Fourth Quarter 2014 Earnings Call. March 4, 2015

Transcription

1 March 4, 2015

2 Conference Call Reminders Forward-Looking Information Certain matters in this presentation and conference call, including our 2015 outlook, expectations and planning assumptions, and any estimates, projections, and statements relating to our business plans or objectives, constitute forward-looking statements and are based upon management s expectations and beliefs concerning future events impacting the company. These statements are subject to risks and uncertainties, including currency rates and exchange risks, cost savings and reductions, raw material, energy, and other input costs, competition, market demand, economic condition, and legislative and regulatory actions. There can be no assurance that these future events will occur as anticipated or that the company s results will be as estimated. Forwardlooking statements speak only as of the date they were made, and we undertake no obligation to publicly update them. For a more complete listing and description of other factors that could cause the company s future results to differ materially from those expressed in any forwardlooking statements, see the company s Form 10 and Quarterly Reports on Form 10-Q. Non-GAAP Financial Measures Management believes that non-gaap financial measures enhance investors understanding and analysis of the company s performance. As such, results and outlook have been adjusted to exclude certain items for relevant time periods as indicated in the non-gaap reconciliations to the comparable GAAP financial measures included in today s earnings release and described in additional information posted on our Web site ( 2

3 Fourth Quarter Earnings Call Agenda Spin-off Update Robert Abernathy, Chairman and Chief Executive Officer Fourth Quarter and Year-End 2014 Results Steve Voskuil, Chief Financial Officer 2015 Outlook Robert Abernathy, Chairman and Chief Executive Officer Q&A 3

4 Spin-off Update Robert Abernathy, Chairman and Chief Executive Officer

5 Spin-off Update Executed smooth transition from Kimberly- Clark on October 31 Positioned to pursue healthcare-focused strategies Focused on long-term growth Delivering shareholder value 5

6 Halyard Health Overview Addressing some of today s most important health and healthcare needs, offering products and solutions to prevent infection, eliminate pain and speed recovery across the healthcare continuum - $1.7 billion net sales in ,000 employees globally - Two segments: Surgical & Infection Prevention (S&IP) and Medical Devices Net Sales by Segment (1) Net Sales by Region Medical Devices Asia Pacific & Latin America Other (2) 12% 5% North America 31% 69% Europe, Middle East & Africa 13% 70% 1. Excludes Corporate and other. 2. Includes related party sales to Kimberly-Clark. S&IP 6

7 Spin-off Update No business disruptions Beginning transition to new Halyard brand Moved to new corporate headquarters Strong finish to 2014 Flexibility to execute long-term growth strategy Exactly where we expected to be and positioned to execute 7

8 Fourth Quarter and 2014 Results Steve Voskuil, Chief Financial Officer

9 Fourth Quarter and 2014 Headlines Pleased with progress since spin-off Demonstrated ability to efficiently operate the business Fourth quarter sales increased 3 percent, in constant currency Adjusted operating margin of 17.6 percent for the quarter, up 250 bps compared to prior year Adjusted operating margin of 17.2 percent for the year, up 200 bps compared to 2013 Adjusted EBITDA up 17 percent for the quarter and 11 percent for the year 9

10 Fourth Quarter Consolidated Performance Millions Total Net Sales Change in NS Q4 Adjusted Operating Profit $439 Total Change 2% $77 $431 Volume 4% Price/Mix -1% 36% $ % Currency -2% 15.0% Q Q Other 1% Q Q Net sales increased 2 percent Constant currency net sales increased 3 15% percent Adjusted operating margin up 250 bps Driven by cost savings and lower selling and general expenses 10

11 Fourth Quarter S&IP Millions $293 S&IP Net Sales $299 Change in NS Q4 Total Change 2% Volume 5% Price/Mix -1% Currency -2% 36% Operating Profit $48 $ % 13.0% Q Q Other 0% Q Q Net sales increased 2 percent, constant currency net sales increased 4 percent Increased volume in facial protection and exam gloves in North America and 15% EMEA Operating margin up 310 bps Higher volume, cost savings and lower selling and general expenses 11

12 Fourth Quarter Medical Devices Millions Device Net Sales Change in NS Q4 Operating Profit $132 $128 Total Change -3% Volume -1% 36% $22 $28 Price/Mix -1% 21.8% Currency -1% 16.8% Other 0% Q Q Q Q Net sales were down 3 percent 15% Constant currency net sales were down 2 percent Performance impacted by competitive activity in surgical pain in North America Operating margin up 500 bps Lower selling expenses and legal fees related to Chondrolysis litigation 12

13 2014 Consolidated Performance Millions Total Net Sales $1,678 $1,672 Change in NS 2014 Total Change 0% Volume 2% 36% Adjusted Operating Profit $288 Price/Mix -1% Currency -1% Other 0% $ % 17.2% Net sales even to prior year 15% Constant currency net sales also even Adjusted operating margin up 200 bps Cost savings and lower selling and general expenses

14 2014 S&IP Millions 2014 S&IP Net Sales Change in NS 2014 Total Change -1% $1,153 Volume 1% 36% Operating Profit $166 $1,139 Price/Mix -1% Currency -1% Other 0% $ % 14.6% Net sales down 1 percent Constant currency net sales were even Strong volume in facial protection, sterilization 15% and surgical Even to lower selling prices in all of our regions across categories Operating profit up 150 bps Driven by manufacturing cost savings and lower selling and general expenses 14

15 2014 Medical Devices Millions 2014 Devices Net Sales $502 $ Change in NS 2014 Total Change 1% Volume 2% Price/Mix -1% Currency 0% Other 0% 36% Operating Profit $105 $ % 17.2% Net sales grew 1 percent Constant currency net sales up 1 percent 15% Volume growth from digestive health, respiratory health and interventional pain Surgical pain volume down due to competitive activity Adjusted operating margin up 360 bps Lower selling and general expenses 15

16 Cash Flow Ended the year with $149 million of cash Higher cash than anticipated: - Strong net sales - Advance proceeds from sale of Thailand glove facility - Timing of spin-related projects - Payments due to Kimberly-Clark of approximately $20 million Capital spending for the year totaled $79 million 16

17 2015 Outlook Robert Abernathy, Chairman and Chief Executive Officer 17

18 2015 Priorities Complete the separation Position Halyard for future growth Deliver shareholder value 18

19 2015 Outlook Summary 2015 Expectation Net Sales Even to +2 percent Medical Devices 2 to 4 percent S&IP -1 percent to even Adjusted Diluted EPS $2.30 to $2.50 Foreign Currency Impact on Net Sales 2.5 to 3.5 percent Cost Deflation $25 to $30 million R&D $30 to $35 million Post Spin-Off Transitional costs $45 to $55 million Adjusted Effective Tax Rate 37.0 to 39.0 percent Capital Spending $55 to $60 million Share Repurchases $30 to $35 million 19

20 Q&A Session 20