Enovis Corporation · NYSE:ENOV
Enovis — Colfax — Investor Day (December 2019)
69 slides from Enovis's investor day presentation, Dec 18, 2019
Slide 1: Investor Day December 2019
Exhibit 99.1 Investor Day December 2019Exhibit 99.1 Investor Day December 2019
Slide 2: Forward Looking Statements & Non-GAAP Disclaimer
Forward Looking Statements & Non-GAAP Disclaimer The following information may contain forward-looking statements, including forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, st
Slide 3: Agenda
Agenda 9:00 AM Colfax Portfolio Progress & Strategy Matt Trerotola ESAB Overview, Strategy and Shyam Kambeyanda 9:25 AM Platform Progress DJO Overview, Strategy and Brady Shirley 9:50 AM Platform Progress Colfax Financial Update & Guidance Chris Hix 10:25 AM Q&A 10:40 AM DJO Team DJO Breakout Sessio
Slide 4: Colfax Portfolio Progress and Strategy
Colfax Portfolio Progress and Strategy Matt Trerotola | President & CEO 4Colfax Portfolio Progress and Strategy Matt Trerotola | President & CEO 4
Slide 5: What You'll Hear Today
What You’ll Hear Today Powerful strategy, proven capabilities ▪ ESAB journey evidence of successful strategy over time ▪ DJO early progress encouraging Portfolio transformation complete ▪ Reshaped portfolio with higher margins, faster growth, less cyclicality ▪ Broader set of investment paths, signi
Slide 6: Strategy to Create Shareholder Value
Strategy to Create Shareholder Value What we are Multi-platform enterprise of market-leading businesses What we do Compound value by continuously improving our businesses and investing in acquisitions & innovation to build-out our platforms Leverage our business system to drive sustainable process i
Slide 7: Transforming The Colfax Portfolio
Transforming The Colfax Portfolio 2017-2019: Transformation 2020+: Diversified Tech Growth ▪ DJO Global acquired, $1.2B revenue▪ Grow existing businesses ▪ Divested Fluid Handling and Air & ▪ Accelerate growth with Gas Handling (~$2B revenue) strategic add-ons 1 ~$3.5bn sales Medical Medical Technol
Slide 8: Stronger Portfolio With Greater Upside
Stronger Portfolio With Greater Upside ▪ Recurring, run-rate businesses ▪ A global fab tech ▪ Med Tech business ▪ Focus on innovation technology leader with steady secular ▪ Continuous growth drivers ▪ Exposure to improvement with CBS faster-growing ▪ Significant CBS developing ▪ Consistent cash flo
Slide 9: The Power Of The New Colfax Portfolio
The Power Of The New Colfax Portfolio EU Market-leading positions in Fab Tech diverse & attractive US Med Tech ROW markets / applications Better organic growth with > 90% > 90% lower cyclicality (revenues Expected FCF Sales from conversion in recurring, run- and cash flow) 2020 rate products > 40% S
Slide 10: Proven Corporate Value Proposition
Proven Corporate Value Proposition Attract, Focus, Deploy CBS Values, Shape and Invest in Disciplined Capital Develop, and Processes, and Winning Strategies Allocation and Empower Talent Capabilities and Innovation Deployment A proven, repeatable approach to driving strong, consistent results 10Prov
Slide 11: Strong Focus On Talent Development
Strong Focus On Talent Development Our Culture Our Talent Imperatives Outstanding Talent PURPOSE 1 CBS-capable GMs and ops What we do for Creating better together. leaders; business-minded the world functional leads Full Bench 2 Depth & breadth for growth as well as deployment into Continuous improv
Slide 12: CBS Impacts Multiple Areas Of Our Business
CBS Impacts Multiple Areas Of Our Business... Continuous Improvement Focus Areas Standardized Toolset Policy Deployment Leadership Value Stream Standard Work Mapping Visual / Daily Value Pricing Management Problem 5S Solving Process Accelerated Voice Of The Product Customer Development A standardize
Slide 13: ...With Compounding Results
...With Compounding Results Improvement Journey – Concept Improvement Journey – In Practice Filler Metal On Time Delivery (% rate) Policy 92 Deployment 90 +700bps 88 Kaizen 86 Policy 84 Deployment 2014 2019F Major New Product Launches at ESAB Kaizen 14 Daily Management 11 8 Daily Daily 4 Management
Slide 14: Investing In Winning Strategies & Innovation
Investing In Winning Strategies & Innovation Strategy Shaping Process Process Results at ESAB ▪ CFX provocation / ESAB aspiration: − Expand and leverage global reach − Create step change in N. American position Execution Provocation − Develop innovative, leading full solution for market CFX role: CF
Slide 15: Disciplined Capital Deployment
Disciplined Capital Deployment Colfax Bolt-on M&A Performance Disciplined Process 1 Acquisition EV / EBITDA ▪ Proactive approach rooted in business strategy -3.5x ▪ Clear view of value creation thesis, synergy requirements ▪ Intense focus on commercial LTM at Acquisition 2nd Full Year diligence pre-
Slide 16: Building A Better ESAB
Building A Better ESAB 1 2 Core Growth Outperformance FY18 & 19YTD 3.3% ▪ Strong relative performance 2.5% globally ▪ Commercial and operating execution support continued strength 2018 2019YTD ▪ ~340 bps of margin improvement Fab Tech Adjusted EBITA Margin Growth ▪ Demonstrated ability to expand 14.
Slide 17: Successful DJO Integration
Successful DJO Integration Med Tech Quarterly YoY Core Growth, FY19 ▪ Positive customer response to improved delivery and new 5.5%+ product launches ▪ Early CBS results encouraging: 4.5% − Past dues down > 70% 3.5% − Fill rate up from mid-70s to 90% ▪ Focus areas: − Prevention and Rehabilitation sup
Slide 18: Strong Momentum In Our Businesses
Strong Momentum In Our Businesses… Strong Performance Strong Potential ▪ Winning with CBS, plenty of ▪ Beginning with CBS, focusing improvement headroom left on operational transformation ▪ Accelerating the pace of ▪ Re-invigorating vitality in innovation and growth Prevention & Rehabilitation ▪ Cap
Slide 19: ...And An Exciting Future For Colfax
…And An Exciting Future For Colfax Build a $3 billion Med Tech platform with MSD+ growth capability 1 Continue to outperform industry growth in Fab Tech 2 Pursue continuous improvement in operating margin across portfolio 3 Realize strong cash conversion to support proactive investment in 4 acquisit
Slide 20: ESAB Overview, Strategy and Progress
ESAB Overview, Strategy and Progress Shyam Kambeyanda | EVP & CEO, ESAB 20ESAB Overview, Strategy and Progress Shyam Kambeyanda | EVP & CEO, ESAB 20
Slide 21: We Shape the Future
WESHBaeE THES TURE
Slide 22: Strong Financial Performance
STRONG FINANCIAL PERFORMANCE. SALES & aEBITA ($ Billion, %) 214.5% 13.2% 13.2% 12.6% 11.5% = Accelerated product 32.2 development process 2.2 2.0 * Sales force effectiveness 19 18 ® Price management = Acquisitions performance ——$_ 2 _ 2 — ~/ 2015 «2016 «2017S 2018 = 2019F
Slide 23: Technological Leadership
TECHNOLOGICAL LEADERSHIP.
Slide 24: Truly Global Presence
» TRULY GLOBAL PRESENCE. RUSSIA ce Prec aly nd scceey EUROPE ont necaten oc Tiere trom, Iocan potion MIDDLE EAST & AFRICA co ing bratinton Mies Wma owt ‘SOUTH AMERICA, ket nade fousing on Val added welding alors
Slide 25: Winning With CBS
» WINNING WITH CBS. ss » Innovation and Growth » Operational Excellence and Margin Expansion » Investing in Talent
Slide 26: Accelerating Pace Of Innovation
ACCELERATING ss PACE OF INNOVATION. Product introductions (#) * Voice of Customer driving innovation = Executing product roadmaps * Leveraging open innovation 2015 2016 «201720182019 Filler Metals Equipment Automation & Digital Gas Equipment Bs
Slide 27: Capitalizing On Automation Trend
CAPITALIZING ON ss AUTOMATION TREND. ESAB Automation Growth a ay Coren 10% cAGR 2016 2019 Motion Phckope Matas Araiyics Robotics Ary pane ff = Process technology leader * Partnering with integrators (cis con ram SG AS * Best-in-class Filler Metals (actor/Orba Mech Motion : vvvgv = WeldCloud-enabled
Slide 28: Transforming Through Digital Solutions
TRANSFORMING THROUGH ss DIGITAL SOLUTIONS. Weld Sessions Shared (# Thousands) = Comprehensive digital solution * Solving customer pain points * Creating pull thru for all ESAB products * Acquisitions accelerating growth 0 strategies 2017 2018 2019 [CONNECTED SOLUTIONS >) > EDD IED) IED DID DID D292
Slide 29: Acquiring Into Attractive Spaces
ACQUIRING INTO ATTRACTIVE SPACES. Gyctcalty Margins” Tres ee v v v EATON Vv Vv Vv ewec ov v v v v v Gressose v v v
Slide 30: Driving Continuous Improvement Through CBS
DRIVING CONTINUOUS IMPROVEMENT THROUGH CBS. Safety (TRIR) ™ 80% below industrial benchmark’ 2016 2017 2018 2019F = Focusing on leading indicators and safe behaviors On Time Shipment (%) ® Driving continuous improvement culture = Reducing supply chain complexity 2016 2017 2018 2019 1010 Us beef abo S
Slide 31: Expanding Margins
» EXPANDING MARGINS. Price (%) 2017 2018 2019 ity/Sourcing (i kaizens) 2017 2018 2019 Plant Consolidation (i plants) 2018 2019 = Dynamic price management * Offsetting inflation and metal costs = Kaizen momentum delivering results ® Improved labor efficiency ® Created space for plant consolidation *
Slide 32: Investing In Talent
» INVESTING IN TALENT. ss Engagement Score (%) 7 i i ® Talented team 2017 2018 2019 = Engaged workforce * Investing in our people Participation Rate (°) pil 2017 2018 2019 Pathways GM program delivering
Slide 33: Exciting Future
+ EXCITING FUTURE. ss » Innovation Delivering Share Gain » Continuing our Digital Journey » Using CBS for Impact « Investing in Talent » Acquiring Great Companies
Slide 34: Future Begins Now
eee }URE BEGINSINOWE
Slide 35: DJO Overview, Strategy and Progress
DJO Overview, Strategy and Progress Brady Shirley | EVP & CEO, DJO 35DJO Overview, Strategy and Progress Brady Shirley | EVP & CEO, DJO 35
Slide 36: We Believe In Powering Motion
WE BELIEVE IN POWERING MOTION: We exist to get and keep people movingWE BELIEVE IN POWERING MOTION: We exist to get and keep people moving
Slide 37: DJO: Powering Motion
DJO: POWERING MOTION! th • 7 largest in attractive $50B Orthopedic market • Global leader in Bracing, returned to growth • Fast-growing surgical implants business, leader in reverse shoulder in US • Integration on track, starting CBS journey • Strong opportunities for margin improvement and innovati
Slide 38: DJO A Leader In The Attractive $50 Billion Orthopedic Care Market
DJO A LEADER IN THE ATTRACTIVE, GROWING $50 BILLION ORTHOPEDIC CARE MARKET ORTHOPEDIC MARKET, ~$50 Billion TOP ORTHO PLAYERS ($ Billions) 9.0 DePuy Synthes Zimmer Biomet 7.1 Joint Reconstruction 36% Stryker 6.3 3.2 Smith & Nephew Spine 18% 2.9 Medronic 2.0 Arthrex Trauma 14% 1.2 Sports Medicine 11%
Slide 39: Orthopedic Growth Driven By Aging Population And Secular Trends
ORTHOPEDIC GROWTH DRIVEN BY AN AGING POPULATION AND SUSTAINABLE SECULAR TRENDS MARKET MEGATRENDS 1 & GROWTH VOLUME GROWTH POPULATION • 65+ population from 600M to 10.2 9.7 1.0B in 2030 9.2 8.8 • 30% of global population is 8.4 obese or overweight 7.8 7.3 • Increasing incidence of lifestyle 6.9 6.5 d
Slide 40: DJO Business Units Advantaged In $22 Billion Served Market
DJO BUSINESS UNITS UNIQUELY ADVANTAGED IN $22 BILLION SERVED MARKET PREVENTION & REHABILITATION Bracing & Supports #1 Globally Bracing & ($3bn global market) Supports Rehabilitation Equipment #1 Globally ($1bn global market) #1 in US Footcare ($0.2bn US market) Rehab Footcare RECONSTRUCTIVE Surgical
Slide 41: DJO Positioned Along Full Orthopedic Continuum Of Care
DJO UNIQUELY POSITIONED ALONG FULL ORTHOPEDIC CONTINUUM OF CARE Prevention Repair Recovery PERFORMANCE PREVENTION SURGICAL RECOVERY REHAB • Athletic braces • Pre-op braces • Shoulders • Post-op braces • Traction devices • Muscle stimulation • Slings • Knees • Bone growth • Electrotherapy stimulators
Slide 42: Building On #1 Position In Bracing
BUILDING ON #1 POSITION IN BRACING BUILDING ON #1 POSITION IN BRACING
Slide 43: #1 In Bracing & Support
#1 IN BRACING & SUPPORT ~$3B GLOBAL MARKET Iconic brand is #1 Synonymous with #1 in hospitals and in performance and walking boots, leader acute care settings clinic channels in foot/ankle Breg Other Ossur • Strong #1 in the three largest segments Bauerfeind Bort • DJO stock & bill at almost 40% of
Slide 44: Innovation Drives Growth In Bracing
INNOVATION DRIVES GROWTH IN BRACING US BRACING SALES GROWTH • Brand reputation still very strong vs VITALITY INDEX • Returned to growth in 2019 Organic Growth Vitality Index • Improving innovation process with CBS 8% • Executing pipeline for sustained double 6% Double digit vitality digit vitality 4
Slide 45: Recent Product Launches With Category Leading Technology
RECENT PRODUCT LAUNCHES WITH CATEGORY LEADING TECHNOLOGY REFRESHING CORE PRODUCT LINES FILLING PRODUCT GAPS ICEMAN CLASSIC 3 ProCare XTEND 173 • Lowers cost by 25% • Improves position in higher growth spine segment • Innovative dual motor system for improved • Motion controlled flexion, extension an
Slide 46: Leading Connected Medicine In Bracing
LEADING CONNECTED MEDICINE IN BRACING CONNECTED MEDICINE • Expansion of post operative outpatient rehab through digital protocol delivery and monitoring • Improved outcomes through real time compliance tracking • Early discovery of critical factors to mitigate return to inpatient setting • Data coll
Slide 47: DJO Building On Leadership In Workflow Management And Automation
DJO BUILDING ON LEADERSHIP POSITION IN WORKFLOW MANAGEMENT AND AUTOMATION RD NEARLY 2/3 OF 6750 CLINICS UTILIZE STOCK & BILL PROGRAMS Orthopedic Clinics Workflow • Orthopedic clinics have significant stocking, fitting, and billing workflow 36% • Most clinics use a “stock and bill” solution Non-Stock
Slide 48: MotionMD – Purpose Built SaaS Platform
® MotionMD – A PURPOSE BUILT SaaS PLATFORM TO STREAMLINE ORTHOPEDIC CLINIC WORKFLOW Workflow Apps Surgeon/Patient Apps ® MOTIONMD OFFICECARE BENEFIT BREAKTHROUGH APPLICATION ® • Higher reimbursement rate, faster collections • VeriPro benefits verification ® • >40% reduction in inventory volume • Oar
Slide 49: Driving Growth At DJO Surgical
DRIVING GROWTH AT DJO SURGICALDRIVING GROWTH AT DJO SURGICAL
Slide 50: Driving Double Digit Growth In Surgical
DRIVING DOUBLE DIGIT GROWTH IN SURGICAL ~$17B GLOBAL MARKET • Pioneer and leader in Reverse Shoulder Other • Rapid growth in $16B Knee / Hip segment Shoulder • Industry leading KOL (Key Opinion Leader) teams Knee Hip Sustaining double-digit organic growth: 1. Build on demonstrated outcome performanc
Slide 51: US Orthopedic Implant Market Overview
US ORTHOPEDIC IMPLANT MARKET OVERVIEW MARKET CAGR DJO 2018 & 2019 ~1.6 MILLION JOINT REPLACEMENT TO 2022 GROWTH PROCEDURES (2018) (’000) (billions) Shoulder $1.1 6% Mid-teens 139 (8% Reverse Shoulder) 883 Knee $4.6 2% Double digit 562 $3.2 2% Double digit Hip ® Source: SmartTRAK Copyright © 2019 by
Slide 52: Better Demonstrated Outcomes Lead To Surgeon Preference
BETTER DEMONSTRATED OUTCOMES LEAD TO SURGEON PREFERENCE ® ® ALTIVATE REVERSE SHOULDER Design recognized by top Key Opinion Leaders, including lead designer of another major player: “Glenoid lateralization and inferiorization, as well as a 135o shaft angle, promoted initially by Mark Frankle, are the
Slide 53: Deepen And Expand Market Coverage In Core Segments
DEEPEN AND EXPAND MARKET COVERAGE IN CORE SEGMENTS COMPLETENESS OF Current Portfolio Breadth PRODUCT PORTFOLIO • Shoulder 79% 100% • Knee 62% • Hip 60% 2020-2023 • Expands “same surgeon” sales from ~65% to 90%+ of procedure coverage 0% • Improving asset efficiency (instruments) 2017 Today 2023 • Acc
Slide 54: Shift To Outpatient Total Joint Replacement
SHIFT TO OUTPATIENT TOTAL JOINT REPLACEMENT PROVIDES SIGNIFICANT GROWTH OPPORTUNITY PROJECTED TJR VOLUME IN Drivers: 1 OUTPATIENT SETTING • Medicare/Medicaid rule change 1/1/2020 • Bundled “Episode of Care” 60% • Physician ownership 51% 50% DJO Opportunity: 40% 30% • Empowr® Knee patient profile 19%
Slide 55: DJO and Colfax Creating Value
DJO AND COLFAX CREATING VALUEDJO AND COLFAX CREATING VALUE
Slide 56: Colfax Business System Integration
COLFAX BUSINESS SYSTEM INTEGRATION Strengthening DJO • Efficiency and margin expansion through proven business management system (CBS) • Early focus tied to strategic needs LEADERSHIP – Distribution and supply chain – Business unit level operating and strategic processes – New product development pr
Slide 57: DJO Embracing The Best Team Wins
DJO EMBRACING “THE BEST TEAM WINS” • Retention stable, team excited about Colfax future • Great Place to Work survey revealed: – Strong alignment to mission – Positive view of Colfax future – Opportunity around individual development • DJO “Leading for Growth” kickoff in 2019 • Colfax talent process
Slide 58: Investing In Growth
INVESTING IN GROWTH Growth drivers: ORGANIC GROWTH • Sustaining customer experience in P&R • Significant vitality improvement in 5.5%+ bracing through strategic NPI 3.5 to 4.5% 4.5% • Continuing strong growth in Surgical 3.5% through bag expansion and ASC transition leadership 1.5% • Leading the fut
Slide 59: Broad Range Of Opportunities To Accelerate By Acquisition
BROAD RANGE OF OPPORTUNITIES TO ACCELERATE BY ACQUISITION EXPAND Redefine boundaries Patient Continuum of Care Build around EXTEND the surgeon Build out from core Geographic expansion Build around Technology the provider add-ons Channel / customer Digital solutions share of wallet Fill gaps Channel
Slide 60: DJO Value Creation Strategy
DJO VALUE CREATION STRATEGY Improve EBITDA Ramp to margins >50 bps per 4-5%+ annual growth year Increase unlevered FCF to Achieve Colfax 10% $200+ million p.a. by year 3 ROIC target by year 5 Copyright © 2019 by DJO, LLC – CONFIDENTIAL 60DJO VALUE CREATION STRATEGY Improve EBITDA Ramp to margins >50
Slide 61: Colfax Financial Update
Colfax Financial Update Chris Hix | EVP & CFO 61Colfax Financial Update Chris Hix | EVP & CFO 61
Slide 62: What You've Heard Today
What You’ve Heard Today ▪ Colfax strategy proven over time; DJO integration a solid first step & ESAB now delivering top-tier performance ▪ Portfolio transformation complete; exiting 2019 with a better business & stronger growth options ▪ Exciting opportunities for next year & beyond; CBS accelerati
Slide 63: Levers For Long-Term Value Creation
Levers For Long-Term Value Creation ▪ Med Tech core growth improving to 4-5% over next Sales 2 years ▪ Fab Tech returns to volume growth in 2H 2020, continues to outperform market over course of business cycle ▪ New portfolio with higher margins Margins ▪ Long-term average of 50 bps per year margin
Slide 64: Improved Cash Flow Capability
Improved Cash Flow Capability $mm Working Capital 2017 2018 2019e 2020e 20 ▪ > $250mm 2020 free 0 -20 cash flow ▪ 90%+ conversion -40 Pension Funding ▪ Higher / more consistent cash flow 2017 2018 2019e 2020e 0 -20 ▪ Growing profits -40 ▪ Lower structural friction from working Restructuring Funding
Slide 65: Demonstrated Track Record of Deleveraging
Demon Demonstrat strated ed Tr Trac ack k Re Reco cord rd of of Dele Delevera veragi ging ng Gross Leverage 6.0x ▪ Amended credit agreement supports 5.0x near-term flexibility, 4.0x deleveraging plan 3.0x ▪ Improved portfolio cash flow capability provides 2.0x dual path of 1.0x deleveraging and inve
Slide 66: 2020 Outlook
2020 Outlook ▪ DJO organic sales growth $2.10- 3.5-4.5% 2.20 ~$0.22-0.27 $1.95- 2.00 ▪ ESAB core sales growth 0- 2%, positive in 2H; ~1.5% ~$(0.07) FX headwind ▪ CFX quarterly sales seasonality profile: approximately 24%, 25- 26%, 24-25%, 26% ▪ Adj. EBITA margins: 14.25- 14.75% Expect core earnings
Slide 67: An Exciting Future For Colfax
An Exciting Future For Colfax Build a $3 billion Med Tech platform with MSD+ growth capability 1 Continue to outperform industry growth in Fab Tech 2 Pursue continuous improvement in operating margin across portfolio 3 Realize strong cash conversion to support proactive investment in 4 acquisitions
Slide 68: Appendix
Appendix 68Appendix 68
Slide 69: Non-GAAP Reconciliation
Non-GAAP Reconciliation __________ (1) Includes amortization of acquired intangibles and fair value charges on acquired inventory. Note: Dollars in millions. 69Non-GAAP Reconciliation __________ (1) Includes amortization of acquired intangibles and fair value charges on acquired inventory. Note: Dol