Virbac SA · EURONEXT:VIRP

Virbac SA — FY2019 Earnings Presentation

44 slides from Virbac SA's earnings presentation, March 2020

  1. Slide 1: 2019 results & perspectives

    2019 results & perspectives March 2020 Shaping the future of animal health

  2. Slide 2: Disclaimer

    Disclaimer This presentation contains forward-looking statements with respect to Virbac’s profitability and financial condition, business operations, projects and outlook. Although Virbac’s management believes that such forward-looking statements are based on reasonable assumptions, as made as of th

  3. Slide 3: Agenda

    AGENDA 2019 financial highlights Main 2019 achievements Company priorities & 2020 situation Appendix : 2020 agenda 3

  4. Slide 4: 2019 Financials – Summary (1/5)

    2019 FINANCIALS – SUMMARY (1/5) • Solid organic growth of 6.6% • Driven by all areas • Favorable 2018 base effect linked to stock decrease at distributor level in H1 2018 in the USA • Double-digit margin growth • Sales increase in the USA (+13.6% @ constant rate / ~ +7.0% excl. 2018 base effect link

  5. Slide 5: 2019 Financials – Summary (2/5)

    2019 FINANCIALS – SUMMARY (2/5) Average rates USD GBP JPY MXN AUD ZAR BRL INR CHF CLP A 2018 1.17 0.88 130 22.7 1.58 15.6 4.31 80.8 1.15 757 A 2019 1.12 0.88 122 21.6 1.61 16.2 4.42 78.8 1.11 786 Variance A19/A18 4.6% 0.6% 6.7% 5.2% -1.9% -3.5% -2.5% 2.6% 3.9% -3.6% Average rates NZD COP CRC PHP THB

  6. Slide 6: 2019 Financials – Summary (3/5)

    2019 FINANCIALS – SUMMARY (3/5) • Net profit: 54.4 M€ (vs. 21.0 M€ in 2018) @ real rate driven by : • Operational improvement • Decrease of the cost of our debt • Unfavorable exchange rate impact on CLP vs. US$ and € (-2.8 M€) • Impairment on CaniLeish assets (-7.2 M€) • Decrease of total net debt b

  7. Slide 7: 2019 Financials – Summary (4/5)

    2019 FINANCIALS – SUMMARY (4/5) 2019 Actuals aligned with last guidance Perspectives 2019 Actuals 2019 • Organic growth 6% - 7% +6.6% √ • EBIT Adj.1 ratio @ constant rate ~+3.0 pts +3.0 pts √ • Net Debt reduction @ cst rate & scope ~80 M€ 88 M€ √ 1 Ebit Adj.: Current operating profit before deprecia

  8. Slide 8: Consolidated Sales (5/5)

    CONSOLIDATED SALES (5/5) 2019 Million euros 2019 2018 Var.% Consolidated sales 938.3 868.9 +8.0% - Exchange rate impact vs. 2018 -12.2 Consolidated sales at constant rates 926.1 868.9 +6.6% - change in perimeter 0.0 Consolidated sales, pro-forma at 926.1 868.9 +6.6% constant exchange rates 8

  9. Slide 9: Sales Evolution

    SALES EVOLUTION 2019 12.2 M€ 16.3 13.6% 22.8 5.7% 18.1 5.2% 938.3 69.4 M€ (8%) at actual rates 868.9 57.2 M€ (6.6%) at constant rates A 2018 Europe ROW USA Exchange rates A 2019 9

  10. Slide 10: Sales Growth by Region

    SALES GROWTH BY REGION 2019 At constant rates Europe North America 364.8 M€ 143.0 M€ +5.2% +13.6% Asia 162.6 M€ +8.2% Africa/Middle East 34.3 M€ Latin America +8.4% 155.9 M€ +7.6% Pacific 77.7 M€ -3.5% 10

  11. Slide 11: Sales Growth by Segment - Companion Animals

    SALES GROWTH BY SEGMENT - COMPANION ANIMALS 2019 At constant rates A 2018 494.2 Parasiticides 149.4 (4%) 5.6 Other 115.4 (13.6%) 13.6 Antibiotics/Dermatology 83 (14.8%) 10.6 Specialties 75.8 (11.5%) 7.7 Biologicals 75.5 (-0.4%) -0.3 Petfood 50.5 (24.8%) 10.0 Exchange rate 8.3 0 (0%) A 2019 549.7 11

  12. Slide 12: Sales Growth by Segment - Food Producing Animals

    SALES GROWTH BY SEGMENT - FOOD PRODUCING ANIMALS 2019 At constant rates A 2018 101.8 (-5.3%) 363.8 Antibiotics 101.8.0 (-5.3%) - 5.6 Bovine, Nutritionals 69.7 (3.7%) 2.5 Swine & Poultry Antiparasiticides 65.9.0 (1.8%) 1.1 Other 50.3 (4.7%) 2.3 Vaccines 38 (13.3%) 4.4 Aquaculture 50.5 (9%) 4.0 Exchan

  13. Slide 13: Sales Breakdown by Region and Business

    SALES BREAKDOWN BY REGION AND BUSINESS 2019 Other developped Europe North America countries* Emerging countries 39.4% 15.2% 10.9% 34.5% (40.4%) (13.8%) (11.8%) (34.0%) Companion Animals 58.6% 29.7 % 14.7 % 4.9 % 9.3 % (56.9%) (29.8 %) (13.3 %) (5.1%) (8.6 %) Food Producing 24.7% Animals 40.1% 9.6 %

  14. Slide 14: New IFRS Accounting Standards

    NEW IFRS ACCOUNTING STANDARDS • Standards applicable to financial years beginning on or after January 1, 2019 • IFRS 16 - Lease Recording of future lease payments as a liability and the right of use as an asset on the balance sheet For the implementation of this standard, the Group opted for the sim

  15. Slide 15: Profit & Loss Statement at Real Rates

    PROFIT & LOSS STATEMENT AT REAL RATES 2019 2019 % 2018 % in M€ Net sales 938.3 100.0 868.9 100.0 Gross margin on material cost 623.5 66.5 574.6 66.1 Net expenses 463.0 49.3 457.8 52.7 Amortizations, depreciations and provisions 38.1 4.1 28.7 3.3 Current operating profit before depreciation of assets

  16. Slide 16: Breakdown of EBIT Adjusted Evolution

    BREAKDOWN OF EBIT ADJUSTED1 EVOLUTION 2019 17.0 -2.5 1.1 -1.2 M€ 15.2 88.1 4.7 15.2 17 -2.5 4.7 -1.2 122.4 1.1 122.40 88.1 2 1 Ebit adjusted: current operating profit before depreciations of assets arising from acquisitions 2 RDL: Research, Development & Licensing 16

  17. Slide 17: Contribution of the US Operations to the EBIT Adjusted

    CONTRIBUTION OF THE US OPERATIONS TO THE EBIT ADJUSTED1 2019 M$ 18.2 -1.5 1.2 0.1 Excluding R&D One-time events 30.0 12.0 A 2018 Margin Improvement Contract Building sale OPEX Decrease A 2019 (Volume, Cost absorption, Manufacturing Gross to Net) 17 1 Ebit adjusted: current operating profit before de

  18. Slide 18: Evolution of Cash-Flow

    EVOLUTION OF CASH-FLOW 2019 M€ 156.5 119.3 1 Operating cash flow 106.4 Net cash flow 70.0 2018 2019 1 The application of IFRS 16 has positively impacted 2019 operating cash flow by 9.7 M€, and net cash flow by 8.5 M€ 18

  19. Slide 19: Evolution of Free Cash-Flow

    EVOLUTION OF FREE CASH-FLOW 2019 2018.12 2019.12 M€ 23.0 3.7 9.6 92.9 33.9 106.4 89.2 70.0 4.2 3.1 33.1 28.9 19

  20. Slide 20: Evolution of Net Debt

    EVOLUTION OF NET DEBT 2019 M€ 106.4 8.8 41.9 1.6 0.0 3.7 9.6 23.0 426.1 Closing net debt @ constant rates 370.0 M€ 368.4 Closing net debt @ constant rates & accounting method (IFRS 16) 338.4 M€ 3 Opening net Net cash Capex WCR Acquisitions Dividends Lease Other Conversion Closing net debt flow 1 obl

  21. Slide 21: Balance Sheet Analysis

    BALANCE SHEET ANALYSIS 2019 991.0 M€ 984.9 M€ 991.0 M€ 984.9 M€ 134.9 125.1 426.1 368.4 98.7 104.6 856.1 859.7 460.3 517.8 2018.12 2019.12 2018.12 2019.12 Fixed assets Net financial debt Working capital Non controlling interests + LT reserves Shareholder's equity INVESTED CAPITAL CAPITAL EMPLOYED 21

  22. Slide 22: Financing - Debt Situation

    FINANCING - DEBT SITUATION 2019 Situation December 2018 Situation December 2019 Financial covenant (Net debt/Ebitda) at Financing available : ~611 M€ December, 2019 : Financing available : ~592 M€ • Banking pool (RCF1) : ~420M€ • Banking pool (RCF 1) : ~420M€ 2022 maturity 2.29 (2.22 excl. 2022 matu

  23. Slide 23: Balance Sheet – Financial Ratios

    BALANCE SHEET – FINANCIAL RATIOS 2019 2017.12 2018.12 2019.12 Net debt1/Shareholder’s equity 105.4% 92.6% Group’s share 71.2% 7.4 Net debt1/Net cash-flow 6.1 3.5 Net debt1/Operating cash-flow 4.3 3.6 2.4 1 The methodology for calculating the bank covenant differs slightly from the accounting method

  24. Slide 24: Shareholding

    SHAREHOLDING Number of shares: 8 458 000 In shares In Voting Rights In Shares In Voting Rights Treasury shares Treasury 0.0% shares Public 0.3% Public Dick Family 36.0% 49.5% 49.6% Dick Family 63.2% Employees Employees savings plan savings plan 0.8% 0.6% 24

  25. Slide 25: Agenda

    AGENDA 2019 financial highlights Main 2019 achievements Company ambition & 2020 priorities Appendix : 2020 agenda 25

  26. Slide 26: Main 2019 Achievements (1/2)

    MAIN 2019 ACHIEVEMENTS (1/2) Long term competitivity Gaining market share, delivering growth • Corporate Social Responsability: launch of many new initiatives above market rate (estimated below 4% in 2019) • Great Place To Work: employees engagement to design action plans and 6.6% at constant rates

  27. Slide 27: Main 2019 Achievements (2/2)

    MAIN 2019 ACHIEVEMENTS (2/2) Geographies  28 out of 32 geographies are growing  11 countries growing double-digit of which China, Brazil and the USA (top 3 WW markets)  Chile (Centrovet) back to growth Products ranges  Busters programs showing double-digit growth including: o Petfood (+25%) over

  28. Slide 28: Geographies: Focus USA (1/4)

    GEOGRAPHIES: FOCUS USA (1/4)  Ex-Virbac performance: +14% and around +7% excluding 2018 base effect (2018 destocking impact) o 160 MU$ in 2019 vs. 140 MU$ in 2018  2 different dynamics within our US portfolio o Sentinel slightly up ex-Virbac but decreasing excluding base effect of 2018 (destocking

  29. Slide 29: Geographies: Focus China (2/4)

    GEOGRAPHIES: FOCUS CHINA (2/4)  China growing double-digit for the last 8 years  Execution of our “Think very big” plan: +33% in 2019  Launch of our T-mall shop and growth of our on-line sales (e-retailers)  Pet care program … despite loss of opportunities due to African Swine fever preventing u

  30. Slide 30: Geographies: Focus Brazil (3/4)

    GEOGRAPHIES: FOCUS BRAZIL (3/4)  Brazil, growing double-digit for the last 4 years (top market performer) with significantly improved profitability  2019: +18% @ constant rate, mainly driven by cattle products growth o Parasiticides : +51% o Vaccines : +21% o Nutritionals : +34% 30

  31. Slide 31: Geographies: Focus Chile (4/4)

    GEOGRAPHIES: FOCUS CHILE (4/4) Growth at constant rates perfectly in line with expectations mainly driven by aqua parasiticides and injectable vaccines • Aquaculture : +9% • Other species : stable  Injectable vaccines: +15%  Companion animals: +5%  Oral vaccines: -19%  Pigs & Poultry: -8%  Anti

  32. Slide 32: Products Ranges: Focus Antibiotics – France (1/2)

    PRODUCTS RANGES: FOCUS ANTIBIOTICS – FRANCE (1/2)  Decrease of antibiotics in market is slowing down in France Stable exposure in 2018 vs. 2017 (+0.7% in exposure index or Alea) as published by the ANSES (French agency) - Sharp drop in drug premixes (-12%) offset by a fairly sharp increase in indiv

  33. Slide 33: Products Ranges: Focus Antibiotics (2/2)

    PRODUCTS RANGES: FOCUS ANTIBIOTICS (2/2)  Virbac global antibiotics sales stable over the last two years (~17% of total sales)  Evolution of the regulatory context: publication by the EMA (European medicine agency) of the categorization of antibiotics in the European union  From 3 to 4 antimicrob

  34. Slide 34: Products Ranges: Focus FPA Vaccines & Micro-Nutritionals

    PRODUCTS RANGES: FOCUS FPA VACCINES & MICRO-NUTRITIONALS  Growth on two preventative segments: o Food producing animal vaccines: +12.6%, with Europe and Latin America pulling this growth Vaccines 2019 growth @cst rate vs. 2018 (%) Aqua +11% Ruminants +12% Pig & Poultry +29% o Injectable Micro-Nutri

  35. Slide 35: Products Ranges: Focus on Petfood / Petcare

    PRODUCTS RANGES: FOCUS ON PETFOOD / PETCARE  Petfood > 50 M€ sales in 2019 without USA, China, Brazil, Canada, etc…  New geographies to come  New products to come (line extension)  Plan to extend to a Pet care program including hygiene products such as dentals, shampoos, nutraceuticals, etc.  P

  36. Slide 36: Agenda

    AGENDA 2019 financial highlights Main 2019 achievements Company ambition & 2020 priorities Appendix : 2020 agenda 36

  37. Slide 37: Company Purposes & Financial Priorities

    COMPANY PURPOSES & FINANCIAL PRIORITIES  To have a positive impact on the world through 3 main purposes:  To help (better) feed the planet  To protect the living (“One Health”)  To promote animal welfare  To accelerate the debt reduction  Choose sustainability by deleveraging the company  Cre

  38. Slide 38: Main 2020 Priorities

    MAIN 2020 PRIORITIES Market share gains Improve profitability Commercial excellence • Competitiveness (productivity) of • Commercial Busters manufacturing sites • Key Products • Digital business • Profitable growth in all regions Business development GROWTH TARGET 15%1 • Strict control of opex in HQ

  39. Slide 39: Update Covid-19: Current Situation March 7, 2020

    UPDATE COVID-19: CURRENT SITUATION MARCH 7, 2020  Virbac teams are safe and the Group is constantly monitoring the local situations and adjusting actions & communication (masks supplies, travel guidance, home office…)  Supply monitoring, network set-up with affiliates and third party suppliers to

  40. Slide 40: Estimated Peak Sales Potential of Main R&D Projects

    ESTIMATED PEAK SALES POTENTIAL OF MAIN R&D PROJECTS (March, 2020) Launch Companion Animals M€ Food Producing Animals M€ Year • Parasiticides (Evicto*) • Parasiticides (Kryptazen*) • Vaccines 2020 • Non pharma products 21* • Minerals 14* • Vaccines • Dermatology • Vaccines • Parasiticides 2021 • Para

  41. Slide 41: 2020 Perspectives – Summary

    2020 PERSPECTIVES – SUMMARY All perspectives at constant exchange rates and scope (without possible impact of Covid-19 situation) 2020 revenue growth : between 4% and 6% Ebit adjusted1 ratio : +~0.5 pt (+~1 pt excluding 2019 one-offs) Debt reduction: around 60 M€ (no dividend paid by Virbac SA) 1. E

  42. Slide 42: Agenda

    AGENDA 2019 financial highlights Main 2019 achievements Company ambition & 2020 priorities Appendix : 2020 agenda 42

  43. Slide 43: 2020 Agenda

    2020 AGENDA April 15* Q1 sales June 22 Annual shareholders’ meeting July 20* Q2 - H1 sales September 16* Half-year financial results September 17 SFAF meeting - 1st half 2020 financial & strategic information October 14* Q3 sales January 19, 2021* Q4 - Full year sales * After market close 43

  44. Slide 44: Shaping the future of animal health

    Shaping the future of animal health =

Virbac — FY2019 Earnings Presentation on 6ix