Medtronic Plc. · NYSE:MDT
Medtronic — Q4 FY18 Earnings Presentation
25 slides from Medtronic's earnings presentation, May 24, 2018
Slide 1: Medtronic plc Q4 FY18 Earnings Presentation
Exhibit 99.2 MEDTRONIC PLC Q4 FY18 EARNINGS PRESENTATION MAY 24, 2018 • Q4 FY18 CONSOLIDATED RESULTS & GROUP REVENUE HIGHLIGHTS • FY18 FINANCIAL HIGHLIGHTS • FREE CASH FLOW • FY18 DIVESTITURE IMPACT • FY19 GUIDANCE & OTHER ASSUMPTIONS
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This presentation contains forward-looking statements. They are based on current assumptions and expectations that involve uncertainties or risks. These uncertainties and risks include, but are not limited to, those described in the filings we make with the U.S. Securities
Slide 3: Q4 FY18 Consolidated Results & Group Revenue Highlights
Q4 FY18 CONSOLIDATED RESULTS & GROUP REVENUE HIGHLIGHTS
Slide 4: Another Strong Quarter; Q4 FY18 Highlights
MDT ANOTHER STRONG QUARTER; Q4 FY18 HIGHLIGHTS EXPANDED OUR OPERATING MARGIN AND DELIVERED EPS LEVERAGE Revenue: DIAB . Delivered 6.5% organic revenue growth; 100 – 200 bps above guidance provided on 8% EM 15% CVG Q3 earnings call RTG 39% U.S. 26% 52% • Continue to see a clear acceleration in therap
Slide 5: Q4 FY18 GAAP Select Financial Information
MDT Q4 FY18 GAAP SELECT FINANCIAL INFORMATION Q4 Q4 Y/Y Growth / FY18 FY17 Y/Y Change Net Sales ($M) 8,144 7,916 3% Cost of Products Sold 2,395 2,436 -2% Gross Margin 70.6% 69.2% 140 bps SG&A ($M) 2,552 2,479 3% % of Sales 31.3% 31.3% Flat R&D ($M) 592 553 7% % of Sales 7.3% 7.0% (30 bps) Other Expe
Slide 6: Q4 FY18 Y/Y EPS Walk
MDT Q4 FY18 Y/Y EPS WALK EPS Strong EPS leverage of 870 bps 15% Y/Y1 1.60 $0.19 $1.44 ($0.02) $1.42 ($0.35) 1.40 $0.49 ($0.08) $1.25 1.20 $1.07 1.00 $0.84 0.80 0.60 0.40 0.20 0.00 Q4 FY17, Q4 FY17, Q4 FY17, Q4 FY17, Performance Q4 FY18, FX Q4 FY18, Q4 FY18, Q4 FY18, GAAP Non-GAAP Divestiture Impact
Slide 7: Q4 FY18 Y/Y Operating Margin Changes
MDT Q4 FY18 Y/Y OPERATING MARGIN CHANGES Operating Margin Significant operating margin expansion driven by continued company-wide focus 35.0% 0.8% 31.8% 0.6% 31.0% (1.6%) 9.8% 30.2% (6.4%) 30.0% 25.0% 23.8% 20.6% 20.0% 15.0% 10.0% 5.0% 0.0% Q4 FY17, Q4 FY17, Q4 FY17, Q4 FY17, Performance Q4 FY18, FX
Slide 8: Q4 FY18 Non-GAAP Select Financial Information
MDT Q4 FY18 NON-GAAP SELECT FINANCIAL INFORMATION Q4 FY18 Q4 FX Q4 FY18 Q4 Comparable FY17 Impact CCC Growth FY18 Constant Revised1 $M / Change / Change3 Currency3 Net Sales ($M) 8,144 7,351 315 -- 7% Cost of Products Sold2 2,376 2,101 95 -- 9% Gross Margin2 70.8% 71.4% (10 bps) 70.9% (50 bps) SG&A
Slide 9: CVG Revenues Grew 5.4% Organic
CVG REVENUES GREW 5.4% ORGANIC Q4 FY18 HIGHLIGHTS HeartWare™ . Cardiac Rhythm & Heart Failure: +1.5% growth driven by LSD growth in HVAD™ System Growth Driven by Arrhythmia Management, partially offset by LSD declines in Heart Failure CSH, AFS and Emerging Markets • Continued strength in AF Solution
Slide 10: MITG Revenues Grew 4.8% Organic
MITG REVENUES GREW 4.8% ORGANIC Q4 FY18 HIGHLIGHTS Signia™ . Surgical Innovations (SI): +5.9% growth driven by Advanced Energy and Stapling Growth Driven by Open to MIS and System Stapling Emerging Markets • Stability of procedure volumes continues to drive Advanced Surgical growth • Strong growth i
Slide 11: RTG Revenues Grew 6.1% Organic
RTG REVENUES GREW 6.1% ORGANIC; Q4 FY18 HIGHLIGHTS BEST QUARTER IN RTG’S 8-YEAR HISTORY . Spine: +1.0% growth driven by HSD growth in BMP offset by LSD declines in Infuse® Continued Strength in Brain and Pain; Bone Graft Core Spine (in-line with global spine market) LSD Spine Growth • Core Spine rev
Slide 12: Diabetes Revenues Grew 21.3% Organic
DIABETES REVENUES GREW 21.3% ORGANIC Q4 FY18 HIGHLIGHTS . Intensive Insulin Management: Over 25% growth driven by robust demand MiniMed® Strong 670G Adoption; Unconstrained 670G for the MiniMed® 670G hybrid closed loop insulin pump sensor manufacturing capacity • Strong CGM and sensor utilization EM
Slide 13: FY18 Financial Highlights
FY18 FINANCIAL HIGHLIGHTS Medtronic Further, Together
Slide 14: Strong Second Half Performance; FY18 Highlights
MDT STRONG SECOND HALF PERFORMANCE; FY18 HIGHLIGHTS REVENUE AND EPS GROWTH AT HIGH END OF ANNUAL GUIDANCE Revenue: DIAB . Executed on our broad, sustainable growth strategy, driving therapy innovation and 7% EM 15% CVG global market penetration RTG 38% 26% U.S. Non-U.S. 53% • 4.6% organic revenue gr
Slide 15: FY18 GAAP Select Financial Information
MDT FY18 GAAP SELECT FINANCIAL INFORMATION Y/Y Growth / FY18 FY17 Y/Y Change Net Sales ($M) 29,953 29,710 1% Cost of Products Sold 9,055 9,291 -3% Gross Margin 69.8% 68.7% 110 bps SG&A ($M) 9,974 9,711 3% % of Sales 33.3% 32.7% (60 bps) R&D ($M) 2,253 2,193 3% % of Sales 7.5% 7.4% (10 bps) Other Exp
Slide 16: FY18 Y/Y EPS Walk
MDT FY18 Y/Y EPS WALK EPS EPS growth at upper-end of annual guidance range despite headwinds 10% Y/Y1 5.00 $0.44 $4.81 ($0.04) $4.77 ($2.50) $1.71 ($0.23) $4.37 4.00 $2.89 3.00 $2.27 2.00 1.00 0.00 FY17, FY17, FY17, Divestiture FY17, Performance FY18, FX FY18, FY18, FY18, GAAP Non-GAAP Impact Compar
Slide 17: FY18 Y/Y Operating Margin Changes
MDT FY18 Y/Y OPERATING MARGIN CHANGES Operating Margin Operating margin expansion driven by SG&A leverage 0.3% 28.4% 0.2% 28.6% (0.7%) 30.0% 10.2% 27.9% (5.7%) 25.0% 22.2% 20.0% 17.9% 15.0% 10.0% 5.0% 0.0% FY17, FY17, FY17, FY17, Performance FY18, FX FY18, FY18, FY18, GAAP Non-GAAP Divestiture Impac
Slide 18: FY18 Non-GAAP Select Financial Information
MDT FY18 NON-GAAP SELECT FINANCIAL INFORMATION FY18 FX FY18 FY17 Comparable FY18 Impact CCC Growth Revised1 Constant $M / Change / Change3 Currency3 Net Sales ($M) 29,953 28,046 494 -- 5% Cost of Products Sold2 8,970 8,278 148 -- 7% Gross Margin2 70.1% 70.5% Flat 70.1% (40 bps) SG&A ($M)2 9,934 9,47
Slide 19: Free Cash Flow
FREE CASH FLOW Medtronic Further, Together
Slide 20: Components of Free Cash Flow
MDT COMPONENTS OF FREE CASH FLOW $ Billions FY16 FY17 FY18 Operating Cash Flow $5.2 $6.9 $4.7 CAPEX ($1.0) ($1.3) ($1.1) FY18 free cash flow would have been $4.7B, after adjusting for Free Cash Flow $4.2 $5.6 $3.6 the $1.1B Puerto Rico IRS pre- Divestiture Impact1 ($0.3) ($0.3) $0.3 payment the co
Slide 21: FY18 Divestiture Impact
FY18 DIVESTITURE IMPACT Medtronic Further, Together
Slide 22: Q1 & Full Year FY18 Revised Historical Revenue & Baseline Metrics
MDT Q1 & FULL YEAR FY18 REVISED HISTORICAL REVENUE & SELECT BASELINE FINANCIAL METRICS Revised to reflect divestiture & new MITG reporting structure All figures in $millions 3 Q1 FY18 FY18 Q1 FY18 FY183 Minimally Invasive Therapies Group 1,936 8,166 Net Sales ($M) 6,840 29,403 World Wide Surgical In
Slide 23: FY19 Guidance & Other Assumptions
FY19 GUIDANCE & OTHER ASSUMPTIONS
Slide 24: FY19 Guidance & Other Assumptions
MDT FY19 GUIDANCE & OTHER ASSUMPTIONS FY18 Organic Growth Implied Revenue Implied Revenue FX1 Comparable Base2 Guidance Range Growth REVENUE $29,403M 4.0 – 4.5% (-$50M) to (-$150M) $30.4 - $30.7B 3.5% - 4.3% FY18 Constant Currency Implied Operating Implied Operating FX1 Comparable Base2 Guidance Mar
Slide 25: Appendix: Acronyms / Abbreviations
APPENDIX ACRONYMS / ABBREVIATIONS Growth Other Business Specific Business Specific DD Double Digit FDA Food and Drug Administration AF Atrial Fibrillation JNJ/J&J Johnson & Johnson HSD High-Single Digit FX Foreign Exchange AFS AF Solutions MCS Mechanical Circulatory Systems LDD Low-Double Digit FY F