MEDTRONIC PLC Q4 FY20
EARNINGS PRESENTATION MAY 21, 2020
- COVID-19RESPONSE
- Q4 FY20 CONSOLIDATED RESULTS & GROUP REVENUE HIGHLIGHTS
- FY20 FINANCIAL HIGHLIGHTS
- FREE CASH FLOW
- FY21 RTG REPORTING STRUCTURE
FORWARD LOOKING STATEMENTS
This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties, including risks related to the impact COVID-19 has had and is expected to continue to have on our business, operations and production, as well as demand for our offerings, and on our employees, medical professional and healthcare system, communities in which we operate, and our financial results and condition, competitive factors, difficulties and delays inherent in the development, manufacturing, marketing and sale of medical products, government regulation and general economic conditions and other risks and uncertainties described in the company's periodic reports on file with the U.S. Securities and Exchange Commission including the most recent Annual Report on Form 10-K of the company, as filed with the U.S. Securities and Exchange Commission. Actual results may differ materially from anticipated results. Medtronic does not undertake to update its forward-looking statements or any of the information contained in this presentation, including to reflect future events or circumstances.
Non-GAAP Financial Measures
Certain information in this presentation includes calculations or figures that have been prepared internally and have not been reviewed or audited by our independent registered public accounting firm. Use of different methods for preparing, calculating or presenting information may lead to differences and such differences may be material. This presentation contains financial measures and guidance which are considered "non-GAAP" financial measures under applicable SEC rules and regulations. Medtronic management believes that non-GAAP financial measures provide information useful to investors in understanding the company's underlying operational performance and trends and to facilitate comparisons with the performance of other companies in the med tech industry. Non-GAAP financial measures should be considered supplemental to and not a substitute for financial information prepared in accordance with U.S. generally accepted accounting principles (GAAP), and investors are cautioned that Medtronic may calculate non-GAAP financial measures in a way that is different from other companies. Management strongly encourages investors to review the company's consolidated financial statements and publicly filed reports in their entirety. GAAP to non-GAAP reconciliations are provided on our website and can be accessed using this link.
Financial Comparisons
References to quarterly results increasing, decreasing, or remaining flat are in comparison to Q4 FY19, and references to annual results increasing, decreasing, or remaining flat are in comparison to FY19. References to organic revenue growth exclude the impact of significant acquisitions or divestitures and currency. Unless stated otherwise, quarterly and annual rates and ranges are given on a constant currency basis, which adjusts for the impact of currency.
Q4 FY20 Earnings Results | May 21, 2020 | 2
MDT
COVID-19 RESPONSE
UNPRECEDENTED CHALLENGE REQUIRES UNPRECEDENTED RESPONSE
TO SUPPORT EMPLOYEES, CUSTOMERS AND COMMUNITIES
EMPLOYEE SAFETY AND | CUSTOMER SUPPORT AND | COMMUNITY | ||
PROTECTION | PRODUCT AVAILABILITY | CITIZENSHIP | ||
- Monetary Assistance and Aid:Financial support and awards granted through programs and policies developed for employees significantly impacted byCOVID-19;instituted measures to help protect field employees from significant impacts to their incentive compensation
- Facility Sanitization:Facilities regularly cleaned and sanitized while utilizing personal protection equipment and social distancing best practices for employees
- Telehealth:Employees and their family members provided with access to a free, virtual COVID-19 evaluation and monitoring tool
- Ventilator Capacity:Significantly expanded production of ventilators and on track to increase production five-fold from pre-pandemic levels by the end of June
- Collaboration and Partnership:Partnered with technology and manufacturing companies, such as Intel, SpaceX, and Foxconn, to create significant capacity and add remote monitoring features; released Puritan Bennett™ 560 ventilator design specifications publicly, resulting in over 125,000 registrations
- Remote Monitoring Solutions:Developed and deployed remote monitoring solutions to reduce exposure toCOVID-19for employees, customers and patients
Q4 FY20 Earnings Results | May 21, 2020 | 3
- Donations & Matching:Pledged over $36 million in monetary and product donations since February to support health systems and global communities while offering a 2:1 match on monetary donations made by employees and retirees
- External News Hub:Launched platform to provide latest updates to company's response to the pandemic: Medtronic.com/covid19
- Expansion of Medtronic Assurance Program:Provides support to diabetes customers who have lost their health insurance due toCOVID-19-related job loss; current, eligible, U.S. customers can receive a3-monthsupply of glucose sensors, infusion sets and reservoirs at no cost
Q4 FY20 CONSOLIDATED RESULTS & GROUP REVENUE HIGHLIGHTS
MDT
Q4 FY20 HIGHLIGHTS
Revenue:
DIAB | EM | |||
10% | ||||
CVG | 15% | |||
U.S. | ||||
RTG | 33% | |||
48% | ||||
25% | ||||
Non-U.S. | ||||
Dev | ||||
MITG | 37% | |||
32% | ||||
Revenue | As Rep | CC2 | Organic | |
$M1 | Y/Y % | Y/Y % | Y/Y % | |
CVG | 2,004 | (34.3) | (32.8) | -- |
MITG | 1,934 | (14.2) | (12.2) | -- |
RTG | 1,490 | (32.7) | (31.8) | (32.5) |
Diabetes | 570 | (8.9) | (6.7) | -- |
Total | $5,998 | (26.4%) | (24.8%) | (25.0%) |
U.S. | 2,852 | (33.4) | (33.4) | |
Non-U.S. Dev | 2,218 | (13.9) | (11.0) | |
EM | 929 | (27.8) | (23.5) | |
Total | $5,998 | (26.4%) | (24.8%) |
PROCEDURE DEFERRALS DUE TO COVID-19 CONSISTENT WITH INTRA- QUARTER UPDATE; CONTINUING TO INVEST IN PEOPLE & PIPELINE
COVID-19:Healthcare resources being diverted to respond to the pandemic resulted in |
deferral of procedures and a decline in customer capital equipment and bulk purchases, |
offset by increased demand for products used in the fight against COVID-19 |
REVENUE:-24.8% constant currency, -25.0% organic, consistent with intra-quarter |
update and MedTech industry |
• CVG:Declined -32.8% reflecting deferred procedures and reduction in typical end of year customer bulk |
purchases |
• MITG:Declined -12.2% driven by broad global deferral of surgical procedures, partially offset by increased |
demand for Respiratory and Renal Care Solutions products |
• RTG:Declined -32.5% organic, reflecting deferrable procedure mix and higher proportion of capital |
equipment |
• Diabetes:Declined -6.7% driven by delays in new patient starts due to closing of physician offices, partially |
offset by stocking of supplies, primarily in International markets |
• Geographies:China experienced full quarter impact, while U.S. and WE impact began mid-March |
• Americas:Declined -32%; U.S. tracking with expectations until mid-March |
• EMEA:Declined -10%; tracking with expectations until mid-March; WE declined 32% in April |
• Asia Pacific:Declined -13%;COVID-19 cases peaked in Korea and ANZ within the quarter |
•China: |
Other Financial Highlights:
Diluted | As Rep | CC2 | |
EPS | Y/Y | Y/Y% | |
GAAP | $0.48 | (44.8%) | NC |
Non-GAAP | $0.58 | (62.3%) | (62.3%) |
Cash Flow | $1.5B |
from Ops | |
Free Cash | $1.1B |
2 | |
Flow |
Declined -38%; sequential revenue improvement from mid-March |
EPS:Non-GAAP EPS declined 62.3%; deleveraging consistent with intra-quarter update |
DIVIDEND:Announced quarterly increase to $0.58; Annual $2.32 from prior $2.16; 43rd |
consecutive year of dividend increases |
- Data has been intentionally rounded to the nearest million and, therefore, may not sum.
- Figures represent comparison to Q4 FY19 on a constant currency basis.
3 Operating cash flows less property, plant, and equipment additions. | Q4 FY20 Earnings Results | May 21, 2020 | 5 |
MDT
Q4 FY20 GAAP TONON-GAAPSELECT FINANCIAL INFORMATION
Non-GAAP Adjustments
Q4 FY20 | Acquisition- | Gain/Loss on | Medical | Exit of | Contribution | IPR&D | Certain Tax | Q4 FY20 | Q4 FY19 | Y/Y | |||||
Amortization Restructuring | Litigation | Growth / | |||||||||||||
GAAP | Related | Minority | Device | Business | to MDT | Charges | Adjustments | Non-GAAP | Non-GAAP | ||||||
Investments | Regulations | Foundation | Change | ||||||||||||
Net Sales ($M) | 5,998 | 5,998 | 8,146 | -26.4% | |||||||||||
Cost of Products Sold | 2,264 | (38) | (2) | (7) | 2,217 | 2,448 | -9% | ||||||||
Gross Margin | 62.3% | 63.0% | 69.9% | -690 bps | |||||||||||
SG&A | 2,360 | (57) | (37) | 2,266 | 2,565 | -12% | |||||||||
% of Sales | 39.3% | 37.8% | 31.5% | -630 bps | |||||||||||
R&D | 567 | (10) | 557 | 594 | -6% | ||||||||||
% of Sales | 9.5% | 9.3% | 7.3% | -200 bps | |||||||||||
Other (Income) Expense, Net | (17) | 48 | (11) | (25) | (5) | (30) | -83% | ||||||||
% of Sales | -0.3% | -0.1% | -0.4% | -30 bps | |||||||||||
Amortization of Intangible Assets | 439 | (439) | 0 | 0 | 0 | ||||||||||
Restructuring Charges, Net | 31 | (31) | 0 | 0 | 0 | ||||||||||
Certain Litigation Charges | 37 | (37) | 0 | 0 | 0 | ||||||||||
Operating Profit | 317 | 439 | 126 | 37 | (9) | -- | 17 | 11 | -- | 25 | -- | 963 | 2,569 | -63% | |
Operating Margin | 5.3% | 16.1% | 31.5% | -1,540 bps | |||||||||||
Other Non-Operating Income, Net | (51) | (30) | (81) | (94) | -14% | ||||||||||
Net Income attributable to MDT ($M) | 646 | 358 | 105 | 12 | (12) | 30 | 14 | 5 | -- | 22 | (403) | 777 | 2,077 | -63% | |
Diluted EPS ($) | 0.48 | 0.27 | 0.08 | 0.01 | (0.01) | 0.02 | 0.01 | 0.00 | -- | 0.02 | (0.30) | 0.58 | 1.54 | -62.3% | |
1 The data in this row has been intentionally rounded to the nearest $0.01 and, therefore, may not sum.
Q4 FY20 Earnings Results | May 21, 2020 | 6
MITG
Q4 FY20 RESULTS
VENTILATOR & AIRWAY DEMAND DRIVES RGR GROWTH
DEFERRABLE PROCEDURE MIX IMPACTS SI GROWTH IN LATE MARCH & APRIL
RGR Growth Offset by
COVID-19 Impact on SI Volumes
EM | U.S. | |
19% | ||
RGR | 39% | |
40% |
SI
60%
Non-
U.S. Dev
42%
Revenue | As Rep | CC1 | |
$M | Y/Y % | Y/Y % | |
SI | 1,168 | (23.6) | (21.6) |
RGR | 766 | 5.5 | 7.7 |
Total | $1,934 | (14.2%) | (12.2%) |
U.S. | 763 | (21.4) | (21.4) |
Non-U.S. Dev | 805 | (5.7) | (2.7) |
EM | 366 | (14.9) | (10.0) |
Total | $1,934 | (14.2%) | (12.2%) |
1 Figures represent comparison to Q4 FY19 on a constant currency basis.
- Respiratory, Gastrointestinal, & Renal (RGR):+7.7% growth behind increased demand for Respiratory and Renal Care Solutions products
- Respiratory:Mid-40's growth as MITG seeks to meet ventilator needs globally; low-20's growth in Airway products
- On track to increase ventilator production 5x by end of June
- Received U.S. FDA Emergency Use Authorization for the PB560 ventilator in the U.S.
- MDT ventilators are designed for acute care settings(in-hospital patients in intensive care units, emergency departments or on the general care floors) and sub-acute segment (out of hospital, long-term care facilities or home-ventilated patients)
- Ventilator portfolio primarily includes the PB980, PB840, PB560, and HT70 models
- Patient Monitoring: Flat performance as deferrable procedure mix offset regional spikes in demand for Nellcor™ pulse oximetry and Microstream™ capnography products
- Capnography had strong DD growth fromCOVID-19 demand
- Renal Care Solutions:HSD growth due to strong demand for Renal Access Catheters and Acute/Chronic Bellco™ consumables
- FDA grants marketing authorization for Carpediem™, first dialysis for pediatric use U.S.; in Europe Carpediem™ available since 2012
- GI Solutions:Low-20's declines, reflecting deferrable procedure mix
- Surgical Innovations (SI):-21.6% declines due to broad global COVID-19 impact on surgical procedures, particularly Bariatric, Colorectal, GYN, Hernia and Thoracic
- Advanced Surgical:Low-20's declines from April halting of deferrable procedures; low-20's declines in both Advanced Energy and Advanced Stapling
- General Surgical:Low-20's declines due to procedure volume reduction
Puritan
Bennett™
980
Puritan
Bennett™
560
Nellcor™
Pulse
Oximetry
Microstream™ Capnography
Q4 FY20 Earnings Results | May 21, 2020 | 7
CVG
Q4 FY20 RESULTS
DEFERRED PROCEDURES & BULK ORDERS DRIVE DECLINES
STRONG RDN AND TAVR DATA AT ACC.20; MICRA™ AV LAUNCHED IN U.S.
Declines Driven by Procedure Volumes across Businesses and Geographies, and Reduction in Bulk Purchases
APV | EM | ||
18% | 17% | U.S. | |
CRHF | 44% | ||
47% | |||
CSH | Non- | ||
35% | U.S. Dev | ||
39% |
Revenue | As Rep | CC1 | |
$M | Y/Y % | Y/Y % | |
CRHF | 940 | (39.5) | (38.1) |
CSH | 697 | (29.9) | (28.1) |
APV | 367 | (26.9) | (25.5) |
Total | $2,004 | (34.3%) | (32.8%) |
U.S. | 880 | (41.7) | (41.7) |
Non-U.S. Dev | 785 | (21.6) | (19.0) |
EM | 340 | (36.9) | (33.2) |
Total | $2,004 | (34.3%) | (32.8%) |
1 Figures represent comparison to Q4 FY19 on a constant currency basis.
- Coronary & Structural Heart:-28.1% decline, driven by COVID-19 procedure impact; mid-20's declines in Structural Heart, low-30's declines in Coronary
- Renal Denervation:OFF-MED pivotal data demonstrated RDN works; magnitude of effect is clinically relevant, and may be understated; RDN is 'always on'
- TAVR:Approx. -30% decline; strong implant trends pre-COVID-19 impact; estimated held sequential WW procedure share
- Evolut®Low Risk bicuspid trial data supports Evolut®as valve of choice for bicuspid patients who are TAVR-indicated; bicuspid patients represent ~60% of Low Risk population
- Low Risk LTI trial data showed different valve designs may lead to differences in durability
- Cardiac Surgery:High-teens declines with strong ECMO demand
- Coronary:Low-30's declines driven by reduction in procedure volumes; held sequential WW share
- Cardiac Rhythm & Heart Failure:-38.1% as April declines in businesses with more deferrable procedures weighed on the quarter; Micra™ AV a bright spot
- Arrhythmia Management:High-30'sdeclines
- High-20'sPacing declines; strong, low-20's U.S. leadless pacing growth - over 60% in February and March - fueled by launch of Micra™ AV
- Mid-30'sICD declines; therapy considered 'moderately deferrable'
- Cobalt™/Crome™ FDA approvedearly-May; Europe launch underway
- High-40'sAFS declines given COVID-19 impact on more deferrable procedures
- High's-50'sDiagnostics declines as April deferrable procedure volumes slowed dramatically
- Heart Failure:High-30's declines; CRT-Dlow-40's declines; CRT-Pmid-30's declines; LVADs high- 30's declines
- Aortic, Peripheral & Venous:-25.5% decline due to COVID-19 impacts
- Low-20'sAortic declines, with both TAA and AAA down mid-20's
- Mid-30'sVenous declines given more deferrable nature of procedures
- Low-30'sWW DCB declines
CoreValve™ Evolut™PRO+
Symplicity™ RDN
System
Micra™ AV
Transcatheter
Pacing System
Cobalt™ & Crome™
ICDs & CRT-Ds
Valiant Navion™
Q4 FY20 Earnings Results | May 21, 2020 | 8
RTG | CAPITAL EQUIPMENT & PROCEDURE DEFERRALS |
Q4 FY20 RESULTS | TRANSLATE TO ACROSS THE BOARD DECLINES |
COVID-19 Headwinds Offset Early
Positive Trends
Pain | EM | ||
13% | Spine | 12% | |
Specialty | 32% | ||
Non-US | |||
13% | U.S. 63% | ||
Dev | |||
26% | |||
Brain | |||
41% |
- Brain Therapies:-24.7% decline allayed by relative strength in Neurovascular
- Neurovascular:HSD decline partially offset by growth in Ischemic Stroke therapy products
- Ischemic: HSD growth driven by sales of Riptide™ aspiration system and React™ aspiration catheters
- Hemorrhagic:Mid-teens decline driven by deferrals of hemorrhagic stroke cases where unruptured aneurysm is not at immediate risk of rupture
- Neurosurgery:Down approximately -30% due to hospitals delaying capital equipment purchases
- Relative strength from Midas Rex™ MR8™ powered surgical instruments and StealthStation™ sales
- DBS:High-30's decline resulting from procedure deferrals and reduction of normal year-end customer bulk purchases
Solitaire™ X
Revascularization
Device
Mazor X Stealth™
Edition
- Spine:-32.0% organic decline driven by procedure deferrals and a reduction in typical end-of-year customer bulk purchases
Revenue | As Rep | CC1 | |
$M | Y/Y % | Y/Y % | |
Brain | 615 | (26.0) | (24.7) |
Spine | 480 | (30.5) | (29.8) |
Specialty | 197 | (43.9) | (43.0) |
Pain | 198 | (42.1) | (41.5) |
Total | $1,490 | (32.7%) | (31.8%) |
U.S. | 935 | (36.5) | (36.5) |
Non-U.S. Dev | 380 | (21.5) | (19.2) |
EM | 175 | (32.2) | (28.3) |
Total | $1,490 | (32.7%) | (31.8%) |
- Spine revenue combined with enabling tech2: -33.7%organic decline reflecting delays in capital equipment evaluations and purchases
- Core Spine:Mid-20's decline driven by procedures deferrals
- Specialty Therapies:-43.0% decline indicative of procedure deferrals
- ENT:High-20's decline reflecting pullback in ENT procedures
- Pelvic Health:High-50's decline due to deferrals of most SNM procedures; share increased following European launch of InterStim™ Micro
- Pain Therapies:-41.5% decline resulting from procedure deferrals
- Interventional:Comparatively fewer deferred procedures
- Pain Stim:Declined due to deferrals of most pain stim procedures
- Targeted Drug Delivery:Declined due to procedure deferrals
InterStim™ Micro &
InterStim™
SureScan™ MRI Leads
DTM™ SCS Therapy on Intellis™ Platform
- Figures represent comparison to Q4 FY19 on a constant currency basis.
- Spine-relatedenabling technologies revenue reflected in Neurosurgery business within Brain division.
Q4 FY20 Earnings Results | May 21, 2020 | 9
DIABETES
Q4 FY20 RESULTS
SLOWER NEW PUMP STARTS OFFSET BY CONSUMABLES
OUS DEVELOPED MARKETS GROWTH PARTIALLY OFFSETS COVID-19 PRESSURES
Continued WW CGM Growth;
COVID-19 Pressured New
Patient Starts
EM 8%
U.S. 48%
Non-US
Dev 44%
Revenue | As Rep | CC1 | |
$M | Y/Y % | Y/Y % | |
U.S. | 274 | (17.0) | (17.0) |
Non-U.S. Dev | 248 | 5.1 | 9.3 |
EM | 48 | (20.0) | (13.3) |
Total | $570 | (8.9%) | (6.7%) |
1 Figures represent comparison to Q4 FY19 on a constant currency basis.
- International Revenue:Accounts for approximately half of total sales, with 5% growth despite COVID-19 pressure
- Positive offsets in EMEA with supplies and sensor stocking
- U.S. Revenue:Declined high-teens, primarily due to new patient starts delayed by closing of physician offices, and competitive challenges
- Guardian™ Connect grew LDD despiteCOVID-19 headwinds
- CGM:Growth driven by WW strength in both Integrated and Stand Alone CGM
- Stand Alone CGM:Guardian™ Connect Smart CGM system continues momentum with growth despite COVID-19
- Integrated CGM:Strong global growth driven by increased CGM penetration & new patient acquisitions, partially offset by COVID-19 impacts
- Insulin Pumps:COVID-19 has resulted in the closing of physician offices and delayed new patient starts; continued competitive pressures in the U.S.
- Next Tech Pathway upgrade program continues to gain acceptance
- MiniMed™ 670G installed base increased sequentially to ~249,000 trained, active users benefiting from SmartGuard™ technology
- Medtronic Assurance Program:Expanded support for diabetes customers who have lost their health insurance due to COVID-19-related job loss
- U.S. customers withCOVID-19 related job loss can receive a 3-month supply of glucose sensors, infusion sets and reservoirs at no cost
MiniMed™
670G
MiniMed ™
640G
Guardian™
Sensor 3
Guardian™
Connect w/
Sugar.IQ™
Q4 FY20 Earnings Results | May 21, 2020 | 10
FY20 FINANCIAL HIGHLIGHTS
MDT
FY20HIGHLIGHTS
Revenue:
DIAB | EM | ||
8% | |||
16% | |||
CVG | |||
RTG | 36% | U.S. | |
27% | Non-U.S. | 52% | |
Dev | |||
MITG | 32% | ||
29% | |||
Revenue | As Rep | CCC1 | |
$M | Y/Y % | Y/Y % | |
CVG | 10,468 | (9.0) | (7.6) |
MITG | 8,352 | (1.5) | 0.2 |
RTG | 7,725 | (5.6) | (4.7) |
Diabetes | 2,368 | (1.0) | 0.8 |
Total | $28,913 | (5.4%) | (4.0%) |
U.S. | 14,919 | (7.9) | (7.9) |
Non-U.S. Dev | 9,287 | (3.6) | (0.9) |
EM | 4,707 | (0.5) | 2.8 |
Total | $28,913 | (5.4%) | (4.0%) |
PRODUCT PIPELINE READY TO KICK IN; 97% FREE CASH FLOW CONVERSION
REVENUE:Q4 impact of COVID-19 weighed heavily on full year results; executed on our broad, | |
sustainable growth strategy | |
• Continuing to drive therapy innovation and global market penetration | |
• Steady cadence of innovative, new product launches | |
PIPELINE:Several recent approvals; launches interrupted by COVID-19 but positions us well | |
competitively | |
• Despite COVID-19, Micra™ VR together with recently launched Micra™ AV grew high-20's in the U.S. in FY20 | |
• Product features available on new products even more valuable in current environment | |
• | Remote monitoring |
• | Distance programming |
• Launched Evolut™ PRO+, Midas Rex™ MR8™ powered surgical instruments, Percept™ DBS with BrainSense™ | |
technology, Stimgenics DTM™ launch on Intellis™ platform, Cobalt™/Crome™, and Micra™ AV; expanded | |
MiniMed™ 670G through Europe; unveiled soft tissue robot | |
• Presented RDN OFF-MED, Stimgenics DTM™, TAVR Bicuspid and Leaflet Immobility clinical data; received Low Risk | |
indication expansion for TAVR | |
EPS:Non-GAAP EPS $4.59; declined 11.3% given significant Q4 deleveraging as the company | |
continued to invest in its people and pipeline | |
• Beat and raised EPS guidance each quarter in the first three fiscal quarters | |
• Delivered 50bps CC operating margin expansion in the first three fiscal quarters | |
2 |
Other Financial Highlights:
Diluted | As Rep | CCC1 | |
EPS | Y/Y | Y/Y% | |
GAAP | $3.54 | 3.8% | NC |
Non-GAAP | $4.59 | (12.1%) | (11.3%) |
Cash Flow | $7.2B |
from Ops | |
Free Cash | $6.0B |
2 | |
Flow |
FREE CASH FLOW :$6.0B; conversion ratio3of 97% well above 80% target |
CAPITAL ALLOCATION:Strategically executed balanced capital deployment |
• Invested in future growth through disciplined investment in R&D and tuck-in acquisitions, including Titan Spine, Klue, |
Stimgenics, and Digital Surgery |
• Return to Shareholders: $2,894M in dividends and $664M in net share repurchases, representing 59% of Free Cash |
Flow2and 57% of Non-GAAP Net Income |
- Figures represent comparison to FY19 on a comparable, constant currency basis.
- Operating cash flows less property, plant, and equipment additions.
3 Conversion Ratio = Free Cash Flow divided by Non-GAAP Net Income. | Q4 FY20 Earnings Results | May 21, 2020 | 12 |
MDT
FY20 GAAP TONON-GAAPSELECT FINANCIAL INFORMATION
Non-GAAP Adjustments
FY20 | Gain/Loss on | Medical | Debt tender | Contribution | FY20 | FY FY19 | Y/Y Growth | |||||||||
Amortization Restructuring | Litigation | Acquisition- | premium and | Exit of | IPR&D | Certain Tax | ||||||||||
GAAP | Related | Minority | Device | other | Business | to MDT | Charges | Adjustments | Non-GAAP | Non-GAAP | / Change | |||||
Investment | Regulations | Foundation | ||||||||||||||
charges | ||||||||||||||||
Net Sales ($M) | 28,913 | 28,913 | 30,557 | -5.4% | ||||||||||||
Cost of Products Sold | 9,424 | (155) | (5) | (20) | 9,244 | 9,057 | 2% | |||||||||
Gross Margin | 67.4% | 68.0% | 70.4% | -240 bps | ||||||||||||
SG&A | 10,109 | (168) | (103) | 9,838 | 10,157 | -3% | ||||||||||
% of Sales | 35.0% | 34.0% | 33.2% | -80 bps | ||||||||||||
R&D | 2,331 | (28) | 2,303 | 2,330 | -1% | |||||||||||
% of Sales | 8.1% | 8.0% | 7.6% | -40 bps | ||||||||||||
Other (Income) Expense, Net | 71 | 42 | 7 | (52) | (80) | (25) | (37) | 141 | -126% | |||||||
% of Sales | 0.2% | -0.1% | 0.5% | 60 bps | ||||||||||||
Amortization of Intangible Assets | 1,756 | (1,756) | 0 | 0 | 0 | |||||||||||
Restructuring Charges, Net | 118 | (118) | 0 | 0 | 0 | |||||||||||
Certain Litigation Charges | 313 | (313) | 0 | 0 | 0 | |||||||||||
Operating Profit | 4,791 | 1,756 | 441 | 313 | 66 | -- | 48 | (7) | 52 | 80 | 25 | -- | 7,565 | 8,872 | -15% | |
Operating Margin | 16.6% | 26.2% | 29.0% | -280 bps | ||||||||||||
Other Non-Operating Income, Net | (356) | (19) | (375) | (311) | 21% | |||||||||||
Net Income attributable to MDT ($M) | 4,789 | 1,472 | 372 | 254 | 53 | 22 | 42 | 320 | 40 | 62 | 22 | (1,242) | 6,206 | 7,089 | -12% | |
Diluted EPS ($) | 3.54 | 1.09 | 0.28 | 0.19 | 0.04 | 0.02 | 0.03 | 0.24 | 0.03 | 0.05 | 0.02 | (0.92) | 4.59 | 5.22 | -12.1% | |
Q4 FY20 Earnings Results | May 21, 2020 | 13
FREE CASH FLOW
MDT
COMPONENTS OF FREE CASH FLOW
$ Billions
Operating Cash Flow
CAPEX
Free Cash Flow
Non-GAAP Net Income
Conversion Ratio4
Conversion Ratio adjusted to include post-tax amortization
Included in Operating Cash Flow:
-Tax | Certain Litigation Payments, net1,2 |
Restructuring Payments | |
Pre | 1 |
Other Payments1,3 | |
Puerto Rico IRS Pre-Payment
Certain Other Tax Payments
FY16 | FY17 | FY18 | FY19 | FY20 | |
$5.2 | $6.9 | $4.7 | $7.0 | $7.2 | |
($1.0) | ($1.3) | ($1.1) | ($1.1) | ($1.2) | |
$4.2 | $5.6 | $3.6 | $5.9 | ||
$6.0 | |||||
$6.2 | $6.4 | $6.5 | $7.1 | $6.2 |
67% | 88% | 55% | 83% | 97% |
88% | 114% | 72% | 105% | 127% |
$0.2 | $0.3 | $0.3 | $0.5 | $0.2 |
$0.2 | $0.2 | $0.2 | $0.4 | $0.5 |
$0.2 | $0.3 | $0.3 | $0.2 | $0.2 |
-- | -- | $1.1 | -- | -- |
$0.8 | $0.4 | $0.4 | $0.4 | $0.1 |
- Cash flow impact does not reflect associated tax cost / benefit, as timing and amount are difficult to estimate.
- Includes payments accrued as"Non-GAAP" charges, as well as COV acquisition opening balance sheet adjustments.
- Includesacquisition-related,divestiture-related, and European Union medical device regulations charges, as well as contributions to the Medtronic Foundation.
4 Conversion Ratio = Free Cash Flow divided by Non-GAAP Net Income. | Q4 FY20 Earnings Results | May 21, 2020 | 15 |
FY21 RTG REPORTING STRUCTURE
MDT
FY21REVENUE REPORTING CHANGES - RESTORATIVE THERAPIES GROUP
RESTORATIVE THERAPIES GROUP
FY20 Structure
BRAIN | SPINE | SPECIALTY | PAIN | |||||||
THERAPIES | THERAPIES | THERAPIES | ||||||||
| Neurovascular | | Core Spine | | ENT | | Pain Stim | |||
| Neurosurgery | | Biologics | | Pelvic Health | | Targeted Drug | |||
| DBS | | Kanghui | Delivery | ||||||
| Interventional |
RESTORATIVE THERAPIES GROUP
New FY21 Structure
1 | 2 | 3 |
CRANIAL & SPINAL | SPECIALTY | NEUROMODULATION | ||
TECHNOLOGIES | THERAPIES | |||
Core Spine & | Neurovascular | Pain (Stim & Targeted | ||
Biologics | Drug Delivery) |
- ENT
Enabling | | Brain Modulation |
Technologies | Pelvic Health | (DBS) |
(Neurosurgery) | | Interventional |
- China Orthopedics (Kanghui)
1 | Combining Neurosurgery business | 2 | Moving Neurovascular business | 3 | Combining DBS business with | ||
with Spine division to form | Pain Therapies division to form | ||||||
toSpecialty Therapies division | |||||||
Cranial & Spinal Technologies division | Neuromodulation division | ||||||
See following slide for restated historical revenue
Q4 FY20 Earnings Results | May 21, 2020 | 17
MDT
FY21RTG REVENUE REPORTING CHANGES - RESTATED HISTORICAL REVENUE
Recast to reflect new RTG reporting structure
All figures in $millions
World Wide
Business Unit | Q1 FY20 | Q2 FY20 | Q3 FY20 | Q4 FY20 | FY20 | |
Cranial & Spinal Technologies | 1,050 | 1,117 | 1,117 | 798 | 4,082 | |
Specialty Therapies | 563 | 575 | 588 | 420 | 2,147 | |
Neuromodulation | 398 | 420 | 406 | 272 | 1,497 | |
Restorative Therapies Group | 2,012 | 2,112 | 2,111 | 1,490 | 7,725 | |
Q1 FY20 | Q2 FY20 | Q3 FY20 | Q4 FY20 | FY20 | ||
Cranial & Spinal Technologies | 742 | 802 | 790 | 546 | 2,879 | |
U.S. | Specialty Therapies | 336 | 351 | 350 | 217 | 1,253 |
Neuromodulation | 261 | 287 | 270 | 172 | 990 | |
Restorative Therapies Group | 1,338 | 1,440 | 1,409 | 935 | 5,122 | |
Q4 FY20 Earnings Results | May 21, 2020 | 18
APPENDIX
ACRONYMS / ABBREVIATIONS
Growth | |
DD | Double Digit |
HSD | High-Single Digit |
LDD | Low-Double Digit |
Other | |
~ or Approx. | Approximately |
ANZ | Australia & New Zealand |
bps | Basis Points |
CAPEX | Capital Expenditures |
CC | Constant Currency |
COV | Covidien |
Dev | Developed |
EM | Emerging Markets |
EMEA | Europe, the Middle East & Africa |
EPS | Earnings Per Share |
FDA | Food and Drug Administration |
FY | Fiscal Year |
Other | |
GAAP | Generally Accepted Accounting |
Principles | |
IPR&D | In-Process Research & Development |
IRS | Internal Revenue Service |
Ops | Operations |
PLC | Public Limited Company |
Q | Quarter |
R&D | Research & Development |
Rep | Reported |
SEC | U.S. Securities & Exchange Commission |
SG&A | Selling, General & Administrative |
Tech | Technology |
U.S. | United States |
WW | Worldwide |
WE | Western Europe |
Y/Y | Year-over-Year |
$M | Millions of Dollars |
Business Specific | |
AAA | Abdominal Aortic Aneurysm |
ACC | American College of Cardiology |
AFS | Atrial Fibrillation Solutions |
APV | Aortic, Peripheral & Venous |
CGM | Continuous Glucose Monitoring |
CRHF | Cardiac Rhythm & Heart Failure |
CRT-D | Cardiac Resynchronization Therapy - |
Defibrillator | |
CRT-P | Cardiac Resynchronization Therapy - |
Pacemaker | |
CSH | Coronary & Structural Heart |
CVG | Cardiac & Vascular Group |
DBS | Deep Brain Stimulation |
DIAB | Diabetes |
DCB | Drug Coated Balloon |
DTM | Differential Target Multiplexed Waveform |
ECMO | Extracorporeal Membrane Oxygenation |
ENT | Ear, Nose, & Throat |
Business Specific | |
GYN | Gynecology |
GI | Gastrointestinal |
ICD | Implantable Cardioverter Defibrillator |
LTI | Leaflet Thickening or Immobility |
LVAD | Left Ventricular Assist Device |
MDT | Medtronic |
Med | Medical |
MITG | Minimally Invasive Therapies Group |
RDN | Renal Denervation |
RGR | Respiratory, Gastrointestinal, & Renal |
RTG | Restorative Therapies Group |
SCS | Spinal Cord Stimulation |
SNM | Sacral Neuromodulation |
Stim | Stimulation |
SI | Surgical Innovations |
TAA | Thoracic Aortic Aneurysm |
TAVR | Transcatheter Aortic Valve Replacement |
Q4 FY20 Earnings Results | May 21, 2020 | 19
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Medtronic plc published this content on 21 May 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 May 2020 12:19:01 UTC