Q4&FY 2018 Investor Presentation

Transcription

1 Q4&FY 2018 Investor Presentation Jon Sigurdsson, President & CEO Sveinn Solvason, CFO 5 February 2019

2 1. FY 2018 highlights 2. Q review 3. Guidance for Summary 1

3 FY 2018 vs. guidance Guidance 2018 Actual 2018 Sales growth Organic 4-5% 5% EBITDA margin Before special items ~19% 19% CAPEX % of sales ~5% 5% Tax Effective tax rate 23-24% 24%* * Tax rate has been normalized for the revaluation of previously acquired shares, increasing effects from associates by USD 21 million in 2018, and impacting net profit. The reported effective tax rate is 18%. 2

4 Highlights in FY 2018 Sales EBITDA Highlights FY 2018 Sales split and organic growth B&S +2% 48% 613 million Prosthetics 52% +7% Sales growth FY 2018 FY 2017 Reported 8% 9% Organic 5% 5% FY 2018 EBITDA in USD million* +11% FY '17 FY '18 EBITDA margin* FY 2018 FY 2017 Reported 19% 18% Sales Strong growth in Prosthetics led by high-end innovative products Soft sales in B&S in the US & France, rationalization in certain regions Profitability Increased profitability from scalability, positive changes in product mix, and savings from efficiency initiatives Positive net FX impact on EBITDA margin of about 20 basis points Acquisitions Össur acquired four companies in 2018 Guidance for 2019 Organic growth 4-5%, EBITDA margin of ~23%**, CAPEX 4-5% of sales and effective tax rate of 23-24% * Before special items ** The EBITDA margin includes the expected impact of the IFRS 16 implementation. EBITDA margin excluding the impact of IFRS 16 is expected to be ~20% in

5 FY 2018 Sales by business segments Sales contribution in USD million % Organic Reported Growth contribution Segment growth +4 pp. +1 pp. 5% +2 pp. +1 pp. 8% 7% 2% Note: Bridge is an approximation for growth contribution 4

6 Key ratios from the income statement Financial results USD million FY '18 FY '17 Sales Reported sales growth 8 % 9 % Organic sales growth 5 % 5 % Gross profit Gross profit margin 63 % 62 % EBITDA* EBTDA margin* 19 % 18 % EBITDA growth* 11 % 5 % EBIT margin 13 % 13 % Effective tax rate 18 % 16 % Net profit Net profit margin 13 % 10 % Net profit growth 38 % 13 % Sales Strong organic growth of 5% Reported growth of 8% Profitability Gross profit margin increasing to 63% vs. 62% in 2017 EBITDA margin of 19% vs. 18% in 2017 Higher profitability primarily driven by strong sales growth, positive changes in product mix, and savings from efficiency initiatives Impairment of USD 4 million in goodwill in Q related to a discontinued product with minimal sales, acquired in 2012 Net profit Step-up in value of investment in associated companies ETR of 18%, impacted by step-up, normalized ETR ~24% Net profit margin of 13% and growing by 38% * Before special items 5

7 FY 2018 EBITDA bridge EBITDA margin bridge* Gross profit Positive impact from change in product mix, stable unit cost, and savings from ongoing efficiency initiatives S&M Investments in emerging markets and new business development R&D Increased investments in line with plans not visible in margin bridge as recent acquisitions have no R&D expenses G&A Scalability with strong sales growth Slight negative impact from acquisitions * Before special items 6

8 FY 2018 Free cash flow bridge Free cash flow bridge in USD million* Operating profit Strong profitability in the year NWC Temporary NWC increase related to the efficiency initiatives Taxes Normalized ETR down to ~24% compared to ~26% in 2017 Higher income tax expense due to increased operating profit and Q was impacted by one-time benefits CAPEX Efficiency initiatives, various investments in leasehold improvements and integration of a new CRM software * Before special items, acquisitions, and changes in financial assets Note: Changes in net working capital (NWC) include other receivables and payables 7

9 1. FY 2018 highlights 2. Q review 3. Guidance for Summary 8

10 Highlights in Q Sales EBITDA Highlights Q4 Sales split and organic growth B&S +3% 47% 168 million Prosthetics 53% +6% Sales growth Q Reported 9% Organic 4% Q4 EBITDA in USD million* +8% Q4 '17 Q4 '18 EBITDA margin* Q Reported 20% Sales Strong growth in Prosthetics in all market regions Soft sales in B&S in the US & France and rationalization in certain regions Profitability Increased EBITDA driven by positive changes in product mix, savings from efficiency initiatives, and acquisitions Positive net FX impact on EBITDA margin of about 60 basis points Acquisitions Four acquisitions in FY 2018 (3x in Q4) * Before special items 9

11 Q4 Sales by business segments Sales contribution in USD million % Organic Reported Growth contribution Segment growth +3 pp. +1 pp. 4% +8 pp. -3 pp. 9% 6% 3% Note: Bridge is an approximation for growth contribution 10

12 Q4 sales by geography Americas 22% growth EMEA 3% growth APAC 9% growth 7% 78 million 46% 47% 78 million 12 million Organic growth 3% High-end products contributing to growth in both segments Excellent performance in prosthetics but soft quarter for B&S in the US Own distribution companies growing Organic growth 3% Good performance in prosthetics in all major market regions Soft sales in B&S in France Product rationalization in B&S in selected markets Organic growth 9% Strong growth in both prosthetics and B&S Excellent performance in China and Australia Note: Amounts are in USD and all growth numbers refer to quarter-on-quarter growth including acquisitions (in local currency) unless otherwise stated Percentages next to charts refer to % of total sales 11

13 Key ratios from the income statement Financial results USD million Q4 '18 Q4 '17 Sales USD sales growth 9 % 11 % Organic sales growth 4 % 7 % Gross profit Gross profit margin 64 % 63 % EBITDA* EBTDA margin* 20 % 20 % EBITDA growth* 8 % 19 % EBIT margin 13 % 16 % Effective tax rate 9 % (4) % Net profit Net profit margin 20 % 15 % Net profit growth 47 % 60 % Sales Organic growth of 4% Reported growth of 9% Profitability Gross profit margin increasing to 64% in Q EBITDA margin before special items of 20%, same as in the comparable period Profitability impacted by acquisitions and OPEX investments Net profit Step-up in value of investment in associated companies (17m) ETR of 9%, impacted by step-up, normalized ETR ~25% Net profit margin of 20% and growing by 47% * Before special items 12

14 Q4 EBITDA bridge EBITDA margin bridge* Gross profit Positive change in product mix and savings from ongoing efficiency initiatives S&M Investments in new business development and emerging markets R&D Increased investments in line with plans, no impact on EBITDA margin as acquired companies have no R&D G&A Impact of acquisitions Investments in specific functions to support a growing business EBITDA bridge in USD million* * Before special items 13

15 Status on efficiency initiatives Initiative Completion Status Update on progress Estimated savings USD million Distribution 2018 Completed West coast distribution facility closed and moved to Mexico manufacturing facility Forecasted Realized ~10 8 Manufacturing 2020 On track Part of manufacturing moved from Iceland to Mexico Investments in equipment in Mexico 6 ~6 4 ~3 Strategic sourcing 2020 On track Good progress made Currently working on several categories Note: Össur announced efficiency initiatives in September For further information see company announcement no. 68/

16 1. FY 2018 highlights 2. Q review 3. Guidance for Summary 15

17 Impact of IFRS 16 Description As of January 2019, Össur implemented the new IFRS 16 Leasing accounting standard Income statement Lease cost in the amount of USD 19 million will be removed from OPEX, increasing the EBITDA Depreciation expense of USD 17 million will be added to D&A USD 3 million will be added to interest expenses Net profit will decrease by USD 1 million Balance sheet Assets will increase by USD 90 million Lease liabilities will increase by USD 93 million The difference is booked to equity or negative USD 3 million Cash flow Repayments of lease liability will be added to financing activities in the cash flow No net impact on cash flow IFRS 16 Income statement impact USD million Before After Delta Sales Gross profit OPEX D&A EBIT Net financial expenses Net profit EBITDA IFRS 16 Balance sheet impact USD million Before After Delta Assets Equity Liabilities Assets - Equity + Liabilities IFRS 16 Cash flow statement impact USD million Before After Delta Net profit D&A Repayment of lease liability Total

18 Guidance for full year 2019 Guidance 2019 Actual 2018 Sales growth Organic 4-5% 5% EBITDA margin Before special items ~23% (~20% excl. IFRS16) 19% CAPEX % of sales 4-5% 5% Tax Effective tax rate 23-24% 24%* * Tax rate has been normalized for one-time benefits impacting the tax rate during the year. Reported ETR amounted to 18%. 17

19 1. FY 2018 highlights 2. Q review 3. Guidance for Summary 18

20 Q&A Sales Strong growth in Prosthetics in all market regions Soft sales in B&S in the US & France and rationalization in certain regions Profitability Increased EBITDA driven by positive changes in product mix, savings from efficiency initiatives, and acquisitions Positive net FX impact on EBITDA margin of about 60 basis points Acquisitions Four acquisitions in FY 2018 (3x in Q4) 19

21 Financial calendar and upcoming events & conferences Meet with us Morgan Stanley European MedTech & Services Conference (UK) 5 March 2019 Carnegie Nordic Healthcare Seminar (SE) 6 March 2019 SEB New York & Boston Conference 2019 (US) May 2019 Goldman Sachs 16th Annual European Medtech and Healthcare Conference (UK) 4-5 September 2019 ABGSC Small & Midcap Seminar (DK) 25 September 2019 Financial calendar Annual General Meeting 7 March 2019 Interim Report Q April 2019 Interim Report Q July 2019 Interim Report Q October 2019 Interim Report Q and Annual Report for February 2020 Annual General Meeting 12 March 2020 Further information David Hreidarsson Investor Relations Manager dhreidarsson@ossur.com Tel: Össur press releases by If you wish to receive Össur press releases by please register on our website: 20

22 Forward-looking statement This presentation contains forward-looking statements, which reflect the Management s current views with respect to certain future events and financial performance. Although the statements are based upon estimates the Management believes to be reasonable, there is no assurance that these statements will be achieved. ÖSSUR. 04-Feb- 19 Statements containing the financial outlook for 2019 and the following years naturally involve risks and uncertainties, and consequently actual results will differ, and may differ materially, from those projected or implied in the forward-looking statements. The risks and uncertainties may include unexpected developments in the international currency exchange and securities markets, financing, market driven price decreases for Össur s products, delay or failure of development products, production problems and unexpected cost increases, development of new technologies by competitors, the introduction of competing products within Össur s core areas, exposure to product liability and other lawsuits, changes in reimbursement rules and governmental laws. 21