thank you.

Thank you very much. Two quick questions, please, firstly, on the Corona business, are you noticing any bottlenecks at your competitors at the moment that you were able to capitalize on?

It just seems from looking at it that you are benefiting a little bit more than others. So I'm curious why that might be the case?

So any thoughts would be appreciated. And then, secondly, on the LPS market, the true underlying LPS market, how recovered, what you say that market is from the pandemic and how much pandemic related volatility do you still sense in the market at the moment?

Yes. Thank you very much for these two questions.

So the first one, I would love to be able to give you a quantitative answer to that difficult. And as you know, most of our direct competitors even don't publish numbers, anywhere close to the level of detail that we do.

And therefore, I would really like to hesitate and do hesitate to give any quantifiable numbers. My impression is that our competitors are doing a great job.

They are also expanding their capacities. I think one can read that also.

I would say that we are probably doing quite well in regards to our delivery times and/or delivery ability. But as I pointed out earlier, we now also see quite longer delivery times then this usually is the case.

So we might have done a little bit better. And maybe we still do a little bit better, but I definitely would not be able to pinpoint filtration buy rate this or that, where we are doing better than the competitors.

Bottom-line I would be surprised if growth rates would look very different for the different players in the industry. That would be my best guess, at least.

The second question is a tricky one, to be honest, and because we are not in a loan, we are in this market recovery as you, I think rightly called it for a long time, may be two quarters now, because the third quarter last year was still very much impacted by lockdowns and restrictions in the number of countries. And therefore, I would honestly hesitate to give a clear answer on that.

What I can say is, as you can easily read from comparing our Q1 numbers to our guidance that we as of now would say Q1 was very strong, because four quarters of Q1 would be quite a bit higher than what we are projecting for full-year now. So, therefore we still would say that should have been some catch up even in, so even more than recovery, maybe even some orders that are -- yes, some demand that has been shifted by customers into Q1 maybe, and then maybe a normalization going forward.

Honestly, I think we will have more substance to talk about this topic as year progresses. Bit too early to be more precise here.

I hope that's okay for you.

Yes. Thank you.

So, thank you very much. Very much appreciated your interest in Sartorius and Sartorius Stedim Biotech's performance.

Appreciate also very much all the questions. I hope we were able to answer them to your satisfaction.

Very much looking forward to all your participation on the 20th of May at our Virtual Capital Markets Day, and then I think we will publish our numbers on Q2 and half-year in pretty much precisely three months' time, which will be then our next touch point. So, having said that, thanks again, take care, and stay safe.

All the best. Bye-bye.