investor presentation (nyse: ivc)
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S e p t e m b e r 1 4 , 2 0 2 1
Investor Presentation(NYSE: IVC)
Baird Healthcare Conference
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N This presentation contains forward-looking statements within the meaning of the “Safe Harbor” provisions of the PrivateSecurities Litigation Reform Act of 1995. Forward-looking statements are those that describe future outcomes orexpectations that are usually identified by words such as “will,” “should,” “could,” “plan,” “intend,” “expect,” “continue,”“forecast,” “believe,” and “anticipate” and include, for example, any statement made regarding the company's futureresults, financial condition and the impact of COVID-19. Actual results may differ materially as a result of various risksand uncertainties, including those expressed in the cautionary statements and Risk Factors sections in the company’sannual reports on Form 10-K, quarterly reports on Form 10-Q and other filings with the Securities and ExchangeCommission. The company may not be able to predict and may have little or no control over many factors or events thatmay influence its future results and, except as required by law, shall have no obligation to update any forward-lookingstatements. .
Financial results presented are as of June 30, 2021, unless otherwise noted. Forward-looking information reported on aspecified date is provided herein as of such date and is not updated or reaffirmed as of a later date hereby.
Non-GAAP Measures .This presentation will reference certain non-GAAP financial information, including, but not limited to, Adjusted EBITDA,constant currency net sales and free cash flow. For a description and reconciliation of non-GAAP measures presented inthis document, please see the Appendix attached to this presentation. Any non-GAAP financial information is not asubstitute for, and should be read in conjunction with, GAAP financial information.
Forward Looking Statements
Invacare Corporation: Baird Healthcare Conference – Sep 14, 2021
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NMaking Life’s Experiences Possible
TTM Revenues $858M as of Jun 30, 2021
Headquartered near Cleveland, OHCelebrating over 40 years of Making Life’s Experiences Possible
Design, manufacture and distribute durable medical equipment for congenital, acquired and degenerative conditions
Distribute products to private and government medical equipment providers and residential care providers typically used in non-acute care settings
N.Amer.40%
Europe56%
APAC4%
3,400 employees worldwide
Who We Are
Sales by Segment (TTM as of Jun 30,2021)
What We Do
Safe patient handling and hygiene❑ Safe transfers for resident and
caregiver safety❑ Daily hygiene products
Custom power and manual wheelchairs and custom seating❑ Alternative drive controls and
touch-screen technology❑ Informatics❑ Elite recreational sports
equipment
Respiratory therapy products❑ Stationary and portable
oxygen concentrators❑ HomeFill® oxygen refilling
systems
Long-term care beds and therapeutic support surfaces❑ Pressure relief for
wound healing and prevention
❑ Continued pressure monitoring
24-Hours of Care - Move, Rest, Breathe, Hygiene
Invacare Corporation: Baird Healthcare Conference – Sep 14, 2021
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NBroad Product L ine with High Cl in ical Value
Lifestyle (47%)Globally focused on home healthcare and post-acute care, including aids for daily living, walking aids, lifts, wheelchairs, beds and surfaces
Mobility & Seating (38%)Custom power and custom manual wheelchairs, seating and positioning, and power add-ons
Respiratory (12%)Stationary concentrators and ambulatory oxygen such as portable concentrators and refilling devices for portable tanks
Other (3%)Services and rentals
$403
$324
$105
$26
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
Lifestyle Mobility &Seating
Respiratory Other
(in
mill
ion
s)
Reported Net Sales *
$858Million*
* TTM sales as of June 30, 2021
Invacare Corporation: Baird Healthcare Conference – Sep 14, 2021
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Award winning clinical solutions and full product pipeline:✓ Launched center-wheel, front-wheel and rear-wheel drive standing positioning system with clinical and
social benefits of vertical positioning, including pediatric standing system
✓ First wirelessly remote-controlled portable oxygen concentrator
✓ First with hydroforming technology that allows production of manual wheelchairs with significantly higher performance without increased weight
✓ Invacare Ampla Action bariatric wheelchair – winner of the Red Dot Award: Product Design 2019, Platinum A’Design Award, and German Design Award 2020
Operational improvements to expand margins and accelerate profitability:✓ Benefit of expanded standard gross margin from plant consolidations in Europe and favorable product mix
✓ Near-term margins negatively impacted by supply chain challenges including higher material, labor and freight costs but the company has implemented actions to mitigate the impact
Partnership with Birlasoft Solutions to modernize business with flexible IT systems to:✓ Drive operational efficiencies
✓ Improve our customers’ experience
✓ Generate substantial cost savings over time
Initiatives Accelerating Our Multi-Year Strategy to Return to Profitability
Invacare Corporation: Baird Healthcare Conference – Sep 14, 2021
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NSupporting sales growth with frequent introduction of clinically innovative solutions
Rehab (Mobility and Seating)
Post Acute Care (Lifestyle)
Respiratory
MayE-pilot P15 Power Add On
Birdie Evo Lifter
May
MPS Maxx Modular Power Standing System
Sep
Ocean Ergo Commode chair
Sep
2019
May
SMOOV One™ Power Add On
Invacare Stand Assist
Apr
Birdie Evo Xplus Lifter
May
Innovation Pipeline
2020
Mar
AVIVA® FX / AVIVA RXPower Wheelchairs
Platinum®Mobile®concentrator with remote control functionality
Sep
NordBed
MPS Mini Maxx Standing System
Apr Sep
Kompas™Foldable Power wheelchair
Optisling safe patient handling products
Sep
NordBed ™Kid
Oct
Jan
Ampla bariatric manual chair
Jul
Clematis Pro tilt-in-space manual wheelchair
Feb
Pico Green eco-friendly shower chair
2018 2021
Aug
AVIVA Storm RX
Jul
P5NXG 5L stationary oxygen concentrator
Invacare Corporation: Baird Healthcare Conference – Sep 14, 2021
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NCulture of Innovation & Process Improvements Paves Way for Growth
Product introductions in all categories to drive incremental sales at higher margins Business Optimization
✓ Customer friendly e-commerce portal expected to launch in North America in 4Q21
✓ Completed the outsourcing of the IT infrastructure and began deploying our modernized IT system in the first stages in Canada and New Zealand
✓ Completed German plant consolidation for anticipated $5 million of annual cost savings starting in 2021
Invacare Corporation: Baird Healthcare Conference – Sep 14, 2021
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NDemonstrated Improvement in Financial Performance
27.5%
28.2%
28.8%29.0%
28.0%27.8%
26.5%
27.0%
27.5%
28.0%
28.5%
29.0%
29.5%
2018 2019 2020
% of Net Sales
Gross Margin SG&A
$11.3
($10.4)
($18.3)
($20.0) ($15.0) ($10.0) ($5.0) $0.0 $5.0 $10.0 $15.0
2020
2019
2018
(in millions)
Operating Income (Loss)
$6.6
$28.7 $31.9
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
2018 2019 2020
(in
mill
ion
s)
Adjusted EBITDA
$0.0
($8.1)
($52.7)
($60.0) ($50.0) ($40.0) ($30.0) ($20.0) ($10.0) $0.0 $10.0
2020
2019
2018
(in millions)
Free Cash Flow (Usage)
2020
2020*
* Includes $9.8 million gain on divesture of Dynamic Controls
+11.1%
+333.9%
Invacare Corporation: Baird Healthcare Conference – Sep 14, 2021
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NRecent Concurrent Global Supply Chain and COVID-19 Related Disruptions Temporarily Impacting GrowthThree key factors in mid- to late-August temporarily impacted revenue growth in 3Q21. Actions to limit the impact have beentaken. Benefits will correct trajectory, but are not likely to fully correct the impact within the fiscal year.
Logistics and Freight
• Transportation – Unexpected loss of significant amount of transportation capacity at our European Distribution Center impacted shipments of completed products and delayed revenue recognition
✓ Secured additional freight forwarders to return to prior levels –catching up with delayed deliveries in process
• Freight – Significantly higher inbound and outbound costs
✓ Implemented pricing changes or surcharges to mitigate the additional costs – benefit anticipated to be realized in 4Q21
Labor
• North America – Tight labor market impacted the ability to attract and retain labor, resulting in higher than expected turnover
✓ Offering attractive packages, increasing competitiveness
✓ Redeployed long-term associates to products with higher demand
• Europe – Tight labor market and higher than typical vacation by both associates and customers impacted the ability to sell, manufacture and distribute products efficiently
✓ Added 2nd shift at German facility
✓ 3rd party distribution center increased labor force to accelerate output
Materials
• Materials – Significantly higher prices on steel, plastics and other key components compressed margins and impacted Adjusted EBITDA
✓ Implemented price increases on the majority of products and customers, as applicable, to mitigate higher costs
✓ Net benefit of price increases partially offset by the potential for reduced sales; expected to impact in 4Q21
Invacare Corporation: Baird Healthcare Conference – Sep 14, 2021
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($52.7)
($8.1)$0.0
($60)
($40)
($20)
$0
$20
Free Cash Flow(in millions)
$6.6
$28.7 $31.9
$0
$10
$20
$30
$40
2018 2019 2020 2021 Est
Adjusted EBITDA(in millions)
2021 Financial Guidance
The company anticipates increased customer activity and demand for its products even as
the pandemic continues to present challenges related to labor, material and freight
availability. These challenges are moderating near-term revenue growth and will result in
elevated levels of inventory and higher conversion costs. The company is taking actions such
as working with its customers on price increases, as appropriate, to defray higher input
costs; strategically increasing the labor force in key locations to improve throughput; and
increasing freight carriers to reduce the currently elevated backlog, driving revenue growth
and Adjusted EBITDA improvement in 4Q21 and beyond. As a result of the updated outlook
and assumptions in the medium-term, the company is revising its guidance as follows:
Third Quarter 2021 Guidance
❑ Constant currency net sales growth of 0% to 4%;
❑ Adjusted EBITDA of $6 to $9 million; and,
❑ Free cash flow usage of $4 to $7 million.
Full Year 2021 Guidance
❑ Constant currency net sales growth of -1% to 2%;
❑ Adjusted EBITDA of $30 to $37 million; and,
❑ Free cash flow usage of $10 to $20 million.
Free cash flow usage will increase due to lower profitability in the range of $8 to $15 million
while only realizing a portion of the full year benefit of mitigation actions and higher
working capital requirements with increased investment in inventory and accounts
receivable of approximately $10 million more than originally anticipated. The company
believes this increased investment will collect to cash over the course of 2022.2018 2019 2020 2021 Est*
+11.1%+333.9%
$30.0
$37.0
($20.0)
($10.0)
Invacare Corporation: Baird Healthcare Conference – Sep 14, 2021
* Includes one-time payment totaling $15 million related to German severance and the repayment of delayed VAT and other taxes from 2020
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We are striving to regain market leadership
We have a clear roadmap to further enhance and simplify our operations
We have a strong pipeline of innovative products coming to market
Our financial performance is improving as a result of these initiatives
Key Takeaways
Business Improvement Highlights
Invacare Corporation: Baird Healthcare Conference – Sep 14, 2021
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