Invacare Corporation Third Quarter 2021 Conference Call Webcast
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Invacare
Corporation
Third Quarter 2021
Conference Call
Webcast
Invacare 3Q21 Earnings Release and Conference Call Website Slides – October 27, 2021Forward-Looking Statements
This presentation contains forward-looking statements within the meaning of the “Safe Harbor” provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements are those that describe future outcomes or
expectations that are usually identified by words such as “will,” “should,” “could,” “plan,” “intend,” “expect,”
“continue,” “forecast,” “believe,” and “anticipate” and include, for example, any statement made regarding the
company's future results. Actual results may differ materially as a result of various risks and uncertainties, including those
expressed in the cautionary statement in the company’s earnings press release for the third quarter 2021 posted on
www.invacare.com/investorrelations, as well as in the company's annual reports on Form 10-K, quarterly reports on Form
10-Q and other filings with the Securities and Exchange Commission. The company may not be able to predict and may
have little or no control over many factors or events that may influence its future results and, except as required by law,
shall have no obligation to update any forward-looking statements.
Financial results presented are as of September 30, 2021, unless otherwise noted.
Non-GAAP Financial Measures
Some of the information in this presentation is derived from the company’s consolidated financial data but not
presented in its financial statements prepared in accordance with U.S. generally accepted accounting principles
(GAAP). Certain of these data points are considered “non-GAAP financial measures” under Securities and Exchange
Commission rules. These non-GAAP financial measures supplement the company’s GAAP disclosures and should not be
considered an alternative to the GAAP measure. The reconciliations to their most directly comparable GAAP financial
measures are included in the accompanying table and Appendix.
Invacare 3Q21 Earnings Release and Conference Call Website Slides – October 27, 2021 2Strong Demand Across all Key Product Categories
❑ Persistent demand yielding net sales growth
– Driven by a double-digit increase in lifestyle products in Europe and
high single-digit growth in mobility & seating in North America $224.2 million
– Respiratory sales remain elevated
– Paired with strong new order intake, excess backlog remained higher
Reported Net Sales*
than typical compared to pre-pandemic levels, which is expected to * Constant currency net sales growth of 2.9%
drive sequential sales growth
❑ Gross profit benefited from favorable sales mix driven
by higher sales in all key product categories $18.1 million
❑ Free Cash Flow usage improved sequentially Adjusted EBITDA**
** Includes $10.1 million CARES Act benefit
– Reflects increased inventory of $10.1 million from 2Q21 to mitigate
supply chain challenges and to support sales growth
– Anticipated to improve materially in 4Q21
($6.1) million
Free Cash Flow
All key metrics within guidance range
Invacare 3Q21 Earnings Release and Conference Call Website Slides – October 27, 2021 3Expecting Strong Finish to 2021
❑ Adapting with business environment, increasing agility
– While access to healthcare has not returned to pre-pandemic levels,
it continues to improve
– Actions in place to rectify gross margin impact from supply chain-
related disruptions expected to become effective starting in 4Q21
– Next phase of IT initiatives launched in North America
❑ Sustaining strong demand trends
– Favorable order intake for mobility & seating and lifestyle products
– Elevated demand for respiratory products driven by the pandemic
❑ Expected improvement in all key metrics in 4Q21
– Revenues: sequential growth driven by seasonally stronger sales and
improved operations to partially reduce excess backlog
– Gross Margin: actions taken in 3Q21 expected to positively impact
4Q21 and beyond
– Adjusted EBITDA: profitability to accelerate driven by sales growth,
manufacturing efficiencies and SG&A leverage
– Free Cash Flow: improve materially driven by increased profitability
and reduced working capital
Invacare 3Q21 Earnings Release and Conference Call Website Slides – October 27, 2021 4Financial Results Invacare 3Q21 Earnings Release and Conference Call Website Slides – October 27, 2021 5
Key Financial Metrics – Consolidated 6
Key Metrics As compared to 3Q20
❑ Constant currency net sales increased 2.9%
Change – Driven by 5.2% growth in lifestyle products and 1.8% growth in
(in millions USD) 3Q21 3Q20
Fav (Unfav) mobility & seating products
❑ Gross profit increased $0.3 million
Net Sales $224.2 $211.9 5.8% – Gross margin decreased 140 basis points due to supply chain-
related disruptions
Constant Currency Net Sales $218.0 $211.9 2.9% – Partially offset by favorable product mix
❑ Constant currency SG&A expense decreased 1.2%
Gross Profit $60.3 $60.0 0.4%
– Spending benefited from lower employee costs, including
reduced stock compensation expense
Gross Profit % of Net Sales 26.9% 28.3% (140 bps)
– Partially offset by unfavorable foreign currency transactions
SG&A $56.1 $55.5 (1.1%) ❑ Operating income (excl. goodwill impairment) increased by $0.9
million
– Driven by sales growth and lower restructuring costs
Constant Currency SG&A $54.9 $55.5 1.2%
– Including goodwill impairment, operating loss increased $27.7
Operating Income (Loss) ($24.8) $2.9 -- million
❑ Adjusted EBITDA increased $8.3 million
Operating Income (excl. – Excluding the CARES Act benefit, Adjusted EBITDA was $8.0 million
$3.8 $2.9 29.6%
goodwill impairment)* ❑ Free cash flow usage increased $4.3 million
Adjusted EBITDA $18.1 $9.8 83.9% – Higher investment in working capital to support net sales growth
– Inventory levels increased $10.1 million from 2Q21 - expected to
Free Cash Flow Usage ($6.1) ($1.8) -- convert to cash in the next few quarters
* Non-cash goodwill impairment of $28.6 million
Continued momentum sets the stage for a strong 4Q21
Invacare 3Q21 Earnings Release and Conference Call Website Slides – October 27, 2021 6Net Sales by Product Line – Consolidated 7
Key Metrics As compared to 3Q20
❑ Lifestyle
Change
(in millions USD) 3Q21 3Q20 – Constant currency net sales increased 5.2% driven by
Fav (Unfav)
growth in Europe
❑ Mobility & Seating
Reported Sales $224.2 $211.9 5.8%
– Constant currency net sales increased 1.8%
Lifestyle $103.6 $95.5 8.4% – Growth in North America and Asia Pacific
– Partially offset by declines in Europe
Mobility & Seating $88.1 $84.1 4.8% ❑ Respiratory
– Constant currency net sales increased 1.3%, with
Respiratory $26.3 $25.7 2.4% continued strong demand globally influenced by the
pandemic
Rentals and Services * $6.2 $6.6 (6.2%)
* Previously reported as Other
Strong demand drove constant currency net sales growth
Invacare 3Q21 Earnings Release and Conference Call Website Slides – October 27, 2021 7Key Financial Metrics – Europe 8
Key Metrics As compared to 3Q20
❑ Constant currency net sales increased 4.5%
Change
(in millions USD) 3Q21 3Q20 – Driven by 17.1% growth in lifestyle products, primarily
Fav (Unfav)
manual wheelchairs and hygiene product, as a result of
improved product availability
Reported Sales $127.0 $116.3 9.2%
– Partially offset by lower sales of respiratory and mobility &
seating products
Lifestyle $61.7 $50.3 22.6%
– Respiratory demand remains strong, but revenue
impacted by lack of availability of components to fulfill
Mobility & Seating $56.5 $54.9 3.1% orders
❑ Gross profit increased $3.2 million and gross margin
increased 20 basis points
Respiratory $4.2 $6.1 (30.4%)
– Driven by net sales growth and favorable product mix
Services * $4.6 $5.1 (9.4%) – Partially offset by higher freight costs and supply chain
disruptions
❑ Operating income increased $2.0 million
Operating Income $9.6 $7.6 25.7%
– Driven by increased gross profit from higher net sales
– Partially offset by increased SG&A expense
* Previously reported as Other
Benefit of leverage drove significant improvement in operating income
Invacare 3Q21 Earnings Release and Conference Call Website Slides – October 27, 2021 8Key Financial Metrics – North America 9
Key Metrics As compared to 3Q20
❑ Constant currency net sales decreased 0.4%
Change
(in millions USD) 3Q21 3Q20 – Growth of 7.1% in mobility & seating and 6.3% in
Fav (Unfav)
respiratory products
Reported Sales $88.1 $88.1 0.0% – Partially offset by lower sales of lifestyle products as
access to institutional and government customers
remains limited compared to pre-pandemic levels
Lifestyle $38.7 $41.8 (7.6%)
– Sales of respiratory products remained elevated due to
pandemic-related demand
Mobility & Seating $28.4 $26.6 6.9% ❑ Gross profit declined $2.8 million and gross margin declined
80 basis points
Respiratory $20.9 $19.4 7.5% – Due to unfavorable operating variances and higher
material and freight costs, including expediting costs
Services * $0.1 $0.2 (49.4%) – Partially offset by favorable product mix
❑ Operating loss of $1.5 million
Operating (Loss) Income ($1.5) $3.0 -- – Due to reduced gross profit and higher SG&A expense to
support revenue growth
* Previously reported as Other
Strong constant currency net sales growth in mobility & seating products
Invacare 3Q21 Earnings Release and Conference Call Website Slides – October 27, 2021 9Key Financial Metrics – All Other 10
Key Metrics As compared to 3Q20
❑ Constant currency net sales in Asia Pacific increased 17.0%
Change
(in millions USD) 3Q21 3Q20 – Driven by significantly higher sales of respiratory products
Fav (Unfav)
and a 15.5% increase in mobility & seating products
Reported Sales $9.1 $7.6 20.5% – Partially offset by lower sales of lifestyle products
❑ Operating loss improved by $2.2 million
Lifestyle $3.2 $3.4 (4.3%) – Driven primarily from lower Corporate SG&A expense
attributable to lower employment costs, including stock
compensation
Mobility & Seating $3.2 $2.7 18.8%
– Partially offset by lower profits in the Asia Pacific region
with lower gross margin impacted by higher material and
Respiratory $1.2 $0.2 523.1% freight cost and higher SG&A expense
Rentals and Services * $1.5 $1.3 13.4%
Operating Loss ($3.9) ($6.1) 36.6%
* Previously reported as Other
Strong sales growth in Asia Pacific region
Invacare 3Q21 Earnings Release and Conference Call Website Slides – October 27, 2021 10Balance Sheet Supports Strategic Growth
Total Debt * Cash and Working Capital
Total Debt of $318 million comprised of: Cash of $74 million:
In 3Q21, the company received
- $279 million in convertible debt - Decreased primarily as a result of cash used forgiveness of its CARES Act debt
- $39 million of other debt including to fund working capital needs obligation of $10.1 million of
amounts drawn on the ABL credit facility principal and accrued interest.
and other debt Working Capital excl. cash of $73 million:
- Includes higher inventory levels of $10.1 In 3Q21, the company initiated
million in the quarter, a portion to mitigate accounts receivable factoring
supply chain challenges programs in Norway, Sweden and
Denmark which benefited free
cash flow by $2.5 million.
Convertible Debt Maturity Schedule
$160 $151 $120 $105
$140 $125 $100
$120
$80 $74 $73
$100
(millions)
(millions)
$80 $60
$60 $39
$40
$40
$20
$20 $3
$0 $0
2021 2022 2023 2024 2025 2026 12/31/20 09/30/21
Cash Working Capital excl. Cash
* Excludes $81.5 million of financing and operating lease obligations as of 9/30/21 as compared to $81.6 million as of 12/31/20
Invacare 3Q21 Earnings Release and Conference Call Website Slides – October 27, 2021 11Re-Affirming Full Year 2021 Guidance
The company reaffirms its financial guidance for full year 2021 Adjusted EBITDA
(in millions)
consisting of:
$40
❑ Constant currency net sales growth of -1% to 2%; $37.0
$30
❑ Adjusted EBITDA of $30 to $37 million; and, $31.9 $30.0
$28.7
❑ Free cash flow usage of $10 to $20 million. $20
$10
+11.1%
Full year Adjusted EBITDA guidance range excludes the CARES $6.6 +333.9%
$0
Act benefit recorded in 3Q21.
2018 2019 2020 2021 Est*
For 4Q21, the company anticipates sequential improvement in
Adjusted EBITDA and free cash flow as a result of constant Free Cash Flow
(in millions)
currency net sales growth and gross margin expansion.
$20
At year end, inventory levels are expected to remain elevated to $0 $0.0
($8.1) ($10.0)
mitigate supply chain challenges. In addition, due to anticipated
($20.0)
net sales growth in 4Q21 and timing of related collections, ($20)
($52.7)
accounts receivable are expected to be higher at year-end.
($40)
($60) 2018 2019 2020 2021 Est**
* Excludes CARES Act benefit recorded in 3Q21
** Includes one-time payments totaling approximately $15 million related to German severance and the repayment of delayed VAT and other taxes from 2020
Invacare 3Q21 Earnings Release and Conference Call Website Slides – October 27, 2021 12Positive Trends to Drive Sequential Improvement
❑ 3Q21 results were in line with expectations
❑ Easing of healthcare restrictions in key markets
continues to be slow, but steadily improving
❑ Adjusted EBITDA and free cash flow
anticipated to improve materially in 4Q21,
driven by constant currency net sales growth
❑ Gross margin expansion anticipated as actions
taken to mitigate elevated costs become
effective
❑ These positive trends instill confidence in
achieving full year 2021 financial guidance
Invacare 3Q21 Earnings Release and Conference Call Website Slides – October 27, 2021 13Thank you
for your time
Q&A
Invacare 3Q21 Earnings Release and Conference Call Website Slides – October 27, 2021 14Appendix: 3Q21 Financial Results Invacare 3Q21 Earnings Release and Conference Call Website Slides – October 27, 2021 15
Appendix: Reconciliation of Non-GAAP
Performance Metrics to GAAP Financial Measures
16
(Dollars in millions) 3Q21 3Q20 Non-GAAP Financial Measures
Net Loss ($22.8) ($7.3)
Income Taxes 1.8 2.1
Some of the information in this presentation is derived from the company’s
Loss before Income Taxes (20.9) (5.2)
consolidated financial data but not presented in its financial statements
Interest Expense, net 6.3 7.4
prepared in accordance with U.S. generally accepted accounting principles
Loss (gain) on debt extinguishment incl. financing charges & fees (10.1) 0.8
(GAAP). Certain of these data points are considered “non-GAAP financial
Operating Income (Loss) (24.8) 2.9 measures” under Securities and Exchange Commission rules. These non-GAAP
Impairment of Goodwill 28.6 0.0
financial measures supplement the company’s GAAP disclosures and should
not be considered an alternative to the GAAP measure. The reconciliations to
Depreciation and Amortization 4.2 3.7
their most directly comparable GAAP financial measures are included in the
EBITDA 8.0 6.6
company’s earnings press release for the third quarter 2021. The company
Gain on CARES Act Forgiveness 10.1 0.0 uses non-GAAP financial measures including the following:
Restructuring Charges 0.4 1.6
Stock Compensation (0.4) 1.6
Adjusted EBITDA 18.1 9.9 ❑ “Adjusted EBITDA” – EBITDA plus stock compensation, charges related to
restructuring activities and gain on CARES Act Forgiveness
Net Cash Provided (Used) by Operating Activities (0.8) 4.1
❑ “Constant currency net sales” – Net sales excluding the impact of foreign
Plus: Sales of Property and Equipment, including advances 0.0 (0.0)
currency translation and divestiture.
Less: Purchases of Property and Equipment (5.3) (5.9)
Free Cash Flow Usage (6.1) (1.8) ❑ “Constant currency SG&A” – SG&A excluding the impact of foreign
currency translation and divestiture.
Reported Net Sales % Change 5.8 (10.1)
❑ “EBITDA” – Earnings (loss) before income taxes, interest expense-net,
Less: Foreign Exchange Impact 2.9 1.5
gain/loss on debt extinguishment including debt financing charges and
Less: Impact of Divested Entities 0.0 (1.6) fees, gain/loss on sale of business, impairment of goodwill and
Constant Currency Sales % Change 2.9 (10.0) depreciation and amortization.
Reported SG&A % Change 1.1 (12.6) ❑ “Free cash flow” – Net cash provided (used) by operating activities less
Less: Foreign Exchange Impact 2.3 1.5 purchases of property and equipment plus proceeds, including the
Less: Impact of Divested Entities 0.0 (1.6) advances from sales of property and equipment.
Constant Currency SG&A % Change (1.2) (12.5)
Invacare 3Q21 Earnings Release and Conference Call Website Slides – October 27, 2021 16You can also read
