Q3 2018 Investor Presentation - Jon Sigurdsson, President & CEO Sveinn Solvason, CFO 25 October 2018 - Össur
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Q3 2018 Investor Presentation Jon Sigurdsson, President & CEO Sveinn Solvason, CFO 25 October 2018
Highlights in Q3 2018
Sales EBITDA* Highlights in Q3
Q3 Sales split and organic growth Q3 EBITDA margin and USD million Sales
• Strong growth in Prosthetics, driven by
high-end products
23%
Prosthetics • Soft sales in B&S in the US & France
+11% 30 and rationalization in selected markets
21%
Profitability
47% 145 19% 25 • Increased profitability driven by
million 53% 21% scalability, strong sales growth and
B&S 17%
18% positive changes in product mix
+2%
• FX positively impacting EBITDA margin
15%
Q3 '17 Q3 '18 by about 30 basis points
Guidance
Sales growth Q3 9M EBITDA growth Q3 9M • CAPEX ~5% of sales (previous ~4%)
• Other parameters unchanged
USD 5% 7% USD 20% 13%
Acquisitions
Organic 7% 5% Local currency 22% 10%
• Össur recently acquired two companies
* Before special items
1
Q3 Sales highlights by business segments
Sales contribution in USD million
% Organic LCY USD
Growth
+6% +1% +7% - +7% -2% +5%
contribution
Segment
+11% +2%
growth
Note: Bridge is an approximation for growth contribution and figures in bridge are rounded to million
2
Q3 Sales highlights by geography
Americas EMEA APAC
6% growth 5% growth 26% growth
8%
46%
66 67 12
million million million
46%
• High-end products contributing to • Good performance in prosthetics in all • Strong growth in both prosthetics and
growth in both segments major market regions B&S
• Excellent performance in prosthetics • Soft sales in B&S in France • Excellent performance in China and
but soft quarter for B&S in the US • Product rationalization in B&S in Australia
• Own distribution companies growing selected markets
Note: Amounts are in USD and all growth numbers refer to quarter-on-quarter growth and measured in LCY unless otherwise stated
Percentages next to charts refer to % of total sales
3
Key ratios from the income statement
Financial results
Sales
USD million 9M '18 9M '17 Q3 '18 Q3 '17 • Strong organic growth of 7% in Q3 2018 resulting in
Sales 445 415 145 139 5% organic growth in 9M 2018
USD sales growth 7% 8% 5% 8% • Negative FX impact on sales in Q3 2018
LCY sales growth 5% 9% 7% 5%
Profitability
Organic sales growth 5% 4% 7% 3%
• Gross profit margin increasing to 64% in the
Gross profit margin 63 % 62 % 64 % 63 % quarter, driven by product mix
EBITDA* 82 73 30 25 • EBITDA* margin of 21% in Q3 2018 compared to
EBTDA margin* 18 % 17 % 21 % 18 % 18% in Q3 2017
EBITDA growth in LCY* 10 % 0% 22 % 3% • EBITDA* growing by 22% in local currency in the
quarter
EBIT margin 13 % 12 % 12 % 12 %
Effective tax rate 23 % 26 % 23 % 26 %
Net profit
Net profit* 46 35 16 11 • Step-up in value of investment in associated
Net profit margin* 10 % 8% 11 % 8% companies
Net profit growth* 33 % -5 % 43 % -14 % • Net profit margin of 11% and growing by 43%
* Before special items
4
Q3 EBITDA bridge
EBITDA margin bridge*
Gross profit (9% growth)
• Positive change in product mix, stable
unit cost, and savings from efficiency
initiatives
S&M (5% growth)
• New business development and
investments in emerging markets
R&D (-3% growth)
• Temporary decline
• Q4 expected to be higher and more in
line with a higher expense level in 1H
G&A (2% growth*)
• Scalability with strong sales growth
* Before special items
Note: Amounts are in USD and all growth numbers refer to quarter-on-quarter growth and measured in LCY unless otherwise stated
Operational expenses delta in USD refers to quarter-on-quarter changes and measured in LCY 5
Status on efficiency initiatives
Initiative Completion Status Update on progress Estimated savings
USD million
• Investments in equipment in
Mexico
12
Manufacturing • West coast distribution facility
and 2020 On track closed and moved to our ~10
10
distribution Mexico manufacturing facility,
with savings already
beginning to materialize 8
~6
6
• Good progress made 4
Strategic ~3
2020 On track • Currently working on several
sourcing
categories 2
0
2017 2018 2019 2020
Expect to expense USD ~6 million in Q3 2019 as special items
Note: Össur announced efficiency initiatives in September 2017. For further information see company announcement no. 68/2017.
6Q3 Free cash flow bridge
Free cash flow bridge in USD million*
Operating profit
• Strong profitability in the quarter
NWC
• Reverting to a more normalized level
compared to previous quarters in 2018
Taxes
• Higher cash tax in line with growing
profit from operations
CAPEX
• Efficiency initiatives in addition to
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
7Guidance for full year 2018
Guidance Guidance
2018 2018 9M 2018 Actual 2017
(current) (as per July)
Sales growth
4-5% 4-5% 5% 5%
Organic
EBITDA margin
Before special ~19% ~19% 18% 18%
items
CAPEX
~5% ~4% 5% 3%
% of sales
Tax
23-24% 23-24% 23% 25-26%*
Effective tax rate
* The tax rate is shown as normalized for all the one-time benefits impacting the tax rate in the year. Reported effective
tax rate amounted to 16% in the FY 2017.
8Q&A
Sales
• Strong growth in Prosthetics, driven by high-end products
• Soft sales in B&S in the US & France and rationalization in
selected markets
Profitability
• Increased profitability driven by scalability, strong sales growth
and positive changes in product mix
• FX positively impacting EBITDA margin by about 30 basis
points
Guidance
• CAPEX ~5% of sales (previous ~4%)
• Other parameters unchanged
Acquisitions
• Össur recently acquired two companies
9Financial calendar and upcoming events & conferences
Meet with us
HSBC Healthcare Day 2018 (GE) 12 November 2018
Jefferies London Healthcare Conference (UK) 15 November 2018
Nordea Tech & Medtech/Life Science Seminar (SE) 26-27 November 2018
DNB Nordic-American Life Science Conference (US:NY) 29 November 2018
Danske Bank Winter Seminar (DK) 4 December 2018
SEB Nordic Seminar (DK) 7-9 January 2019
Carnegie Nordic Healthcare Seminar (SE) 5-6 March 2019
Barclays Global Healthcare Conference (US:FL) 12-14 March 2019 Further information
David Hreidarsson
Goldman Sachs 16th Annual European Medtech and
4-5 September 2019 Investor Relations Manager
Healthcare Conference (UK)
e-mail: dhreidarsson@ossur.com
Tel: +354 515 1380
Financial calendar
Interim Report Q4 2018 and Consolidated Financial
5 February 2019 Össur press releases by e-mail
Statements for FY 2018
If you wish to receive Össur press releases by e-mail
Annual General Meeting 7 March 2019 please register on our website: www.ossur.com/investors.
10Forward-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.
Statements containing the financial outlook for 2018 and the following years naturally involve © ÖSSUR.
risks 24-Oct-18
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.You can also read
