Medtronic Plc. · NYSE:MDT
Medtronic — Q3 FY18 Earnings Presentation
21 slides from Medtronic's earnings presentation, Feb 20, 2018
Slide 1: Medtronic plc Q3 FY18 Earnings Presentation
MEDTRONIC PLC Q3 FY18 EARNINGS PRESENTATION FEBRUARY 20, 2018 * CONSOLIDATED RESULTS & GROUP REVENUE HIGHLIGHTS ¢ FREE CASH FLOW * DIVESTITURE IMPACT * FY18 GUIDANCE & OTHER ASSUMPTIONS
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS risks. risks include, butare not limited to, hi ibed i ing i S. Securiti issi ) i ially Fe day's date, 1p any of i ined in thi Financial Data Certain i ion in thi ion i i figure: it i ited by our i registered idered “non-GAAP” i i r non-GAAP i ide i i i i i pany i i facil
Slide 3: Consolidated Results & Group Revenue Highlights
CONSOLIDATED RESULTS & GROUP REVENUE HIGHLIGHTS Oe
Slide 4: Q3 FY18 Highlights
MDT Q3 FY18 HIGHLIGHTS Revenue: 2,355, 1,102 $7,369 ($1.03) $1.17 (275%) 4% * Delivered 7% revenue growth! with strong, diversified performance in all groups and regions * Continue to see a clear acceleration in therapy innovation, with new product launches and value- based healthcare initiatives dr
Slide 5: Q3 FY18 GAAP Select Financial Information
MDT Q3 FY18 GAAP SELECT FINANCIAL INFORMATION Net Sale ) Cost of Products Sold Gross Margin SGSA ($M) % of Sales R&D ($M) f Sales Other Expense, Net Operating Profit Operating Margin Diluted EPS/(LPS) ($) Q3 FY17 7,283 2,268 68.9% 1388 32.8% Y/Y Growth/ Y/Y Change 140 bps 5%
Slide 6: Q3 FY18 Y/Y EPS Walk
MDT Q3 FY18 Y/Y EPS WALK Strong EPS leverage of ~580 bps* i 1 H 12% Y/Y ! 1 -—— 1 eo H $0.13 $1.18 | — (so.01 $1.17 (82.20) 1 1 z= $1.05 SS pe Er A 1 i 1 1 ' f 075) $0.59 f } \ i 0.45 4 4 t 1 1 \ 1 0.15 + ' ! 1 f -0.15 4 Q3FY17, Q3FY17, Q@sryi7, | FY17, Performance @srris, | FX Q3FY18, Q3FY18, 5 GAA
Slide 7: Q3 FY18 Y/Y Operating Margin Changes
MDT Q3 FY18 Y/Y OPERATING MARGIN CHANGES Operating margin expansion driven by SG&A leverage f 35.0% 7 i j : 1 ' 3% | Ce 28.8% | (09%) 30.0% ~ 12.5% ps 1 28.5% c M 27.9% — ' = (8.5%) ' 25.0% + i H ' 1 { 19.4% 20.0% 4 1 H H 15.7% ' { 15.0% + ' { ' H i 10.0% + ' i ' H 5.0% + 1 i 1 1 1 0.0% t Q3FY17, Q3
Slide 8: Q3 FY18 Non-GAAP Select Financial Information
MDT Q3 FY18 NON-GAAP SELECT FINANCIAL INFORMATION Net Sales ($M) 7,369 7% Cost of Products Sold? 2,174 8% Gross Margin? 70.5% (10 bps) (30 bps) SG&A ($M)? 2,489 52 5% % of Sales 33.8% (10 bps) R&D ($M) 4 % of Sales (10 bps) Other (Income) Expense, Net ($M)? 80 (30%) % of Sales Operating Leverage* Op
Slide 9: CVG Q3 FY18 Highlights
CVG Q3 FY18 HIGHLIGHTS KEY PERFORMANCE DRIVERS? Cardiac Rhythm & Heart Failure (CRHF) "Arrhythmia Mgmt: + "Heart Failure: +MSD * Implantable Therapeutics Pacing&ICDs:MSDdecine _* CRT Systems: LSt ontinued strong uptake orMicra® and TYR’ * Strengthi = pease Shock® eens itive CRT Risk Ca gaining tract
Slide 10: MITG Q3 FY18 Highlights
MITG KEY PERFORMANCE DRIVERS? Q3 FY18 HIGHLIGHTS Surgical Innovations (SI) = Advanced Surgical: 20SD * Stability of procedure m : dvanced S | growth * Substantial gains in emerging mz sans pat iat) /MEACAT & China * Advanced Stapling growth driven by. * Signia™ owered stapler (US, Japan, Europe) + T
Slide 11: RTG Q3 FY18 Highlights: Key Performance Drivers
KEY PERFORMANCE DRIVERS! Brain Therapies eNeurovesedier: hat = leeris RTG Q3 FY18 HIGHLIGHTS =Core Spin * Roughly in-lin * Strong growthin cet LP’ =BMP: +MSD o( quer tation® ENT platform launch in Q: Non-U.S. Dev —EM Total =Pelvic Heath: +HSD 19 perforn by US InterStim® sale
Slide 12: Diabetes Q3 FY18 Highlights
DIABETES Q3 FY18 HIGHLIGHTS Non-U.S. Dev —M Total KEY PERFORMANCE DRIVERS? (IIM) =MiniMed ® 670G System with Guardian® Sensor 3: 10 patients using lent feedback from physicians and patients performance Sout ‘omes consistent with pivotal capacity improvement efforts on trac * Ontrack to meet al senso
Slide 13: Free Cash Flow
FREE CASH FLOW
Slide 14: Components of Free Cash Flow
MDT COMPONENTS OF FREE CASH FLOW Strong Economic Benefits $ Billions FY16 | FY17 | FY18 YTD Despite Impact to Free Cash Flow Operating Cash Flow $5.2 $6.9 $3.6 @ Untrapped $10B Cash = Cost®: $0.4B Tax Payment CAPEX ($1.0)@ ($1.3)@ ($0.8)@ cS Free Cash Flow $4.2 $5.6 $2.8 = Completed $5B incremental
Slide 15: Divestiture Impact
DIVESTITURE IMPACT
Slide 16: Q3 FY18 Revenue Reporting Changes — New MITG Structure
MDT Q3FY18 REVENUE REPORTING CHANGES — NEW MITG STRUCTURE MITG — Prior View MITG—New View 4 = Product lanes i i Product Lines Surgical . Surgical i . i Solutions ™ Advanced Energy Innovations ™ Advanced Energy = Hernia ® Hernia = Gynecology is o * Intervent General Surgical = Sutures * Instruments G
Slide 17: Reporting Changes: Restated Historical Revenue
MDT REPORTING CHANGES: RESTATED HISTORICAL REVENUE Recast to reflect divestiture & new MITG reporting structure ‘in $millions Minimally Invasive Therapies Group World Wide ; TOTAL MEDTRONIC PLC Minimally Invasive Therapies Group U.S. Medtronic Plc MITG Q3FY18Eamings Results | February20,2018 | 17
Slide 18: FY17 Revised Baseline Financial Metrics
MDT FY17 REVISED BASELINE FINANCIAL METRICS — SELECT P&L LINE ITEMS Note: Gross Margin, Operating Margin, and Diluted EPS are management's best ip including cost all Q2z Q3 Qa FY17 FY17 Fray, || ©%27" Net Sales ($M) Gross Margin Operating Margin‘? Diluted EPS*= ($)
Slide 19: FY18 Guidance & Other Assumptions
FY18 GUIDANCE & OTHER ASSUMPTIONS
Slide 20: FY18 Revenue / EPS Guidance & Other Assumptions
MDT FY18 REVENUE / EPS GUIDANCE & OTHER ASSUMPTIONS i cari Growth Q4FY17 Guidance’ Comparable Base* +$. $28,046 4.5-5.5% $7,351 9-10% 4 $4.37 11-13% ‘Compounded Annually 5 FY16 Free Cash Flow’ ee CVG LSD (Act y MITG RTG Diabete: Double Digit Early FY19 Commentary * Expect to give FY19 guic F in May
Slide 21: Appendix: Acronyms / Abbreviations
APPENDIX ACRONYMS / ABBREVIATIONS Double Digits High-Single Digit Low-Double Digits Low-Single Digit Mid-Single Digit Earnings Per Share European Union Food and Drug Administration Foreign Exchange Fiscal Year Asia Pacific Basis Points Comparable, Constant Currency Conformité Européene Centers for M