Werfen (WERFEN; NR, BBB- S, BBB- Pos) Private co

IPT out for €500m 6Y at +175.

Had some benefit from Covid on largest Hemostasis unit & under other businesses on PCR testing though seems to have emerged largely unphased (-2% & -11%yoy in both units respectively). Historical organic growth is strong, margins look in-line with peers, R&D spend (% of sales) in-line to tad weaker - though has been riding headline growth in absolute spend. Leverage run-up on recent acquisition was well tolerated by rating agencies given mgmt targets - dividend cancellation evidence of BS discipline. Maturity profile clean, no net supply here - paying down term loans.

• Considers itself a "specialised diagnostics" player including in Hemostasis (30% market share), acute care diagnostics (17%), transfusion (20%), transplant (10%) & autoimmunity (19%).
• It seems focused on In Vitro diagnostics (IVD) instruments, reagents (substances used to for diagnostics), clinical software solutions & education/training.
• On Financials; Strong growth in headline revenues at 8% on 10yr CAGR (+6% organic), now at €2.1b revenues. Seems well diversified across business units & geographies (WE 36%, NA 33%) with consistent high 50's (%) profit margin and 20-30% EBITDA margins (at €517m). Recurring business generates 94% of revenue.
• R&D; currently 8% of sales/€169m - in absolute terms strong growth in recent years (€106m in 2020).

• On BS; Net Debt reported at €1.9b/3.5x on EBITDA with target <3x - its cancelled dividend after run-up on acquisition to bring it back in. It has tolerance for M&A but ceiling seems <4x. Reported liquidity is €633m including €300m in Cash and a RCF on remainder.
• No net supply - €500m raise will be used to pay down term loans & will leave no significant maturities outside the €300m 26 line. Maturity profile is clean.
• Rating agencies were happy to stay unch through Immucor acquisition given stated leverage targets - positive for future run-ups on leverage/acquisition.