Avanos Medical, Inc. · NYSE:AVNS
Avanos Medical — Q3 2024 Earnings Presentation
28 slides from Avanos Medical's earnings presentation, Oct 30, 2024
Slide 1: Q3 2024 Earnings Presentation
Q3 2024 Earnings Presentation October 30th, 2024 Getting patients back to the things that matter.
Slide 2: Leadership changes, Q3 Results & Q4 2024 Planning Assumptions
Gary Blackford Michael Greiner Avanos Board Chair Interim CEO Leadership changes Q3 Results & Q4 2024 Planning Assumptions 2
Slide 3: Disclaimer Regarding Forward-Looking Statements; Non-GAAP Financial Measures
DISCLAIMER REGARDING FORWARD-LOOKING STATEMENTS Certain matters in this presentation, including expectations and planning assumptions, any comments about our expected performance, and any estimates, projections, or statements relating to our business plans, objectives, acquisitions and transformatio
Slide 4: Leadership Changes
Leadership Changes • Joe Woody has announced his decision to retire from his role as Avanos CEO • Michael Greiner has been appointed interim CEO • Warren Machan has been appointed interim CFO 4
Slide 5: Reflections on Q3 Performance
Reflections on Q3 Performance • Achieved a significant milestone in our transformation journey • Fell short of our mid single-digit organic growth objective • Remain focused on getting patients back to the things that matter • Assisted over one million patients year-to-date 5
Slide 6: Third Quarter Performance
Third Quarter Performance Sales Adjusted EBITDA Adjusted EPS Millions Millions $171 $31 $0.36 $170 $28 $0.30 0.3% 1.1% 16.2% 17.9% organic organic margin margin growth growth Q3 2023 Q3 2024 Q3 2023 Q3 2024 Q3 2023 Q3 2024 -1% +11% +20% *Numbers include rounding 6
Slide 7: Another Strong Quarter for Digestive Health
Another Strong Quarter for Digestive Health Digestive Health Sales * Millions • Digestive Health revenue grew nearly 6% for the $98 $93 quarter (constant currency / normalized sales) • NeoMed sales grew double-digit versus prior year • At market growth for legacy Enteral Feeding products Q3 2023 Q3
Slide 8: Mixed Progress in our Pain Businesses
Mixed Progress in our Pain Businesses Pain Management & Recovery Sales * • Excluding HA, normalized organic sales were up $74 Millions over 1% $72 • On-Q growth impacted by supplier constraints but partially offset by ambIT continued double- digit growth Q3 2023 Q3 2024 • Double-digit growth in Game
Slide 9: Third Quarter Performance – Margin Expansion
Third Quarter Performance – Margin Expansion Adjusted Gross Profit Millions Adjusted gross margin comparable to prior year $100 Adj. $99 • HA price pressures, inflation and unfavorable Gross product mix offset by savings programs 58.2% 58.0% Margin • Anticipate adjusted gross margin to be ~59% margi
Slide 10: 2024 Q4 Guidance
2024 Q4 Guidance $175 million to $180 million Sales Low to mid-single digit growth Adjusted Adjusted gross margin approximately 59.0% Margins Adjusted SG&A as a % of Revenue approximately 40.0% Adjusted $0.38 to $0.43 Diluted EPS 10
Slide 11: Capital Allocation and Net Debt
Capital Allocation and Net Debt Target margin $ in millions 12/31/23 09/30/24 accretive deals ~3.5% annually Cash $88 $89 Returns above cost of capital Term Debt (118) (112) M&A R&D SHARE- HOLDER Revolver (50) (50) VALUE CREATION SHARE CAPEX Net (Debt) ($80) ($73) REPURCHASE TTM Adjusted 99 111 EBIT
Slide 12: Priorities for Reimagining our Business
Priorities for Reimagining our Business Cost Capital 1 Optimization 2 Portfolio 3 4 Management Allocation Strategic & Transform the Additional Cost Continued Efficient Commercial Product Portfolio Management Capital Allocation Optimization Initiatives to Strategies to Enhance Operating Expand Return
Slide 13: Third Quarter Progress Toward our Transformation
Third Quarter Progress Toward our Transformation • Delivered above market growth in Enteral Feeding leveraging ENFit conversion tailwinds in North America Strategic & 1 Commercial • Captured higher IVP procedural volumes Optimization • Continued execution for our ambIT product line • Continued effor
Slide 14: Thank You
Thank You
Slide 15: Appendices: Non-GAAP Reconciliations
APPENDICES Non-GAAP Reconciliations
Slide 16: Non-GAAP Reconciliations: Gross Profit
NON-GAAP RECONCILIATIONS In millions Gross Profit Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 Continuing Discontinued Continuing Discontinued Operations Operations Total Operations Operations Total As reported $ 92.9 $ (5.4) $ 87.5 $ 95.5 $ 11.2 $ 106.7 Restructuring
Slide 17: Non-GAAP Reconciliations: Operating Profit (Loss)
NON-GAAP RECONCILIATIONS In millions Operating Profit (Loss) Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 Continuing Discontinued Continuing Discontinued Operations Operations Total Operations Operations Total As reported $ 12.0 $ (2.2) $ 9.8 $ 1.2 $ 6.7 $ 7.9 Acquisit
Slide 18: Non-GAAP Reconciliations: Operating Profit (Loss), Nine Months
NON-GAAP RECONCILIATIONS In millions Operating Profit (Loss) Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023 Continuing Discontinued Continuing Discontinued Operations Operations Total Operations Operations Total As reported $ 22.3 $ (7.5) $ 14.8 $ (7.0) $ (49.2) $ (56.2) A
Slide 19: Non-GAAP Reconciliations: Income (Loss) Before Taxes
NON-GAAP RECONCILIATIONS In millions Income (Loss) Before Taxes Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 Continuing Discontinued Continuing Discontinued Operations Operations Total Operations Operations Total As reported $ 9.5 $ (2.2) $ 7.3 $ (2.6) $ 6.7 $ 4.1 Acqu
Slide 20: Non-GAAP Reconciliations: Income (Loss) Before Taxes, Nine Months
NON-GAAP RECONCILIATIONS In millions Income (Loss) Before Taxes Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023 Continuing Discontinued Continuing Discontinued Operations Operations Total Operations Operations Total As reported $ 17.2 $ (7.5) $ 9.7 $ (16.8) $ (49.2) $ (66.0
Slide 21: Non-GAAP Reconciliations: Tax (Provision) Benefit
NON-GAAP RECONCILIATIONS In millions Tax (Provision) Benefit Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 Continuing Discontinued Continuing Discontinued Operations Operations Total Operations Operations Total As reported $ (3.6) $ 0.6 $ (3.0) $ (6.2) $ (1.6) $ (7.8) T
Slide 22: Non-GAAP Reconciliations: Net Income (Loss)
NON-GAAP RECONCILIATIONS In millions Net Income (Loss) Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 Continuing Discontinued Continuing Discontinued Operations Operations Total Operations Operations Total As reported $ 5.9 $ (1.6) $ 4.3 $ (8.8) $ 5.1 $ (3.7) Acquisition
Slide 23: Non-GAAP Reconciliations: Net Income (Loss), Nine Months
NON-GAAP RECONCILIATIONS In millions Net Income (Loss) Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023 Continuing Discontinued Continuing Discontinued Operations Operations Total Operations Operations Total As reported $ 10.7 $ (5.5) $ 5.2 $ (20.9) $ (51.4) $ (72.3) Acquisi
Slide 24: Non-GAAP Reconciliations: SG&A Expense
NON-GAAP RECONCILIATIONS In millions Selling, General and Administrative Expense Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 Continuing Discontinued Continuing Discontinued Operations Operations Total Operations Operations Total As reported $ 74.3 $ — $ 74.3 $ 78.7 $
Slide 25: Non-GAAP Reconciliations: SG&A Expense, Nine Months
NON-GAAP RECONCILIATIONS In millions Selling, General and Administrative Expense Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023 Continuing Discontinued Continuing Discontinued Operations Operations Total Operations Operations Total As reported $ 238.8 $ — $ 238.8 $ 260.5 $
Slide 26: Non-GAAP Reconciliations: EBITDA
NON-GAAP RECONCILIATIONS In millions EBITDA Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 Continuing Discontinued Continuing Discontinued Operations Operations Total Operations Operations Total Net income (loss) $ 5.9 $ (1.6) $ 4.3 $ (8.8) $ 5.1 $ (3.7) Interest expense
Slide 27: Non-GAAP Reconciliations: EBITDA, Nine Months
NON-GAAP RECONCILIATIONS In millions EBITDA Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023 Continuing Discontinued Continuing Discontinued Operations Operations Total Operations Operations Total Net income (loss) $ 10.7 $ (5.5) $ 5.2 $ (20.9) $ (51.4) $ (72.3) Interest exp
Slide 28: Non-GAAP Reconciliations: Free Cash Flow and 2024 Outlook
NON-GAAP RECONCILIATIONS In millions Free Cash Flow Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Cash provided by operating activities $ 23.0 $ 29.1 $ 42.8 $ 19.7 Capital expenditures (3.0) (3.9) (13.0) (11.9) Free Cash Flow $ 20.0 $ 25.2 $ 29.8 $ 7.8 2024 Out