Teva Pharmaceutical Industries Limited · TASE:TEVA
Teva Pharmaceutical Industries — Q4 2016 Earnings Presentation
41 slides from Teva Pharmaceutical Industries's earnings presentation, Feb 13, 2017
Slide 1: Fourth Quarter and Full Year 2016 Results
Teva Pharmaceutical Industries Ltd. Fourth Quarter and Full Year 2016 Results February 13, 2017
Slide 2: Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995
Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995: This presentation contains forward-looking statements, which are based on management’s current beliefs and expectations and involve a number of known and unknown risks and uncertainties that could cause our future
Slide 3: Dr. Sol J. Barer, Chairman of the Board
Dr. Sol J. Barer Chairman of the Board
Slide 4: Dr. Yitzhak Peterburg, Interim President & CEO
Dr. Yitzhak Peterburg Interim President & CEO
Slide 5: Eyal Desheh, EVP, Chief Financial Officer
Eyal Desheh EVP, Chief Financial Officer
Slide 6: Q4 2016 Results
Q4 2016 Results
Slide 7: Q4 2016 P&L Highlights
Q4 2016 P&L Highlights $ millions, except EPS Q4 2016 Q4 2015 Q4 2016 Q4 2015 GAAP Non-GAAP Revenues 6,492 4,881 6,492 4,881 Operating income (loss) (137) 931 1,944 1,481 (2.1%) 19.1% 29.9% 30.3% Net income (loss) (973) 500 1,480 1,136 EPS ($) (1.10) 0.55 1.38 1.28 1,015M shares 875M shares 1,076M s
Slide 8: Q4 2016 Non-GAAP P&L Highlights
Q4 2016 Non-GAAP P&L Highlights $ billions, except EPS Q4 2016 Q4 2015 Change Revenues 6.5 4.9 +33% Operating income 1.9 1.5 +31% 29.9% 30.3% EBITDA 2.1 1.6 +31% Net income 1.5 1.1 +30% EPS ($) 1.38 1.28 +8% 1,076M shares 888M shares Cash flow from operations 1.4 1.6 (12%) Free cash flow 1.1 1.4 (19
Slide 9: Q4 2016 Non-GAAP Adjustments
Q4 2016 Non-GAAP Adjustments $ millions Q4 2016 Details Impairments 1,032 Rimsa goodwill of $900M Financial expenses 544 Venezuela monetary assets $500M, Mylan shares $43M Legal settlements 225 Ciprofloxacin settlement Teva (~$190M), Actavis (~$170m), Actavis & Rimsa PPA Amortization 182 adjustment
Slide 10: Q4 2016 Foreign Exchange & Venezuela Impact
Q4 2016 Foreign Exchange & Venezuela Impact $ millions Q4 2016 Q4 2015 Diff Fx Effect Venezuela Revenues 6,492 4,881 1,611 (41) 184 Operating income (loss) (137) 931 (1,068) (14) (34) GAAP Operating income 1,944 1,481 463 (9) 75 Non-GAAP In light of the economic conditions in Venezuela, we exclude t
Slide 11: Quarterly EBITDA
Quarterly EBITDA $ billion 2016 EBITDA $7.3 billion 2.1 1.9 1.6 1.6 1.7 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Adjusted EBITDA is based on non-GAAP operating income, which excludes amortization and certain other items, and excludes depreciation 11 expenses.
Slide 12: Cash Flow Trends
Cash Flow Trends $ millions Cash flow from 1.6 1.4 1.0 1.5 1.4 Operations ($ billions) 246 215 171 319 Asset Purchase, Net 167 Free Cash Flow* 1,369 1,205 1,246 1,106 796 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 * Free cash flow excludes proceeds from divestitures related to Actavis Generics of $1,72
Slide 13: Liquidity Trends
Liquidity Trends $ billions 36.9 35.8 Debt 9.9 10.2 10.9 Equity 32.0 37.0 35.0 29.9 30.6 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Leverage 25% 25% 25% 50% 51% Debt/EBITDA 1.50 1.54 1.66 5.38 4.87 Net Debt/EBITDA 0.44 0.63 0.58 5.13 4.72 Adjusted EBITDA is based on non-GAAP operating income, which exc
Slide 14: Updated Segmentation
Updated Segmentation We operate our business in two segments: • Generic medicines, which are chemical and therapeutic equivalents of originator medicines in a variety of dosage forms. This segment also includes • our OTC business, and • our API manufacturing business • Specialty medicines In additio
Slide 15: Quarterly Revenues
Quarterly Revenues $ millions 106 153 1,252 -28 301 US 737 Ex US 515 173 6,492 4,881 Q4-15 Divestitures Actavis* Anda Teva Generics* Specialty Fx and Other Q4-16 * Including divestitures and revenues from manufacturing services related to divested products. All data, except Fx, are net of the impact
Slide 16: Quarterly Revenue Breakdown by Region
Quarterly Revenue Breakdown by Region $ millions 6,492 1,505 (23%) ROW 4,881 Europe 1,015 (21%) 1,525 (24%) US 1,224 (25%) 3,462 (53%) 2,642 (54%) Q4-15 Q4-16 16
Slide 17: Quarterly Revenue Breakdown by Business Line
Quarterly Revenue Breakdown by Business Line $ millions 6,492 573 (9%) 4,881 1,188 (18%) Other 194 (4%) Specialty 1,154 (23%) 1,015 (16%) MS Specialty Generics 960 (20%) 3,716 (57%) 2,573 (53%) Q4-15 Q4-16 17
Slide 18: Quarterly Non-GAAP Operating Profit
Quarterly Non-GAAP Operating Profit $ millions 43 96 324 1,944 1,481 Q4-15 Generics Specialty G&A, FX and other Q4-16 Segment profit consists of gross profit, less S&M and R&D expenses related to the segment, but excludes G&A expenses, amortization, and certain other items. 18
Slide 19: Quarterly Business Line Profit
Quarterly Business Line Profit $ millions 2,239 40 (2%) Other 308 (14%) Specialty 1,761 37 (3%) MS Specialty 318 (18%) Generics 816 (36%) 713 (40%) 1,075 (48%) 693 (39%) Q4-15 Q4-16 Profit is presented on a non-GAAP basis. Segment and business line profit consists of gross profit, less S&M and R&D e
Slide 20: Generics Segment Gross Profit and Profit Margin Evolution
Generics Segment Gross Profit and Profit Margin Evolution 48.8% 49.4% Gross Profit 45.4% 45.7% 44.9% Margin 30.1% 28.9% 26.9% 26.0% Profit Margin 24.1% Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Segment profit consists of gross profit, less S&M and R&D expenses related to the segment, but excludes G&A expenses,
Slide 21: Copaxone revenues and US market shares
Copaxone® revenues and US market shares $ millions / % market share 1,200 960 1,006 1,141 1,061 1,015 35% 186 30% 1,000 187 185 186 200 25% 800 20% 600 15% 955 400 821 874 829 760 10% 200 5% 0 0% Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 US Ex-US US TRx MS* Copaxone® family US TRx MS* Copaxone® 40mg Market shar
Slide 22: 2016 Results
2016 Results
Slide 23: 2016 P&L Highlights
2016 P&L Highlights 2016 2015 Diff 2016 2015 Diff $ millions, except EPS GAAP Non-GAAP Revenues 21,903 19,652 +11% 21,903 19,652 +11% Operating income 2,154 3,352 (36%) 6,847 6,174 +11% 9.8% 17.1% 31.3% 31.4% Net income 329 1,588 (79%) 5,244 4,696 +12% EPS 0.07 1.82 (96%) 5.14 5.42 (5%) 961M shares
Slide 24: 2016 Non-GAAP P&L Highlights
2016 Non-GAAP P&L Highlights $ billions, except EPS 2016 2015 Change Revenues 21.9 19.7 +11% Operating income 6.8 6.2 +11% 31.3% 31.4% EBITDA 7.3 6.6 +11% Net income 5.2 4.7 +12% EPS ($) 5.14 5.42 (5%) 1,020M shares 867M shares Cash flow from operations 5.2 5.5 (6%) Free cash flow excluding divestme
Slide 25: 2016 Non-GAAP Adjustments
2016 Non-GAAP Adjustments $ millions 2016 Details Impairments 1,646 Rimsa $900M, Zecuity® $248M, Revascor® $258M Amortization 993 $881M in COGS Legal settlements 899 FCPA $521M, Ciprofloxacin $225M Financial expenses 888 Venezuela $746M, Mesoblast $99M R&D 423 Regeneron $250M, Celltrion $160M Invent
Slide 26: 2016 Foreign Exchange & Venezuela Impact
2016 Foreign Exchange & Venezuela Impact $ millions 2016 2015 Diff Fx Effect Venezuela Revenues 21,903 19,652 2,251 (174) 526 Operating income 2,154 3,352 (1,198) (81) 23 GAAP Operating income 6,847 6,174 673 (55) 133 Non-GAAP In light of the economic conditions in Venezuela, we exclude the 2016 inc
Slide 27: 2016 Revenue Breakdown by Business Line
2016 Revenue Breakdown by Business Line $ millions 21,903 19,652 1,239 (6%) 774 (4%) Other 4,451 (20%) 4,315 (22%) Specialty 4,223 (19%) MS Specialty 4,023 (20%) Generics 11,990 (55%) 10,540 (54%) 2015 2016 27
Slide 28: 2016 Business Line Profit
2016 Business Line Profit $ millions 8,039 7,361 68 (1%) Other 75 (1%) 1,226 (15%) Specialty 1,276 (17%) MS Specialty Generics 3,435 (43%) 3,085 (42%) 2,925 (40%) 3,310 (41%) 2015 2016 Operating Profit is presented on a non-GAAP basis. Segment and business line profit consists of gross profit, less
Slide 29: Balance Sheet
Balance Sheet $ billions Dec 31, 2016 Dec 31, 2015 Diff Cash and Cash Equivalents 1.0 6.9 -5.9 Other Financial assets 1.0 1.5 -0.5 AR Trade 7.5 5.4 2.1 Pre-paid Expenses and Other Current Assets 2.8 2.2 0.6 Inventory 5.0 4.0 1.0 Fixed Assets 8.1 6.5 1.6 Goodwill 44.4 19.0 25.4 Intangible Assets 21.5
Slide 30: 2017 Guidance
2017 Guidance
Slide 31: FY 2017 Financial Outlook Reaffirmed
FY 2017 Financial Outlook Reaffirmed FY 2017 Outlook Revenues 23.8 - 24.5 $ billions Non-GAAP EPS 4.90 - 5.30 $ This includes Copaxone® revenues of $3.8 - $3.9 billion, comprised of: • U.S. revenues of $3.1- $3.2 billion • Non-U.S. revenues of $0.7- $0.9 billion And assumes no launch of AB-rated gen
Slide 32: Copaxone Updated Downside Case
Copaxone® Updated Downside Case • Potential impact of 1-2 generic competitors to Copaxone® 40 mg launching in Feb 17 in the U.S. : • Revenues decrease $1.0 - $1.3 billion • Maintaining a relatively high level of expenses to support sales • EPS decrease $0.75 - $0.95 32
Slide 33: FY 2017 Quarterly Progression
FY 2017 Quarterly Progression • Q1 will be the lowest of the four quarters • 40% of our 2017 EPS will be generated in Q1-Q2; 60% in Q3-Q4 • Majority of U.S. Gx launches expected only in the second half of 2017 33
Slide 34: Quarterly Dividend
Quarterly Dividend
Slide 35: Teva's Dividend History
Teva’s Dividend History Q4 2016 dividend per ordinary share / ADS of $0.34; dividend per MCPS of $17.50 $450 $0.40 405 410 410 $400 376 $0.35 367 $350 $0.30 291 299 294 290 290 $300 281 288 287 268 276 272 264 $0.25 $250 230 237 214 $0.20 $200 $0.15 $150 $0.10 $100 $50 $0.05 $0 $0.00 Total Dividend
Slide 36: Q&A
Q&A
Slide 37: Additional Information
Additional Information
Slide 38: Q4 2016 GAAP Income Data
Q4 2016 GAAP Income Data Q4-16 Q4-15 $ millions, except EPS Q4-16 Q4-15 Diff Margins Margins Revenues 6,492 4,881 +33% COGS 3,102 47.8% 2,034 41.7% +52% Gross profit 3,390 52.2% 2,847 58.3% +19% R&D 684 10.5% 446 9.1% +53% S&M 1,129 17.4% 916 18.8% +23% G&A 311 4.8% 291 6.0% +7% Legal settlements an
Slide 39: Q4 2016 Non-GAAP Income Data
Q4 2016 Non-GAAP Income Data Q4-16 Q4-15 $ millions, except EPS Q4-16 Q4-15 Diff Margins Margins Revenues 6,492 4,881 +33% COGS 2,633 40.6% 1,827 37.4% +44% Gross profit 3,859 59.4% 3,054 62.6% +26% R&D 514 7.9% 395 8.1% +30% S&M 1,106 17.0% 898 18.4% +23% G&A 295 4.5% 280 5.7% +5% Operating income
Slide 40: 2016 GAAP Income Data
2016 GAAP Income Data $ millions, except EPS 2016 2016 Margins 2015 2015 Margins Diff Revenues 21,903 19,652 +11% COGS 10,044 45.9% 8,296 42.2% +21% Gross profit 11,859 54.1% 11,356 57.8% +4% R&D 2,111 9.6% 1,525 7.8% +38% S&M 3,860 17.6% 3,478 17.7% +11% G&A 1,236 5.6% 1,239 6.3% - Legal settlement
Slide 41: 2016 Non-GAAP Income Data
2016 Non-GAAP Income Data 2016 2015 $ millions, except EPS 2016 2015 Diff Margins Margins Revenues 21,903 19,652 +11% COGS 8,485 38.7% 7,437 37.8% +14% Gross profit 13,418 61.3% 12,215 61.9% +10% R&D 1,665 7.6% 1,436 7.3% +16% S&M 3,714 17.0% 3,418 17.4% +9% G&A 1,192 5.4% 1,187 6.0% - Operating inc
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