Slide 1: 2021 Annual Results: Pivoting to sustainable & profitable growth
2021 Annual Results: Pivoting to sustainable & profitable growth 8 March 2022
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 Frank Schulkes Chief Executive Officer Chief Financial Officer Introduction & 2021 Financial review strategic update 2
Slide 4: ConvaTec – Pivoting to sustainable and profitable growth
ConvaTec – Pivoting to sustainable and profitable growth Good 2021 financial performance Strategic Transformation Investments Largely Complete Stronger Competitive Position Attractive Growth Prospects 3
Slide 5: Financial review
Financial review Frank Schulkes, Chief Financial Officer 4
Slide 6: ConvaTec – Pivoting to sustainable and profitable growth
ConvaTec – Pivoting to sustainable and profitable growth Good 2021 financial performance Strategic Transformation Investments Largely Complete Stronger Competitive Position Attractive Growth Prospects 5
Slide 7: Strategic transformation investments driving improved financial performance
Strategic transformation investments driving improved financial performance Revenue Adjusted operating profit Diluted adjusted EPS +5.81% +5.41% +8.3% Revenue increased Adjusted EBIT of $362m, Diluted adjusted to $2,038m 18.4% margin1 EPS 13.0 cents (2020: $1,894m) (2020: $350m with 18.5% margin) (2
Slide 8: Pivoting to sustainable & profitable growth – good topline momentum
Pivoting to sustainable & profitable growth – good topline momentum Growth 5.8% @ Constant Currency 5.5% 7.9% 1.7% 9.6% Cure 35 Acq. 9 31 29 ($m) 10 2.1% organic 2,038 30 9.2% organic 19 1,894 Skincare Disposal 2020 Advanced Wound Continence & Ostomy Infusion FX 2021 Care Critical Care Care Care • P
Slide 9: AWC rebound following 2020 COVID challenges; CCC growth enhanced by acquisitions
AWC rebound following 2020 COVID challenges CCC growth enhanced by acquisitions Organic growth1 350 -1.8% 2.7% -4.8% -0.8% 16.3% 3.4% Advanced • Positive rebound after weak 2020 comparatives Wound Care 250 • Good growth in all regions, particularly GEM 271 299 251 296 294 298 2021 Organic1 9.2% • En
Slide 10: IC continuing to deliver significant growth; OC modest growth
IC continuing to deliver significant growth OC modest growth although quality improving Organic growth1 0.8% 8.0% 12.6% 21.2% 6.5% 12.5% 200 • Strong growth in automated insulin delivery segment Infusion Care • Strong growth in non-diabetes, off a small base 144 161 162 175 182 • Successfully launch
Slide 11: Achieved gross margin improvement despite FX and inflation headwinds
Achieved gross margin1 improvement despite FX and inflation headwinds Gross margin1 improvement despite headwinds 0.2% ~1.3% ~2.5% 61.8% ~70bps ahead of 60.5% 60.5% historic norm 59.5% 59.5%% 2 2020 Price, FX COGS 2021 Mix & Inflation Productivity - total 1. Adjusted gross margin 10 2. Cost of Goods
Slide 12: Dynamic inflationary backdrop
Dynamic inflationary backdrop Inflationary backdrop COGS1 55% 5% 40% COGS1 inflation Materials & 3rd Party Products Freight & Conversion & other Total Logistics factory related costs Historic norm c.1.5% p.a c.3% p.a c.3.5% p.a c.1.5-2% p.a 2021 c.2.5% c.10% c.3.5% c.3% 2022E: c.5% Interventions Pri
Slide 13: Strategic transformation investments largely complete
Strategic transformation investments largely complete Improving opex balance – further G&A opportunity 2018 2021 Medium/long term opportunity Adjusted as % of revenues • EBIT margin mid-20s 39.8 39.5 COGS • Expect continued investment in S&M Sales, Distribution & Marketing 22.7 26.5 and R&D G&A 11.4
Slide 14: Healthy cash flow, investing for future growth and providing returns to shareholders
Healthy cash flow, investing for future growth and providing returns to shareholders $4m $86m $112m $401m $94m $891m $877m $881m $791m $59m $36m Investments $679m for future growth $585m $526m $490m $490m 2020 2 Net Cash Interest Tax Capex Acquisitions and Dividends Other 1 2021 2 Net Debt generated
Slide 15: Continued to strengthen the balance sheet
Continued to strengthen the balance sheet Leverage • Issued $500m unsecured senior notes • Diversified Debt • Extended maturity profile $565m $500m 3.0x 2.7x 2.5x Target <2x Net Debt /EBITDA1 $150m $150m 2.0x 1.9x 1.5x 2022 2023 2024 2025 2026 2027 2028 2029 2017 2018 2019 2020 2021 Long term corpor
Slide 16: 2022 Guidance
2022 Guidance • 4.0-5.5% Organic revenue growth ‐ Continued good growth in AWC – although normalised comparatives Revenue ‐ CCC modest improvement with decline in Critical offset by growth in Continence Growth ‐ Similar growth in OC ‐ IC another strong year of growth CC Adjusted 17.7% >18% EBIT Marg
Slide 17: Strategic update
Strategic update Karim Bitar, Chief Executive Officer Transforming ConvaTec - Pivoting to Sustainable and Profitable Growth 16
Slide 18: ConvaTec – Pivoting to sustainable and profitable growth
ConvaTec – Pivoting to sustainable and profitable growth Good 2021 financial performance Strategic Transformation Investments Largely Complete Stronger Competitive Position Attractive Growth Prospects 17
Slide 19: ConvaTec is now a stronger and faster growing business
ConvaTec is now a stronger and faster growing business Strengthened focus through acquisitions & exits Improved quality – decreasing complaints per million Exiting lower-margin 65 63 63 Enhanced positions activities 60 55 53 • US SkinCare disposal 50 47 • Exited >26 countries 45 • Incontinence dispo
Slide 20: Vision: Pioneering trusted medical solutions to improve the lives we touch
2021 – We have continued executing well on our FISBE strategy Vision: Pioneering trusted medical solutions to improve the lives we touch Focus Innovate Simplify Build Execute on key markets in our work and our organisation core capabilities with excellence and categories trusted solutions 19
Slide 21: Focus – we have strengthened our position in key categories & markets
Focus – we have strengthened our position in key categories & markets Strengthened Continence business Expanded AWC portfolio • Cure Medical • ChloraSolv partnership • $89m acquisition with RLS • Impact: • Part of Wound Hygiene ‐ #2 manufacturer in the US Protocol ‐ More comprehensive product portfo
Slide 22: Focus – entering Wound Biologics segment via acquisition of Triad
Focus – we are entering attractive Wound Biologics segment1 via acquisition of Triad Life Sciences (subject to regulatory approval) Worldwide Wound Biologics Revenues1 ($m ) 2.3 2.2 2.1 1.9 1.8 1.7 Strong strategic rationale • Entry into large, rapidly growing Wound Biologics segment • Innovative &
Slide 23: Innovate – we have further strengthened our capabilities and processes
Innovate – we have further strengthened our capabilities and processes Continued investment in R&D Improving our processes $100m $99m $95m $98m $97m $96m $95m $94m $93m $92m $91m $90m $89m $88m $87m $82m $86m $85m $84m $83m $82m $81m $80m $79m $78m $77m $76m $75m $74m $73m $72m $71m $70m $69m $68m $
Slide 24: Simplify – we are continuing to streamline for efficiency
Simplify – we are continuing to streamline for efficiency Expanded GBS and improving processes Further reducing portfolio complexity • Expansion of Global Business • Ostomy Care rationalisation programme Service Centre in Lisbon 3,000 2,996 2,992 ‐ Streamlining financing 2,988 2,984 2,980 2,976 2,97
Slide 25: Build – we have continued to strengthen core capabilities
Build – we have continued to strengthen core capabilities Sales Force Excellence CoE Marketing CoE Quality CoE • CRM roll-out complete in • Refreshing Masterbrand • Increased Quality & Europe and N. America compliance standards • Enhancing digital interactions • Improving productivity ‐ Speed of det
Slide 26: Execute – we continue to execute with excellence
Execute – we continue to execute with excellence Procurement & Productivity Professional Education Pricing • Procurement efficiencies • Introduced commercial contracting system • Data Analytics Platform • >300k HCPs ‐ Online • New E2E Sourcing Process Launched • Strong Net Promoter Scores ‐ Insight
Slide 27: We are now pivoting to sustainable and profitable growth
We are now pivoting to sustainable and profitable growth Strategic Transformation Investment Stabilised the Invested in the foundation Strengthened the business & core capabilities innovation pipeline Pivoting to Sustainable & Profitable Growth 26
Slide 28: Plan to grow in line or faster than the market
Plan to grow in line or faster than the market Advanced Wound Care Ostomy Care Continence Care Infusion Care Global market size ($bn) ~$8.0bn ~$2.6bn ~$2bn ~$1.2bn Market growth, p.a. ~4% ~ 4% ~4% ~7% ConvaTec – in line or faster growth 27
Slide 29: Summary
Summary 2021 • Good financial performance • Strategic transformation investments largely complete Pivoting to sustainable and profitable growth • Stronger competitive position • Attractive growth prospects 2022 Outlook • Organic revenue growth: 4.0 to 5.5% • CC Adjusted EBIT margin: > 18% 28
Slide 30: Q&A
Q&A If you would like to ask a question during the live Q&A please dial into: United Kingdom – 0800 279 6877 United States – 800-289-0720 Access code: 6659206 29
Slide 31: Appendix
Appendix @ ConvaTec
Slide 32: Key financial metrics
Key financial metrics 2021 2020 Growth Comments • $35m FX tailwind, $30m acquisition contribution, $(20)m Revenue $2,038m $1,894m 7.6% / 5.8%1 disposals Gross margin2 60.5% 59.5% 100 bps • +120 bps operational, -20 bps FX EBIT2 $361.7m $350.2m 3.3% • Transformation costs, investment driven coupled w
Slide 33: ConvaTec
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