Teva Pharmaceutical Industries Limited · TASE:TEVA
Teva Pharmaceutical Industries — Q3 2021 Earnings Presentation
39 slides from Teva Pharmaceutical Industries's earnings presentation, Oct 27, 2021
Slide 1: Third Quarter 2021 Results
Teva Pharmaceutical Industries Ltd. Third Quarter 2021 Results October 27, 2021
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, President and Chief Executive Officer
Kåre Schultz President and Chief Executive Officer
Slide 4: Q3 2021 Financial Highlights
Q3 2021 Financial Highlights − Revenues of $3.9 billion − Adjusted EBITDA of $1.2 billion − GAAP diluted EPS of $0.26; Non-GAAP diluted EPS of $0.59 − Free cash flow of $795 million − Debt reduction continues; net debt reduced to $21.7 billion − Announced $4 billion refinancing |4|
Slide 5: Revenue Development
Revenue Development $ millions 4,468 4,454 4,357 332 344 4,093 307 3,978 3,982 3,910 3,887 314 3,870 578 565 316 572 289 335 298 262 565 490 529 485 530 488 1,184 1,237 1,402 1,163 1,116 1,214 1,001 1,184 1,220 Other Activities 2,373 2,300 2,051 2,082 2,047 2,017 1,989 1,943 International Markets 1,
Slide 6: AUSTEDO Continues to Grow
AUSTEDO® Continues to Grow ® AUSTEDO® Revenues By Quarter AUSTEDO® TRx Count Per Quarter Highlights ($ million) 45,000 41,091 • U.S. sales of $201 million in Q3 201 2021, an increase of 19% vs. $168 40,000 185 million in Q3 2020 174 168 35,000 161 146 • >41K prescriptions were dispensed 30,000 136 i
Slide 7: AJOVY Net Sales Steady in Q3 vs. Q2 2021
AJOVY® Net Sales Steady in Q3 vs. Q2 2021 AJOVY® U.S QTR Normalized TRx AJOVY EU Monthly Volume market share Highlights • Net global sales of $108* million in Q3 250,000 2021: 220,537 • North America - $46 million 30.0% 27.2% • Europe - $23 million 200,000 • International Markets - $39* million 25.0
Slide 8: Teva Specialty & Biosimilar Product Pipeline
Teva Specialty & Biosimilar Product Pipeline by development stage – October 27, 2021 Under Regulatory Pre-clinical Phase 1 Phase 2 Phase 3 Pre Submission Review TEV-56278 Fremanezumab2 Fremanezumab2 Fasinumab4 Digihaler® Biosimilar to Humira® TEV-56285 Osteoarthritic Pain Oncology Status Migrainosus
Slide 9: MODAG Strategic License Agreement
MODAG Strategic License Agreement ̶ Signed in October 2021* ̶ Exclusive global license to develop, manufacture and commercialize Modag’s compound for the treatment of Multiple System Atrophy (MSA) and Parkinson’s disease ̶ Potential to be applied to other treatments for neurodegenerative disorders,
Slide 10: Operating Margin Expansion
Operating Margin Expansion Non-GAAP operating margin % 28.5% 28.0% 28.0% 27.8% 27.5% 27.5% 27.0% 26.8% 26.5% 26.3% Q3-21 26.0% 25.9% YTD 25.5% 25.0% 24.5% 24.5% 24.0% 2017 2018 2019 2020 2021 Guidance* 2023 Target | 10 | * Estimated margin based on 2021 guidance
Slide 11: Net Debt Development
Net Debt Development $ billions $36.0 $34.0 $34.0 $32.0 $30.0 $28.0 $26.0 $24.0 $21.7 $22.0 $20.0 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 | 11 |
Slide 12: Long-Term Financial Targets
Long-Term Financial Targets To be achieved by year-end 2023 Operating income margin (2)(3) Cash-to-earnings(1)(3)(4) Net debt / EBITDA (3)(5) 28% >80% <3X Committed to utilizing cash flow to pay down debt; we do not plan to raise equity (1) Free cash flow includes cash flow from operating activities
Slide 13: Eli Kalif, EVP & Chief Financial Officer
Eli Kalif EVP & Chief Financial Officer
Slide 14: Q3 2021 Summary
Q3 2021 Summary $ millions, except EPS Q3 2021 Q3 2020 Q3 2021 Q3 2020 GAAP Non-GAAP Revenues* 3,887 3,978 3,887 3,978 Operating income (loss) 623 )4,342( 1,042 1,025 Net income (loss) attributable to Teva 292 )4,349( 651 637 Earnings (loss) per share ($)** 0.26 )3.97( 0.59 0.58 1,109 million 1,096
Slide 15: Non-GAAP Adjustments
Non-GAAP Adjustments $ millions Q3 2021 Comments Amortization 199 Quarterly run-rate Impairment of long-lived assets 47 Mainly U.S. tangible assets IPR&D and product rights Restructuring expenses 28 Equity Compensation Plans 26 Contingent Consideration 9 Financial Expenses 6 Including Idle capacity,
Slide 16: Q3 2021 Non-GAAP Summary
Q3 2021 Non-GAAP Summary $ billions, except EPS Q3 2021 Q3 2020 Change Q3 YTD 2021 Q3 YTD 2020 Change Revenues* 3.9 4.0 (2%) 11.8 12.2 (4%) 2.1 2.1 - 6.3 6.4 (1%) Gross profit 53.6% 52.4% 1.2% 53.6% 52.5% 1.1% 1.0 1.0 - 3.2 3.2 - Operating income 26.8% 25.8% 1.0% 26.8% 26.6% 0.2% EBITDA 1.2 1.2 - 3.
Slide 17: Spend Base
Spend Base -333 (-4%) -540 Net of FX $ millions 8,958 8,625 -108 (-4%) -128 Net of FX 2,953 2,845 5,799 5,467 (65%) (63%) 1,894 1,804 (64%) (63%) 3,159 3,158 1,059 1,041 (35%) (37%) COGS (36%) (37%) OPEX Q3 2020 Q3 2021 YTD 2020 YTD 2021 Revenues 3,978 3,887 12,206 11,778 GP% 52.4% 53.6% 52.5% 53.6%
Slide 18: Free Cash Flow by Quarters
Free Cash Flow by Quarters $ millions 974 795 625 582 551 551 506 471 59 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 | 18 |
Slide 19: Proactive Refinancing
Proactive Refinancing − Align debt maturity to − In-line with our long- − Keep serving the Sustainability-linked cash flow generation term financial targets debt as our main Bond (“SLB”): for the coming 2-3 commitment to bond years − Proceeds will be holders and – Social KPIs regarding used for refi
Slide 20: Ongoing Debt Reduction
Ongoing Debt Reduction $ billions 23.8 23.7 23.2 22.7 21.7 Net Debt 4.8 4.9 4.7 4.8 4.8 EBITDA MAT Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Net Debt / EBITDA MAT* 4.92 4.83 4.90 4.73 4.51 Leverage 71% 70% 69% 69% 67% | 20 | * Teva's Net Debt/EBITDA MAT covenant ratio limits are 5.5x for H1 2021 and 5
Slide 21: Reaffirming 2021 Non-GAAP July Outlook
Reaffirming 2021 Non-GAAP July Outlook $ billions, except EPS FY 2020 February 2021 Outlook July 2021 Outlook Revenues* 16.7 16.4 – 16.8 16.0 - 16.4 COPAXONE® $1,337 million ~$1,050 million ~$1,050 million AUSTEDO® $638 million ~$950 million ~$850 million AJOVY® $183 million ~$300 million ~$300 mill
Slide 22: Q&A
Q&A
Slide 23: Additional Information
Additional Information teva
Slide 24: Q3 YTD 2021 Summary
Q3 YTD 2021 Summary $ millions, except EPS Q3 YTD 2021 Q3 YTD 2020 Q3 YTD 2021 Q3 YTD 2020 GAAP Non-GAAP Revenues* 11,778 12,206 11,778 12,206 Operating income (loss) 1,638 )3,978( 3,153 3,248 Net income (loss) attributable to Teva 576 )4,140( 2,001 2,077 Earnings (loss) per share ($)** 0.52 )3.78(
Slide 25: Quarterly GAAP Income Statement
Quarterly GAAP Income Statement Q3 2021 Q3 2020 $ millions, except EPS Q3 2021 Q3 2020 Change Margins Margins Revenues 3,887 3,978 (2%) COGS 2,093 53.8% 2,126 53.4% (2%) Gross profit 1,794 46.2% 1,852 46.6% (3%) R&D 222 5.7% 258 6.5% (14%) S&M 597 15.4% 605 15.2% (1%) G&A 291 7.5% 279 7.0% 4% Legal
Slide 26: Q3 YTD 2021 GAAP Income Statement
Q3 YTD 2021 GAAP Income Statement Q3 YTD 2021 Q3 YTD 2020 $ millions, except EPS Q3 YTD 2021 Q3 YTD 2020 Change Margins Margins Revenues 11,778 12,206 (4%) COGS 6,234 52.9% 6,528 53.5% (4%) Gross profit 5,544 47.1% 5,678 46.5% (2%) R&D 723 6.1% 704 5.8% 3% S&M 1,798 15.3% 1,815 14.9% (1%) G&A 822 7.
Slide 27: Q3 2021 Foreign Exchange Impact
Q3 2021 Foreign Exchange Impact $ millions Q3 2021 Q3 2020 Diff FX Effect Diff net FX Revenues 3,887 3,978 (92) 42 (133) Operating income (loss) 623 (4,342) 4,965 22 4,943 GAAP Operating income 1,042 1,025 17 23 (6) Non-GAAP | 27 |
Slide 28: Net Revenue and Profitability (Non-GAAP)
Net Revenue and Profitability (Non-GAAP) $ millions 4,468 4,454 4,357 4,093 3,978 3,982 3,870 3,910 3,887 51.4% 50.6% 53.1% 52.0% 52.4% 52.3% 53.8% 53.3% 53.6% 25.7% 28.5% 25.3% 25.8% 25.6% 27.1% 26.4% 26.8% 23.8% Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Net Revenues G
Slide 29: Revenues by Activity and Geographical Area
Revenues by Activity and Geographical Area $ millions Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 North America Segment 2,017 2,300 1,989 1,943 1,875 Generic products 928 1,206 1,053 951 859 AJOVY® 35 36 31 46 46 AUSTEDO® 168 185 146 174 201 BENDEKA®/TREANDA® 105 102 91 106 95 COPAXONE® 236 213 164 152 133 ProAir
Slide 30: Profits and EPS (Non-GAAP)
Profits and EPS (Non-GAAP) $ millions, EPS in $ 1,244 1,140 1,061 1,077 1,051 1,025 1,034 1,042 979 835 753 699 637 683 637 651 651 605 0.76 0.68 0.58 0.62 0.55 0.58 0.63 0.59 0.59 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Net Income Operating Profit EPS | 30 |
Slide 31: Spend Base Trend (Non-GAAP)
Spend Base Trend (Non-GAAP) $ millions Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 COGS 1,894 2,126 1,838 1,826 1,804 S&M 566 627 549 582 567 R&D 233 254 244 243 217 G&A 269 312 278 231 275 Other income (8) (5) (5) (6) (18) Total 2,953 3,313 2,905 2,876 2,845 | 31 |
Slide 32: Quarterly Non-GAAP Operating Income
Quarterly Non-GAAP Operating Income $ millions +17 (+2%) -6 Net of FX (-1%) 10 27 -101 81 1,025 1,042 Q3-20 North America Europe International Markets Other Activities Q3-21 | 32 |
Slide 33: YTD Non-GAAP Operating Income
YTD Non-GAAP Operating Income $ millions -95 (-3%) -138 Net of FX (-4%) -127 20 -5 16 3,248 3,153 YTD - 20 North America Europe International Markets Other Activities YTD - 21 | 33 |
Slide 34: Operating Income by Segments: Q3 2021 vs. Q3 2020
Operating Income by Segments: Q3 2021 vs. Q3 2020 $ millions 1,140 33 (3%) 1,077 1,025 96 (8%) 41 (4%) 1,034 1,042 28 (3%) 47 (5%) 38 (4%) 122 (11%) 125 (12%) 123 (12%) 152 (15%) 273 )24%( 338 312 343 )31%( )30%( )33%( 394 )38%( 738 560 )65%( 577 521 )55%( )54%( 458 )50%( Other Activities )44%( Inte
Slide 35: Quarterly Adjusted EBITDA
Quarterly Adjusted EBITDA* $ millions 1,277 1,206 1,153 1,162 1,170 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 | 35 | * Adjusted EBITDA is defined as operating income excluding depreciation and amortization expenses and certain other items
Slide 36: Q3 2021 Adjusted EBITDA to Free Cash Flow
Q3 2021 Adjusted EBITDA to Free Cash Flow $ millions (375) (32%) (223) 121 (217) 221 15 (147) (146) (397) 397 1,170 795 529 Adjusted Interest Tax payments AR Inventory AP & Other Securitization* Operating Securitization Asset sales; Free EBITDA payments, cash flow reclass Capex gross cash flow net |
Slide 37: Consolidated Balance Sheet
Consolidated Balance Sheet $ billions Sep 30, 2021 Jun 30, 2021 Diff Cash and Cash Equivalents 2.0 2.4 (0.4) AR Trade 4.0 4.5 (0.5) Pre-paid Expenses and Other Current Assets 1.9 1.5 0.4 Inventory 4.2 4.4 (0.2) Fixed Assets 6.0 6.1 (0.1) Intangible Assets 7.8 8.1 (0.3) Goodwill 20.2 20.4 (0.2) Other
Slide 38: Q3 2021 Debt Movements
Q3 2021 Debt Movements $ billions -1.5 0.3 -0.2 -2.0 25.1 23.7 21.7 Jun 30, Debt maturity RCF utilization* FX Sep 30, Cash balance Sep 30, 2021 2021 2021 Gross Debt Gross Debt Net Debt | 38 | * During the third quarter of 2021, we borrowed $500 million under our RCF, of which $200 million was repaid
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