Q1 2020 Presentation 23 April 2020 Johan Ek, President and CEO Pernilla Lindén, CFO
Summary Q1 2020 • Revenues decreased organically in the quarter, primarily due to the negative impact of Covid-19 • Slight increase in Accessibility - Double-digit growth for Stairlifts North America - Stairlifts Europe impacted by Covid-19 • Decline in revenue for Patient Handling - US sales still challenging - Strong growth for EU/ROW • Adjusted EBITA margin declined vs last year due to the weak performance in North America • Goodwill impairment of MEUR 25 relating to the Patient Handling operations in North America • Strong operating cash conversion in the quarter and a leverage of 2.4x (excluding IFRS 16) • Strategic review concluded - Successful divestments of Puls, Vehicle Accessibility Denmark and Patient Handling Europe/ROW - New segment reporting 2020 2
Focused measures to reduce Covid-19 impact • Furlough and short-term layoffs - Stairlifts: Furlough in UK and NL - Vehicle Accessibility: Furlough initiated in Norway - Patient Handling North America: US short-term layoffs. Furlough in Canada • Innovative sales approaches - E.g. digital sales • External spend reduction - General spend and investment freeze of non-critical items/investments 3
Financial highlights – Group Adjusted EBITA bridge January - March LTM Full year MEUR 2020 2019 ∆% 2019/20 2019 5.2 Revenue 61.0 67.2 -9.3 % 264.8 271.0 Organic revenue growth -2.0 % 3.8 0.2 0.3 0.7 Gross margin 42.9 % 41.7 % 41.7 % 41.5 % Adjusted EBITA 3.8 5.2 -27.8 % 20.1 21.5 -2.6 Adjusted EBITA margin 6.2 % 7.7 % 7.6 % 7.9 % Adj. EBITA (ex. Veh Acc DK) 3.8 5.0 -25.6 % 20.1 21.3 Adjusted EBITA margin (ex. Veh Acc DK) 6.2 % 8.1 % 8.0 % 8.4 % Q1-19 Sales Margin Opex Depreciation Q1-20 Note: All P&L numbers in this report exclude the divested business area Puls. No change to the balance sheet Note: Numbers include Vehicle Accessibility Denmark for the period prior the divestment December 2019 Note: Organic revenue growth exclude Vehicle Accessibility Denmark Revenue Q1: organic growth - 2.0% • Accessibility +0.1% • Patient Handling -7.2% • Vehicle Accessibility +2.8% • Covid-19 impact from Mid-March EBITA Q1: adjusted margin 6.2% (7.7%) • Gross margin increased to 42.9% (41.7%) mainly as a result of no trading impact from the low margin in Vehicle Acc. Denmark in Q1-20. • Operating expenses (excluding Vehicle Accessibility Denmark) were higher than LY. • Group costs (excluding depreciation and Vehicle Accessibility Denmark) 2.7 MEUR (2.8 MEUR). OCF Q1: 6.4 MEUR (1.6) • Cash flow from working capital +1.5 MEUR (-4.8 MEUR). • Leverage 2.4x (excluding IFRS 16). Goodwill write off Patient Handling North America • Recognized a goodwill impairment of MEUR 25 relating to the Patient Handling operations in North America, as a result of updated impairment testing that includes a delayed returned to improved profitability. 4
Accessibility Revenue and Q-on-Q organic growth (%)* – Stairlifts NA January - March LTM Full year MEUR 2020 2019 ∆% 2019/20 2019 9% 24% 22% 47% 15% 16% 6% 6% Q-on-Q %* Revenue 39.0 38.7 0.8 % 157.6 157.3 Organic revenue growth 0.1 % Adjusted EBITA 6.1 6.3 -2.9 % 24.6 24.8 Revenue Adjusted EBITA margin 15.7 % 16.2 % 15.6 % 15.8 % (MEUR) Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 *e.g. Q1 2020 vs Q1 2019 Revenue Q1: organic growth 0.1% • Strong growth in North America (21.6%), and in Europe we saw strong growth in Netherlands and France. • Countries like UK, Spain and Italy were struggling due to Covid-19. EBITA Q1: adjusted margin 15.7% (16.2) • Adjusted EBITA margin decreased slightly due to higher personnel related costs. Gross margin was up during the period. 5
Patient Handling January - March LTM Full year MEUR 2020 2019 ∆% 2019/20 2019 Revenue 17.8 19.0 -6.4 % 74.6 75.8 Organic revenue growth -7.2 % Adjusted EBITA 0.2 1.2 -85.7 % 4.9 5.9 Adjusted EBITA margin 1.0 % 6.5 % 6.5 % 7.8 % Adj EBITA (excl PH EU) -1.3 -0.1 0.0 1.2 Adjusted EBITA margin (excl. PH EU) -12.6 % -0.9 % 0.1 % 2.5 % • Agreement signed to divest Patient Handling Europe, including all Patient Handling operations outside North America. The transaction is expected to close in May. For Q1, PH EU is included in the continuing operations. Revenue Q1: organic decline - 7.2% • Continue to struggle in North America, down with 16.7% partly due to weak performance and partly due to negative Covid-19 impact. • The organic growth in Europe was strong and revenue rose by 9.9% partly due to positive impact from Covid-19. EBITA Q1: adjusted margin 1.0% (6.5%) • Operating expenses was flat in the period, but declining revenue putting pressure on the operational cost base. 6
Vehicle Accessibility January - March LTM Full year MEUR 2020 2019 ∆% 2019/20 2019 Revenue 4.1 4.3 -5.2 % 19.7 19.9 Organic revenue growth 2.8 % Adjusted EBITA 0.3 0.4 -32.4 % 1.4 1.6 Adjusted EBITA margin 6.2 % 8.7 % 7.3 % 7.8 % Revenue Q1: organic growth +2.8% • Organic growth driven by slightly higher ambulance conversion compared to last year. EBITA Q1: adjusted margin 6.2% (8.7) • Adjusted EBITDA margin was down primarily driven by a gross margin decrease as the operating expenses were unchanged in absolute terms and in relation to revenue. Gross margin was down due to a weakening NOK against EUR. 7
The Lift Up Program
Handicare – becoming a more focused company • Handicare has not performed as expected • Good growth and solid profitability in Accessibility Stairlifts • Poor performance in smaller businesses • Strategic review offers a new start, creating a more focused company • Successful divestments of Patient Handling Europe, Vehicle Accessibility Denmark & Puls • Opportunity to optimize organization and make it more focused • Stronger balance sheet to support growth agenda, both organic and inorganic (M&A) • Accessibility now accounts for more than 90% of the EBITA of the group • Strong market positions in key European markets • Good growth opportunity in the US • 6% organic CAGR for the last eight years in Accessibility Stairlifts • Patient Handling North America – Increasing profit is key focus • Solid underlying market and position • Bring back to profit Implementing “The Lift Up Program” – a three-phase plan 9
Focus & Simplify Profitability Growth The Lift Up Program Build a focused Accessibility company poised for growth
Why Accessibility – market trends and growth drivers • Demographic development • Expected increasing share of elderly people and a longer life expectancy • Increase in number of people living longer with chronic diseases • Preference among the elderly to stay at home and maintain independence • Focus on cost containment and efficiency, e.g. through: • Continuing global pressure on public spending healthcare budgets • Critical need products which save public money, providing incentives for healthcare systems to move patients to homecare settings • Keep people in their homes for a longer period of time • Preferences among end-users • Improving welfare in core markets • Expanding access to public funding given cost saving potential (e.g. government grants for stairlifts) 11
Attractive market within Stairlifts Europe • Strong growth in existing markets Market size 1 Sales LTM Mar-20 Market growth Geographic expansion plan • Opportunity to materially expand addressable market by entering new geographies and adjacent categories ~2- 4% €480m • Further broadening of the product offering 86% Only includes markets where Handicare is currently present – clear opportunity to expand both geographically as well as to product adjacencies North America Market size Sales LTM Mar-20 Market growth 13% ~3- 5% €250m Notes 1 Includes UK, Netherlands, Germany, France and Italy 12
The Lift Up Program in summary • Establish a more focused and agile organization • Create a Group that reflects our focus on Stairlifts • Optimize processes and avoid duplication of efforts • Simplify structures and streamline cost base – best fit for purpose • Increase profitability, strengthen margins and drive for growth • Improve margins by better procurement processes and pricing mechanisms • Expand market presence • Strengthen product portfolio • Drive focused M&A agenda • Patient Handling North America under review • Take actions to ensure profitable growth • Assessment of options to follow • Ongoing updates, next one on June 12 th Build a focused Accessibility company poised for growth 13
Q&A
Forward-looking statements To the extent this report contains forward-looking statements, these statements are based on the current expectations of Handicare’s Group management. Although management considers the expectations expressed in such forward-looking statements to be reasonable, there is no guarantee that these expectations will prove correct. Accordingly, actual future outcomes may differ significantly from those expressed in the forward- looking statements due to such factors as changed economic, market and competitive conditions, changes in regulatory requirements and other policy measures, and fluctuations in exchange rates. 15
Appendices
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