Slide 1: Delivering sustainable and profitable growth
6 March 2024 Delivering sustainable and profitable growth Annual results for the twelve months ended 31 December 2023
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 3
Slide 4: Convatec is delivering sustainable and profitable growth
Convatec is delivering sustainable and profitable growth Accelerating broad-based organic revenue growth Expanding operating profit margin Growing earnings and free cash flow Continuing to strengthen competitive position Raising medium-term guidance 4
Slide 5: Sustaining revenue growth and further expanding operating margin
Sustaining revenue growth and further expanding operating margin Organic revenue growth Adjusted operating profit margin 26.0% 7.2% 24.0% 23.4% 22.0% 5.6% 20.2% 5.3% 20.0% 19.4% 19.5% 18.5% 4.2% 17.7% 18.0% 16.0% 2.3% 14.0% 12.0% 0.2% 10.0% 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023
Slide 6: Financial review FY 2023
Financial review FY 2023
Slide 7: 2023: strong financial performance
2023: strong financial performance Organic revenue growth1 +7.2% FY 22: 5.6% Good growth across all four categories +130bps constant currency expansion Operating margin* expansion +70 bps 20.2% vs 19.5% +250 bps over two years Diluted EPS* growth +6.1% 13.4₡ vs 12.6 ₡ Pivoting to earnings growth EBI
Slide 8: Strong organic revenue growth across categories
Strong organic revenue growth across categories Group Organic1 9.5% 4.2% 6.5% 8.7% 7.2% Constant currency 11.6% 3.4% 7.4% 8.7% 3.2% 2,300 2,200 30 ($m) 31 (91) 25 2 2,100 72 2,142 2,142 2,000 2,073 1,900 2022 Advanced Ostomy Continence Infusion Hospital Care FX 2023 Wound Care Care Care (exited) Car
Slide 9: AWC: Strong growth enhanced by biologics; OC: Good growth driven by Convatec products
AWC: Strong growth enhanced by biologics OC: Good growth driven by Convatec products 2000000.0% Organic 750 0.5% -2.7% 9.2% 6.8% 9.5% • 0.0% growth1 Significant growth in biologics2 - growing 650 -2000000.0% market share Advanced -4000000.0% • Continued strength in antimicrobial and Wound Care 550 i
Slide 10: CC: Strong growth supported by price; IC: Continued strong demand for infusion sets
CC: Strong growth supported by price IC: Continued strong demand for infusion sets Organic 550 5.4% 5.4% 3.4% 5.1% 6.5% 0.0% growth*1 -200000.0% • Strong operating performance supported by 450 higher reimbursement pricing with US HSG Continence -400000.0% • Increasing share of Convatec products, bot
Slide 11: Further expanding operating margin
Further expanding operating margin 25.0% 24.0% Gross margin +210 bps* +130 bps +70 bps 23.0% 2.5% 22.0% 1.1% -2.5% 21.0% -1.6% 0.8% 20.8% -0.6% 1.0% 20.2% 20.0% 19.0% 19.5% 18.0% 17.0% 16.0% 15.0% FY 2022 Price Mix COGS Operations Opex G&A FY 2023 FX FY 2023 inflation productivity investment efficie
Slide 12: Pivoting to earnings growth
Pivoting to earnings growth Adjusted P&L Adjusted diluted Earnings per Share YoY +6.1% 2022 2023 14.0 13.5 13.4 Operating profit $404m $432m +7.0% 13.0 12.6 13.0 12.5 $ cents Financing and FX $(66)m $(75)m 12.0 11.5 Tax $(81)m $(83)m 11.0 10.5 Net profit $257m $274m +6.7% 10.0 2021 2022 2023 12
Slide 13: Adjusting items primarily non-cash
Adjusting items primarily non-cash P&L Cash ($m) Commentary 2022 2023 2022 2023 Fundamental • Transformation related – e.g factory closure 8.5 22.8 6.1 10.0 restructuring • One-time material restructuring • Hospital care exit • Fair value movement of contingent consideration M&A 115.9 30.8 5.0 13.6
Slide 14: Improving cash generation and conversion while investing to strengthen the business
Improving cash generation and conversion while investing to strengthen the business 650 5.4% growth YoY 550 8 84% Operating cash 450 129 conversion1 $91m 28 83% 350 better 36 Equity cash working 66 conversion2 250 527 518.9 vs capital 32 2022 Leverage 389.7 361.3 361 111 flat at 325.1 259.5 150 227.
Slide 15: Re-investing to grow whilst maintaining a strong balance sheet
Re-investing to grow whilst maintaining a strong balance sheet Driving the flywheel Capital allocation prioritised to support growth Invest organically to grow – opex and capex Progressive dividends consistent with target 35-45% payout ratio Bolt-on M&A Any surplus capital returned to shareholders M
Slide 16: FY 2024 Guidance summary
FY 2024 Guidance summary Confidence in new product pipeline and Organic revenue growth 5.0-7.0% commercial execution Mix, price, productivity, operating leverage Adjusted operating profit margin ≥21.0% @ CC offsetting inflation • Adj. net finance expense: $75-85m Adjusted EPS growth ≥10% • Adj. book
Slide 17: Medium term: on track to deliver mid-20s operating profit margin
Medium term: on track to deliver mid-20s 1 operating profit margin 30.00% 28.00% 26.00% 24-26% 24.00% Mix portfolio 22.00% Mix across categories Mix within categories 20.2% 20.00% G&A 18.00% 17.7% Global quality & ops Commercial 16.00% +125 bps p.a. Expect average ≥100 bps p.a. 14.00% 12.00% 10.00%
Slide 18: Strategic update
Strategic update
Slide 19: Convatec is delivering on its strategy
Convatec is delivering on its strategy Focus Innovate Simplify Build Execute Strong new G&A efficiency Pricing Sales force >90% product pipeline +100 bps Targeting key accounts chronic – recurring 12% benefit to 9% 8% revenue Vitality ~27% gross margin ~20%* 2021 2022 2023 Organic growth in Patents
Slide 20: Innovation – strong and growing pipeline
Innovation – strong and growing pipeline 2023/2024 2025/2026 Innovamatrix US New iterations and formulations OUS 780G MioAdvance Extended Wear Globally ConvaFoam US Europe GEM Infusion set for Betabionics iLet pump US Abbvie Parkinson’s Japan Europe US GentleCath Air for Women 2.0 Europe & US Infusi
Slide 21: AWC – Growing in key segments and strong growth prospects
AWC – Growing in key segments and strong growth prospects 2023: Growing in key segments Leading in Antimicrobial Improving in Foam Growing strongly in Biologics • Encouraging US start – strong • Fast growth and winning share • Continued leadership clinical performance & high win • Strong clinical pe
Slide 22: OC in 2023 – Transformation progressing well – growing 6% with Convatec product
OC in 2023 – Transformation progressing well – growing 6% with Convatec product Improving commercial execution Enhancing product & service quality Renewing product portfolio • Improved • Further reduced • New product launches in call volume on key ~30%* complaints per million ~10%* fast-growing segm
Slide 23: OC in 2024 - launching new Esteem Body with Leak Defense and improved discretion
OC in 2024 - launching new Esteem Body with Leak DefenseTM and improved discretion Best-in-class Attractive opportunity Gold-standard Novel soft convexity Patient-centric design adhesive • Secure seal • Adapts to unique • Enhanced • Stops leakage and body and stoma discretion Large and growing skin
Slide 24: Introducing Esteem Body with Leak Defense
Introducing Esteem BodyTM with Leak DefenseTM 24
Slide 25: CC in 2023 – Excellent service in the US & expanding globally
CC in 2023 – Excellent service in the US & expanding globally Focus on commercial execution in US Expanding across Europe and GEM 90 NPS* ~ 40% 80 • Strong market presence • Significantly improved 70 60 World class >70 85 50 Service share service performance 40 40 30 at Amcare UK 20 10 0 • World-cla
Slide 26: CC in 2024 – launching the new GentleCath Air for Women with FeelClean Technology
CC in 2024 – launching the new GentleCath Air for Women with FeelClean TechnologyTM “Designed for superior comfort and less sticky residue”* *Cleared by the Food and Drug Administration, designed for superior comfort and less sticky residue 26 FDA K213283 https://www.accessdata.fda.gov/cdrh_docs/pdf
Slide 27: CC in 2024 – launching the new GentleCath Air for Women with FeelClean Technology
CC in 2024 – launching the new GentleCath AirTM for Women with FeelClean TechnologyTM Current New Standard GentleCath GlideTM New Compact GentleCath AirTM GentleCath Glide GentleCath Air Protection ✓ ✓ Discretion ✓ Ready-to-use ✓ 27
Slide 28: IC – continued strong growth and broadening in diabetes and new therapies
IC – continued strong growth and broadening in diabetes and new therapies 2023 performance Sustained leadership in diabetes Growth in non-diabetes • Large and growing installed base ~1.1m patients • Strong double-digit growth in pain management, immunoglobulin and • Several new launches with partner
Slide 29: Expect to deliver consistent double-digit EPS and FCF to Equity growth over medium term
Expect to deliver consistent double-digit EPS1 and FCF to Equity growth over medium term Medium-term targets Opportunity Medium-term outcome Sustainable Expanding operating Potential M&A to Double-digit EPS1 and FCF top-line growth profit1 margin enhance growth to Equity CAGR 5-7% Strengthening orga
Slide 30: Summary and outlook
Summary and outlook 2023 – strong financial performance • Strong organic revenue growth & operating margin expansion • Earnings momentum and improving cash performance 2024 guidance • Organic revenue growth of 5.0-7.0% • Constant currency adjusted operating profit margin: ≥ 21.0% • Double-digit grow
Slide 31: Q&A
Q&A & , col nvatec
Slide 32: Investing to drive future growth and resilience
Investing to drive future growth and resilience Capex Key projects • Digital: omnichannel, CRM and HR transformation $144m • Automation: including Deeside woundcare facility $129m • Innovation: Esteem Body, Convafoam development Digital • Capacity: Expansion for IC, GC Air for Women Automation • Mai
Slide 33: Maintaining a conservative balance sheet
Maintaining a conservative balance sheet Targeting 2x Net Debt to Adjusted EBITDA Attractive debt profile 2.5x RCF Margin +2.0% Average interest in ‘23: ~5.8% $950 Average ~75% hedged to fixed 2.2x Bond 2.1x 2.1x 3.875% $500 1.9x $ Term loan Margin +2.25% $250 2019 2020 2021 2022 2023 2023 2024 2025