Teva Pharmaceutical Industries Limited · TASE:TEVA

Teva Pharmaceutical Industries — Q2 2017 Earnings Presentation

29 slides from Teva Pharmaceutical Industries's earnings presentation, Aug 3, 2017

  1. Slide 1: Second Quarter 2017 Results

    Teva Pharmaceutical Industries Ltd. Second Quarter 2017 Results August 3, 2017

  2. 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

  3. Slide 3: Dr. Yitzhak Peterburg, Interim President & CEO

    Dr. Yitzhak Peterburg Interim President & CEO

  4. Slide 4: Mike McClellan, Interim Chief Financial Officer

    Mike McClellan Interim Chief Financial Officer

  5. Slide 5: Q2 2017 Results

    Q2 2017 Results

  6. Slide 6: Q2 2017 P&L Highlights

    Q2 2017 P&L Highlights $ millions, except EPS Q2 2017 Q2 2016 Q2 2017 Q2 2016 GAAP Non-GAAP Revenues 5,686 5,038 5,686 5,038 Operating income (loss) (5,740) 361 1,597 1,583 (100.9%) 7.2% 28.1% 31.4% Net income (loss) (5,970) 254 1,100 1,228 attributable to Teva EPS ($) (5.94) 0.20 1.02 1.25 1,017M s

  7. Slide 7: Q2 2017 Non-GAAP P&L Highlights

    Q2 2017 Non-GAAP P&L Highlights $ billions, except EPS Q2 2017 Q2 2016 Change Revenues 5.7 5.0 +13% Operating income 1.6 1.6 +1% 28.1% 31.4% EBITDA 1.7 1.7 +3% Net income 1.1 1.2 (10%) EPS ($) 1.02 1.25 (18%) 1,017M shares 979M shares Cash flow from operations 0.7 1.0 (23%) Free cash flow 0.6 0.8 (2

  8. Slide 8: Q2 2017 Non-GAAP Adjustments

    Q2 2017 Non-GAAP Adjustments $ millions Q2 2017 Details Goodwill impairment 6,100 US generics Amortization 411 Including Actavis PPA adjustment Legal settlements 324 Carvedilol patent litigation reserve ($235m) Impairment 145 Godollo closure ($68m), Rimsa ($43m) Contingent consideration 140 Bendeka®

  9. Slide 9: Balance Sheet

    Balance Sheet $ billions Jun 30, 2017 Mar 31, 2017 Diff Cash and Cash Equivalents 0.6 0.9 -0.3 Other Financial assets 0.3 0.3 0.0 AR Trade 7.4 7.3 0.1 Pre-paid Expenses and Other Current Assets 1.5 1.7 -0.1 Inventory 5.1 5.0 0.1 Fixed Assets 8.1 8.2 -0.1 Goodwill 40.0 45.0 -5.0 Intangible Assets 21.

  10. Slide 10: Q2 2017 Foreign Exchange & Venezuela Impact

    Q2 2017 Foreign Exchange & Venezuela Impact $ millions Q2 2017 Q2 2016 Diff FX Effect Venezuela Revenues 5,686 5,038 648 (35) (183) Operating income (loss) (5,740) 361 (6,101) (15) (47) GAAP Operating income 1,597 1,583 14 (18) (38) Non-GAAP In light of the political and economic conditions in Venez

  11. Slide 11: Quarterly EBITDA

    Quarterly EBITDA $ billions 2.09 1.93 1.69 1.77 1.75 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 EBITDA is based on non-GAAP operating income (which excludes amortization and certain other items) and excludes 11 depreciation expenses.

  12. Slide 12: Cash Flow

    Cash Flow $ millions Cash flow from Operations 963 1,461 1,425 470 741 215 319 167 Asset Purchase, Net Free Cash Flow* 1,246 174 1,106 796 198 567 272 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 * Proceeds from divestitures related to Actavis Generics were $1.7 billion in Q3 2016 and $0.7 billion in Q1

  13. Slide 13: Liquidity

    Liquidity $ billions 36.9 35.8 34.6 35.1 Debt 10.9 Equity 32.0 37.0 35.0 35.7 29.6 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Leverage 25% 50% 51% 49% 54% Debt/EBITDA 1.66 5.38 4.87 4.63 4.65 Net Debt/EBITDA 0.58 5.13 4.72 4.49 4.56 EBITDA is based on non-GAAP operating income (which excludes amortizat

  14. Slide 14: Quarterly Revenues

    Quarterly Revenues $ millions -111 327 -218 316 -77 410 5,038 5,686 Q2 - 16 US Gx EU & MS Specialty Other FX & VZ Q2 - 17 RoW Gx Specialty All data, except FX and VZ nominal, are net of the impact of foreign exchange fluctuations. 14

  15. Slide 15: Quarterly Revenue Breakdown by Business Line

    Quarterly Revenue Breakdown by Business Line $ millions 5,686 Other 5,038 543 (10%) Specialty 210 (4%) MS Specialty 1,042 (18%) 1,130 (22%) Generics 1,023 (18%) 1,141 (23%) 3,078 (54%) 2,557 (51%) Q2-16 Q2-17 15

  16. Slide 16: Quarterly Non-GAAP Operating Profit

    Quarterly Non-GAAP Operating Profit $ millions 136 -91 20 -51 1,583 1,597 Q2-16 Generics Specailty G&A Other, FX and VZ Q2-17 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. 16

  17. Slide 17: Generics Segment Gross Profit and Profit Margin

    Generics Segment Gross Profit and Profit Margin 48.8% 49.4% Gross Profit 44.9% 44.8% Margin 42.8% 30.1% 28.9% 25.5% Profit Margin 23.6% 22.4% Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Segment profit consists of gross profit, less S&M and R&D expenses related to the segment, but excludes G&A expenses, amortizati

  18. Slide 18: Copaxone revenues and US market shares

    Copaxone® revenues and US market shares $ millions / % market share 1,141 1,061 1,015 970 1,023 1,200 35% 186 30% 1,000 187 186 180 188 25% 800 20% 600 15% 955 400 874 829 843 782 10% 200 5% 0 0% Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 US Ex-US US TRx MS* Copaxone® family US TRx MS* Copaxone® 40mg Market shar

  19. Slide 19: Financial Outlook

    Financial Outlook

  20. Slide 20: 2017 non-GAAP P&L outlook

    2017 non-GAAP P&L outlook 2017 Business Outlook Updated Business Outlook billions, except EPS January 2017 August 2017 Net revenues 23.8 - 24.5 22.8 - 23.2 Gross profit (%) 57% - 58% 56% - 57% R&D 1.75 - 1.85 1.6 - 1.7 S&M 3.4 - 3.55 3.45 - 3.55 G&A 1.0 - 1.1 1.1 - 1.2 Operating income ($B) 7.4 - 7.

  21. Slide 21: Dr. Sol J. Barer, Chairman of the Board

    Dr. Sol J. Barer Chairman of the Board

  22. Slide 22: Q&A

    Q&A

  23. Slide 23: Additional Information

    Additional Information

  24. Slide 24: Quarterly GAAP P&L

    Quarterly GAAP P&L Q2-17 Q2-16 $ millions, except EPS Q2-17 Q2-16 Diff Margins Margins Revenues 5,686 5,038 +13% COGS 2,865 50.4% 2,161 42.9% +33% Gross profit 2,821 49.6% 2,877 57.1% (2%) R&D 486 8.5% 375 7.4% +30% S&M 960 16.9% 952 18.9% +1% G&A 272 4.8% 311 6.2% (13%) Legal settlements and loss c

  25. Slide 25: Quarterly Non-GAAP P&L

    Quarterly Non-GAAP P&L Q2-17 Q2-16 $ millions, except EPS Q2-17 Q2-16 Diff Margins Margins Revenues 5,686 5,038 +13% COGS 2,459 43.2% 1,888 37.5% +30% Gross profit 3,227 56.8% 3,150 62.5% +2% R&D 450 7.9% 370 7.3% +22% S&M 906 15.9% 898 17.8% +1% G&A 274 4.8% 299 5.9% (8%) Operating income 1,597 28.

  26. Slide 26: H1 GAAP P&L

    H1 GAAP P&L H1-17 H1-16 $ millions, except EPS H1-17 H1-16 Diff Margins Margins Revenues 11,316 9,848 +15% COGS 5,676 50.2% 4,180 42.4% +36% Gross profit 5,640 49.8% 5,668 57.6% +0% R&D 943 8.3% 764 7.8% +23% S&M 1,931 17.1% 1,791 18.2% +8% G&A 508 4.5% 615 6.2% (17%) Legal settlements and loss cont

  27. Slide 27: H1 2017 Non-GAAP Adjustments

    H1 2017 Non-GAAP Adjustments $ millions H1 2017 Details Goodwill impairment 6,100 US generics Amortization 731 Legal settlements 344 Carvedilol patent litigation reserve ($235m) Restructuring, acquisition and integration 284 expenses Contingent consideration 161 Bendeka® royalties ($98m) Impairment

  28. Slide 28: H1 Non-GAAP P&L

    H1 Non-GAAP P&L H1-17 H1-16 $ millions, except EPS H1-17 H1-16 Diff Margins Margins Revenues 11,316 9,848 +15% COGS 4,893 43.2% 3,682 37.4% +33% Gross profit 6,423 56.8% 6,166 62.6% +4% R&D 896 7.9% 745 7.6% +20% S&M 1,813 16.0% 1,719 17.5% +5% G&A 496 4.4% 593 6.0% (16%) Operating income 3,218 28.4

  29. Slide 29: 2017 non-GAAP P&L outlook

    2017 non-GAAP P&L outlook 2017 Business Outlook Updated Business Outlook billions, except EPS January 2017 August 2017 Net revenues 23.8-24.5 22.8-23.2 Gross profit (%) 57%-58% 56 %-57% R&D 1.75-1.85 1.6-1.7 S&M 3.4-3.55 3.45-3.55 G&A 1.0-1.1 1.1-1.2 Operating income ($B) 7.4-7.8 6.6-6.8 EBITDA 8.0-

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