Slide 1: Alcon 2Q20 Earnings Presentation
Alcon Earnings Alcon 2Q20 Earnings Presentation August 19, 2020 Business Use Only | 1
Slide 2: Legal Disclaimers
Legal Disclaimers Forward-Looking Statements This document contains “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward- looking statements can be identified by words such as: “anticipate,” “inte
Slide 3: Agenda
Agenda Key Topics 2Q20 & 1H20 Financial Results Outlook 3
Slide 4: Key Topics
Key Topics
Slide 5: 2Q20 Key Topics
2Q20 Key Topics COVID-19 IMPACT EXECUTING OUR PRIORITIES ACCELERATING INNOVATION • Recovery curve as expected, with • Keeping associates, doctors, • PanOptix in US, Japan and China sequential monthly improvement patients and communities safe • Vivity pilot in Europe, Canada from April lows • Maintai
Slide 6: 2Q20 Select Financial Highlights
2Q20 Select Financial Highlights TOP LINE PROFITABILITY CORE EPS CASH GENERATION (1) (1) (1) Third Party Sales Core Operating Margin Core Diluted EPS Free Cash Flow ($M) (%) ($) ($M) 2Q19 1,863 2Q19 16.6 2Q19 0.47 2Q19 95 2Q20 1,198 2Q20 (6.6) 2Q20 (0.21) 2Q20 (110) (1) Sales down (34%) cc in 2Q20 C
Slide 7: Cataracts progressively worsen over time
Cataracts progressively worsen over time Risk of blindness Significant risk of visual impairment: 33% of cases account for 51% of (1) blindness Physical risks Cataract patients prone to fall-related hip-fractures , contributing to greater (2) need for nursing home placement Compromised mobility Driv
Slide 8: Behavioral insights informing product innovation
Behavioral insights informing product innovation AT-IOLs Dry eye PanOptix IOL Systane Ultra multi-dose Vivity IOL preservative free (MDPF) Daily SiHy Ocular Allergy Precision1 sphere Pataday Extra Strength Dailies Total1 toric Pataday Once Daily Precision1 toric Pataday Twice Daily 8
Slide 9: IFRS Results
IFRS Results
Slide 10: 2Q20 & 1H20 IFRS Results
2Q20 & 1H20 IFRS Results Worldwide Net Sales Operating Margin EPS $1,863M $1,198M (2.8)% (38.9)% ($0.80) ($0.86) 2Q20 2Q19 2Q20 2Q19 2Q20 2Q19 2Q20 (36)% Worldwide Net Sales Operating Margin EPS 3,640 3,020 (2.8)% (16.4)% ($1.02) ($0.98) 1H20 1H19 1H20 1H19 1H20 1H19 1H20 (17)% 10
Slide 11: 2Q20 IFRS to Core Operating Income bridge
(1) 2Q20 IFRS to Core Operating Income bridge (79) 13 13 62 41 258 (466) IFRS Amortization of Impairment of Separation Transformation Other items Core certain intangible costs costs intangible assets assets (1) Core operating income is a non-IFRS measure. An explanation of non-IFRS measures can be f
Slide 12: Core Results
Core Results
Slide 13: 2Q20 Core Results
(1) 2Q20 Core Results Worldwide Net Sales Core Operating Margin Core Diluted EPS $1,863M 16.6% $0.47 $1,198M (6.6)% ($0.21) 2Q19 2Q20 2Q19 2Q20 2Q19 2Q20 (34)% cc 70 bps negative impact from FX (1) Core operating margin, core EPS, and constant currency growth, including FX impacts, are non-IFRS meas
Slide 14: 1H20 Core Results
(1) 1H20 Core Results Worldwide Net Sales Core Operating Margin Core Diluted EPS $0.98 $3,640 17.1% $3,020 7.4% $0.24 1H19 1H20 1H19 1H20 1H19 1H20 (15)% cc 70 bps negative impact from FX (1) Core operating margin, core EPS, and constant currency growth, including FX impacts, are non-IFRS measures.
Slide 15: Mix of Vision Care and Surgical Products
Diversified portfolio across businesses and geographies Mix of Vision Care and Surgical Products Vision Care $0.6B (50%) Surgical $0.6B (50%) Ocular Health (45%) Implantables (29%) • Dry eye products • Monofocal intraocular lenses (IOLs) • Allergy eye drops • Advanced technology IOLs • Contact lens
Slide 16: Surgical impacted by restrictions on procedures due to COVID-19
Surgical impacted by restrictions on Net Sales procedures due to COVID-19 (USD $M) $1,051 + • Strong adoption of PanOptix in US and Japan • Market share gains in AT-IOLs and monofocals $300 (1) (USD) (CC) $602 (43)% (42)% - • Broad impact across all categories due to the COVID-19 related slowdown in
Slide 17: Vision Care demand impacted by COVID-19
Vision Care demand impacted by COVID-19 Net Sales (USD $M) $812 • Positive momentum and feedback from returning + optometrists for Precision1 (USD) (CC)(1) • Solid results from Pataday OTC US launch $596 (27)% (25)% $493 • Decline in sales driven by lower demand and widespread - practice and store c
Slide 18: Core operating margin bridge
(1) Core operating margin bridge 2Q20 vs 2Q19 (% of net sales) • GM: primarily driven by lower sales / leverage and higher 16.6 unabsorbed manufacturing overhead due to production below normal capacity • SG&A: mainly expense deleverage and provisions for expected credit losses related to COVID-19, p
Slide 19: Core operating margin bridge
(1) Core operating margin bridge 1H20 vs 1HQ19 (% of net sales) • GM: primarily driven by lower sales / leverage and higher unabsorbed manufacturing overhead due to production below 17.1 normal capacity • SG&A: mainly expense deleverage and provisions for expected credit losses related to COVID-19,
Slide 20: Balance sheet and cash flow to support key investments
Balance sheet and cash flow to support key investments Cash and cash equivalents $1.3 billion Cash flows from operations $58 million (1) Free cash flow ($110) million Capex $168 million Investing in new contact lens manufacturing lines Debt $4.1 billion Raised $750 million in senior notes No financi
Slide 21: Serving customers, doctors and patients
Serving customers, doctors and patients See Brilliantly 21
Slide 22: Appendix
Appendix
Slide 23: Non-IFRS measures as defined by the Company
Appendix: Non-IFRS measures as defined by the Company Alcon uses certain non-IFRS metrics when measuring performance, including when measuring current period results against prior periods, including core results, percentage changes measured in constant currencies, and free cash flow. Because of thei
Slide 24: Reconciliation of IFRS to Core Results
Reconciliation of IFRS to Core Results Three months ended June 30, 2020 IFRS Amortization of certain Separation Transformation Other Core (1) (2) (3) (4) (5) ($ millions except (loss) per share) Results intangible assets Impairments costs costs items Results Gross profit 345 250 41 4 — 14 654 Sellin
Slide 25: Reconciliation of IFRS to Core Results
Reconciliation of IFRS to Core Results Three months ended June 30, 2019 Amortization of certain Separation Transformation Other (1) (2) (3) (4) ($ millions except (loss)/earnings per share) IFRS Results intangible assets costs costs items Core Results Gross profit 947 252 3 — 2 1,204 Selling, genera
Slide 26: Reconciliation of IFRS to Core Results
Reconciliation of IFRS to Core Results Six months ended June 30, 2020 Amortization of certain Separation Transformation (1) (2) (3) (4) (5) ($ millions except (loss)/earnings per share) IFRS Results intangible assets Impairments costs costs Other items Core Results Gross profit 1,217 502 57 7 — 4 1,
Slide 27: Reconciliation of IFRS to Core Results
Reconciliation of IFRS to Core Results Six months ended June 30, 2019 Amortization of certain Transformation (1) (2) (3) (4) (5) ($ millions except (loss)/earnings per share) IFRS Results intangible assets Separation costs costs Legal items Other items Core Results Gross profit 1,799 502 3 — — 10 2,
Slide 28: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow The following is a summary of Alcon free cash flow for the the six months ended June 30, 2020 and 2019, together with a reconciliation to net cash flows from operating activities, the most directly comparable IFRS measure: ($ millions) 2020 2019 Net cash flows from o
Slide 29: Alcon
Alcon SEE BRILLIANTLY