Virbac SA · EURONEXT:VIRP
Virbac SA — H1 2019 Earnings Presentation
38 slides from Virbac SA's earnings presentation, September 2019
Slide 1: 2019 half year results & perspectives
2019 half year results & perspectives September 2019 Shaping the future of animal health
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
Slide 3: Agenda
AGENDA 2019 half year results Strategy execution & perspectives Appendix : 2019 agenda 3
Slide 4: Financials – Summary (1/4)
FINANCIALS – SUMMARY (1/4) H1 2019 • 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 • Translating into a double-digit margin growth • Sales increase in the USA (+20.5% @ constant rate / ~ +7.0% excl.
Slide 5: Financials – Summary (2/4): average exchange rates
FINANCIALS – SUMMARY (2/4) H1 2019 Average rates USD GBP JPY MXN AUD ZAR BRL INR CHF CLP A 2018 1.19 0.88 131 23.1 1.57 14.9 4.15 79.6 1.17 740 A 2019 1.13 0.87 124 21.6 1.60 16.0 4.35 79.0 1.13 762 Variance A19/A18 5.8% 0.6% 5.8% 6.6% -1.9% -7.3% -4.4% 0.7% 3.6% -2.8% Average rates NZD COP CRC PHP
Slide 6: Financials – Summary (3/4)
FINANCIALS – SUMMARY (3/4) H1 2019 • Net profit : 28.4 M€ (vs. 12.6 M€ in 2018) @ real rate impacted by : • Operational improvement • Changes in the pension scheme of the members of the Executive Board (+3.2 M€) • Favorable exchange rate impact on CLP vs. US$ and € • Impairment on CaniLeish assets (
Slide 7: Consolidated Sales (4/4)
CONSOLIDATED SALES (4/4) H1 2019 Million euros 2019 2018 Var.% Consolidated sales 463.7 430.0 +7.9% - Exchange rate impact vs. 2018 -5.3 Consolidated sales at constant rates 458.4 430.0 +6.6% - change in perimeter 0.0 Consolidated sales, pro-forma at 458.4 430.0 +6.6% constant exchange rates 7
Slide 8: Sales Evolution
SALES EVOLUTION H1 2019 20.5% 5.3 M€ 11.7 6.3% 12.4 2.4% 4.3 463.7 430.0 33.8 M€ (7.9%) at actual rates 28.3 M€ (6.6%) at constant rates A 2018 Europe ROW US Exchange rates A 2019 8
Slide 9: Sales Growth by Region
SALES GROWTH BY REGION H1 2019 At constant rates Europe North America 181.0 M€ 69.8 M€ +2.4% +20.5% Asia 74.6 M€ +8.9% Africa/Middle East 17.1 M€ Latin America +6.5% 75.7 M€ +9.3% Pacific 41.1 M€ -2.7% 9
Slide 10: Sales Growth by Segment - Companion Animals
SALES GROWTH BY SEGMENT - COMPANION ANIMALS H1 2019 At constant rates A 2018 243.2 Parasiticides 78.6 (11.2%) 7.7 Other 53.7 (6.8%) 3.4 Antibiotics/Dermatology 40.1 (13.9%) 4.8 Specialties 38.1 (6.9%) 2.4 Biologicals 36.4 (0.8%) 0.3 Petfood 23.5 (20.8%) 4.0 Exchange rate 4.6 0 (0%) A 2019 270.4 10
Slide 11: Sales Growth by Segment - Food Producing Animals
SALES GROWTH BY SEGMENT - FOOD PRODUCING ANIMALS H1 2019 At constant rates A 2018 47 (-10%) 181.8 Antibiotics 47.0 (-10%) - 5.2 Antiparasiticides 35.4 (4.7%) 1.6 Bovine, Swine & Nutritionals 33.0 (3.4%) 1.1 Poultry Vaccines 19.9 (15%) 2.6 Other 24.7 (6.3%) 1.5 Aquaculture 26.3 (10.7%) 2.4 Exchange r
Slide 12: Sales Breakdown by Region and Business
SALES BREAKDOWN BY REGION AND BUSINESS H1 2019 Other developped Europe North America countries* Emerging countries 39.3% 15.7% 11.3% 33.7% (41.7%) (13.2%) (12.1%) (33.0%) Companion Animals 58.3% 29.6 % 15.2 % 4.6 % 9.0 % (30.7 %) (12.9 %) (4.7%) (8.4 %) (56.6%) Food Producing 24.1% Animals 40.2% 9.6
Slide 13: 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
Slide 14: Profit & Loss Statement at Real Rates
PROFIT & LOSS STATEMENT AT REAL RATES H1 2019 2019 % 2018 % in M€ Net sales 463.7 100.0 430.0 100.0 Gross margin on material cost 311.2 67.1 285.0 66.3 Net expenses 224.3 48.4 227.0 52.8 Amortizations, depreciations and provisions 20.0 4.3 12.8 3.0 Current operating profit before depreciation of ass
Slide 15: Breakdown of Ebit Adjusted Evolution
BREAKDOWN OF EBIT ADJUSTED1 EVOLUTION H1 2019 M€ 9.7 -0.9 -0.1 -0.1 11.1 66.9 2.0 45.2 2 1 Ebit adjusted : current operating profit before depreciations of assets arising from acquisitions 2 RDL : Research, Development & Licensing 15
Slide 16: Contribution of the US Operations to the Ebit Adjusted
CONTRIBUTION OF THE US OPERATIONS TO THE EBIT ADJUSTED1 H1 2019 M$ 15.2 -1.5 -1.4 1.2 Excluding R&D One-time events 17.4 4.0 A 2018 Margin Improvement Contract Building sale OPEX increase A 2019 (Volume, Cost absorption, Manufacturing Gross to Net) 16 1 Ebit adjusted : current operating profit befor
Slide 17: Evolution of Cash-Flow
EVOLUTION OF CASH-FLOW H1 2019 M€ +38.5% Operating cash flow 1 82.4 Net cash flow 59.5 61.2 +85.5% 33.0 2018 2019 1 The application of IFRS 16 has positively impacted H1 2019 operating cash flow by 4.9 M€, and net cash flow by 4.1 M€ 17
Slide 18: Evolution of Free Cash-Flow
EVOLUTION OF FREE CASH-FLOW H1 2019 2018.06 2019.06 M€ 16.6 12.2 33.0 61.2 39.5 46.3 -23.2 -24.9 2.6 2.1 1.7 0.6 18
Slide 19: Evolution of Net Debt
EVOLUTION OF NET DEBT H1 2019 M€ 3.1 7.4 34.2 0.0 2.1 46.3 61.2 455.5 12.2 Closing net debt 426.1 @ constant rates 452.4 M€ Closing net debt @ constant rates & accounting method (IFRS 16) 423.8 M€ Opening net Net cash flow Capex WCR Acquisitions Dividends Lease Other ** Conversion Closing net debt o
Slide 20: Balance Sheet Analysis
BALANCE SHEET ANALYSIS H1 2019 1,051.1 M€ 1,051.1 M€ 991.0 M€ 991.0 M€ 134.9 186.2 455.5 426.1 104.6 106.8 856.1 865.0 460.3 488.9 2018.12 2019.06 2018.12 2019.06 Fixed assets Net financial debt Working capital Non controlling interests + LT reserves Shareholder's equity INVESTED CAPITAL CAPITAL EMP
Slide 21: Financing - Debt Situation
FINANCING - DEBT SITUATION H1 2019 Situation December 2018 Situation June 2019 Financial covenant Financing available : ~611 M€ Financing available : ~610 M€ (Net debt/Ebitda) at • Banking pool (RCF1) : ~420M€ • Banking pool (RCF 1) : ~420M€ 2022 maturity June, 2019 3 : 2022 maturity • BEI : ~90 M$
Slide 22: Balance Sheet – Financial Ratios
BALANCE SHEET – FINANCIAL RATIOS H1 2019 2018.06 2018.12 2019.06 108.2% Net debt1/Shareholder’s equity Group’s share 92.6% 93.2% Net debt1/Net cash-flow2 7.4 6.1 3.7 Net debt1/Operating cash-flow2 4.1 3.6 2.8 1 The methodology for calculating the bank covenant differs slightly from the accounting me
Slide 23: Shareholding
SHAREHOLDING Number of shares: 8 458 000 In shares In Voting Rights 23
Slide 24: Agenda
AGENDA 2019 half year results Strategy execution & perspectives Appendix : 2019 agenda 24
Slide 25: Massive consolidation in last 10 years has created a new top tier
MASSIVE CONSOLIDATION IN LAST 10 YEARS HAS CREATED A NEW TOP TIER Companies that were acquired or merged between 2007 and 2019 Top 10 Companies Revenue in 2007 ($m) … And in 2018 ($m) 2,639 5,825 2,449 4,673 (1) 1,310 4,619 (2) 1,125 3,102 Announced acquisition in 2019, closing expected mid 2020 1,1
Slide 26: Animal health: a growing market with possibility to expand into animal care
ANIMAL HEALTH: A GROWING MARKET WITH POSSIBILITY TO EXPAND INTO ANIMAL CARE Market Categories ADJACENT ~$400bn Pet supplies Genetics Pet food COMPLEMENTARY ~$30bn Health & wellness Nutritional Pet pet food Health insurance Animal Health Pet CORE services ~$35bn Veterinary devices & Digital diagnosti
Slide 27: Virbac: a very well positioned portfolio, with opportunities
VIRBAC : A VERY WELL POSITIONED PORTFOLIO, WITH OPPORTUNITIES IN VACCINES (FPA), USA AND BLOCKBUSTERS Competitor 1 Competitor 2 (*) 2018 Competitor 3 Competitor 4 Sales +++++ ++++ ++ + + % Companion 45% 35% 58% 0% 56% animals % Antimicrobials 22% 37% 17% n.d n.d within portfolio % Biologicals 26% n.
Slide 28: Main 2019 half year achievements
MAIN 2019 HALF YEAR ACHIEVEMENTS Long term competitivity Gaining market share, delivering growth • « Competitivity review » of main manufacturing sites above market rate leading to execution of action plans in France and USA Signature of a private label agreement adding volumes to the 6.6% at consta
Slide 29: Main 2019 half year commercial achievements
MAIN 2019 HALF YEAR COMMERCIAL ACHIEVEMENTS Product ranges growth at constant rates • Busters programs o Petfood (+21%) o Veggiedent chews (+18%) o Suprelorin (+6%) due to supply constraints • FPA vaccines (w/o Aquaculture) > +15% Aquaculture vaccines +28% Countries growth at constant rates • ~ 50%
Slide 30: USA
USA Ex-Virbac performance : +21% and around +7% excluding destocking impact (base effect of 2018) In-clinic market performance1 : • Sentinel sales eroding but globally in line with market trend • Iverhart & Other ranges growing double-digits Strong growth of on-line sales 1 In-clinic market pe
Slide 31: Chile
CHILE Growth at constant rates perfectly in line with expectations • Aquaculture : +17% • Other species : Stable Injectable vaccines: +45% Companion animals: +8% Oral vaccines: -7% Pigs & Poultry: +8% Antibiotics: -14% Ruminants: -28% Parasiticides: +28% Other products: +37% 31
Slide 32: Main 2019 priorities
MAIN 2019 PRIORITIES Competitivity • Industrial focus • Profitable growth in all regions (margin & opex ratios) • Business development boost • HQ costs optimization Busters & portfolio management • Innovation & partnerships • Commercial (Petfood, Suprelorin, Veggiedent chews, others) Digital & syste
Slide 33: Estimated peak sales potential of main R&D projects
ESTIMATED PEAK SALES POTENTIAL OF MAIN R&D PROJECTS (September, 2019) Launch Companion Animals M€ Food Producing Animals M€ Year • Anti-infectives Specialities • Vaccines 16 12 • 2019 • Dermatology • Parasiticides • Non pharma products • Parasiticides • Parasiticides 2020 • Vaccines 21 • Minerals 14
Slide 34: 2019 Perspectives – Summary
2019 PERSPECTIVES – SUMMARY 2019 organic growth1: at the upper end of the 4% to 6% range Ebit adjusted2 ratio: + ~2.0 pt @ constant rate Debt reduction: between 40 and 50 M€ @ constant rate (no dividend paid by Virbac SA) 1. At constant exchange rates and scope 2. Ebit adjusted : current operating p
Slide 35: Ambition: ~15% Ebita around 2022
AMBITION 1 key objective 3 main levers ~15 of Ebita % 1 • Top-line revenue growth (around 2022) US infrastructure • St. Louis profitability leverage improvement plan • Entry in FPA • Leveraging emerging Profitable growth in countries dynamism • Controlling cost of doing other geographies business in
Slide 36: Agenda
AGENDA 2019 half year results Strategy execution & perspectives Appendix : 2019 agenda 36
Slide 37: 2019 Agenda
2019 AGENDA April 11* Q1 sales June 18 Annual shareholders’ meeting July 16* Q2 – H1 sales September 16* Half-year financial results September 17 SFAF meeting - 1st half 2019 financial & strategic information October 11* Q3 sales January 16, 2020* Q4 – Full year sales * After market close 37
Slide 38: Shaping the future of animal health
Shaping the future of animal health =