Convatec Group Plc · LSE:CTEC
Convatec — H1 2024 Earnings Presentation
34 slides from Convatec's earnings presentation, Jul 30, 2024
Slide 1: Strong and broad-based growth
30 July 2024 Strong and broad-based growth Interim results for six months ended 30 June 2024
Slide 2: Disclaimer
Disclaimer For the purposes of this notice, “Presentation” means this document, its contents or any part of it, any oral presentation, any question or answer session and any written or oral material discussed or distributed before, during or after the Presentation meeting. This information, which do
Slide 3: Hosts
Hosts Karim Bitar Jonny Mason Chief Executive Officer Chief Financial Officer
Slide 4: Convatec is delivering sustainable and profitable growth
Convatec is delivering sustainable and profitable growth Strong, broad-based organic revenue growth Operating profit margin expansion on track Growing earnings and free cash flow Stronger competitive position with pipeline delivering Confirming 2024 and medium-term guidance 4
Slide 5: On track to achieve another year of strong growth and continued margin progression
On track to achieve another year of strong growth and continued margin progression Organic revenue growth Adjusted operating profit margin 26.0% 24.0% 23.4% 7.2% 5-7% 22.0% ≥21%* 20.2% 20.0% 19.4% 19.5% 5.6% 18.5% 5.3% 18.0% 17.7% 4.2% 16.0% 14.0% 2.3% 12.0% 0.2% 10.0% 2018 2019 2020 2021 2022 2023
Slide 6: Financial Review H1'24
Financial Review H1’24 6
Slide 7: H1'24: financial results on track
H1’24: financial results on track Strong, broad-based growth across all four Organic revenue growth1 +6.6% H1 23: 6.6% categories (30) bps in actual currency Operating margin in CC2 +40 bps 20.7% vs 20.3% inflation higher in H1, lower in H2 Earnings per Share3 flat 6.8₡ vs 6.8₡ +4.5% in CC; higher f
Slide 8: Broad-based growth across all categories
Broad-based growth across all categories 1,200 Group Organic1 6.7% 4.9% 8.2% 7.3% 6.6% 14 (10) (5) ($m) 1,100 22 15 23 1,113 1,113 1,055 1,000 H1'23 Advanced Ostomy Continence Infusion Hospital Care FX H1'24 Wound Care Care Care (exited) Care (inc. FMS) 1. Organic growth presents period over period
Slide 9: AWC: Good growth despite headwinds; OC: Good growth driven by convex portfolio
AWC: Good growth despite headwinds OC: Good growth driven by convex portfolio 2000000.0% Organic 7.3% 6.3% 8.7% 10.3% 6.7% 0.0% growth1 350 -2000000.0% • Solid growth in Europe and GEM, expect -4000000.0% faster growth in second half Advanced 360 • Double-digit growth in North America 250 338 357 Wo
Slide 10: CC: Strong growth from volume and price; IC: Strong demand for infusion sets
CC: Strong growth from volume and price IC: Strong demand for infusion sets Organic 4.5% 5.7% 7.6% 5.5% 8.2% 0.0% 250 growth 1 • US performance driven by growth in volume -200000.0% and price Continence -400000.0% • Increasing new patient numbers and high 236 243 Care 220 221 -600000.0% retention ra
Slide 11: Further progress on margin expansion
Further progress on margin expansion Inflation expected to moderate in H2 +40 -30 bps 0.5% bps 0.5% 0.5% -2.2% 0.7% 20.7% 20.3% -0.7% 0.4% 20.0% H1 Price Mix Operations COGS Other G&A H1 2024 FX H1 2023 productivity inflation Opex efficiency @ CC 2024 11 * In constant currency
Slide 12: EPS growth to accelerate in H2 as financing costs stabilise
EPS growth to accelerate in H2 as financing costs stabilise H1 H2 Full Year H1’23 H1’24 H2’23 H2’24 FY 24 +LSD Operating profit1 $214m $223m $218m +DD% +DD% % Financing cost1,2 $(34)m $(41)m -DD% $(42)m flat -MSD% Tax rate3 23% 24% flat 24% flat flat Net profit1 $139m $139m $135m flat +DD% +DD% Earn
Slide 13: Stronger Free Cash Flow from higher EBITDA and improved working capital
Stronger Free Cash Flow from higher EBITDA and improved working capital • Free cash flow to equity1 increased by $47m YoY • Cash profile is seasonal – on track for double-digit growth for FY’24 8 37 57 -11 ($m) 13 10 EBITDA Capex FCF to Equity H1 '24 FCF to Equity Working Capital Tax, interest,… H1
Slide 14: FY 2024 organic revenue guidance confirmed
FY 2024 organic revenue guidance confirmed Unchanged from May trading update when it was AWC Mid-high single digit reduced to reflect short-term uncertainty from draft LCD proposal OC Mid-single digit Unchanged Upgrading to high-single digit (from mid-high) CC High-single digit given increasing mome
Slide 15: FY 2024 profit and cash guidance confirmed
FY 2024 profit and cash guidance confirmed • Mix, price, productivity and operating leverage Operating profit margin1 ≥21.0% @ CC more than offsetting inflation • Inflation 3% to 5%, lower in H2 than H1 • Adj. net finance expense: upper half of $75-85m Earnings per Share2 ≥10% • Adj. book tax rate:
Slide 16: Medium term: on track to deliver mid-20s operating profit margin
Medium term: on track to deliver mid-20s 1 operating profit margin 24-26% Mix portfolio Mix across categories Mix within categories 20.7%2 ≥21%2 Global quality & ops Strong H2 growth Commercial G&A Mix & Price Lower inflation in H2 Further simplification HY 2024 FY 2024 Simplification Mix Op
Slide 17: Expect to deliver double-digit EPS and FCF to Equity growth over medium term
Expect to deliver double-digit EPS and FCF to Equity growth over medium term Medium-term targets Opportunity Medium-term outcome Sustainable Expanding operating Potential M&A to Double-digit EPS2 and FCF top-line growth profit1 margin enhance growth to Equity3 CAGR 5-7% Strengthening organic growth
Slide 18: Strategy Update H1'24
Strategy Update H1’24 18
Slide 19: Convatec's FISBE strategy is delivering
Convatec’s FISBE strategy is delivering Focus Innovate Simplify Build Execute Pricing Sales force 93% 8 new launches – Operations +50 bps Targeting chronic – recurring winning share productivity benefit to key accounts revenue accelerating gross margin ~65%2 NPS1 > 80 Generating strong G&A efficienc
Slide 20: Majority of revenue is recurring – supporting patients with chronic conditions
Majority of revenue is recurring – supporting patients with chronic conditions Convatec H1 ‘24 revenue split Underlying conditions Chronic Cardiovascular disease 93% AWC Diabetes 7% Bowel & bladder cancer OC Crohn's disease Multiple sclerosis CC Spinal cord injuries Diabetes IC Parkinson’s 20
Slide 21: Diversified and leading position – across large and growing categories
Diversified and leading position – across large and growing categories Convatec growth Category Convatec sales Size Category growth pa Convatec position (H1 ‘24) 32% $7.0bn ~5% 6.7% #3 globally AWC OC 28% $3.0bn ~4% 4.9% #3 globally CC 22% $2.2bn ~4% 8.2% #1 in US IC 18% $1.6bn ~8% 7.3% #1 globally
Slide 22: Rich and growing pipeline across all categories
Rich and growing pipeline across all categories 2023/2024 2025/2026 InnovaMatrix US Outside the US 780G MioAdvance Extended Wear Globally ConvaFoam US Europe GEM Infusion set for Beta Bionics iLet pump US AbbVie Parkinson’s Japan Europe US GentleCath Air for Women 2.0 Europe & US Infusion set for Ta
Slide 23: AWC growing flagship brand Aquacel Ag+ Extra and successfully launching new products
AWC growing flagship brand Aquacel Ag+ ExtraTM and successfully launching new products Flagship brands supported with clinical evidence Successful new product launches Randomised controlled trial demonstrated superiority1 Winning evaluations > 50% in US 75% Standard of care 56% Cleared in Europe - l
Slide 24: InnovaMatrix has a strong scientific and clinical profile – cleared by FDA
InnovaMatrix® has a strong scientific and clinical profile – cleared by FDA • Innovative and proprietary mammalian placental extra Innovative cellular matrix for chronic, surgical & trauma wounds • Cleared by FDA October 2020 as a medical device - FDA clearance 510k process • Demonstrated “substanti
Slide 25: Strong adoption and positive patient outcomes
Strong adoption and positive patient outcomes ~ 2,000 physicians and nurses using in US ~ 10,000 patients treated in US “I think InnovaMatrix® AC is different from every other product I’ve used. What differentiates it is very important to me – it’s the Case study1: Diabetic foot ulcer - BEFORE decel
Slide 26: InnovaMatrix performed strongly in very challenging wounds
InnovaMatrix® performed strongly in very challenging wounds 44% of wounds 44% of wounds were Two-year retrospective real world evidence were limb or life limb or life threatening study threatening % wounds healed InnovaMatrix ~ 53% Strong clinical impact Standard of care < 40% 1. Data on file- Intel
Slide 27: Additional RWE & RCT clinical data will lead to broader coverage
Additional RWE & RCT clinical data will lead to broader coverage Current Current 2026/2027 2026/2027 More studies completed and Real World Evidence (RWE) Publishing in H2 2024 published Evidence Reporting in 2026 - leverage Randomised Controlled Trial (RCT) Initiating in Q3 2024 – DFU & VLU with pay
Slide 28: OC – Continued good performance enhanced by new Esteem Body launch
OC – Continued good performance enhanced by new Esteem BodyTM launch Driving growth through improved execution Esteem BodyTM enhancing growth Global launch well received - strong growth Growthin newpatientstarts(Italy) Growth in new patient starts 7% 6% 2.5x 5% 4% 3% 2% 1% 0% H1 '23 H1 '24 Segment C
Slide 29: CC – Outstanding customer service and differentiated hydrophilic portfolio
CC – Outstanding customer service and differentiated hydrophilic portfolio Leading the way in customer service Proprietary hydrophilic FeelClean TechnologyTM Sustaining world-class customer service Differentiated performance 180 Medical - Net Promoter Score Designed for superior comfort and >80 less
Slide 30: CC – Strong US presence and global expansion
CC – Strong US presence and global expansion Sustained US leadership Driving global expansion with new launches Vertically integrated solutions – high retention GC Air for Women #1 in Service #2 in Manufacturing Gaining momentum in key European markets ~40% Share ~25% Share +100 bps segment share in
Slide 31: Parkinson's disease patient story
Parkinson’s disease patient story Our vision: Pioneering trusted medical solutions to improve the lives we touch Our promise: forever caring 31
Slide 32: IC – strong growth, diversification in diabetes and new chronic diseases
IC – strong growth, diversification in diabetes and new chronic diseases Sustained leadership in diabetes Growth in non-diabetes Partner of choice for innovative pump launches Increasing contribution from pain management, 780 YpsoPump immunoglobulin and Parkinson’s therapies Mobi iLet G Strong doubl
Slide 33: Summary and outlook
Summary and outlook H1’24 – strong, broad based financial performance • Strong organic revenue growth & operating margin expansion1 • Earnings and cash performance improving 2024 guidance confirmed • Organic revenue growth of 5-7% (expected to be in upper half of range) • Operating profit margin1: ≥
Slide 34: &
& 34