2014 Full-year results Conference presentation for investors, - PDF document

26.02.2015 2014 Full-year results Conference presentation for investors, analysts & media Basel, 27 February 2015 1 Disclaimer This presentation contains certain forward-looking statements that reflect the current views of management. Such statements are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Straumann Group to differ materially from those expressed or implied in this presentation. Straumann is providing the information in this presentation as of this date and does not undertake any obligation to update any statements contained in it as a result of new information, future events or otherwise. The availability and indications/claims of the products illustrated and mentioned in this presentation may vary according to country. 2 1

26.02.2015 Dr Peter Hackel, Straumann’s new CFO  Rejoined Straumann on 1 December 2014  Oerlikon Drive Systems (4 years): CFO  Straumann (6 years): Business Development, Head Group Controlling  Geistlich Biomaterials (2 years): Director Orthopedic Marketing & Sales  McKinsey (2 years): Consultant  Education: PhD in Biochemistry and Molecular Biology; Business Administration studies 3 Full-year highlights Marco Gadola, CEO 2

26.02.2015 Strong growth and strategic expansion REVENUE BEST PERFORMERS GROWTH STRATEGY CHF Geographic & segment APAC & RoW 710m expansion 14% growth 1 in both regions FY: +6% 1 New hybrid approach to dynamic Q4: +9% 1 Chinese market; further investment in Instradent (value) platform EMERGING MARKETS MULTI-BRAND PLATFORM CURRENCY IMPACT Portfolio Mitigating 16% expanded actions of Group China & Brazil fuel mid-teen growth New products/solutions (botiss, BLT, Pro Cost-savings & other initiatives to in EMs, which now contribute 16% of Arch etc.); Investments in MegaGen, reduce impact of strong CHF, without Group revenue (14% in 2013) T-Plus, Rodo Medical impairing ability to grow business 1 Organic growth – i.e. excluding the effects of acquisitions, divestitures and currency exchange rates 5 Outpacing the market for 7 consecutive quarters 15% Q4: revenue of CHF 187m (+9% organic) Rightsizing and re-organisation measures 10% 5% 0% -5% -10% -15% 1 Market for tooth replacement & restoration (leading companies) Straumann * Straumann, Nobel Biocare, Zimmer Dental, Biomet 3i, Dentsply Implants - based on company and SEC 1 Straumann, Nobel Biocare, Zimmer Dental, Biomet 3i, Dentsply Implants, based on company and SEC reports, as reports as well as management comments. 6 6 well as management comments. 3

26.02.2015 Profitable growth Organic revenue Adj. gross margin 1 Adj. EBIT margin 1 Adj. EPS 1,2 growth 1 (in %) (in %) (in CHF) +6.4% +20bps +330bps +20% 710.3 20.9 8.40 667.4 78.5 78.7 7.00 17.6 2013 2014 2013 2014 2013 2014 2013 2014 1 Excl. currency exchange rate effects and restructuring costs in 2013 7 2 Excl. one-time benefit from capitalization of deferred tax assets in 2014 amounting to CHF 27m related to Neodent Significant impact from currency exchange rates Operating profit margin 27.4% 25% 20.9% 20% 17.0% 15-20% 15% 10-15% 10-15% 10-15% 10% 9.2% 2008 2012 2013 2014 Straumann Dental peers benchmark 1 1 Average operating income margin for the following companies: Dentsply, Patterson, Henry Schein, Osstem, Sirona, and Nobel Biocare ( 2014 9M) 8 4

26.02.2015 Business and regional review Peter Hackel, CFO Significant profitability improvements FY 2014 FY 2013 in CHF million Change (rounded) excl. FX and excl. FX and Reported Reported excl. FX Reported exceptionals exceptionals Revenue 710.3 679.9 667.4 667.4 Organic growth% 6.4% Gross profit 558.7 535.9 524.0 524.0 6.6% margin 78.7% 78.8% 78.5% 78.5% ( 20 bps) 20 bps EBITDA 176.2 148.4 142.0 149.9 17.5% margin 24.8% 21.8% 21.3% 22.5% 300 bps 230 bps EBIT 148.3 115.8 109.6 117.5 26.2% margin 20.9% 17.0% 16.4% 17.6% 390 bps 330 bps Net profit 157.8 101.2 margin 22.2% 14.9% 10.15 6.55 Basic EPS Adjusted EPS 8.40 7.00 Free cash flow 128.4 139.2 18.1% 20.5% margin 10 5

26.02.2015 Higher implant sales offset FX and mix effects In % of revenue, rounded +20 bps (1.0%) 0.3% 0.9% (0.3%) 78.8% 78.7% 78.5% Gross profit FX effect Adj. gross profit Price / volume / Inventory COGS (higher Gross profit margin margin mix change 1 volumes) margin 2013 2014 1 Change in finished and semi-finished goods in 2014 compared with prior year 11 EBIT margin above 20% In % of revenue, rounded +330 bps 3.2% (0.1%) 0.2% 1.2% (0.6%) 20.9% 17.6% 17.0% Reported EBIT FX effect Restructuring Adjusted EBIT Gross margin Lower OPEX Other income Reported EBIT margin costs 1 margin effect intensity margin 2013 2014 1 Exceptional costs of CHF 8 million related to cost optimization measures in 2013. 12 6

26.02.2015 Strong cash generation constrained by working capital increase In CHF million 27.8 (16.1) (5.5) (2.1) (2.1) (7.6) (5.2) 139.2 128.4 FCF margin FCF margin 20.5% 18.1% Free cash EBITDA Higher net Higher Higher Higher tax Difference in Various Free cash flow 2013 improvment working CAPEX interest payments non-cash flow 2014 capital investments payments OPEX 1 Chart shows cash-relevant changes Jan-Dec 2014 compared with the same period 2013 13 1 Mainly changes in share-based payments and provisions 13 All regions drive growth Revenue development (in CHF million, rounded) 4.5% in CHF 6.4% in l.c. 4.2 13.1 14.0 (12.5) 11.6 710.3 679.9 667.4 Change in l.c. (1.9%) 3.2% 7.8% 14.0% 14.2% Revenue FY FX Effect Revenue FY Europe North America APAC ROW Revenue FY 2013 2013 @ FX 2014 2014 2013 2014 14 7

26.02.2015 Strong finish in Europe; share gains in N. America Revenue change (organic)  Europe grew 8% in Q4 amid tough 7.6% competition 4.1% 2.7% Europe 56%  Best quarterly growth rate since 2008, contributing almost half of overall growth in Q4 (1.4%) (1.5%) (3.4%)  Strong performers: UK, Spain and 53% the Nordic countries; Germany Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 solid North America  N. America posts strong Q4 on top 11.4% 11.0% 9.3% 9.1% of high base line 5.2% 5.4%  High demand for Roxolid and SLActive implant lines Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014  New Bone Level Tapered implant well received in controlled release 27% 15 Boost from China and Japan Revenue change (organic)  China delivers strong increase; good progress in establishing new Asia Pacific 16.3% 17.0% hybrid sales model 15.3% 14.5% 56%  Strong growth in Japan, region’s 8.3% 7.9% largest market  Straumann outperforms Japanese market, driven by SLActive 15% launches Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014  Back to double-digit growth in Q4, 35.1% Rest of World 28.6% driven by strong demand for implants in most markets 18.2% 9.0%  Good performances in Brazil, 3.0% 1.8% Mexico and Middle East  Neodent posts high single-digit growth in 2014 5% Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 16 8

26.02.2015 Double-digit growth in implant volumes drives revenue increase Implants Restorative Regeneratives 17 17 Foreseeable impact of currency rates on 2015 results Development of Straumann’s main currency Theoretical FX impact on 2014 revenue and EBIT exchange rates YTD 2015 Ø 16 January – 27 February In CHF m Ø FX rates 1.2 (rounded) FX rates 16 Jan after 16 January 1 Revenue (75) (55) 0.8 EBIT (40) (31) 0.6 0.4 EURCHF 1.02 1.05 0.2 USDCHF 0.87 0.92 01.01 16.01 31.01 15.02 EURCHF USDCHF BRLCHF JPYCHF Source: Thomson Reuters 18 9

26.02.2015 Mitigating the impact of the strong Swiss franc Short-term measures expected to deliver >CHF 20 million:  Compensation reductions for Directors and all employees in CH; 96% of staff in agreement  Hiring and replacement only to fill business-critical positions Tighter cost control (e.g. travel), additional efficiency measures   Re-negotiation of supplier contracts Mid-term:  Further optimization of cost base; improve order-to-cash process  Improve natural hedge – balance manufacturing capacity, production expansion outside CH, supplier contracts not in CHF, ensure suppliers pass on FX benefits o Long-term growth opportunities not compromised o ‘Swiss label’ comes at a price but adds value to premium brand 19 Update on our strategic progress Marco Gadola, CEO 10

26.02.2015 Mastering challenges and turning them into opportunities CHF Strong Swiss franc Limitations of our current culture GP Increasing number of GPs placing implants Future growth markets are outside Western Europe BRIC Increase in discounters claiming compatibility Growing segment of corporate clinics / dental chains Advanced innovation cycle 21 Our journey to create a high-performance culture In 2014, we started a ‘cultural journey’ to promote and foster: delegation, empowerment, responsibility, risk-taking, challenging and creative thought, which are predominant behavioral styles in high-performance organizations. Straumann’s current culture Our ideal 22 11