Össur hf: Interim report Q1 2020

Announcement no. 27/2020

Interim report Q1 2020

30 April 2020

Highlights

  • Financial performance in Q1 2020 is impacted by the COVID-19 pandemic.
  • Sales declined by 2% in local currency in Q1 2020 and sales declined by 5% organic. Growth in the first two months of the year was in line with expectations. Sales in March were impacted in markets where measures to control the COVID-19 pandemic were implemented.
  • The prosthetics segment declined by 4% organic and the B&S segment declined by 7% organic in Q1 2020. The impact due to COVID-19 was similar across both business segments in the first quarter.
  • Gross profit margin in Q1 2020 is 62% compared to 64% in Q1 2019. EBITDA margin is 14% in Q1 2020 compare to 19% in Q1 2019. The decrease in margins and profitability is mainly due to lower sales as cost increase was moderate. Certain measures have been taken to reduce costs in the short-term.
  • Net profit in Q1 2020 amounted to USD 7 million or 5% of sales.
  • Cash generated by operations amounted to USD 31 million or 20% of sales in Q1 2020 compared to USD 16 million or 10% of sales in Q1 2019. Guidance for 2020 was withdrawn on March 17 due to uncertainty caused by the COVID-19 pandemic.
  • Össur acquired 1,295,450 of own shares through the share buyback for USD 9 million in Q1 2020. As announced on March 17, the share buyback program has been temporarily put on hold.
  • On April 7, Össur received approval notice from the United States Federal Trade Commission (FTC) regarding the acquisition of College Park. Given the uncertainty caused by the COVID-19 pandemic, parties have agreed to remain flexible on closing date but aim to conclude within 3 months.
  • Additional financing of USD 225 million was secured in March where bank balances and cash equivalents in addition to undrawn facilities at the end of Q1 2020 amounted to USD 304 million.

Jon Sigurdsson, President & CEO, comments:

“The COVID-19 pandemic is impacting Össur’s operations and our focus has been on the safety and well-being of employees and customers. Current demand is being met with manufacturing employees working in shifts and many of our office and sales employees are working from home. The pandemic is having a short-term negative impact on demand for prosthetic and bracing & supports products. Financial performance is therefore negatively impacted, and it remains uncertain how long the impact will last. Sales growth in the first two months of the year was in line with earlier expectations but sales began to be impacted in March. Sales month to date in April are furthermore significantly impacted but we are already seeing clear signs of gradual recovery in key European markets and sales in China were in April back at levels comparable with 2019. The long-term prospects and underlying fundamental drivers of the prosthetics and bracing & supports markets are however not expected to change. The impact from COVID-19 is furthermore expected to lead to some pent-up demand. The outlook for the full year however remains uncertain and we are currently unable to provide an updated financial guidance. Even so, we are well financed and confident that we are in a strong position to get through these uncertain times. I would like to thank all our employees and customers for continued flexibility, positive team spirit and their efforts in this challenging time.”

Q1 2020 conference call details

Össur will host a conference call on 30th of April 2020 at 9:00 CET / 7:00 GMT / 3:00 EDT. To participate in the call please dial: Europe: + 45 35 44 55 77, +44 (0) 333 300 0804 or +46 (0) 8 566 426 51, The United States: + 1 631 913 1422, Iceland: +354 800 7437. The PIN CODE to access the call is 19802182#. A webcast can be followed on the Össur website: www.ossur.com/investors.

Further information

David Hreidarsson, Investor Relations Manager, dhreidarsson@ossur.com, +354 661 8225

Helga Danielsdottir, Investor Relations Analyst, hdanielsdottir@ossur.com, +354 766 4959

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About Össur

Össur (Nasdaq Copenhagen: OSSR) is a global leader in non-invasive orthopaedics that help people live a life without limitations. A recognized “Technology Pioneer,” Össur focuses on improving people’s mobility through the delivery of innovative technologies in Prosthetics and Bracing & Supports, by investing significantly in research and product development to create award-winning designs with consistently strong market positions. Successful patient and clinical outcomes are further empowered via Össur’s educational programs and business products.  As part of Össur’s long-standing commitment to social responsibility, the company has been a signatory to the United Nations Global Compact since 2011, and also participates in the Nasdaq Nordic and Baltic exchanges’ voluntary guidelines for Environment, Social and Corporate Governance (ESG). Össur is headquartered in Iceland, with major operations in the Americas, Europe and Asia, and additional distributors worldwide. www.ossur.com