orthofix international n.v. - jefferies group...primarily external fixation devices, with...
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Orthofix International N.V.NASDAQ:OFIX
Brad Mason - President & CEO
June 2017
Except for historical information contained herein, the statements made in this presentation
constitute ‘forward looking statements’ that involve certain risks and uncertainties. These forward
looking statements are based on our beliefs and expectations as of June 8, 2017, and we do not
undertake any obligation to revise or update such forward looking statements. Certain factors
may cause actual results to differ materially from those contained in the forward looking
statements, including those risks detailed from time to time in the Company’s reports on file at
the Securities and Exchange Commission.
Safe Harbor Statement and Use of Non-GAAP Measures
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Orthofix may use certain non-GAAP financial measures in its presentations. Orthofix may use
non-GAAP financial measures as supplemental measures of performance and believes these
measures can provide useful information to investors in evaluating our operations, period over
period. However, non-GAAP financial measures have limitations as analytical tools, and should
not be considered in isolation or as a substitute for Orthofix’s financial results prepared in
accordance with GAAP. In addition, investors should note that any non-GAAP financial measures
Orthofix uses may not be the same non-GAAP financial measures, and may not be calculated in
the same manner, as that of other companies. Investors can find reconciliations of our non-GAAP
financial measures to the most directly comparable GAAP financial measures in our earnings
press releases.
Orthofix is a bone fusion company focused
on the design, manufacture and distribution
of a broad range of regenerative and repair
products worldwide.
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By The Numbers
TTM Net Sales of $414 million
TTM Adjusted EBITDA of $80 million
TTM ROIC* of 10.4%
Global presence in over 70 countries
Sales breakdown: US - 80% OUS - 20%
Cash on March 31, 2017 of $42 million
No debt
$125 million credit facility available
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* Using 38% tax rate
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2014 2015 2016 2017Guidance
CC Net Sales * Guidance Range
$0
$10
$20
$30
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$80
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2014 2015 2016 2017Guidance
CC Adj. EBITDA * Guidance Range
2.6% CAGR
14.1% CAGR
Constant Currency Net Sales and Adjusted EBITDA
* May 04, 2017 foreign exchange rates used for calculations
Net Sales Adjusted EBITDA
Bone Regeneration and Repair
BIOSTIM
EXTREMITY FIXATION
BIOLOGICS
SPINE FIXATION
REGENERATION
REPAIR
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Our Strategic Business Units
43%
14%
25%
18%BioStim
Biologics
Extremity Fixation
Spine Fixation
Strategic Business Unit 2016 Net Sales ($M)
Total Net Sales $410
$73
$103
$58
$176
SBU 2016 NET SALES
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Pulsed Electromagnetic Field technology (PEMF)
Strong clinical data and PMA Class III approval
Market leading spine and cervical products
CervicalStim™ device is only FDA-approved product for cervical spine
CAGR of 6% since 2013
Products primarily sold in the U.S.
BioStim – Bone Growth Stimulation
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Market Size: $500M Market Share: 35% Market Position: #1Annual Market Growth Rate: 1% - 3%
* Internal Estimates
*
Bluetooth connectivity and mobile app (Stim
OnTrack™) designed to facilitate patient
compliance and improve spinal fusion outcomes
Enables physicians to receive real-time data on
patients’ adherence to their prescribed
treatment protocol
Many new patient comfort and convenience
features
FDA and CE Mark Approval for Next-Gen CervicalStim™
and SpinalStim™ Devices
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BioStim Policy Recommendation from NASS
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North American Spine Society’s (NASS)
Coverage Policy Recommendations
Released October 2016
First-of-its-kind coverage recommendations
for electrical bone growth stimulators
Specifically supports the use of PEMF
devices
Clinical evidence-based recommendations
Both cervical and lumbar regions
Biologics – Stem Cell Allograft
Human cellular and tissue-based business
Long-term partnership with Musculoskeletal Transplant Foundation (MTF)
Partners since 2008; current agreement runs to 2025
Trinity ELITE ® allograft tissue has surgeon preference advantages
Products primarily sold in the U.S.
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Market Size: $300M Market Share: 30% Market Position: #2Annual Market Growth Rate: 3% - 5%
* Internal Estimates
*
Extremity Fixation
Leader in external fixation fracture repair, deformity correction and bone
reconstruction
Primarily external fixation devices, with complimentary internal fixation products
Ring fixation, pin-to-bar, plates, screws, nails
~35% of revenue from pediatric procedures
~75% of revenue from outside of the U.S.
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Market Size: $800M Market Share: 13% Market Position: #5(External Fixation) Annual Market Growth Rate: 2% - 4%
*
* Internal Estimates
Spine Fixation
Implants for spine surgeries
Orthofix has a full line of outstanding spinal implants Cervical & Lumbar
Degenerative Disc Disease
MIS
Deformity Correction
Continuous stream of new products – 12 in 2016
~80% of revenue from the U.S.
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Market Size: $9.0B Market Share: 1% Market Position: #9Annual Market Growth Rate: 1% - 3%
* Internal Estimates
*
Well Positioned For The Future
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Achievement Highlights Since 2013
Orthofix of Today
People
PerformanceProducts
Processes
New Management Team Reconstituted Board of Directors Culture of Integrity & Performance Performance-Based Compensation
Investment in: Basic Science & Clinical Research Obtaining Tuck-In Technologies
Prolific new product Pipeline
Adj. EBITDA Expansion ~500 BPS Free Cash Flow Outlook TTM Double Digit ROIC Resolved Legacy SEC/DOJ Issues
Financial Controls Worldwide Oracle® & IT Upgrades Simplified Corporate & SBU Structures Order to Cash Process Improvements
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Orthofix of Today Low to Mid Single-Digit Top Line Growth ~20% Adjusted EBITDA Margins Strong Free Cash Flow Double-Digit ROIC Opportunity to Leverage:
Leadership Team Infrastructure Financial Strength
The Next Chapter Creating additional shareholder value
Looking Ahead
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Leverage our expanded distribution networks and
new product pipeline to accelerate sales growth in
each of our SBUs
Increase utilization of our BioStim products
• Clinical research to increase the number of
applications, find new indications and support
reimbursement
• Leverage NASS coverage recommendations to
expand patient access to this treatment
Continue to increase Adjusted EBITDA, free cash
flow and ROIC
2017 Organic Strategy
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2017 Inorganic Strategy
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Evaluate our current portfolio and structure to
maximize shareholder value
Acquire bolt-on products, technologies and distribution
that will drive sales in our existing businesses
Opportunistically pursue more substantial value
accretive acquisitions that leverage our market leading
positions
To us “value accretive” means:• Strong strategic fit to strengthen our business
• ROIC at least equal to WACC within planning period
• Accretive to EPS in relative near term
• Risk commensurate with strategic and financial
opportunity
Diversified business focused on bone fusion
Market leading position in bone growth stimulation
Global distribution footprint
Multiple avenues of growth opportunity
Investing in core technologies
Accelerating Free Cash Flow
Double-digit TTM ROIC
Strong balance sheet
Summary of Investment Highlights
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Thank You
NASDAQ: OFIX www.orthofix.com
Investor Relations – Mark Quick
© ORTHOFIX INC 2017
May 4, 2017