Avanos Medical, Inc. · NYSE:AVNS
Avanos Medical — Q1 2023 Earnings Presentation
20 slides from Avanos Medical's earnings presentation, May 3, 2023
Slide 1: Q1 2023 Earnings Presentation
Q1 2023 Earnings Presentation May 3, 2023 Getting patients back to the things that matter.
Slide 2: Presenters and agenda
Joe Woody Michael Greiner Chief Executive Officer Senior Vice President, CFO & Chief Transformation Officer Business Progress Q1 Results & 2023 Against 2023 Priorities Planning Environment 2
Slide 3: Forward-Looking Information; Non-GAAP Financial Measures
FORWARD-LOOKING INFORMATION Certain matters in this presentation, including expectations and planning assumptions, any comments about our expected performance, and any estimates, projections, or statements relating to our business plans, objectives, acquisitions and transformation initiatives, const
Slide 4: Reflections on Performance
Reflections on Performance • Overall results in line with our expectations • Continue to experience consistent demand throughout our product portfolio • Challenging but improved supply chain • Remain focused on getting patients back to the things that matter as we meet customer needs 4
Slide 5: First Quarter Performance: Start as Expected
First Quarter Performance: Start as Expected • Achieved net sales of $192 million. Excluding currency and the impact of products no longer sold, organic growth was unfavorable 0.7% • Generated $0.27 of adjusted diluted EPS and greater than $26 million of adjusted EBITDA • Improved adjusted gross mar
Slide 6: Chronic Care Growth Driven by Digestive Health
Chronic Care Growth Driven by Digestive Health Chronic Care Sales * • Chronic Care revenue up more than 5% $125 Millions (constant currency / normalized sales) $121 • Digestive Health grew over 10% $120 $117 • Maintained positive trend; alleviated supply constraints $115 • Continued execution for Ne
Slide 7: Pain Products Struggle in First Quarter
Pain Products Struggle in First Quarter Pain Management Sales * Millions • Pain Management down 10% $80 (constant currency / normalized sales) $78 $76 $76 • Interventional Pain grew 1% $74 $72 $71 • Supply challenges persist and will continue $70 through the first part of 2023 $68 $66 • HA 3-shot (T
Slide 8: Priorities for Reimagining Our Business
Priorities for Reimagining Our Business Cost Capital 1 Optimization 2 Portfolio 3 4 Management Allocation Strategic & Transform the Additional Cost Continued Efficient Commercial Product Portfolio Management Capital Allocation Optimization Initiatives to Strategies to Enhance Operating Expand Return
Slide 9: Q1 2023 Results
Q1 2023 Results Michael Greiner Senior Vice President, CFO & Chief Transformation Officer
Slide 10: First Quarter Performance
First Quarter Performance Sales Adj. Gross Profit Adj. EBITDA Adj. Diluted EPS Millions Millions Millions $197 $192 $110 $26 $0.27 $23 $0.25 $108 3.0% -0.7% 55.9% 56.4% 11.7% 13.6% Q1 2022 Q1 2023 Q1 2022 Q1 2023 Q1 2022 Q1 2023 Q1 2022 Q1 2023 Sales growth % presented on a constant currency basis a
Slide 11: Expanding Margins
Expanding Margins Adjusted gross margin improved 50 bps compared to first quarter of 2022 • Favorable price, manufacturing efficiencies and lower freight expenses • Anticipate gross margin at or above 56% throughout 2023 Like last year, our SG&A margin profile will improve throughout the year • Repo
Slide 12: 2023: Affirming Guidance
2023: Affirming Guidance We remain confident in our ability to meet our guidance for the year • Operating and EBITDA margin improvement by at least 100 bps • Expect to earn between $1.60 and $1.80 of adjusted diluted EPS • Deliver $60 million of free cash flow, excluding the one-time cash costs asso
Slide 13: A 3-Year Transformation Journey
A 3-Year Transformation Journey Portfolio Rationalization $45M-$55M Enhanced Cost ROIC Gross Structure Savings Improved Profitability 13
Slide 14: Thank You
Thank You
Slide 15: Appendices: Non-GAAP Reconciliations
APPENDICES Non-GAAP Reconciliations
Slide 16: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS In millions Gross Profit Three Months Ended March 31, 2023 2022 As reported $ 104.5 $ 106.6 Acquisition and integration-related charges — 0.7 Intangibles amortization 3.6 3.1 As adjusted, non-GAAP $ 108.1 $ 110.4 Gross profit margin, as reported 54.5 % 54.0 % Gross profit ma
Slide 17: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS In millions Income (Loss) Before Taxes Three Months Ended March 31, 2023 2022 As reported $ (0.4) $ 7.3 Acquisition and integration-related charges 1.5 1.7 Transformation Process 8.9 — EU MDR Compliance 1.1 1.6 Intangibles amortization 6.3 5.7 As adjusted, non-GAAP $ 17.4 $
Slide 18: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS In millions Net Income (Loss) Three Months Ended March 31, 2023 2022 As reported $ (0.5) $ 5.4 Acquisition and integration-related charges 1.5 1.7 Transformation Process 8.9 — EU MDR Compliance 1.1 1.6 Intangibles amortization 6.3 5.7 Tax effects of adjusting items (4.6) (2.
Slide 19: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS In millions EBITDA Three Months Ended March 31, 2023 2022 EBITDA, as reported $ 14.7 $ 19.7 Acquisition and integration-related charges 1.5 1.7 Transformation Process 8.9 — EU MDR Compliance 1.1 1.6 Adjusted EBITDA $ 26.2 $ 23.0 Free Cash Flow Three Months Ended March 31, 20
Slide 20: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS In millions, except per share amounts 2023 Outlook Estimated Range Diluted earnings per share (GAAP) $ 0.71 to $ 1.00 Intangibles amortization 0.39 to 0.39 Restructuring and transformation 0.34 to 0.28 EU Medical Device Regulation 0.16 to 0.13 Adjusted diluted earnings per s