Orthofix International N.V. NASDAQ:OFIX
Brad Mason - President & CEO
Doug Rice – CFO
June 4, 2015
Except for historical information contained herein, the statements made in this presentation constitute ‘forward looking statements’ that involve certain risks and uncertainties. These forward looking statements are based on our beliefs and expectations as of June 4, 2015, and we do not undertake any obligation to revise or update such forward looking statements. Certain factors may cause actual results to differ materially from those contained in the forward looking statements, including those risks detailed from time to time in the Company’s reports on file at the Securities and Exchange Commission.
Safe Harbor Statement
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Orthofix may use certain non-GAAP financial measures in its presentations. Orthofix may use non-GAAP financial measures as supplemental measures of performance and believes these measures can provide useful information to investors in evaluating our operations, period over period. However, non-GAAP financial measures have limitations as analytical tools, and should not be considered in isolation or as a substitute for Orthofix’s financial results prepared in accordance with GAAP. In addition, investors should note that any non-GAAP financial measures Orthofix uses may not be the same non-GAAP financial measures, and may not be calculated in the same manner, as that of other companies. Investors can find reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures in our earnings press releases.
Use of Non-GAAP Measures
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Culture of Integrity and Performance
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• Diversified business focused on bone fusion • Market leading products
• Global distribution footprint
• Investing in core technologies
• Infrastructure improvement underway
• Focus on long-term profitable growth
Investment Highlights
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Orthofix – A Bone Fusion Company
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Our Strategic Business Units
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• Pulsed Electromagnetic Field technology (PEMF) • PMA Class III approved • Market leading spine and cervical products • Orthofix Cervical-Stim® is only FDA approved device for cervical spine • Physio-Stim® for long-bone healing • Products primarily sold in the U.S.
BioStim Market & Products
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Market Size: $500 M Market Share: 32% Market Position: #1 Annual Market Growth Rate: 0% - 2%
* Internal Estimates
*
• Invest in research: • Evidence based
• Cost effectiveness • Basic science • New indications for our stimulation technology • Restructure our Physio-Stim® distribution model in the U.S. • Expand our distribution coverage for Spinal-Stim® and Cervical-Stim®
• Leverage our core competencies in PEMF – eNeura® purchase option
BioStim Strategy
Spinal-Stim®
Cervical-Stim®
Physio-Stim®
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Biologics Market & Products
• Human cellular and tissue-based business • Long-term relationship with Musculoskeletal Transplant Foundation (MTF) • Trinity® stem cell tissues are market leader products • Launched new generation tissue form Trinity® ELITE™ in June 2013 • Products primarily sold in the U.S.
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Market Size: $1.74 B Market Share: 5% Market Position: #5 Annual Market Growth Rate: 3% - 5%
• U.S Bone Replacement Market, SmartTRAK™
*
• Continue to leverage the market acceptance of Trinity® ELITE™
• Expand our distribution coverage beyond our spine and extremity fixation sales channels into other orthopedic markets • Increase our feet on the street into our existing markets • Accelerate new tissue development projects with MTF
Biologics Strategy
Trinity® ELITE™ Trinity Evolution®
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Extremity Fixation Market & Products
• Fracture repair, deformity correction and bone reconstruction • External and internal fixation devices • Ring fixation, pin-to-bar, plates, screws, nails • Best-in-class products • 80% of the revenue from outside of the U.S.
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Market Size: $800 M Market Share: 10% Market Position: #5 Annual Market Growth Rate: 2% - 4%
*
* Internal Estimates
• Leverage our initial success with the TrueLok Hex and Galaxy product lines • Reorganize our U.S. and Brazil commercial strategies under new leadership • Increase penetration in existing world markets and expand into additional high potential countries • Develop and acquire premium products for temporary fixation, deformity correction and pediatrics
Extremity Fixation Strategy
Contours VPS® 3 TrueLok Hex™ Guided Growth™
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Spine Fixation Market & Products
• Implants for spine surgeries • Degenerative, MIS and deformity • Cervical, interbody and thoracolumbar • Anterior, posterior and lateral approaches • 85% of revenue from U.S.
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Market Size: $8.2 B Market Share: 1% Market Position: #9 Annual Market Growth Rate: 1% - 3%
* Internal Estimates
*
• Expand U.S. sales force by 50% in the next 18 months • Double the number of regional sales VP’s and focus on field-based training and education - adding training specialists in each region • Achieve higher gross margins through pricing controls, new product introductions, improved instrument set utilization and better inventory management • Improve our new product development productivity and leverage our recent product introductions
Spine Fixation Strategy
LONESTAR™ CSA CONSTRUX® Mini PTC™ Centurion™ POCT
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Optimize sales channels
Invest in core technologies
Improve infrastructure
Establish financial predictability
2015 Key Corporate Objectives
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ORTHOFIX SERVES OVER 65 COUNTRIES WORLDWIDE U.S. • ITALY • BRAZIL
GERMANY • FRANCE • U.K. • PUERTO RICO • AUSTRALIA
Global Footprint
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• Streamlining new product development processes in fixation businesses
• Increasing pre-clinical and clinical research in our PEMF technologies to find new therapeutic indications
• Recently received U.S. FDA approval for two Investigational
Device Exemption clinical trials - odontoid fracture and knee osteoarthritis
• Accelerating our investments with MTF to develop more novel tissue forms for Orthofix to market
• We remain vigilant in finding strategic product tuck-in acquisitions
and licensing opportunities to complement our existing products
Investing in Core Technologies
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• Legal entity and tax structure simplification
• Information technology (Oracle ERP re-implementation)
• Finance, internal controls and reporting
• Supply chain
• Order to cash
2014 – 2017 total investment of ~ $28 million ~ 50% capitalized ~ $18 million total spend in 2015
Objective: To achieve more cost effective and efficient business processes and controls – worldwide
Infrastructure Improvement - Project Bluecore
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Brad Niemann President, BioStim
Bob Goodwin President, Biologics
Davide Bianchi President, Extremity Fixation
Jim Ryaby, PhD Chief Scientific Officer
Brad Mason President and Chief Executive Officer
Leadership Team
Mike Finegan Chief Strategy Officer
Jeff Schumm Chief Administrative Officer General Counsel
Mark Atkinson Chief People Officer
Doug Rice Chief Financial Officer
Jill Mason Chief Compliance Officer
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Consolidated Net Sales and Adjusted EBITDA Margin
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440
398 402
385 - 390
402 - 407
22.5%
14.1%
16.3%
14% - 16%
10%
15%
20%
25%
200
250
300
350
400
450
500
2012 2013 2014 2015
Adj.
EBIT
DA %
$ M
Sales as Reported Revenue CC Impact ADJ EBITDA %
(Est.)
Balance Sheet Summary – March 31, 2015
Assets
Cash 57.0 Accounts Receivable 58.5 Inventory 56.7 Other Assets 214.0
Total Assets 386.2
Liabilities
Current Liabilities 69.4 Long-Term Debt 0.0 Other Long-Term Liabilities 26.3
Total Liabilities 95.7
Shareholder Equity
Shareholder Equity 290.5
Total Liabilities and Shareholder Equity 386.2
($ in Millions)
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• Capital deployment focus on Total Shareholder Return • Continue to increase cash generation through improved AR & inventory management processes • Invest in research and development in our core technology areas • Upgrade our infrastructure to achieve better efficiencies and controls • Acquire or license tuck-in products and technologies that support or
augment our existing businesses • Utilize our available capital to increase shareholder value, including
stock repurchases as prudent
Capital Management Strategy
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• Diversified business focused on bone fusion • Market leading products
• Global distribution footprint
• Investing in core technologies
• Infrastructure improvement underway
• Focus on long-term profitable growth
Investment Highlights
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Thank you for your
Participation
OFIX Orthofix.com
Investor Relations – Mark Quick
COPYRIGHT ORTHOFIX INC 2015 5.25.15 v8
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