Teva Pharmaceutical Industries Limited · TASE:TEVA
Teva Pharmaceutical Industries — Q4 2017 Earnings Presentation
40 slides from Teva Pharmaceutical Industries's earnings presentation, Feb 8, 2018
Slide 1: Fourth Quarter and Full Year 2017 Results
Teva Pharmaceutical Industries Ltd. Fourth Quarter and Full Year February 8, 2018 2017 Results
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are based on management’s current beliefs and expectations and are subject to substantial risks and uncertainti
Slide 3: Kåre Schultz, Chief Executive Officer
Kåre Schultz Chief Executive Officer
Slide 4: 2017 Full-Year Results
4 2017 Full-Year Results $ billion, except EPS 2017 2016 2017 2016 GAAP Non-GAAP Revenues 22.4 21.9 22.4 21.9 Operating income (loss) (17.5) 2.2 6.1 6.8 Net income (loss) (16.3) 0.3 4.3 5.2 attributable to Teva Earnings (loss) per share ($) (16.26) 0.07 4.01 5.14 1,016M shares 961M shares 1,018M sha
Slide 5: Restructuring Plan Update
5 Restructuring Plan Update – New organizational structure – Annual Operating Plan completed with new team – Global workforce reduction of ~14,000 – ~50% expected to be completed by end of Q2 ‘18 – Closures or divestments of 12 manufacturing plants – 6 announced since Dec ‘17; expect to announce an
Slide 6: Focus on Specialty Assets
6 Focus on Specialty Assets Future growth drivers AUSTEDO® fremanezumab fasinumab Movement Disorder Migraine Pain - First product approved - PDUFA June 16, 2018 - Phase 3 studies in and launched to treat osteoarthritis and chronic - API manufacturing partner, both Tardive Dyskinesia low back pain un
Slide 7: Commitment to Deleverage
7 Commitment to Deleverage 5 Year Debt Maturities ($bn)* – Target = Below 4x Net debt/EBITDA by YE 2020 $4.3 $4.2 – Begin 2018 with gross debt of $32.5bn $4.0 – Includes $3.7bn of term loans $3.1 – Proceeds to reduce debt in the short term – $0.7bn from Allergan settlement $1.7 – Organic cash flow g
Slide 8: 2018 Non-GAAP Outlook
8 2018 Non-GAAP Outlook $ billion except EPS 2018 Outlook FY 2017 Revenues 18.3 – 18.8 22.4 Operating Income 4.0 – 4.3 6.1 EBITDA 4.7 – 5.0 6.7 EPS ($) 2.25 – 2.50 4.01 1,030M shares 1,018M shares Free cash flow* 2.6-2.8 2.7 * Free Cash Flow includes cash flow generated from operating activities, ne
Slide 9: Mike McClellan, EVP, Chief Financial Officer
Mike McClellan EVP, Chief Financial Officer
Slide 10: Q4 2017 Results
Q4 2017 Results
Slide 11: Q4 2017 Summary
11 Q4 2017 Summary $ millions, except EPS Q4 2017 Q4 2016 Q4 2017 Q4 2016 GAAP Non-GAAP Revenues 5,459 6,492 5,459 6,492 Operating income (loss) (13,017) (137) 1,385 1,944 Net income (loss) (11,535) (973) 1,014 1,480 attributable to Teva Earnings (loss) per share ($) (11.41) (1.10) 0.93 1.38 1,017M
Slide 12: Q4 2017 Non-GAAP Adjustments
12 Q4 2017 Non-GAAP Adjustments $ millions Q4 2017 Highlights US goodwill ($11,000m) and intangible assets ($1,681m), Impairment 14,263 Japan LLPs and Gx ($623m), plant and equipment of ($302m) Venezuela deconsolidation 396 Amortization 356 Restructuring, acquisition and 253 integration expenses Oth
Slide 13: Q4 2017 Non-GAAP Summary
13 Q4 2017 Non-GAAP Summary $ billions, except EPS Q4 2017 Q4 2016 Change Revenues 5.5 6.5 (16%) Gross profit 2.8 3.9 (26%) 52.2% 59.4% Operating income 1.4 1.9 (29%) 25.4% 29.9% EBITDA 1.5 2.1 (27%) Net income 1.0 1.5 (31%) EPS ($) 0.93 1.38 (33%) 1,018M shares 1,076M shares Cash flow from operatio
Slide 14: Quarterly Revenues
14 Quarterly Revenues $ millions -198 -74 -207 -242 -40 -273 6,492 5,459 Q4 - 16 US Gx EU & RoW Gx MS Specialty Specialty Other FX & VZ Q4 - 17 All data, except Fx and VZ, are net of the impact of foreign exchange fluctuations.
Slide 15: Quarterly Non-GAAP Operating Profit
15 Quarterly Non-GAAP Operating Profit $ millions -62 -95 -156 -4 -46 -197 1,944 1,385 Q4-16 US Gx Generics MS Specialty G&A Other, FX and Q4-17 Ex US VZ nominal All data, except Fx and VZ, are net of the impact of foreign exchange fluctuations.
Slide 16: Copaxone revenues and US market shares
16 Copaxone® revenues and US market shares $ millions / % market share 1,015 970 1,023 987 821 1,200 35% 1,000 30% 186 181 188 185 25% 800 199 20% 600 15% 400 829 782 842 802 10% 622 200 5% 0 0% Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 US Ex-US US TRx MS* Copaxone® family US TRx MS* Copaxone® 40mg Market share
Slide 17: Cash Flow
17 Cash Flow $ millions Cash flow from 1,425 470 741 1,117 1,179 Operations 319 197 245 CAPEX Free Cash Flow* 174 1,106 920 934 198 567 272 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 * Free Cash Flow includes cash flow generated from operating activities, net of cash used for capital investments and ex
Slide 18: Balance Sheet
18 Balance Sheet Dec 31, Sep 30, $ billions 2017 2017 Diff Cash and Cash Equivalents 1.0 0.7 0.3 Other Financial assets 0.1 0.2 -0.1 AR Trade 7.1 7.4 -0.3 Pre-paid Expenses and Other Current Assets 2.4 3.0 -0.7 Inventory 4.9 5.1 -0.1 Fixed Assets 7.7 8.0 -0.3 Goodwill 28.4 39.4 -11.0 Intangible Asse
Slide 19: 2017 Debt Movements
19 2017 Debt Movements $ millions 120 37,000 1,131 36,000 2,715 35,000 35,800 34,000 1,861 33,000 32,000 32,475 31,000 30,000 Q4 FX Rate & other, JPY loans, Net Term Loan RCF & GBP Q4 2016 net Repayment Repayment 2017
Slide 20: 2018 Financial Outlook
2018 Financial Outlook 20
Slide 21: 2018 Non-GAAP Financial Outlook
21 2018 Non-GAAP Financial Outlook 2018 Outlook Revenues 18.3-18.8 ($ billions) Non-GAAP Operating income 4.0-4.3 ($ billions) Non-GAAP EBITDA 4.7-5.0 ($ billions) Weighted average number of shares 1,030 (in millions) Non-GAAP EPS 2.25-2.50 ($) Free cash flow 2.6-2.8 ($ billions) * Free Cash Flow in
Slide 22: Q&A
Q&A
Slide 23: Additional Information
Additional Information
Slide 24: Q4 2017 Results
Q4 2017 Results 24
Slide 25: Quarterly Revenue Breakdown by Region
25 Quarterly Revenue Breakdown by Region $ millions 6,492 ROW 1,505 (23%) 5,459 Europe 1,187 (22%) US 1,525 (24%) 1,611 (30%) 3,462 (53%) 2,661 (49%) Q4-16 Q4-17 Percentages may not add up to 100% due to rounding.
Slide 26: Quarterly Revenue Breakdown by Business Line
26 Quarterly Revenue Breakdown by Business Line $ millions 6,492 573 (9%) 5,459 Other 1,188 (18%) 550 (10%) Specialty MS Specialty 974 (18%) 1,015 (16%) Generics 821 (15%) 3,716 (57%) 3,114 (57%) Q4-16 Q4-17 Percentages may not add up to 100% due to rounding.
Slide 27: Quarterly Business Line Profit
27 Quarterly Business Line Profit $ millions 2,239 40 (2%) Other 308 (14%) Specialty 1,746 MS Specialty 25 (1%) Generics 311 (18%) 816 (36%) 670 (38%) 1,075 (48%) 740 (43%) Q4-16 Q4-17 Profit is presented on a non-GAAP basis. Segment and business line profit consists of gross profit, less S&M and R&
Slide 28: Quarterly GAAP Income Statement
28 Quarterly GAAP Income Statement $ millions, except EPS Q4-17 Q4-17 Q4-16 Q4-16 Change Margins Margins Revenues 5,459 6,492 (16%) COGS 2,917 53.4% 3,102 47.8% (6%) Gross profit 2,542 46.6% 3,390 52.2% (25%) R&D 360 6.6% 684 10.5% (47%) S&M 865 15.8% 1,129 17.4% (23%) G&A 492 9.0% 360 5.5% +37% Leg
Slide 29: Quarterly Non-GAAP Income Statement
29 Quarterly Non-GAAP Income Statement $ millions, except EPS Q4-17 Q4-17 Q4-16 Q4-16 Change Margins Margins Revenues 5,459 6,492 (16%) COGS 2,612 47.8% 2,633 40.6% (1%) Gross profit 2,847 52.2% 3,859 59.4% (26%) R&D 310 5.7% 514 7.9% (40%) S&M 791 14.5% 1,106 17.0% (28%) G&A 361 6.6% 295 4.5% +22%
Slide 30: 2017 Results
2017 Results 30
Slide 31: 2017 Business Line Profit
31 2017 Business Line Profit $ millions 8,039 68 (1%) 7,248 Other 1,226 (15%) 86 (1%) Specialty 1,270 (18%) MS Specialty Generics 3,435 (43%) 3,063 (42%) 3,310 (41%) 2,829 (39%) FY 16 FY 17 Profit is presented on a non-GAAP basis. Segment and business line profit consists of gross profit, less S&M a
Slide 32: 2017 Revenues Breakdown by Business Line
32 2017 Revenues Breakdown by Business Line $ millions 21,903 22,385 1,239 (6%) 2,214 (10%) Other 4,451 (20%) 4,113 (18%) Specialty MS Specialty 4,223 (19%) 3,801 (17%) Generics 11,990 (55%) 12,257 (55%) FY 16 FY 17 Percentages may not add up to 100% due to rounding.
Slide 33: 2017 GAAP Income Statement
33 2017 GAAP Income Statement $ millions, except EPS 2017 2017 2016 2016 Change Margins Margins Revenues 22,385 21,903 +2% COGS 11,560 51.6% 10,044 45.9% +15% Gross profit 10,825 48.4% 11,859 54.1% (9%) R&D 1,848 8.3% 2,111 9.6% (12%) S&M 3,656 16.3% 3,860 17.6% (5%) G&A 1,330 5.9% 1,285 5.9% - Lega
Slide 34: 2017 Non-GAAP Income Statement
34 2017 Non-GAAP Income Statement $ millions, except EPS 2017 2017 2016 2016 Change Margins Margins Revenues 22,385 21,903 +2% COGS 10,141 45.3% 8,485 38.7% +20% Gross profit 12,244 54.7% 13,418 61.3% (9%) R&D 1,587 7.1% 1,665 7.6% (5%) S&M 3,409 15.2% 3,714 17.0% (8%) G&A 1,175 5.2% 1,192 5.4% (1%)
Slide 35: 2017 Summary
35 2017 Summary $ millions, except EPS 2017 2016 2017 2016 GAAP Non-GAAP Revenues 22,385 21,903 22,385 21,903 Operating income (loss) (17,484) 2,154 6,073 6,847 (78.1%) 9.8% 27.1% 31.3% Net income (loss) (16,265) 329 4,335 5,244 attributable to Teva Earnings (loss) per share ($) (16.26) 0.07 4.01 5.
Slide 36: 2017 Non-GAAP Summary
36 2017 Non-GAAP Summary $ billions, except EPS 2017 2016 Change Revenues 22.4 21.9 +2% Operating income 6.1 6.8 (11%) 27.1% 31.3% EBITDA 6.7 7.3 (9%) Net income 4.3 5.2 (17%) EPS ($) 4.01 5.14 (22%) 1,018M shares 1,020M shares Cash flow from operations 3.5 5.2 (33%) Free cash flow* 2.7 4.4 (38%) *
Slide 37: 2017 Non-GAAP Adjustments
37 2017 Non-GAAP Adjustments $ millions 2017 Details Goodwill impairment 17,100 US generics Impairment 3,829 US intangible assets, Japan LLPs and Gx Amortization 1,444 Restructuring, acquisition and integration expenses 640 Carvedilol patent litigation reserve ($235m), 500 Legal settlements Lidoderm
Slide 38: 2017 Foreign Exchange & Venezuela Impact
38 2017 Foreign Exchange & Venezuela Impact $ millions 2017 2016 Diff FX Effect Venezuela Revenues 22,385 21,903 482 148 (1,062) Operating income (loss) (17,484) 2,154 (19,638) (40) (249) GAAP Operating income 6,073 6,847 (774) (12) (323) Non-GAAP In light of the political and economic conditions in
Slide 39: Annual Revenues
39 Annual Revenues $ millions 725 -428 936 -913 -353 515 22,385 21,903 FY 16 US Gx Gx Ex US MS Specialty Specialty Distribution FX and VZ FY 17 and Other nominal All data, except FX and VZ nominal, are net of the impact of foreign exchange fluctuations.
Slide 40: Annual Non-GAAP Operating Profit
40 Annual Non-GAAP Operating Profit $ millions -85 -43 -378 47 2 -316 6,847 6,073 FY 16 US Gx Generics MS Specialty G&A Other, FX and FY 17 Ex US VZ nominal All data, except FX and VZ, are net of the impact of foreign exchange fluctuations.
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