DJO Global, Inc. Company Presentation. June 2013

Transcription

1 DJO Global, Inc. Company Presentation June 2013

2 Safe Harbor Statement This presentation has been prepared by DJOFL. The information contained in this presentation is for information purposes only. The information contained in this presentation is not investment or financial product advice and is not intended to be used as the basis for making an investment decision. This presentation has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. No representation or warranty, expressed or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, none of DJOFL, its directors, employees or agents, nor any other person accepts any liability, including, without limitation, any liability arising out of fault or negligence for any loss arising from the use of the information contained in this presentation. The historical and projected financial information in this presentation includes financial information that is not presented in accordance with generally accepted accounting principles (GAAP). Non-GAAP financial measures may be considered in addition to GAAP financial information, but should not be used as substitutes for the corresponding GAAP measures. Non-GAAP measures in this presentation may be calculated in a way that is not comparable to similarly titled measures reported by other companies. This presentation includes forward-looking statements that reflect DJOFL s current views and information currently available. This information is, where applicable, based on assumptions and analysis that DJOFL believes, as of the date hereof, provide a reasonable basis for the data contained herein. Forward-looking statements can generally be identified by the use of forward-looking words such as may, will, would, could, expect, intend, plan, aim, estimate, target, anticipate, believe, continue, objectives, outlook, guidance or other similar words, and include statements regarding DJOFL s plans, strategies, objectives, targets and expected financial performance. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, capital expenditures, future results, our competitive strengths, our business strategy, the trends in our industry and the benefits of and the anticipated cost savings related to our recent acquisitions. These forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are outside the control of DJOFL and its officers, employees, agents or associates. Actual results, performance or achievements may vary materially from any projections and forward-looking statements and the assumptions on which those forward statements are based. Readers are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance. These forward looking statements are within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, and are intended to be covered by the safe harbors created thereby. Some of the factors that we believe could affect our results include the risks discussed in the Risk Factors section in DJOFL s Annual Report on Form 10-K for the year ended December 31, 2012, filed on February 27, 2013 with the Securities and Exchange Commission. We caution you that in light of the risks and uncertainties described in this Risk Factors section, the matters referred to in the forward looking statements contained in this presentation may not in fact occur. There can be no assurance that the data contained herein is reflective of future performance to any degree. All information herein speaks only as of (1) the date hereof, in the case of information about DJOFL, or (2) the date of such information, in the case of information from persons other than DJOFL. DJOFL undertakes no duty to update or revise the information contained herein, publicly or otherwise. Forecasts and estimates regarding DJOFL s industry and end markets are based on sources we believe to be reliable, however there can be no assurance these forecasts and estimates will prove accurate in whole or in part. 2

3 DJO Profile Business Overview Net Sales and Adjusted EBITDA (1) Headquartered near San Diego, CA Approximately 5,300 employees in 27 countries 4.5% CAGR Net Sales 6.2% CAGR Adjusted EBITDA $1,074.7 $948.5 $946.2 $966.0 $1,129.4 Leading orthopedic company with unique strategy focusing on injury prevention, conservative treatment and rehabilitation Innovator with robust pipeline of products and solutions that are more cost effective and less invasive than most surgical or pharmaceutical alternatives $212.7 $250.4 $262.4 $264.3 $ Revenue Adjusted EBITDA 2012 Net Sales by Segment Surgical Implant 6.5% Solutions that keep people active Motion is Medicine International 24.8% Bracing and Vascular 39.4% Financial sponsor The Blackstone Group (1) Adjusted EBITDA for all periods presented excludes impact of non-recurring costs and other adjustments as permitted by Senior Secured Credit Agreement; excludes pre-acquisition EBITDA and future cost savings related to acquisitions. Recovery Sciences 29.3% 3

4 Bracing and Vascular 39.4 % of 2012 Sales Bracing Products Vascular Products Bracing and Vascular Highlights Bracing and Vascular Net Sales Broad range of soft goods key to GPO penetration Innovative rigid bracing, walking boots and cold therapy Exos thermoformable bracing and splinting Retail pharmacy offering with Bell Horn $312.2 $388.9 $444.4 Vascular systems (DVT prophylaxis) Broad range of compression therapy garments Diabetic footwear #1 share in U.S. Bracing and Supports market of approximately $1.7 billion (1) $105.8 $ Q Q (1) 2009 Frost & Sullivan. (2) Growth rate based on average sales per day. 4

5 Recovery Sciences 29.3% of 2012 Sales Home Electrotherapy - TENS Pain Management & NMES Muscle Stimulation Home Traction Devices Iontophoresis Promotes healing of Non-Union Bone Fractures and Spinal Repair Surgery Clinical Electrotherapy Continuous Passive Motion Clinical Traction Devices Treatment Tables Recovery Sciences Net Sales $346.6 $341.7 $331.5 $83.7 $ Q Q (1) Growth rate based on average sales per day. 5

6 International 24.8% of 2012 Sales 2012 Sales Mix by Geography International Net Sales Spain, Benelux & Italy 8.4% Nordic 3.5% UK 5.1% Germany 29.2% $244.5 $279.3 $280.5 Canada 8.8% France 19.7% ROW 25.3% $71.5 $ Q Q (1) Excludes impact from changes in foreign currency exchange rates (constant currency) and based on average sales per day. 6

7 Surgical Implant 6.5% of 2012 Sales Diverse portfolio of orthopedic reconstructive joint products for knees, hips and shoulders Knees Hips Shoulders Primary focus on shoulder segment with a track record of innovation over 50% of net sales Niche market position with less than 1% share in total, but higher in shoulders U.S. market over $5 billion (1) Surgical Implant Net Sales $62.7 $64.9 $73.0 $17.9 $ Q Q (1) 2006 Frost & Sullivan. (2) Based on average sales per day. 7

8 Leading Market Positions: Defensible, Comprehensive Product Offering Market leader in multiple market segments and product categories Strong brand names Established global presence with over 60 years of history in the physical therapy market and over 30 years of history in orthopedics market Brand recognition and comprehensive product range promotes loyalty from prescribing physicians and physical therapists Low regulatory and technology substitution risk 8

9 Significant Diversification Reduces Risk Sales Channels Patient Need Customers We call on many providers and prescribers minimizing risk that products are dispensed beyond our reach We treat a diverse set of patient needs, making us less reliant than many medical device companies on one technology, one reimbursement code, or one treatment protocol No customer greater than 3% of revenue and top 10 customers less than 10% of revenue 2012 Sales by Segment 2012 Sales by Payor Surgical Implants 6.5% Medicare / Medicaid 6.4% International 24.8% Bracing and Vascular 39.4% Insurances 21.8% Healthcare Professionals 39.0% Recovery Sciences 29.3% Dealers & Distributors 32.8% 9

10 Diverse Sales Forces Provide Differentiated Presence with Multiple Prescriber & Provider Groups = primary market(s) Distribution 10

11 Main manufacturing facility in Tijuana, Mexico (286,000 square feet) is renowned for operational excellence and low cost manufacturing Best practices in lean manufacturing in all facilities and culture of continuous improvement yield margin expansion Expanded plant in Tunisia for European products Vertically integrated manufacturing competencies Efficient, automated distribution capabilities Competitive Advantages in Manufacturing, Distribution and R&D Comprehensive mechanical and electronic R&D competencies 11

12 Historical Financial Summary Net Sales Selected Income Statement Metrics $948.5 $946.2 $966.0 $1,074.7 $1,129.4 Q Q Net Sales $ $ % (2) Adjusted Gross Profit (1) $ $ % of Net Sales 61.5% 61.0% Adjusted EBITDA (1) Adjusted Opex (1) $ $ $250.4 $262.4 $264.3 $271.0 % of Net Sales 40.8% 42.3% $212.7 Adjusted EBITDA (1) $ 65.1 $ % % margin 22% 27% 27% 25% 24% % of Net Sales 23.3% 21.4% (1) Excludes impact of non-recurring costs and other adjustments as permitted by Senior Secured Credit Agreement; excludes pre-acquisition EBITDA and future cost savings related to acquisitions. (2) Growth rate based on average sales per day. Strong, consistent historical financial performance with healthy growth and margins 12

13 Strong EBITDA margins with opportunity to expand further Low capex business model ~ 3% of revenue Opportunities to decrease working capital Strong Cash Flow Generation 2012 Free Cash Flow Adjusted EBITDA (1) $274.0 Capital expenditures (33.0) Increase in working capital (27.1) Subtotal Cash flow before interest, taxes and monitoring $213.9 Cash flow conversion % 78.1% Favorable cash tax position Substantial cash flow should permit significant de-leveraging Cash interest expense (162.6) Cash taxes (4.7) Blackstone monitoring fee (7.0) Free cash flow $39.6 Free cash flow conversion % 14.5% (1) Represents Adjusted EBITDA including permitted adjustments related to pre-acquisition Adjusted EBITDA and future cost savings. 13

14 Unsaved Document / 3/19/2011 / 14:36 March 30, 2013 Capitalization Table Debt: Rate Maturity Revolver ($100 million available) $ 18.0 L+4.75% Mar-2017 Term loans (3) L+3.75% Sep-2017 Second priority senior secured notes (3) % Mar-2018 New Senior unsecured notes due 2018 (3) % Apr-2018 Senior unsecured notes due % Apr-2018 Senior subordinated notes due % Oct-2017 Total Debt $ 2,247.9 Total Contributed Equity $ Total Capitalization $ 3,087.7 Pro forma LTM Adjusted EBITDA (1) $ First lien debt (2) / Adjusted EBITDA (1) 3.1x (4) Total debt (2) / Adjusted EBITDA (1) 8.3x Equity / Total capitalization 27.2% 1) Includes net pre-acquisition EBITDA and expected future cost savings related to recent acquisitions and other adjustments as permitted by Senior Secured Credit Agreement. 2) Net of $36.2 million cash. 3) Exclusive of unamortized original issue discounts and premiums. 4) Subject to Libor Floor of 1.00%. 14

15 Key Credit Highlights Leading market positions with defensible, comprehensive product offering Significant diversification in products, customers, payors and geography Diverse sales forces provide distinctive presence with multiple prescriber groups over a broad geographical footprint Payor / provider relationships create a high barrier to entry Low cost manufacturing 15 years in Mexico, 7 years in Tunisia Strong financial results 15

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