Slide 1: Alcon 3Q20 Earnings Presentation
Alcon Earnings Alcon 3Q20 Earnings Presentation November 11, 2020 Business Use Only | 1
Slide 2: Legal Disclaimers
Legal Disclaimers Forward-Looking Statements This document contains “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward- looking statements can be identified by words such as: “anticipate,” “inte
Slide 3: Agenda
Agenda Key Topics Financial Results Outlook 3
Slide 4: Key Topics
Key Topics
Slide 5: Strong execution enabled Alcon to outperform market
Strong execution enabled Alcon to outperform market (1) (2) (1) (2) • Rebound of surgical procedures as hospitals and private clinics • Momentum from new product launches increase patient flow • Share gains in daily SiHy market supported by launch of • Research suggests surgeons are refilling new pa
Slide 6: Organizational resilience
Organizational resilience • Associates: full employment while maintaining continuous operations (1) • Advancing separation: accelerating IT migration, exited >90% of TSAs • Transformation on schedule: standing up Global Service Centers, simplifying processes and streamlining work in core support fun
Slide 7: Momentum in new product launches
Momentum in new product launches PanOptix • Strong adoption and patient conversion to PanOptix (1) • US PC-IOL share >75% in Q3 • Continued ramp up in Japan, controlled launch in China • Favorable feedback for Vivity's pilot at select practices in Europe Precision1 • Launch of Precision1 sphere driv
Slide 8: Surveys point to favorable demand trends in eye care
Surveys point to favorable demand trends in eye care 90% 70% 45% 70% ~90% of contact lens ~70% of contact lens ~45% are reporting Monthly cataract wearers surveyed are wearers surveyed are dry eye due to referrals have returning to normal willing to pay more increased screen returned to ~70% of (2)
Slide 9: 3Q20 Select Financial Highlights
3Q20 Select Financial Highlights TOP LINE PROFITABILITY CORE EPS CASH GENERATION (1) (1) (1) Third Party Sales Core Operating Margin Core Diluted EPS Free Cash Flow ($M) (%) ($) ($M) 3Q19 1,841 3Q19 17.4 3Q19 0.46 YTD19 260 3Q20 1,818 3Q20 15.3 3Q20 0.39 YTD20 115 Strong recovery in both 3Q20 core o
Slide 10: IFRS Results
IFRS Results
Slide 11: 3Q20 & YTD IFRS Results
3Q20 & YTD IFRS Results Worldwide Net Sales Operating Margin EPS $1,841M $1,818M (1.0)% (7.1)% ($0.14) ($0.30) 3Q20 3Q19 3Q20 3Q19 3Q20 3Q19 3Q20 (1)% Worldwide Net Sales Operating Margin EPS 5,481 4,838 (2.2)% (12.9)% ($1.16) ($1.28) YTD YTD19 YTD20 YTD19 YTD20 YTD19 YTD20 (12)% 11
Slide 12: 3Q20 IFRS to Core Operating Income bridge
(1) 3Q20 IFRS to Core Operating Income bridge 18 279 14 12 48 61 255 (129) IFRS Amortization Impairment Separation Transformation Post- Other items Core of certain of intangible costs costs employment intangible assets benefits assets (1) Core operating income is a non-IFRS measure. An explanation o
Slide 13: Core Results
Core Results
Slide 14: 3Q20 Core Results
(1) 3Q20 Core Results Worldwide Net Sales Core Operating Margin Core Diluted EPS $1,841M $1,818M $0.46 17.4% 15.3% $0.39 3Q19 3Q20 3Q19 3Q20 3Q19 3Q20 (1)% cc 40 bps negative impact from FX $(0.02) from COVID-19 related charges (1) Core operating margin, core EPS, and constant currency growth, inclu
Slide 15: YTD 2020 Core Results
(1) YTD 2020 Core Results Worldwide Net Sales Core Operating Margin Core Diluted EPS $5,481M 17.2% $4,838M $1.43 10.4% $0.63 YTD19 YTD20 YTD19 YTD20 YTD19 YTD20 (11)% cc 50 bps negative impact from FX $(0.19) from COVID-19 related charges (1) Core operating margin, core EPS, and constant currency gr
Slide 16: Mix of Vision Care and Surgical Products
Diversified portfolio across businesses and geographies Mix of Vision Care and Surgical Products Vision Care $0.8B (45%) Surgical $1.0B (55%) Ocular Health (37%) Implantables (29%) • Dry eye products • Monofocal intraocular lenses (IOLs) • Allergy eye drops • Advanced technology IOLs • Contact lens
Slide 17: Surgical: momentum from product launches and market recovery
Surgical: momentum from product launches Net Sales and market recovery (USD $M) (1) (USD) (CC) $1,019 (2)% (2)% $996 + • Strong continued adoption of PanOptix • Favorable feedback from European pilot of Vivity $287 +2% $290 +1% • Monofocal IOLs in line with surgical procedures - • Consumables reflec
Slide 18: Vision Care: product launches and US-led market recovery
Vision Care: product launches and US-led Net Sales market recovery (USD $M) (USD) (CC)(1) • Healthy demand for Precision1 in the US, driven by $822 $822 —% —% + strong commercial execution • Precision1 gains in new and switch fits • Solid growth in Systane; increased screen time $518 $517 —% (1)% +
Slide 19: Core operating margin bridge 3Q20 vs 3Q19
(1) Core operating margin bridge 3Q20 vs 3Q19 (% of net sales) Key Drivers: • GM: Inventory provisions and higher unabsorbed manufacturing overhead 17.4 • SG&A: Disciplined cost management partially offset by credit losses related to COVID-19 • R&D: Timing of external project spend • Other income/ex
Slide 20: Core operating margin bridge YTD20 vs YTD19
(1) Core operating margin bridge YTD20 vs YTD19 (% of net sales) Key Drivers: 17.2 • GM: Lower sales leverage, inventory provisions and higher unabsorbed manufacturing overhead • SG&A: Mainly expense deleverage and provisions for credit losses related to COVID-19, partially offset by reductions in d
Slide 21: Balance sheet and cash flow to support key investments
Balance sheet and cash flow to support key investments Cash and cash equivalents $1.4 billion YTD cash flows from operations $384 million (1) YTD free cash flow $115 million YTD Capex $269 million Investing in new contact lens manufacturing lines Debt $4.1 billion Raised $750 million in senior notes
Slide 22: Serving customers, doctors and patients
Serving customers, doctors and patients See Brilliantly 22
Slide 23: Appendix
Appendix
Slide 24: Appendix: Non-IFRS measures as defined by the Company
Appendix: Non-IFRS measures as defined by the Company Alcon uses certain non-IFRS metrics when measuring performance, including when measuring current period results against prior periods, including core results, percentage changes measured in constant currencies, and free cash flow. Because of thei
Slide 25: Reconciliation of IFRS to Core Results
Reconciliation of IFRS to Core Results Three months ended September 30, 2020 Amortization of Post- IFRS certain intangible Separation Transformation employment Other Core (1) (2) (3) (4) (5) (6) ($ millions except (loss)/earnings per share) results assets Impairments costs costs benefits items resul
Slide 26: Reconciliation of IFRS to Core Results
Reconciliation of IFRS to Core Results Three months ended September 30, 2019 Amortization of certain Separation Transformation Other (1) (2) (3) (4) ($ millions except (loss)/earnings per share) IFRS results intangible assets costs costs items Core results Gross profit 950 252 4 — (31) 1,175 Selling
Slide 27: Reconciliation of IFRS to Core Results
Reconciliation of IFRS to Core Results Nine months ended September 30, 2020 Amortization of Post- certain intangible Separation Transformation employment (1) (2) (3) (4) (5) (6) ($ millions except (loss)/earnings per share) IFRS results assets Impairments costs costs benefits Other items Core result
Slide 28: Reconciliation of IFRS to Core Results
Reconciliation of IFRS to Core Results Nine months ended September 30, 2019 Amortization of certain Transformation (1) (2) (3) (4) (5) ($ millions except (loss)/earnings per share) IFRS results intangible assets Separation costs costs Legal items Other items Core results Gross profit 2,749 754 7 — —
Slide 29: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow The following is a summary of Alcon free cash flow for the the nine months ended September 30, 2020 and 2019, together with a reconciliation to net cash flows from operating activities, the most directly comparable IFRS measure: ($ millions) 2020 2019 Net cash flows
Slide 30: Alcon
Alcon SEE BRILLIANTLY