Teva Pharmaceutical Industries Limited · TASE:TEVA
Teva Pharmaceutical Industries — Q4 2014 Earnings Presentation
36 slides from Teva Pharmaceutical Industries's earnings presentation, Feb 5, 2015
Slide 1: Q4 & Full Year 2014 Review
1 Q4 & Full Year 2014 Review February 5, 2015
Slide 2: Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995
2 Safe Harbor Statement under the U.S. Private Securities 2 Litigation Reform Act of 1995: This release contains forward-looking statements, which are based on management’s current beliefs and expectations and involve a number of known and unknown risks and uncertainties that could cause our future
Slide 3: Erez Vigodman, President & CEO
3 3 Erez Vigodman President & CEO
Slide 4: 2014 Main Achievements
4 2014 Main Achievements 4 Solidifying our Foundation Delivered ~$600m in net cost reductions Significantly improved cash flow from operations (from $3.2b to $5.1b) and free cash flow (from $2.3b to $4.3b) Substantially elevated quality and generated significant achievements On track to achi
Slide 5: 2014 Main Achievements
5 2014 Main Achievements 5 Developing our Growth Engines for the Future and Managing the Life-Cycle of Key Specialty Products In our Generics Business: Improved operating profit before G&A by 510bps from 16.8% in 2013 to 21.9% in 2014 Launched 19 product in the U.S., 209 in Europe and 87 in RO
Slide 6: 2014 Main Achievements
6 2014 Main Achievements 6 Delivering on Our Promise and Rewarding our Shareholders Created the platform to support continued margin improvement, $5.00 EPS floor and grow revenues and earnings organically from 2017 onwards Delivered on the high-end of our guidance despite significant FX headwind
Slide 7: Our Key Priorities for 2015
7 Our Key Priorities for 2015 7 Generate $500m in net cost reductions Deliver on the promise in our specialty pipeline Continue solidifying the generics business, improve its profitability by additional Strong focus on business development 400bps and drive organic growth Continue enhancing the compe
Slide 8: Deliver on the Promise in Our Pipeline
8 Deliver on the Promise in Our Pipeline 8 7 new launches generating $400m of new revenue; 4 target approvals; 4 target submissions; 7 clinical milestones Clinical results Planned submissions Expected approvals Planned launches CEP-33237 extended release Fluticasone Propionate Reslizumab (IV) for PI
Slide 9: Continue Teva's Business Model Transformation
9 Continue Teva’s Business Model Transformation 9 Targeting a Unique Space In The Industry Strategic focus on Where to play Most Competitive Differentiated core capabilities decision global operational integrated R&D and organic platform with growth highest quality standards Beyond chemical Strong m
Slide 10: Key Priorities for Business Development in 2015
10 Key Priorities for Business Development in 2015 10 Targeting a Unique Space In The Industry Growth Markets Attractive Pipeline Assets/ Portfolios Unique Health Solutions, Complex/Hard to Technologies, Services In-Market or Produce Assets or Close to Market Technologies Assets in Core TAs Generics
Slide 11: Eyal Desheh, EVP, Chief Financial Officer
11 11 Eyal Desheh EVP, Chief Financial Officer
Slide 12: Q4 2014 Results
12 Q4 2014 Results
Slide 13: Q4 2014 – A Solid Quarter for Teva
13 13 Q4 2014 – A Solid Quarter for Teva Q4 2014* Q4 2013* Change Revenues $m 5,168** 5,430 (5%) Operating Income 1,496 1,358 +10% $m (28.9%) (25.0%) Net Income 1,125 1,205 (7%) $m (21.8%) (22.2%) EPS 1.31 1.42 (8%) $ Cash flow from Operations 1,752 816 +115% $m *Net income, operating income and EPS
Slide 14: Foreign Exchange Impact
14 Foreign Exchange Impact 14 Q4 2014 Q4 2013 Change ($m) Fx Effect ( $m) Real Change Revenues $m 5,168 5,430 (262) (277) -- Operating income 1,496 1,358 138 (55) +14% $m
Slide 15: Q4 2014 – Non-GAAP Income Data
15 Q4 2014 – Non-GAAP Income Data 15 $m Except EPS Q4 14 Q4 13 Q4 2014 margins Q4 2013 margins Change Revenues 5,168 5,430 (5%) COGS 2,003 2,230 (10%) Gross Profit 3,165 61.2% 3,200 58.9% (1%) R&D 352 6.8% 409 7.5% (14%) S&M 997 19.3% 1,117 20.6% (11%) G&A 320 6.2% 316 5.8% +1% Operating Income 1,49
Slide 16: Cash Flow Trends
16 Cash Flow Trends $ million 1,752 1,424 269 1,053 206 Cash From Operations 816 898 171 225 1,483 Asset Purchase, Net 304 1,218 882 Free Cash Flow* 673 512 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 * Commencing Q4 2014, the data presented has been conformed to reflect the revised definition of free c
Slide 17: Quarterly Revenues Breakdown by Segment
17 Quarterly Revenues Breakdown by Segment 17 $ million 5,430 5,168 536 10% 456 9% 1,072 20% 1,122 22% OTC & Other 1,142 21% 1,121 22% Specialty ex-MS MS Generics 2,680 49% 2,469 48% Q4 13 Q4 14 * We changed the classification of certain of our products. The data presented have been conformed to ref
Slide 18: Quarterly Revenues Breakdown by Market
18 Quarterly Revenues Breakdown by Market 18 $ million 5,430 5,168 1,044 19% 973 19% 1,599 30% 1,387 27% ROW Europe US 2,787 51% 2,808 54% Q4 13 Q4 14
Slide 19: Quarterly Revenues
19 Quarterly Revenues 19 $ million 81 51 29 76 70 277 5,430 5,168 Q4 2013 Generics MS Specialty OTC & Other US OTC* Fx Q4 2014 ex-MS All data, except Fx, are net of the impact of foreign exchange fluctuations. *In July 2014, we sold our U.S. OTC plants, previously purchased from P&G, back to P&G. We
Slide 20: Quarterly Profit Breakdown by Segment
20 Quarterly Profit* Breakdown by Segment 20 $ million 1,674 1,816 0% 3% 18% 19% OTC & Others 51% 47% Specialty ex-MS MS Generics 31% 31% Q4 13 Q4 14 * Segment profit consists of gross profit, less S&M and R&D expenses related to the segment. Segment profit does not include G&A expenses, amortizatio
Slide 21: FY 2014 Results
21 FY 2014 Results
Slide 22: FY 2014 – Strong Results
22 22 FY 2014 – Strong Results 2014* 2013* Change Revenues $m 20,272 20,314 -- Operating Income 5,732 5,198 +10% $m (28.3%) (25.6%) EPS 5.07 5.01 +1% $ Cash flow from Operations 5,127 3,237 +58% $m Revenues were negatively affected by Fx ($346 million) and sale of U.S. OTC plants ($134 million) Excl
Slide 23: Foreign Exchange Impact
23 Foreign Exchange Impact 23 FY 2014 FY 2013 Change ($m) Fx Effect ($m) Real Change Revenues 20,272 20,314 (42) (346) +1% $m Operating income 5,732 5,198 534 (123) +13% $m
Slide 24: 2014 Guidance vs. Actual
24 2014 Guidance vs. Actual 24 December 2013 2014 Actual Guidance Revenues ($b) 20.3 19.9 – 20.8 GP (%) 59.9% 58 %– 60% R&D ($b) 1.4 1.3 – 1.45 S&M ($b) 3.8 4.0 – 4.1 G&A ($b) 1.2 1.2 Operating Income 5.73 5.35 – 5.65 Finance Expense 306 310 – 350 # of Shares 858 840 – 850 Tax (%) 20% 19% – 20% EPS
Slide 25: FY 2014 – Non-GAAP Income Data
25 FY 2014 – Non-GAAP Income Data 25 $ million except EPS 2014 2013 2014 margins 2013 margins Change Revenues 20,272 20,314 § COGS 8,129 8,419 (3%) Gross Profit 12,143 59.9% 11,895 58.6% +2% R&D 1,409 7.0% 1,422 7.0% (1%) S&M 3,785 18.7% 4,036 19.9% (6%) G&A 1,217 6.0% 1,239 6.1% (2%) Operating Inco
Slide 26: Cash Flow Trends
26 Cash Flow Trends 26 $ million 4,572 3,237 5,127 Cash From Operations 871 979 Asset Purchase, Net 928 Free Cash Flow* 4,256 3,593 2,309 2012 2013 2014 Dividends 855 1,089 1,156 Share Repurchases 1,161 497 500 * Commencing Q4 2014, the data presented has been conformed to reflect the revised defini
Slide 27: Annual Revenues Breakdown by Segment
27 Annual Revenues Breakdown by Segment 27 $ million 20,314 20,272 2,024 10% 1,898 9% 4,060 21% 4,151 21% OTC & Other 4,328 20% 4,237 21% Specialty ex-MS MS Generics 9,902 49% 9,814 49% 2013 2014 * We changed the classification of certain of our products. The data presented have been conformed to re
Slide 28: Annual Revenues Breakdown by Market
28 Annual Revenues Breakdown by Market 28 $ million 20,314 20,272 3,865 19% 3,815 19% 5,988 29% 5,823 29% ROW Europe US 10,461 52% 10,634 52% 2013 2014
Slide 29: Annual Revenues
29 Annual Revenues 29 $ million Revenues increased 2%, excluding the effect of U.S. OTC plants sale and Fx 79 277 134 120 38 20,314 346 20,272 2013 Generics MS Specialty OTC & Other US OTC* Fx 2014 ex-MS All data, except Fx, are net of the impact of foreign exchange fluctuations. *In July 2014, we s
Slide 30: Generics Segment Profitability Evolution
30 Generics Segment Profitability* Evolution 30 25.0% 21.9% 19.9% 16.7% 15.0% 2012 2013 2014 * Segment profit consists of gross profit, less S&M and R&D expenses related to the segment. Segment profit does not include G&A expenses, amortization and certain other items. Segment profitability is segme
Slide 31: Annual Profit Breakdown by Segment
31 Annual Profit* Breakdown by Segment 31 $ million 6,437 6,949 4% 3% 19% 20% OTC & Others Specialty ex-MS 51% 46% MS Generics 26% 31% 2013 2014 * Segment profit consists of gross profit, less S&M and R&D expenses related to the segment. Segment profit does not include G&A expenses, amortization and
Slide 32: Annual EPS
32 Annual EPS 32 $ cents 78 14 53 5 501 507 2013 Operating FX Tax # of Shares 2014 Income * Operating Income includes effect of finance expenses and minority share expenses of $ 2 cents.
Slide 33: 2015 Business Outlook – Reaffirmed Despite Currency Volatility
33 2015 Business Outlook – Reaffirmed Despite Currency Volatility 33 2015E Net Revenues ($b) 19.0-19.4 Gross Profit (%) 59.5%-61.5% R&D ($b) 1.3-1.4 S&M ($b) 3.3-3.5 G&A ($b) 1.1-1.2 Operating Income* ($b) 5.7-5.9 Finance Expenses ($m) 250-290 Tax (%) 19%-21% Number of Shares (M) 850-860 EPS* ($) 5.
Slide 34: Improved Financial Resources
34 Improved Financial Resources 34 Debt 12.2 11.8 11.2 10.6 10.3 ($b) Equity 23.6 23.7 23.4 22.6 23.0 ($b) Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Leverage 35% 34% 32% 31% 31% Debt/EBITDA 2.16 2.04 1.90 1.76 1.67
Slide 35: Teva's Dividend Payments
35 35 Teva’s Dividend Payments 350 Increasing quarterly dividend by 10% (in NIS) 1.50 Beginning in April 2015, our dividends will be declared and paid in USD 1.33 300 1.15 1.21 1.20 1.00 250 0.80 0.90 200 0.70 0.60 150 291 299 294 289 281 268 276 272 0.60 264 230 237 204 214 100 203 203 190 165 164
Slide 36: Q&A
36 36 Q&A
Teva Pharmaceutical Industries — Q4 2014 Earnings Presentation on 6ix