Slide 1: 3Q19 Earnings Conference
3Q19 Earnings Conference November 20, 2019
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 Highlights 3Q19 financial results 2019 guidance 3
Slide 4: Highlights
Highlights
Slide 5: Standing up new Alcon
Standing up new Alcon Completed commercial SAP implementation in Europe 85% of sales running through new SAP system Significant progress on installing new Vision Care manufacturing lines Second site ramping up manufacturing this year Executed a successful $2B notes offering Strengthening our long-te
Slide 6: Launched PRECISION1 in the US, the newest daily SiHy lens
Launched PRECISION1 in the US, the newest daily SiHy lens First daily SiHy lens with Smart Surface technology Sales force delivering fit-sets into targeted customers Opened now for distributor ordering Positive initial feedback from optometrists 6
Slide 7: Launched PanOptix, first tri-focal intra-ocular lens in the US
Launched PanOptix, first tri-focal intra-ocular lens in the US Successful placement of consignment sets at key Alcon and competitive accounts Introduced lens to significant number of key surgeons Clinical studies(1) among PanOptix wearers finds: ◦ 99% will choose the same lens again ◦ 98% will recom
Slide 8: Implementing multi-year transformation plan
Implementing multi-year transformation plan Accelerate strategy and drive long-term growth Transform Alcon to a more focused and agile company Reinvest savings to fuel innovation Support Alcon's strategy for creating long-term shareholder value 8
Slide 9: Reinvesting into key growth initiatives
Reinvesting into key growth initiatives Annualized run-rate savings ~$200-$225 million by 2023 Simplify infrastructure Create new global shared services Drive process improvement and automation Reinvest in growth priorities Accelerate R&D pipeline Strengthen commercial programs Develop customer-faci
Slide 10: 3Q19 IFRS Results
3Q19 IFRS Results
Slide 11: Third Quarter and YTD Results (IFRS)
Third Quarter and YTD Results (IFRS) Worldwide Net Sales Operating Margin EPS $1,841M $1,762M (16.1)% (1.0)% $(0.42) $(0.14) 3Q19 3Q18 3Q19 3Q18 3Q19 3Q18 3Q19 +4% $5,360M $5,481M (3.2)% (2.2)% $(0.32) $(1.16) YTD YTD18 YTD19 YTD18 YTD19 YTD18 YTD19 +2% YTD19 EPS includes separation and spin-readine
Slide 12: 3Q19 Core Results
3Q19 Core Results
Slide 13: Third Quarter 2019 Results (Core)
Third Quarter 2019 Results (Core)(1) Worldwide Net Sales Core Operating Core Diluted EPS Margin $1,841M 17.4% 17.0% $1,762M $0.50 $0.46 3Q18 3Q19 3Q18 3Q19 3Q18 3Q19 +6% cc (2) Includes -20 bps FX impact(2) 3Q19 includes $0.06/sh of interest expense on debt and write-off of unamortized issuance cost
Slide 14: Year-to-date 2019 Results (Core)
Year-to-date 2019 Results (Core)(1) Worldwide Net Sales Core Operating Core Diluted EPS Margin $5,481M $5,360M 17.8% $1.60 17.2% $1.43 YTD18 YTD19 YTD18 YTD19 YTD18 YTD19 +5% cc (2) Includes -70 bps FX impact(2) YTD 2019 includes $0.12/sh of interest expense on debt and write-off of unamortized issu
Slide 15: 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 $1B (55%) Implantables (28%) Ocular Health (37%) • Monofocal Intra-ocular lenses • Dry eye products • Advanced technology IOLs • Contact lens solution Implantables Ocular
Slide 16: Surgical growth continues momentum
Surgical growth continues momentum Net Sales (USD $M) (USD) (CC)(1) $965 $1,019 +7% • Double digit growth in AT-IOLs +6% + • Positive early feedback on PanOptix in the US • Steady growth in monofocals $287 +7% +8% $269 • Consumable pull-through from equipment upgrades + • Educational programs OUS dr
Slide 17: Innovation drives growth in Vision Care
Innovation drives growth in Vision Care Net Sales (USD $M) (USD) (CC)(1) + • Double-digit growth for DAILIES TOTAL1 • Strong customer demand for multi-focals $797 $822 +3% +4% $304 -1% n/a $306 + • Ongoing launch of Systane Complete • Strong momentum for other Systane family products $491 $518 +5% +
Slide 18: Core operating margin bridge 3Q19 vs 3Q18
Core operating margin(1) bridge 3Q19 vs 3Q18 (% of net sales) 1.1 0.4 17.6 17.4 17.0 (0.2) (0.7) (0.2) 3Q18 GM SG&A R&D Other FX 3Q19 income/expense (1) Core operating margin and constant currencies are non-IFRS measures. Refer to the Appendix for definitions of IFRS measures and reconciliations to
Slide 19: Core operating margin bridge YTD19 vs YTD18
Core operating margin(1) bridge YTD19 vs YTD18 (% of net sales) 0.4 0.4 17.9 17.8 (0.6) (0.1) 17.2 (0.7) YTD18 GM SG&A R&D Other FX YTD19 income/expense (1) Core operating margin and constant currencies are non-IFRS measures. Refer to the Appendix for definitions of IFRS measures and reconciliations
Slide 20: Managing capital allocation
Managing capital allocation Debt $3.5 billion $2B refinanced to strengthen capital structure Extending average maturity from 2 to 10 years Cash and cash equivalents $792 million YTD cash flows from operations $574 million YTD free cash flow(1) $260 million Capex $314 million YTD Investing in new VC
Slide 21: 2019 Guidance
2019 Guidance
Slide 22: On track towards full-year 2019 guidance
On track towards full-year 2019 guidance FY19 Outlook FY19 Outlook YTD19 (Previous) (Updated) Sales growth (1) 5% 3% – 5% 4% – 5% Core operating margin (2) 17.2% 17% - 18% 17% - 17.5% Core effective tax rate (3) 16.2% 17% - 19% 17% - 18% (1) Constant currency sales growth (cc) is a non-IFRS measure.
Slide 23: Standing up and transforming
Standing up and transforming New Alcon Launching new products and accelerating innovation Helping patients see brilliantly 23
Slide 24: Appendix
Appendix
Slide 25: Appendix: Non-IFRS measures as defined by the Company
Appendix: Non-IFRS measures as defined by the Company Alcon uses certain non-IFRS metrics when measuring performance, including when measuring current period results against prior periods, including core results, percentage changes measured in constant currencies, and free cash flow. Because of thei
Slide 26: Reconciliation of IFRS to Core Results
Reconciliation of IFRS to Core Results Three months ended September 30, 2019 Amortization of certain (1) (2) (3) ($ millions except (loss)/earnings per share) IFRS Results intangible assets Separation costs Other items Core Results Gross profit 950 252 4 (31) 1,175 Selling, general & administration
Slide 27: Reconciliation of IFRS to Core Results
Reconciliation of IFRS to Core Results Three months ended September 30, 2018 Amortization of certain Restructuring (1) (2) (3) (4) (5) ($ millions except (loss)/earnings per share) IFRS Results intangible assets Impairments items Legal items Other items Core Results Gross profit 568 249 337 (25) 1,1
Slide 28: Reconciliation of IFRS to Core Results
Reconciliation of IFRS to Core Results Nine months ended September 30, 2019 Amortization of certain (2) (3) (4) (1) ($ millions except (loss)/earnings per share) IFRS Results intangible assets Separation costs Legal items Other items Core Results Gross profit 2,749 754 7 (21) 3,489 Selling, general
Slide 29: Reconciliation of IFRS to Core Results
Reconciliation of IFRS to Core Results Nine months ended September 30, 2018 Amortization of certain Restructuring (1) (2) (3) (4) (5) ($ millions except (loss)/earnings per share) IFRS Results intangible assets Impairments items Legal items Other items Core Results Gross profit 2,313 751 376 (25) 3,
Slide 30: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow The following is a summary of Alcon free cash flow for the nine months ended September 30, 2019, together with a reconciliation to net cash flows from operating activities, the most directly comparable IFRS measure: ($ millions) Net cash flows from operating activiti
Slide 31: Alcon
Alcon SEE BRILLIANTLY