Fourth Quarter and Full Year End 2013 Financial Results Conference Call

Transcription

1 Fourth Quarter and Full Year End 2013 Financial Results Conference Call February 27, 2014

2 Forward-looking Statements Forward-looking Statements Certain statements made in this presentation may constitute forward-looking statements, including, but not limited to, statements regarding guidance with respect to expected revenues, non-gaap cash earnings per share and adjusted cash flows from operations, organic growth, operating margin, integration-related activities and benefits, synergies, launches and approvals of products and assumptions with respect to guidance of Valeant Pharmaceuticals International, Inc. (the Company ). Forward-looking statements may be identified by the use of the words anticipates, expects, intends, plans, could, should, would, may, will, believes, estimates, potential, or continue and variations or similar expressions. These statements are based upon the current expectations and beliefs of management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to, risks and uncertainties discussed in the company's most recent annual or quarterly report filed with the Securities and Exchange Commission ("SEC") and other risks and uncertainties detailed from time to time in the Company's filings with the SEC and the Canadian Securities Administrators, which factors are incorporated herein by reference. Readers are cautioned not to place undue reliance on any of these forward-looking statements. The Company undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this presentation or to reflect actual outcomes. Non-GAAP Information To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the company uses non-gaap financial measures that exclude certain items, such as amortization of inventory step-up, amortization of alliance product assets & property, plant and equipment step up, stock-based compensation step-up, contingent consideration fair value adjustments, restructuring, acquisition-related and other costs, In-process research and development, impairments and other charges, ("IPR&D"), legal settlements outside the ordinary course of business, the impact of currency fluctuations, amortization including intangible asset impairments and other non-cash charges, amortization and write-down of deferred financing costs, debt discounts and ASC (FSP APB 14-1) interest, loss on extinguishment of debt, (gain) loss on assets sold/held for sale/impairment, net, (gain) loss on investments, net, and adjusts tax expense to cash taxes. Management uses non-gaap financial measures internally for strategic decision making, forecasting future results and evaluating current performance. By disclosing non-gaap financial measures, management intends to provide investors with a meaningful, consistent comparison of the company s core operating results and trends for the periods presented. Non-GAAP financial measures are not prepared in accordance with GAAP. Therefore, the information is not necessarily comparable to other companies and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. Note 1: The guidance in this presentation is only effective as of the date given, February 27, 2014, and will not be updated or affirmed unless and until the Company publicly announces updated or affirmed guidance. 1

3 Agenda 1. Fourth Quarter & Year End 2013 Results 2. Operations Update 3. Financial Update 2

4 Fourth Quarter and Year End 2013 Results Q Y/Y % 2013 Y/Y % Product Sales $2.0 B 116% $5.6 B 72% Total Revenue $2.1 B 109% $5.8 B 66% Cash EPS $ % $ %* Adjusted Cash Flow from Operations $607 M 43% $1.8 B 38% * Excludes $66M dermatology divestitures, $45M milestone payment from GSK and $30M one-time non-cash Fx gain recorded in

5 2013 Organic Growth Same Store Sales Q Ex Generics FY 2013 Ex Generics Total U.S. -3% 14% -7% 10% ROW Developed 12% 12% 2% 7% Total Developed 0% 13% -5% 9% Emerging Markets 8% 8% 11% 11% Total 2% 12% 0% 10% Pro Forma Q Ex Generics FY 2013 Ex Generics Total U.S. 4% 12% -2% 7% ROW Developed 5% 5% 2% 1% Total Developed 4% 10% -1% 6% Emerging Markets 13% 13% 12% 12% Total 6% 11% 2% 7% Note: Generics excluded include Zovirax Franchise, Retin-A Micro, BenzaClin 4

6 Bausch + Lomb Performance Same Store Sales Growth Q (Since Close) U.S. 17% 16% ROW Developed 1% 2% Total Developed Markets 9% 9% Total Emerging Markets 16% 15% Total Company 10% 10% 5

7 Bausch + Lomb U.S. Performance Same Store Sales Growth Q Contact Lens 14% Surgical 24% Rx 16% Consumer 11% Generics 31% Total U.S 17% 6

8 Operational Highlights - Top Performing Business Units Business Unit 4Q Run Rate Y/Y Growth Asia $1.0 B >300% Neurology & Other $1.0 B >20% Aesthetics $400 M >300% Russia $400 M >300% Canada $400 M >10% Poland $250 M >30% Oral Health $125 M >20% 7

9 Adjusted Cash Flow From Operations $607 $345 $423 $408 Excluded Items: Legal Settlements Restructuring/Acquisition Related Costs Tax Benefit from Stock Options 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 2013 Adjusted Cash Flow from Operations = $1.8 Billion 8

10 2013 Performance v. Guidance Original Expectations Final Results Revenue $4.4 - $4.8 billion Revenue $5.8 billion Cash EPS $ $5.65 Cash EPS $6.24 $1.5 - $1.75 billion in Adjusted Cash Flow from Operations $1.8 billion in Adjusted Cash Flow from Operations Organic Growth*: 10% same store sales 7% pro forma * Generics excluded include Zovirax Franchise, Retin-A Micro, BenzaClin 9

11 Update on 2014 Expected Product Launches Product Business Unit Description Estimated Launch Date Bensal Derm Rx Topical treatment for the inflammation and irritation associated with many forms of dermatitis Launched CeraVe Baby Line Consumer OTC Moisturizer Launched envista Inserter Surgical Latest enhancements Approved and Launched Ossix Plus Oral Health Dental Membrane Launched Bausch+Lomb Ultra Contact Lens Silicone Hydrogel monthly disposable contact lenses Luzu Derm Rx Topical antifungal approved for tinea cruris, corporis, and pedis Neotensil Aesthetics Topical product that reduces the appearance of under-eye bags within one hour Launched To Be Launched 3/31 To Be Launched 3/31 Peroxiclear Consumer Hydrogen peroxide-based contact lens solution To Be Launched Late March Retin-A Micro.08% Derm Rx Topical medication to treat Acne Approved and To Be Launched June Victus Enhancements Surgical Launch of multiple VICTUS enhancements FDA corneal incision clearance Feb 14/ FDA lens fragmentation estimated 2H of 2014 Jublia Derm Rx Topical antifungal for onychomycosis 2H 2014 (pending FDA approval) Trulign ranges Surgical Broader range of powers Q2 BioTrue Oneday for Presbyopia Contact Lens Daily Contact Lens Launching regionally in 2014 Hyaluronic Acid for Lips Aesthetics Small-particle filler Q

12 Update on R&D Projects Program Status Result Next Steps Mapracorat Phase 3 Unsuccessful Discontinued Brimonidine (Eye Whitener) Phase 3 Successful Submit in 2015 Latanoprostene bunod (Glaucoma) Phase 3 Pending Receive data 2H 2014 MIM-D3 (Dry Eye) Phase 3 Pending Receive data Q Jublia Submitted Pending Launch 2H 2014 Retin-A Micro.08% snda Approved Launch in June Onexton (Acne) Phase 3 Submitted PDUFA date - Nov 2014 Bausch + Lomb Ultra Toric / Multifocal 510k Cleared Design Validation BioTrue Multifocal 510k Cleared Design Validation 11

13 Emphasis on Sales Professionals Total Sales Professionals % of Headcount (Excl Mfg) Total U.S 1,445 73% Asia 1,900 87% Europe 2,300 68% Latin America % Total Company 6,680 72% 12

14 Update on Aesthetic and Oral Health Expansions Aesthetics Increase facial injectable sales professionals in Q Total facial injectables sales force ~200 Integration of Solta complete Launch Neotensil March 31, 2014 Launch of Obagi 360 system OraPharma Completed sales force expansion by ~50% Recently launched Ossix Plus (dental membrane) in U.S. market Doubled the market share for Xerese (within dental market segment) from Dec Dec 2013 through sales promotion by OraPharma team 13

15 Financial Update Howard Schiller

16 Financial Summary Q Q FY 2013 FY 2012 Product Sales $2.0B $942M $5.6M $3.3B Ongoing Service/Alliance Revenue $32M $44M $129M $147M Total Revenue excl. one-timers $2.1B $986M $5.8B $3.4B One-time items N/A N/A N/A $45M Total Revenue $2.1B $986M $5.8B $3.5B Cost of Goods Sold% 2 (% of product sales) 26% 25% 25% 24% SG&A% 2 (% of total revenue) 22% 20% 22% 21% R&D Expense $60M $20M $157M $79M EBITA Margin 1 (% of total revenue) 49% 53% 50% 53% Cash EPS (Reported) $2.15 $1.22 $6.24 $4.51 w/o one-time items $2.15 $1.22 $6.24 $4.14 Adjusted Cash Flow from Operations $607M $423M $1.8B $1.3B Fully Diluted Share Count 341M 312M 327M 313M 1 Excludes all non-operating expenses 2 Excludes adjustments per Press Tables 2a & 2b 15

17 Q Outlook Cash EPS expected to be 40% / 60% 1H vs. 2H Q1 expected to be lowest quarter; Q4 expected to be highest quarter Generic impact greatest in Q1 Continued impact from Zovirax franchise & RAM New generics Wellbutrin XL (Canada) & Vanos (U.S.) Same store organic growth expected to be negative in Q1 due to generic headwinds, but positive in Q2 and for full year SG&A as a % of revenue is expected to increase in Q1 Launch costs from Luzu, Neotensil, Bausch + Lomb Ultra Expansion of Oral Health and Aesthetics sales forces Completion of late stage R&D programs ~$200m spend expected in 1H Fx impact Movement in currencies to negatively impact Q1 by ~$0.04 per share since budget approved in November 16

18 Fx Exposure Summary Currency % of Total Revenue Change since Budget U.S. ~50% N/A Euro ~15% 0.0% Russian Ruble ~5% -11% Canadian Dollar ~5% -7% Polish Zloty ~5% 2% Japanese Yen ~4% -5% All Others Combined - Turkish Lira - Argentinian Peso - Brazilian Real - Australian Dollar - All others ~20% -10% -33% -5% -5% N/A 17

19 Financial Guidance for % over 2013 Revenue $8.2 - $8.6 billion ~40% Cash EPS $ $8.75 ~40% Adjusted Cash Flow from Operations $2.4 - $2.6 billion ~40% Includes Solta Does not include PreCision will update after close Fx Exposure ~$0.15 per share negative Cash EPS impact since budget was approved in November Significant Fx changes in a number of countries, including Russia, Canada, Japan, Australia, Brazil, Turkey, Argentina See Note 1 regarding guidance 18

20 Fourth Quarter and Full Year End 2013 Financial Results Conference Call February 27, 2014