Alcon : First Quarter 2024 Earnings Conference Call Regulatory Filing

ALCON INC. INTERIM FINANCIAL REPORT

INDEX	Page
Operating Performance	2
Liquidity and Capital Resources	8
Condensed Consolidated Interim Financial Statements of Alcon Inc. (unaudited)
Consolidated Income Statement	11
Consolidated Statement of Comprehensive Income	12
Consolidated Balance Sheet	13
Consolidated Statement of Changes in Equity	14
Consolidated Statement of Cash Flows	15
Notes to Condensed Consolidated Interim Financial Statements of Alcon Inc.	16
Supplementary Information - Definitions and Reconciliations of Non-IFRS Measures
Non-IFRS Measures as Defined by the Company	28
Reconciliation of IFRS Results to Core Results (non-IFRS measure)	30
EBITDA (non-IFRS measure)	32
Cash Flow and Net (Debt)/Liquidity (non-IFRS measure)	32
Net (Debt)/Liquidity (non-IFRS measure)	32
Free Cash Flow (non-IFRS measure)	33
Disclaimer	34

1

OPERATING PERFORMANCE

Key figures

	Three months ended March 31
			Change %
				cc(1)
($ millions unless indicated otherwise)	2024	2023	$	(non-IFRS
measure)
Net sales to third parties	2,444	2,333	5	7
Gross profit	1,382	1,305	6	10
Operating income	368	268	37	54
Operating margin (%)	15.1	11.5
Net income	248	174	43	62
Basic earnings per share ($)	0.50	0.35	43	62
Diluted earnings per share ($)	0.50	0.35	43	62
Core results (non-IFRS measure)(1)
Core operating income	537	480	12	21
Core operating margin (%)	22.0	20.6
Core net income	387	347	12	22
Core basic earnings per share ($)	0.78	0.70	11	21
Core diluted earnings per share ($)	0.78	0.70	11	21

1. Core results and constant currencies (cc) as presented in this table are non-IFRS measures. Alcon uses certain non-IFRS metrics when measuring performance, including when measuring current period results against prior periods. Refer to the 'Supplementary Information' section for additional information and reconciliation tables.

2

Net sales by segment

	Three months ended March 31
			Change %
				cc(1)
($ millions unless indicated otherwise)	2024	2023	$	(non-IFRS
measure)
Surgical
Implantables	433	427	1	6
Consumables	686	656	5	7
Equipment/other	219	221	(1)	2
Total Surgical	1,338	1,304	3	6
Vision Care
Contact lenses	671	615	9	11
Ocular health	435	414	5	8
Total Vision Care	1,106	1,029	7	10
Net sales to third parties	2,444	2,333	5	7

1. Constant currencies is a non-IFRS measure. Refer to the 'Supplementary Information' section for additional information.

First quarter

Surgical

Surgical net sales were $1.3 billion, an increase of 3%. Excluding unfavorable currency impacts of 3%, Surgical net sales increased 6% in constant currencies.

• Implantables net sales were $433 million, an increase of 1%, led by advanced technology intraocular lenses in international markets, partially offset by unfavorable currency impacts of 5%. Implantables net sales increased 6% in constant currencies.
• Consumables net sales were $686 million, an increase of 5%, reflecting demand for vitreoretinal and cataract consumables, particularly in international markets, and price increases. Growth was partially offset by unfavorable currency impacts of 2%. Consumables net sales increased 7% in constant currencies.
• Equipment/other net sales were $219 million, a decrease of 1%. The prior year period benefited from strong demand in international markets for cataract and vitreoretinal equipment. Excluding unfavorable currency impacts of 3%, Equipment/other net sales increased 2% in constant currencies.

Vision Care

Vision Care net sales were $1.1 billion, an increase of 7%. Excluding unfavorable currency impacts of 3%, Vision Care net sales increased 10% in constant currencies.

• Contact lenses net sales were $671 million, an increase of 9%, driven by product innovation, including our toric and multifocal modalities, and price increases. Growth was partially offset by unfavorable currency impacts of 2%. Contact lenses net sales increased 11% in constant currencies.
• Ocular health net sales were $435 million, an increase of 5%, primarily driven by the portfolio of eye drops, including continued strength from the Systane family of artificial tears. Growth was partially offset by unfavorable currency impacts of 3%. Ocular health net sales increased 8% in constant currencies.

3

Operating income

	Three months ended March 31
			Change %
				cc(1)
($ millions unless indicated otherwise)	2024	2023	$	(non-IFRS
measure)
Gross profit	1,382	1,305	6	10
Selling, general & administration	(802)	(785)	(2)	(3)
Research & development	(199)	(202)	1	2
Other income	6	5	20	8
Other expense	(19)	(55)	65	64
Operating income	368	268	37	54
Operating margin (%)	15.1	11.5
Core results (non-IFRS measure)(1)
Core gross profit	1,549	1,478	5	8
Core operating income	537	480	12	21
Core operating margin (%)	22.0	20.6

1. Core results and constant currencies are non-IFRS measures. Refer to the 'Supplementary Information' section for additional information and reconciliation tables.

First quarter

Operating income was $368 million (+37%, +54% cc), compared to $268 million in the prior year period. Operating margin increased 3.6 percentage points, reflecting improved underlying operating leverage from higher sales and the timing of discretionary spend. The prior year period included $26 million for the transformation program which was completed in the fourth quarter of 2023. Operating margin benefits were partially offset by a negative 1.3 percentage point impact from currency. Operating margin increased 4.9 percentage points on a constant currencies basis.

Adjustments to arrive at core operating income in the current year period were $169 million, mainly due to $166 million of amortization. Adjustments to arrive at core operating income in the prior year period were $212 million, mainly due to $173 million of amortization and $26 million of transformation costs.

Core operating income was $537 million (+12%, +21% cc), compared to $480 million in the prior year period. Core operating margin increased 1.4 percentage points, reflecting improved underlying operating leverage from higher sales and the timing of discretionary spend, partially offset by a negative 1.2 percentage point impact from currency. Core operating margin increased 2.6 percentage points on a constant currencies basis.

4

Segment contribution

For additional information regarding segment contribution, please refer to Note 2 to the Condensed Consolidated Interim Financial Statements.

	Three months ended March 31
			Change %
				cc(1)
($ millions unless indicated otherwise)	2024	2023	$	(non-IFRS
measure)
Surgical segment contribution	386	381	1	10
As % of net sales	28.8	29.2
Vision Care segment contribution	258	199	30	35
As % of net sales	23.3	19.3
Not allocated to segments	(276)	(312)	12	12
Operating income	368	268	37	54
Core adjustments (non-IFRS measure)(1)	169	212
Core operating income (non-IFRS measure)(1)	537	480	12	21

1. Core results and constant currencies are non-IFRS measures. Refer to the 'Supplementary Information' section for additional information and reconciliation tables.

First quarter

Surgical

Surgical segment contribution was $386 million (+1%, +10% cc), compared to $381 million in the prior year period. Segment contribution margin decreased 0.4 percentage points, including a negative 1.5 percentage point impact from currency. Segment contribution margin increased 1.1 percentage points on a constant currencies basis due to improvements in underlying operating leverage from higher sales and the timing of discretionary spend.

Vision Care

Vision Care segment contribution was $258 million (+30%, +35% cc), compared to $199 million in the prior year period. Segment contribution margin increased 4.0 percentage points, with improved underlying operating leverage from higher sales and the timing of discretionary spend, partially offset by a negative 0.5 percentage point impact from currency. Segment contribution margin increased 4.5 percentage points on a constant currencies basis.

Not allocated to segments

Operating loss not allocated to segments totaled $276 million (+12%, +12% cc), compared to $312 million in the prior year period. The decrease in amounts not allocated was primarily driven by transformation costs in the prior year period.

5

Non-operating income & expense

	Three months ended March 31
			Change %
				cc(1)
($ millions unless indicated otherwise)	2024	2023	$	(non-IFRS
measure)
Operating income	368	268	37	54
Interest expense	(45)	(47)	4	4
Other financial income & expense	12	(8)	nm	nm
Income before taxes	335	213	57	79
Taxes	(87)	(39)	(123)	(154)
Net income	248	174	43	62
Basic earnings per share ($)	0.50	0.35	43	62
Diluted earnings per share ($)	0.50	0.35	43	62
Core results (non-IFRS measure)(1)
Core taxes	(117)	(78)	(50)	(64)
Core net income	387	347	12	22
Core basic earnings per share ($)	0.78	0.70	11	21
Core diluted earnings per share ($)	0.78	0.70	11	21

nm = not meaningful

1. Core results and constant currencies are non-IFRS measures. Refer to the 'Supplementary Information' section for additional information and reconciliation tables.

First quarter

Interest expense

Interest expense was $45 million, broadly in line with the prior year period.

Other financial income & expense

Other financial income & expense was a net benefit of $12 million, compared to a net expense of $8 million in the prior year period. The change was primarily driven by an increase in interest income and lower foreign currency exchange losses.

Taxes

Tax expense was $87 million, compared to $39 million in the prior year period. The average tax rate was 26.0%, compared to 18.3% in the prior year period. The increase in average tax rate is primarily driven by a net expense of $11 million from discrete tax items in the current year period. The prior year period benefited from the deduction of a statutory expense in Switzerland and from the build of inventory in certain international markets.

Adjustments to arrive at core tax expense were $30 million, compared to $39 million in the prior year period, for the tax effect associated with operating income core adjustments.

Core tax expense was $117 million, compared to $78 million in the prior year period. The average core tax rate was 23.2%, compared to 18.4% in the prior year period. The increase in average tax rate is primarily driven by a net expense of $11 million from discrete tax items in the current year period. The prior year period benefited from the deduction of a statutory expense in Switzerland and from the build of inventory in certain international markets.

6

Net income and earnings per share

Net income was $248 million, compared to $174 million in the prior year period, primarily due to higher operating income and net benefit in other financial income & expense, partially offset by higher tax expense. The associated basic and diluted earnings per share were $0.50, compared to basic and diluted earnings per share of $0.35 in the prior year period.

Core net income was $387 million, compared to $347 million in the prior year period, primarily due to higher core operating income and net benefit in other financial income & expense, partially offset by higher core tax expense. The associated core basic and diluted earnings per share were $0.78, compared to core basic and diluted earnings per share of $0.70 in the prior year period.

7

LIQUIDITY AND CAPITAL RESOURCES

Cash flow

Net cash flows from operating activities

Net cash flows from operating activities amounted to $341 million in the first three months of 2024, compared to $85 million in the prior year period. The current year period includes increased collections associated with higher sales, lower taxes paid due to timing of payments and lower transformation payments following completion of the transformation program in the fourth quarter of 2023, partially offset by associate short-term incentive payments, which generally occur in the first quarter and were higher than in the prior year period. Both periods were impacted by changes in net working capital.

Changes in net working capital in the current year were mainly driven by the net change in other operating liabilities and the increase in trade receivables. The net change in other operating liabilities was primarily driven by the timing of annual associate short-term incentive payments. The increase in trade receivables was primarily driven by new receivables from higher sales outpacing collections.

Changes in net working capital in the prior year period were mainly driven by the net change in other operating liabilities and increases in inventories and trade receivables. The net change in other operating liabilities was primarily driven by the timing of annual associate short-term incentive payments and revenue deduction payments, partially offset by higher wage accruals due to the timing of payroll. The increase in inventories was primarily to meet expected upcoming demand. The increase in trade receivables was primarily driven by new receivables from higher sales outpacing collections. Refer to Note 6 of the Condensed Consolidated Interim Financial Statements for additional details regarding changes within net working capital in the current and prior year periods.

Net cash flows used in investing activities

Net cash flows used in investing activities amounted to $218 million in the first three months of 2024, compared to $155 million in the prior year period. Cash outflows in the current year period primarily include capital expenditures, payments for financial assets measured at fair value through other comprehensive income ("FVOCI") and purchases of intangible assets, primarily related to software and intellectual property licenses.

Cash outflows in the prior year period primarily included capital expenditures and purchases of long-term financial investments measured at FVOCI and intangible assets.

Net cash flows used in financing activities

Net cash flows used in financing activities amounted to $66 million in the first three months of 2024, compared to $21 million in the prior year period. Cash outflows in the current year period primarily include withholding taxes paid upon net settlements of equity-based compensation, lease payments and net payments related to certain local debt facilities.

Cash outflows in the prior year period primarily included withholding taxes paid upon net settlements of equity-based compensation and lease payments, partially offset by net proceeds from local debt facilities.

Free cash flow (non-IFRS measure)

Free cash flow amounted to an inflow of $229 million in the first three months of 2024, compared to an outflow of $19 million in the prior year period, due to increased cash flows from operating activities.

For additional information regarding free cash flow, which is a non-IFRS measure, see the explanation of non-IFRS measures and reconciliation tables in the 'Supplementary Information' section.

8

Balance sheet

Assets

Total non-current assets were $23.9 billion as of March 31, 2024, a decrease of $106 million when compared to $24.0 billion as of December 31, 2023. Intangible assets other than goodwill decreased $138 million due to recurring amortization, partially offset by additions primarily related to software and intellectual property licenses. Property, plant & equipment decreased $40 million primarily due to depreciation and foreign currency translation effects, partially offset by capital expenditures. Financial assets increased $72 million primarily due to purchases of long-term financial investments measured at FVOCI.

Total current assets were $5.7 billion as of March 31, 2024, an increase of $57 million when compared to $5.6 billion as of December 31, 2023. Trade receivables increased $52 million primarily driven by higher sales outpacing collections, partially offset by foreign currency translation effects. Cash and cash equivalents increased $47 million due to the net impact of operating, investing and financing activities as described in the preceding section. Our cash and cash equivalents are maintained at a number of financial institutions. To mitigate the risk of uninsured balances, we select financial institutions based on their credit ratings and financial strength, and we perform ongoing evaluations of these institutions to limit our concentration risk exposure.

Liabilities

Total non-current liabilities were $6.5 billion as of March 31, 2024, a decrease of $125 million when compared to $6.6 billion as of December 31, 2023. Financial debts decreased $123 million primarily due to the movement of local debt facility balances to current financial debts and foreign currency translation effects.

Total current liabilities were $2.3 billion as of March 31, 2024, a decrease of $127 million when compared to $2.4 billion as of December 31, 2023. Provisions and other current liabilities decreased $236 million primarily due to the timing of annual associate short-term incentive payments. Current financial debts increased $78 million primarily due to the movement of local debt facility balances from non-current financial debts, partially offset by net payments of certain local debt facilities.

Equity

Equity was $20.8 billion as of March 31, 2024, an increase of $203 million when compared to $20.6 billion as of December 31, 2023.

Net (debt)/liquidity (non-IFRS measure)

Net debt amounted to $3.6 billion as of March 31, 2024, in line with December 31, 2023. Alcon's liquidity and total financial debt amounted to $1.1 billion and $4.7 billion, respectively, as of March 31, 2024, in line with December 31, 2023.

The average maturity of financial debts outstanding as of March 31, 2024 is 10.5 years, and 97% of Alcon's financial debt is at fixed interest rates. We believe that we have adequate liquidity to meet our needs.

The $1.32 billion revolving credit facility remained undrawn as of March 31, 2024 and May 13, 2024.

For additional information regarding net (debt)/liquidity, which is a non-IFRS measure, see the explanation of non-IFRS measures and reconciliation tables in the 'Supplementary Information' section.

9

Additional Considerations

Foreign currencies

We use the US Dollar as our reporting currency and are therefore also exposed to foreign currency exchange movements and costs to enter hedging agreements, primarily in Euros, Japanese Yen, Chinese Renminbi, Canadian Dollars, Singaporean Dollars, Swiss Francs, Russian Rubles and emerging market currencies. The foreign currency exposure on the balance sheet is hedged with limited exception, but the impact of ongoing macroeconomic conditions is currently unknown and could have a material adverse effect on our results of operations, cash flows or financial condition.

10