Q1 2013 Financial Results Conference Call

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Q1 2013 Financial Results Conference Call

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Q1 2013 Financial Results Conference Call

  1. 1. First Quarter 2013 Financial Results Conference Call May 2, 2013
  2. 2. 1 Forward-looking Statements Forward-looking Statements Certain statements made in this presentation may constitute forward-looking statements, including, but not limited to, statements regarding the performance of our business, synergies, timing of timing of product exclusivity and financial guidance for 2013. Forward-looking statements may be identified by the use of the words “anticipates,” “expects,” “intends,” “plans,” “could,” “should,” “would,” “may,” “will,” “believes,” “estimates,” “potential,” or “continue” and variations or similar expressions. These statements are based upon the current expectations and beliefs of management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to, risks and uncertainties discussed in the Company's most recent annual or quarterly report filed with the Securities and Exchange Commission ("SEC") and other risks and uncertainties detailed from time to time in the Company's filings with the SEC and the Canadian Securities Administrators ("CSA"), which factors are incorporated herein by reference. Readers are cautioned not to place undue reliance on any of these forward-looking statements. The Company undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this presentation or to reflect actual outcomes. Non-GAAP Information To supplement the financial measures prepared in accordance with generally accepted accounting principles (GAAP), the Company uses non-GAAP financial measures that exclude certain items, such as amortization of inventory step-up, stock- based compensation step-up, restructuring and acquisition-related costsTBD, acquired in-process research and development ("IPR&D"), legal settlements, amortization and other non-cash charges, amortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest, loss on extinguishment of debt, and (gain) loss on investments, net, and adjusts tax expense to cash taxes. Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. By disclosing non-GAAP financial measures, management intends to provide investors with a meaningful, consistent comparison of the company’s core operating results and trends for the periods presented. Non-GAAP financial measures are not prepared in accordance with GAAP; therefore, the information is not necessarily comparable to other companies and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. Note 1: The guidance in this presentation is only effective as of the date given, May 2, 2013, and will not be updated or affirmed unless and until the Company publicly announces updated or affirmed guidance.
  3. 3. 2 Agenda 1. First Quarter Results 2. Financial and Deal Updates 3. 2013 Guidance Update
  4. 4. 3 Strong 1Q Earnings and Cash Generation Performance Q1 2013 Q1 2012 Q1 2013 vs 2012 Product Sales $1.039 B $751M 38% Total Revenue $1.068 B $790M 1 35% Cash EPS $1.30 $0.91 1 43% Adjusted Cash Flow $345 M $255 M 1 35% 1 Excludes gains on the divestiture of two dermatology products and a foreign exchange gain related to the acquisition of iNova in the first quarter of 2012
  5. 5. 4 1Q 2013 Organic Growth Same Store Sales As Reported Excluding Generic Impact U.S. Promoted 1 6% 12% U.S. Neuro 2 -10% -10% Canada / Australia -11% 5% Central/Eastern Europe 11% 11% Latin America 7% 7% South East Asia/South Africa 28% 28% Pro Forma U.S. Promoted 1 0% 2% U.S. Neuro 2 -4% -4% Canada / Australia -11% 2% Central/Eastern Europe 11% 11% Latin America 7% 7% South East Asia/South Africa 28% 28% 1 Going forward, organic growth will be reported excluding the impact of Zovirax genericization 2 US Neuro & Other EBITA contribution was flat
  6. 6. 5 Key U.S. Brands Performance vs. Budget Acanya Arestin AcneFree CeraVe Ziana Solodyn Zyclara Dysport Restylane Perlane
  7. 7. 6 Customer Focus – Senior Management  Conferences Attended To Date (with one-on-one meetings)  Maui Derm & Maui Derm NP + PA  Winter Clinical Derm (Hawaii Derm)  ABAM (American-Brazil Aesthetic Meeting)  Noah Worcester Derm Society  AAD Winter Meeting (American Academy of Dermatology)  ASAPS (American Society for Aesthetic Plastic Surgery)  South Beach Symposium  AAD Industry Summit  Cosmetic Update (Canada)  Real World Dermatology for Residents  Customer Dinner Meetings Conducted To Date in U.S.  New York City  San Francisco  Los Angeles  Phoenix  Ft. Lauderdale / Miami  Washington DC  Chicago  Scheduled / In Process: Houston, Dallas, Orange County (CA), Atlanta, and many more  Customer Dinner Meetings started in Canada  Vancouver, Toronto, Montreal, Calgary  Leadership through American Skin Association  Honored as “Dermatology company of the Year”
  8. 8. 7 Emerging Markets - Strong Growth Eastern/ Central Europe Latin America South East Asia/South Africa ($ in millions) Q1 2013 Organic Growth Total Product Sales - LTM Q1’ 13 Q1’ 13 Q1’ 13
  9. 9. Financial and Deal Updates Howard Schiller
  10. 10. 9 Financial Summary Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Product Sales $751M $743M $853M $942M $1,039M Ongoing Service/Alliance Revenue $39M $32 M $31M $44 M $29M Total Revenue excl. “one-timers” $790M $775M $884M $986M $1,068M One-time items $66 M $45 M N/A N/A N/A Total Revenue $856M $820M $884M $986M $1,068M Cost of Goods Sold% (% of product sales) 1 25% 24% 23% 24% 22% SG&A% (% of total revenue) 19% 22% 20% 20% 23% R&D Expense $22M $18M $19M $20M $24M Operating Margin (% of total revenue) (excluding amortization) 55% 52% 54% 53% 52% Cash EPS (Reported) $1.14 $1.01 $1.15 $1.22 $1.30 w/o one-time items $0.91 $0.87 $1.15 $1.22 $1.30 Adjusted Cash Flow from Operations 2 $255M $307M $241M $423M $345M Fully Diluted Share Count 316 M 313 M 312 M 312 M 312 M 1 Q1 2012 COGS has been restated to show impact of contract mfg moved to Service/Alliance (previously stated at 26%) 2 Q1 2012 adjusted cash flow excludes $66 M from divestiture of IDP-111 and generic Efudex
  11. 11. 10 Medicis Deal Upsides  >$300 million synergies run rate expected by year end  Up from >$225 million original estimate  Ziana extended to July 2016 from 2013  Zyclara extended to January 2019 from 2013 - 2015  Over achieved corporate structure efficiencies
  12. 12. 11 Q1 2013 LTD Medicis Project Related Costs ($ in millions) Restructuring Related Costs Amount Paid Severance Payments $99.5 Acquisition Related Costs Paid to 3rd Parties $24.1 Integration Related Consulting, Duplicative Labor, Transition Services, and Other $14.3 Costs Incurred to date to Achieve Synergies $138.0 Restructuring costs should be significantly less than $275 million
  13. 13. 12 Update on Obagi  Closed transaction April 25  All personnel notified of status April 26  Consolidated Irvine office into Long Beach April 28  Current sales force of ~95 people  Synergy run rate of at least $50 million expected
  14. 14. 13 Annual Financial Guidance for 2013 Previous Guidance  Revenue $4.4 - $4.8 billion  $5.45 - $5.75* Adjusted Cash EPS  $1.5 - $1.75 billion in Adjusted Cash Flow from Operations As of May 2, 2013  Revenue $4.4 - $4.8 billion  $5.55 - $5.85 Adjusted Cash EPS  $1.5 - $1.75 billion in Adjusted Cash Flow from Operations See Note 1 regarding guidance * Does not include $0.30 - $0.40 impact from Zovirax generic
  15. 15. First Quarter 2013 Financial Results Conference Call May 2, 2013

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