Virbac SA · EURONEXT:VIRP
Virbac SA — H1 2015 Earnings Presentation
41 slides from Virbac SA's earnings presentation, September 2015
Slide 1: 2015 First Half Financials and Strategic Update
2015 First Half Financials and Strategic Update September 2015
Slide 2: Agenda
AGENDA First half of 2015 performance Virbac strategic perspectives Appendix : 2015 agenda 2
Slide 3: First Half of 2015 – Summary (1/2)
FIRST HALF OF 2015 – SUMMARY (1/2) • Heavy impact of the St. Louis interruption in the USA: • drop of revenue : -32.4 M$ vs. 2014; • drop of operating profit : -47.7 M$ vs. 2014. • Only partially off-set by the strong contribution from Sentinel: • 49.7 M$ in revenue; • 19.9 M$ in operating profit (a
Slide 4: First Half of 2015 – Summary (2/2)
FIRST HALF OF 2015 – SUMMARY (2/2) • Evolution in the presentation of the P&L: current operating profit – adjusted = excludes amortization - amortization of intangibles from acquisitions = Current Operating Profit - exceptionals (essentially specific IFRS entries) = Operating Profit. • Net result :
Slide 5: Consolidated Sales H1 2015
CONSOLIDATED SALES H1 2015 Million euros 2015 2014 Var.% Consolidated sales 432.3 366.3 +18.0% - Exchange rate impact vs. 2014 (36.6) Consolidated sales at constant rates 395.7 366.3 +8.0% - change of perimeter* (36.3) Consolidated sales, pro-forma at constant exchange rates 359.4 366.3 -1.9% * Acqu
Slide 6: Quarterly Organic Growth H1 2015
QUARTERLY ORGANIC GROWTH H1 2015 +9,0% * Pro forma sales, excluding impact of +7,0% exchange rates +5,0% +3,0% +2.2% +1,0% 220.9 (185.8) -1,0% First half -1.9% -3,0% 211.4 -5,0% (180.5) -7,0% -6.1% Q1 Q2 * ( ) : 2014 numbers 6
Slide 7: Sales Evolution H1 2015
SALES EVOLUTION H1 2015 M€ 460 Organic growth -1.9% +9.9% +10.0% +18.0% 440 432.3 36.6 420 400 +5.3% 36.3 380 366.3 16.8 -23.7 360 -52% 340 320 1st 1st half half 2014 2015 300 Outside USA USA Sentinel Exchange acquisition rates 4 7
Slide 8: Breakdown of Top Countries by Organic Growth
BREAKDOWN OF TOP 15 COUNTRIES (81% OF SALES) BY ORGANIC GROWTH H1 2015 2015 4 countries with more than 10% growth : Mexico, India, UK, Spain 3 countries decreasing : 19% USA, France, Brazil 29% 13% 3 countries with 5% to 10% growth : 20.% RSA, Chile, Belgium 5 countries below 5% growth : Germany, It
Slide 9: Sales Growth by Region
H1 2015 SALES GROWTH BY REGION at constant exchange rates North America : Europe : 163.0 M€ Total : 71.8 M€ +27.3% +2.6% -52% excl. Sentinel Asia : 59.1 M€ Africa/Middle East : +13.3% 16.6 M€ Latin America : +2.3% Pacific : 77.7 M€ 44.2 M€ +7.9% +3.5% 9
Slide 10: Growth by Segment: Companion Animals
GROWTH BY SEGMENT COMPANION ANIMALS H1 2015 Businesses / Ranges Net Organic growth Organic growth outside the U.S. Revenue (=excl. Sentinel) 2015 (M€) < - 5% - 5% to 0% to < - 5% - 5% to 0% to +5% to > 10% 0% +5% 0% +5% +10% Companion Animals 242,4 -5,3% 7,5% Parasiticides 53,3 1,0% 35,6% Biological
Slide 11: Growth by Segment: Food Producing Animals
GROWTH BY SEGMENT FOOD PRODUCING ANIMALS H1 2015 Net Organic growth Businesses / Ranges Revenue +10% - 5% to 0% to +5% to < - 5% to > 15% 2015 (M€) 0% +5% +10% +15% Food Producing Animals 185,2 3,1% Bovine parasiticides 26,0 3,2% Bovine antibiotics 28,2 -10,0% Other bovine products 61,5 10,8% Antibi
Slide 12: Sales Breakdown by Region and Business
SALES BREAKDOWN BY REGION AND BUSINESS H1 2015 Northern Other developed Emerging Europe America countries* countries 38.5% 16.6% 12.1% 32.9% (42.6%) (13.4%) (12.3%) (31.8%) 4.7% 6.9% Companion 56.1% 27.9% 16.5% Animals (5.4%) (6.9%) (54%) (28.9%) (12.9%) Food producing 42.8% 25.8% 10.2% 6.8% animals
Slide 13: Consolidated Profit & Loss Statement First Half of 2015
CONSOLIDATED PROFIT & LOSS STATEMENT FIRST HALF OF 2015 30/06/2015 % 30/06/2014 % Variation en M€ Net sales 432.3 100,0 366.3 100,0 18.0% Margin on material cost 273.2 252.8 8.1% Reserves on inventories -5.5 1.3 Gross margin 278.7 64.5 251.5 68.7 10.8% External expenses 98.2 22.7 75.4 20.6 30.3% Per
Slide 14: Breakdown of EBIT (Adjusted) Evolution
BREAKDOWN OF EBIT (ADJUSTED) EVOLUTION H1 2015 M€ Evolution of the US Evolution outside 60 contribution -22.1 M€ of the US -3.3 M€ 52.8 45 +14.5 30 +4.4 27.4 -1.7 -2.0 -3.0 -2.7 15 -34.9 EBIT EBIT (ajusted) (ajusted) 1st half 1st half 2014 2015 0 USA excl. Sentinel $ exch. rate ROW excl. R&D Excepti
Slide 15: Contribution of the US Operations to the EBIT - Adjusted
CONTRIBUTION OF THE US OPERATIONS TO THE EBIT - ADJUSTED MUS $ +17.0 15 Contribution To EBIT Legacy business Sentinel 2015 Adjusted 0 2014 H1 2015 -22.0 Loss of margin Contribution Activity : to EBIT Underabsorption of - 32,6 M$ Adjusted -10.6 manufacturing cost -15 -10.8 -6.9 One-off expenses Excep
Slide 16: Contribution of Sentinel
CONTRIBUTION OF SENTINEL M€ Net revenue 44.6 Current operating profit adjusted 17.9 (Ebit adjusted) Amortization of intangibles acquired (6.6) = related to the Purchase Price Allocation (PPA) under IFRS Current operating profit 11.3 One-off / non recurring expense (7.9) = counterpart of inventory re
Slide 17: Evolution of Cash-Flows
EVOLUTION OF CASH-FLOWS H1 2015 M€ 65.0 50.2 43.4 -33% 33.0 -34% Operating cash-flow (« EBIT DA ») Net cash-flow 30.06.14 30.06.15 14 17
Slide 18: Use of Funds H1 2015
USE OF FUNDS H1 2015 M€ Net Cash flow CAPEX Working Capital Dividends Acquisitions Other* = Net debt increase 367.7 -0.2 435.8 2015 : + 44.4 23.6 -0.2 87.0 2014 : + 37.2 26.4 23.9 H1 2014 H1 2015 56.2 65.6 0 H1 2015 H1 2014 21.2 - ---’--- 21.8 -33.0 -50.2 * Including translation variance 18
Slide 19: Evolution of Net Debt
EVOLUTION OF NET DEBT H1 2015 Net debt Net Cash Working Dividends Others Net debt CAPEX Acquisitions opening flow Capital closing 367.7 -0.2 632.4 30.06.2015 23.9 56.2 21.2 196.6 -33.0 31.12.2014 19
Slide 20: Balance Sheet Analysis
BALANCE SHEET ANALYSIS H1 2015 1171.4 1171.4 M€ 247.3 Shareholder’s equity 741.5 430.7 Working capital 741.5 Minority interests 194.8 108.3 + LT reserves 378.6 Fixed assets Net financial debt 546.7 924.1 632.4 97.8 265.1 06.30.14 06.30.15 06.30.14 06.30.15 INVESTED CAPITAL CAPITAL EMPLOYED 16 20
Slide 21: Balance Sheet – Financial Ratios
BALANCE SHEET – FINANCIAL RATIOS 2014.06.30 2014.12.31 2015.06.30 146.8% 70.0% 46.5% Net debt / Shareholder’s equity Group’s share Net debt / Net cash-flow 2.64 1.87 9.59 Net debt / Operating cash-flow 2.04 1.40 7.28 21
Slide 22: Shareholding
SHAREHOLDING Number of shares : 8 458 000 Treasury shares Employees savings plan Employees savings plan 0,9% 0,4% 1,2% Others 33,1% 49,7% Others Dick Family 49,0% 65,7% Dick Family In shares In voting rights 22
Slide 23: Agenda
AGENDA First half of 2015 performance Virbac strategic perspectives Appendix : 2015 agenda 23
Slide 24: Growth of the Worldwide Veterinary Market
GROWTH OF THE WORLDWIDE VETERINARY MARKET MAT Q1 2015 +5% + 10 % + 15 % Virbac market share evolution - Europe ++, but NS North America Latin America (1) -- ++ Asia ++ Pacific +, but NS Worldwide Legend : -,+ : less than 2 pts vs market (1) Probably overstated Source CEESA, Virbac --, ++ : more than
Slide 25: USA
USA Global AH market $ 24 B $ 8.1 B VIRBAC 58% C.A. 4% m.s.* 34% North America VIRBAC 42% F.P.A. 0 * MAT Q1 2015 25 Source : Vetnosis, CEESA, Virbac analysis
Slide 26: Sentinel in Vet Clinics
SENTINEL IN VET CLINICS Penetration rate of vet clinics Dispensed doses (million) (% of vet clinics carrying the Sentinel brand) Delivered doses (million) to vet clinics to petowners 0% 12.3 - 8.4 % 11.9 11.3 11.5 +4% 75% 25% 50% June 2015 2014 2015 2014 2015 January 2015 42.9% 44.8% 26
Slide 27: Sales from Vet Clinics to Pet Owners
SALES FROM VETCLINICS TO PET OWNERS Heartworm and « Combos » products (heartworm + fleas & ticks) YTD June Total market Total market ($ million) (million doses) 894 902 + 0.9 % 81.5 80 - 1.7 % +4% + 13 % 11.5 11.9 Sentinel 104.7 118.7 Market share 14.1 % 14.9 % Market share 11.7 % 13.2 % 27
Slide 28: The Quality Challenge in St. Louis
THE QUALITY CHALLENGE IN St. LOUIS PROCESSES EQUIPMENTS SUPPLIERS DATA MANAGEMENT SKILLS CULTURE 28
Slide 29: The Quality Challenge in St. Louis
THE QUALITY CHALLENGE IN St. LOUIS PROCESSES EQUIPMENTS SUPPLIERS Tighter Higher constraints cohesiveness DATA MANAGEMENT SKILLS CULTURE 29
Slide 30: The Quality Challenge in St. Louis
THE QUALITY CHALLENGE IN St. LOUIS PROCESSES • Production vs dossier EQUIPMENTS • QA: deviation mngt SUPPLIERS • QC • Qualification/ • Cleaning methods • Active ingredients: validation • Audits GMP and environmental • Technical upgrades requirements DATA SKILLS MANAGEMENT • Management • Systematic t
Slide 31: Perspectives for the US Legacy Portfolio
PERSPECTIVES FOR THE US LEGACY PORTFOLIO ($ million, excluding Sentinel) 136.6 Other ex St Louis 113.2 products 50/60 27/37 Discontinued products 7.4 23 30 Third party products 16 2014 2015 2016 31 actual perspective perspective
Slide 32: Europe
EUROPE Global AH market $ 24 B $ 7.4 B VIRBAC 46% C.A. 9% m.s. 31% Europe VIRBAC 53% F.P.A. 4% m.s. 32 Source : Vetnosis, CEESA, Virbac analysis
Slide 33: Europe
EUROPE • Very solid growth in H1, except in France, led by the launch of new products: • Strong market entry of Milpro and Effitix; • Combined sales of 5 main new products (Milpro, Effitix, Cyclavance, Deltanil and Neopril) in excess of 15m€. • Very negative evolution in France in Q1 (impact of new
Slide 34: ROW
ROW Global AH market VIRBAC $ 24 B $ 8.5 B m.s. > 10% 13% Pacific 35% Latin 35% ROW America VIRBAC m.s. > 5% 48% Asia VIRBAC m.s. ~ 3% * MAT an 2015 34 Source : Vetnosis, CEESA, Virbac analysis
Slide 35: ROW: Perspectives in Main Countries
ROW : PERSPECTIVES IN MAIN* COUNTRIES 1st half sales growth (constant exchange rate) Comments/perspectives <0% 0/+5% +5%/+10% +10%/+15% >15% Australia Slighty higher growth expected in H2 Chile Slowdown expected in H2 India Higher growth expected in H2 Mexico Lower growth expected in H2 Streamlining
Slide 36: Peak Sales Potential of the Main Innovation Expected 2016–2017
PEAK SALES POTENTIAL OF THE MAIN INNOVATION : EXPECTED TO BE LAUNCHED IN THE 2016 – 2017 PERIOD Three years potential (m €) 3/5 5/10 10/15 > 15 Companion Animals Europe Digestive External parasiticides External parasiticides US Dermatology Internal parasiticide Internal parasiticide Foo
Slide 37: Perspectives
PERSPECTIVES • 2nd half of 2015: • gradual return to market of ex St Louis products, but still limited impact; • strong improvement of the adjusted EBIT, but likely under the 2014 level; • significant decrease of the debt level vs. 1st half. • 2016: • strong rebound of the US legacy portfolio, but n
Slide 38: Agenda
AGENDA First half of 2015 performance Virbac strategic perspectives Appendix : 2015 agenda 38
Slide 39: Thank you
ee // Thank you for your attention
Slide 40: Appendix: Agenda of Next Communications
APPENDIX : AGENDA OF NEXT COMMUNICATIONS October 15* Q3 sales January 14, 2016* Q4 – Full year sales * After market close
Slide 41: 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