2020 results & perspectives

2020 results & perspectives

March 18, 2021

Shaping the future animal healthof

2

Disclaimer

This presentation contains forward-looking statements with respect to Virbac’sprofitability and financial condition, business operations, projects and outlook.

Although Virbac’s management believes that such forward-looking statements arebased on reasonable assumptions, as made as of the date of this presentation, suchstatements do not constitute guarantees of future performance. Actual results may

differ materially from the forward-looking statements as a result of a number of risks and uncertainties, many of which are outside Virbac’s control, including but not limited to any

risk described in the reports and documents regularly made available to the public and filed to the AMF.

Investors and security holders may obtain a free copy of such documents at :

corporate.virbac.com

https://corporate.virbac.com/home-fr.html

AGENDA

2020 financial highlights

Ability to execute and main 2020 achievements

Company priorities & 2021 situation

Virbac 2030 strategic plan

Appendix : 2021 agenda3

4

Strong organic growth of 5.7% @ constant rates• Overall, contributions at constant exchange rates are positive across the entire business, except for the

United States, which fell slightly, excluding Sentinel, and the impact of the disruptions to dog and cat vaccines

Sales slightly decreasing in the USA (-0.8% @ constant rate & perimeter)• Mainly due to lower sales of the dental range impacted by Covid-19 and the shortage in antibiotics• All other ranges performing better especially the derm range with Easotic, Movoflex, Spot on and Iverhart

Strong increase of Ebit adjusted (Ebita1) +16.9 M€ @ constant exchange rate leading to 14.4% of EBITA ratio

• Strong gross margin contribution of all regions driven by sales growth and positive product mix• Positive short term impact of expenses reduction in the context of the Covid-19 (~15.0 M€)2

• Commercial expenses : travel ban, postponement to 2021 of many meetings, congresses, events & sponsorships, marketing spend and recruitment limitation

• R&D expenses : postponement of many studies and +1.7 M€ favorable RTC3 impact• Other expenses : deferral of Opex and Capex projects

• Forex impact • Unfavorable on sales (-34.5 M€)• Unfavorable on Ebita (-10.5 M€)

1 Ebita : Current operating profit before depreciation of assets arising from acquisitions2 Rough estimation vs. 20193 RTC : Research Tax Credit

FINANCIALS – SUMMARY (1/5) 2020

5



6

• Net profit : 141.8 M€ (vs. 54.4 M€ in 2019) @ real rate impacted by:• + Operational performance & opex savings (one-off) due to Covid-19 situation• + Non-recurring items incl.

⁻ + Sales of Sentinel (net capital gain ~66.5 M€)⁻ - Impairment on CaniLeish (-3.0 M€)

• + Decrease of the net cost of financing• + Favorable variance vs. last year on CLP exchange rate vs. US$ and € at year end

• Decrease of total net debt by 431.8 M€ (Decrease by 71.9 M€ @ constant exchange rate & scope)

• Positive cash situation @ 63.4 M€ vs. a net debt of 368.4 M€ at year end 2019• Positive impact of Sentinel divestment of 363.3 M€• Additional working capital needs ( increase in inventories in anticipation of activity rebound

and in trade receivables essentially linked to decrease of factoring, both partially compensated by higher payables linked to sustained activity in last quarter of 2020 vs. 2019)

• Co. fully deleveraged: Net debt on Ebitda ratio @ -0.291 in December 2020• From 7.3 in June 2015 to -0.29 in December 2020 below bank covenant commitment of 3.75

1. Covenant calculated as per the RCF contract

7

• Growth @constant rates 0% - 3% +3.2%

• EBIT Adj.1 ratio to revenue@ constant rates ~14.0% 14.4 pts

• Net Debt cash positive -63.4 M€

2020 Actuals aligned with last guidance

√

√

√

Perspectives 2020 Actuals 2020

2020 FINANCIALS – SUMMARY (4/5)

1 Ebit Adj.: Current operating profit before depreciations of assets arising from acquisitions

8

CONSOLIDATED SALES (5/5) 2020

9

SALES EVOLUTION 2020

M€

10

North America121.4 M€-0.8%

Latin America148.6 M€+7.1%

Europe386.1 M€+5.9%

Africa/Middle East31.2 M€+4.5%

Asia166.7 M€+7.1%

Pacific80.3 M€+6.6%

SALES GROWTH BY REGION 2020

At constant rates

11

SALES GROWTH BY SEGMENT - COMPANION ANIMALS 2020

At constant rates

(+7.3 excluding Sentinel)

M€

12

SALES GROWTH BY SEGMENT - FOOD PRODUCING ANIMALS 2020

Bovine, Swine & Poultry

At constant ratesM€

29.7%(XX%)

9.6%(XX%)

( ) : 2019 * Australia. New Zealand. Japan. Korea 13

SALES BREAKDOWN BY REGION AND BUSINESS 2020

14

SENTINEL DIVESTMENT ACCOUNTING IMPACTS 2020

• The net value of assets sold breaks down as follows (in € million):

• The sale amounts to €363 million (US $410 million) generating :

➢ A capital gain of around €70 million (US $79 million) before tax and €67 million after tax (given the utilisation of deferred tax assets not previously recognized in our balance sheet)

Goodwill - 169.6Intangible assets - 109.9Inventories - 7.6Others - 6.6

- 293.7

PROFIT & LOSS STATEMENT AT REAL RATES 2020

15

16

BREAKDOWN OF EBIT ADJUSTED1 EVOLUTION 2020

1 Ebit adjusted : current operating profit before depreciation of assets arising from acquisitions2 RDL : Research, Development & Licensing3 Including write-off of intangibles and industrial equipments as well as base effect with 2019 (US Headquarter sale)

2

M€

-16m$ essentially linked to : ● -13m$ Sentinel divestment● -6m$ linked to One-off3

US Contribution to EBIT Adjusted : ● From 30m$ in 2019 …● … to 14m$ in 2020

● +3.6m€ of vaccine related insurance

● -3.5m€ of 2019 base effect (pension fund reversal)

EVOLUTION OF CASH FLOW 2020

17

M€

18

EVOLUTION OF FREE CASH-FLOW 2020

M€2019.12 2020.12

19

EVOLUTION OF NET DEBT 2020

M€

Closing net debt @ constant rate & scope

296.5 M€

(-71.9 M€ vs. 12/2019)

BALANCE SHEET ANALYSIS 2020

20

984.9

M€

984.9

655.7655.7

21

BALANCE SHEET – FINANCIAL RATIOS 2020

2018.12 2019.12 2020.12

SHAREHOLDING AS OF DECEMBER 31, 2020

Number of shares: 8 458 000

22






AGENDA

A GREAT ABILITY TO EXECUTE OVER THE LAST 3 YEARS

24

the long term sustainability of the company being our top 1 priority

2017 2020

NET REVENUES M€ 861.9 934.2 + 8.4%(despite Sentinel divestment)

EBITA M€ 80.3 128.9 +60.5%

EBITA % 9.3% 13.8% +4.5 pts

NET PROFITS M€Group share -2.6 137.5 +140.1 M€

(incl. Sentinel divestment)

ROIC % 6.0% 14.7% +8.7 pts

ROE % -0.6% 24.1% +24.7 pts(incl. Sentinel divestment)

Net Debt M€ 460 -63.4 - 523.4 M€

3 year performance despite the Sentinel divestment at the end of June 2020

Financial performance Social performance Environmental performance

Market shares gains (with organic growth above market rate) and very significant Ebita increase

with the definition of true objectives at 5 years (on waste reduction, gas emission reduction, electricity consumption, etc.)

Over 3 years, focus on

HSE and GPTW (Great place to work) programs

A GREAT ABILITY TO EXECUTE OVER THE LAST 3 YEARS

25

Organic growth at +4.5%, Ebita +18.5% (+1.3 point), Debt reduction of €48 million @ constant exchange rates. Net profit €21 million vs. €1.8 million in 2017

Main decisions to improve our long term competitiveness

• The divestment of our logistic platform in Wissous (France)• The closing of our Brazilian manufacturing site• Successful transfer of the production of Sentinel Spectrum to our St.

Louis manufacturing site (Missouri, USA)• Launch of a China « think very big » growth plan• Creation of a new affiliate in Turkey• Celebration of the 50 year anniversary of Virbac in Carros (France)

– 3000 people• Launch of the GPTW (Great Place to Work) project• New strategic vision and new governance with board office and a

global network team (GNT) to better execute our strategy• 3 year roadmaps for each function• Creation of a department to boost our innovation (DPO)• Start of the digital transformation of the company

Organic growth at +6.6%, Ebita +37.8% (+3 points), Debt reduction of €88 million @ constant exchange rates.Net profit €54.4 million vs. €21 million in 2018

20192018

Main decisions to improve our long term competitiveness

• Building of a R&D lab in Taiwan and investments in our R&D center in Uruguay

• Divestment of our work offices in Fort Worth to relocate our U.S. team to a smaller rented space

• Successful FDA inspection of our St. Louis manufacturing site• Closing of our IT offshore platform in India (savings)• Company digital transformation acceleration

• G suite worldwide deployment• Launch of many web shops across different countries and

launch of TMall in China• Competitivity review of our manufacturing sites & performance

improvement programs• Launch of a « (Block)Buster » initiative both in innovation and

commercial• Launch of several legal compliance programs

26

Another strong annual performance(5.7% at constant rates and scope and 3.2% at constant rates and real scope despite Sentinel divestment at the end of S1 2020)

Ebita at 14.4% @ cst rates (+1.4 point), with profit improving double-digit due to- strong sales growth benefitting from the overall AH market

resilience;- operational costs reduction (no travelling, congress, event;

marketing expenses reduction, etc.);- some R&D delays / postponing of trials (not recurrent, expenses

will increase in near future).

Debt reduction of 432 M€ versus end of December 2019, turning the company cash positive (63.4 M€ at the end of 2020)

Return on invested capital at 14.7%Return on equity at 24.1% (including Sentinel divestment)

Year main focus• Covid-19 management: priority given to the health and safety of people

• Business continuity: remote communication channels strengthened to better communicate and meet our commitments to customers in the animal care and food production chain

• Sale of our US Sentinel brands @ US $410 million, and 10 years Sentinel Spectrum supply agreement; to erase our debt, rebalance our overall product portfolio and accelerate our growth

• Acquisition of Ictyogroup Tilapia vaccines and R&D programs

• Acquisition of Companion animal products from Elanco in Mexico

• Corporate Social Responsibility: pursuing the many recently launched initiatives

• Great Place To Work: some initiatives have been postponed due to the sanitary situation but the vision and the ambition of this project have remained unchanged with a very good execution on most important topics in 2020

• Building of a wet lab and Aquaculture diagnostics center in Vietnam

• Acceleration of our digital transformation to benefit from the market trends with home delivery and auto ships programs

• « Competitivity improvement » of our main manufacturing sites progressing well

MAIN 2020 ACHIEVEMENTS (1/2)

27

MAIN 2020 COMMERCIAL ACHIEVEMENTS (2/2)Geographies

➢ Top 5 growth countries @ constant rates: India, France, Brazil, Mexico & China

➢ 10 zones growing double-digit of which Benelux, Brazil, China, Poland, New Zealand, Colombia, Scandinavia, Thailand, Vietnam…

➢ Busters commercial programs remain resilient:○ Petfood (+26.5%)○ Veggiedent (-1.0%/+16.5% excluding USA) impacted by Covid-19 & U.S. base effect from 2019

○ Suprelorin (+17.1%) implant for dog reversible sterilization

➢ Some product launches impacted/delayed due to Covid-19

Products ranges

MAIN 2020 ACHIEVEMENTS (2/2)

28

➢ 2020 performance impacted by Covid-19: -0.8% @ constant rate excluding Sentinel (-14.3% @ constant rate and actual scope) : US $92.2 million in 2020 vs. US $92.9 million in 2019 excluding Sentinel

➢ Major dynamics within our U.S. portfolio

○ Strong Sentinel sales in S1 following price increases in February 2020

➢ Sales of Sentinel 2020 first half: US $39 million (vs. US $35 million in H1-2019)➢ 2020 full year impact around -1 point in ratio of Ebita/sales due to good sales in 2020 first half➢ Full year pro forma impacts of Sentinel divestment at Group level (decrease in sales of around

US $55 million and decrease in Ebita’s Group profitability of around -3 pts)

○ Successful return to market of EasOtic and launch of Senergy (selamectin generic)

○ Dentals and Antibiotics affected by Covid-19 situation

GEOGRAPHIES: FOCUS USA

29

➢ China growth plans impacted by pandemic:

○ Petfood launch postponed (due to African Swine Fever & now Bird Flu)○ Suprelorin launch impacted by Covid-19 > Relaunch in 2021○ Launch of Virbagest (Altrenogest) for Swine as planned○ Other projects on target & progressing well (vaccines registration, M&A

activities)

➢ Limited 2020 performance:

➢ Only +17.3% in 2020 @ cst rates with digital growth +50% at the end of December 2020 vs. end of December 2019 Virbac in the top 4 in companion animals

GEOGRAPHIES: FOCUS CHINA

30

➢ Continuous R&D investments to comply with new regulations and obtain new registrations for existing vaccines by 2022

➢ Successful renewal of significant third party distribution agreements

➢ Manufacturing competitivity improvement program

➢ 2020 performance strongly impacted by Covid-19: +0.3% at constant rates▪ different product portfolio dynamic vs. 2019 (growth driven by aqua parasiticides and antibiotics)▪ Less smolts in the water for 2021 production

Minority shares acquisition (49%):decision to be made in mid 2021

GEOGRAPHIES: FOCUS CHILI

AGENDA



Company priorities & 2021 update



32

Divestment of Sentinel (loss of ~ 55M$ and ~ 3 points of Ebita) & portfolio reallocation

Significant investments in manufacturing& informatic systems (ERP, MES, LIMS, HRIS,…)*⇒ Capex : ~ €60 million/year in 2021 &

2022

Significant investments in new areas ⇒ Market entries: Petfood, FPA USA

Focus on organic growthabove market / Gaining MS%Adding on programmatic M&A activities

Boost US performance(Petfood, FPA)

Leverage commercial investment

Set a timing for going back to 15% Ebita

Transition2020-2022

Run2023-2025

* Enterprise Resource Planning, Manufacturing Execution System, Laboratory Information Management System, Human Resource Information System, etc.

«CHOOSING SUSTAINABILITY»: SUSTAINABLE & PROFITABLE GROWTH

MAIN 2021 PRIORITIES

To have the BEST & MOST

ENGAGED people of the

industry

To SIMPLIFY & DIGITALIZE

PEOPLE• New gouvernance• Virbac 2030 “purpose”• ESG, HSE• GPTW• Participative management & new normal post-covid

To generate ACCRETIVE

GROWTH

To better PREPARE the company for the FUTURE

TARGET 15%1

• Organic growth above market rate• Boost M&A and licensing• Focus on margin improvement• Opex control• Ebita growth acceleration

INVESTMENTS / SYSTEMS

• Manufacturing & Lab systems (ERP, MES, LIMS,...)

• Key processes (HR, Finance, Purchase)

• Digital business & market access

PORTFOLIO MANAGEMENT

• Reorganization of industrial settings

• Strategic investmentsin Biology and Petfood

• To accelerate R&D & to develop “BUSTERS” programs

1. Objective of reaching ~15% of EBIT/A (timing to be set)

34

➢ AH market extremely resilient compared to other industries but there are still certain uncertainties related to the current health situation with resurgences of second/third waves of Covid-19 currently and in the coming months, which could lead to lockdowns in certain countries impacting the demand

➢ Preservation of the group’s employees health, safety and security to enable well-being at work in the “new normal” (safety measures on site, guidance on home office work, meetings duration, investments in equipments such as laptops, screens, headphones, very restricted travelling, etc.)

➢ Supply: pressures across the world on the supply and prices of certain

components and materials

UPDATE COVID-19: CURRENT SITUATION MARCH 2021

AGENDA



Company priorities & 2021 update



36

➢ Build the purpose and the long term vision for Virbac as a unique & highly differentiated company in the animal health market in 2030 : highly relevant & profitable in a changing world (consolidation of the industry and the customers, digitalization, market access, home delivery, disruptive innovation, new technologies, etc.)

➢ Align the organization to pull in the same direction for maximum efficacy and achievement of the target 2030 objectives through high focus, collective intelligence and efficiency

➢ Strategic and selective re-allocation of resources to generate accretive, profitable and sustainable growth

1. Performance related moves• Differentiating innovation

• Industrial strategy and competitiveness

• Programmatic M&A

2. Portfolio related moves➢ To rebalance our portfolio between the 3 segments: Pharmaceuticals, Biologicals, and

Petfood / Petcare, while preserving our focus on our strategic species: Companion animals, Bovine, Swine and Aquaculture species.

STRATEGY - VIRBAC 2030

VIRBAC STRATEGIC POSITIONING – PRODUCTS PORTFOLIO

38

Launch Year Companion Animals M € Food Producing Animals M €

2021

• Dermatology• Parasiticides• Non pharma products• Vaccine

7• Parasiticides• Anti-infectives• Vaccine 22

2022

• Vaccine• Non pharma products• Specialities• Parasiticides

36• Parasiticides• Anti-infectives• Nutritionals

5

2023• Specialities• Parasiticides• Non pharma products

37• Anti-infectives• Parasiticides• Miscellaneous

37

2024

• Non pharma products• Parasiticides• Specialities• Petfood

39 • Biologicals• Miscellaneous TBD

(March, 2021)ESTIMATED PEAK SALES POTENTIAL OF MAIN R&D PROJECTS

391. Ebit adjusted: current operating profit before depreciations of assets arising from acquisitions,

2021 Guidance Notes

Total revenuebetween 3% to 5% @ constant rates

(0% to 2% @ constant rates and actual scope)

Negative exchange rate impact expected at around 10 M€

Ebit adjusted1 ratio to revenue

Between 10% to 12% @ constant rates No material exchange rate impact expected at the EBIT Adjusted level

Capex ~60 M€

2021 PERSPECTIVES – SUMMARY

The payment of a dividend of 0.75 € per share will be proposed to the annual shareholders’ meeting






AGENDA

41

2021 AGENDA

* After market close

April 15* Q1 sales

June 21 Annual shareholders’ meeting

July 20* Q2 - H1 sales

September 15* Half-year financial results

September 16 SFAF meeting - 1st half 2021 financial & strategic information

October 18* Q3 sales

January 19, 2022* Q4 - Full year sales

2020 results & perspectives

Documents

Transcript of 2020 results & perspectives