Embla Medical (EMBLA) Q3 2019 earnings summary

Executive summary

• Q3 sales were USD 168m, up 15% reported, 19% in local currency and 5% organically; growth was led by Prosthetics and recent launches.

• Strong 9M results narrowed FY19 organic growth guidance to ~6%; EBITDA margin guidance before special items was ~23% including IFRS 16.

Financial highlights

• Q3 sales were USD 168m versus USD 145m; reported growth included 13 percentage points from 2018 acquisitions and a 3-point negative currency impact.

• Q3 EBITDA before special items was USD 40m, up 34%; excluding IFRS 16, EBITDA was USD 35m and margin was 21%.

• Q3 net profit was USD 14.5m versus USD 15.9m; Q3 2018 included a one-time USD 5m minority-interest revaluation benefit. 9M net profit was USD 51.2m versus USD 45.9m.

• 9M sales were USD 507m versus USD 445m, up 14% reported and 7% organically; EBITDA before special items was USD 112m versus USD 82m.

• Q3 free cash flow was USD 43m versus USD 25m; cash generated by operations was USD 49m versus USD 32m.

Outlook and guidance

• FY19 organic sales growth guidance narrowed to ~6% from 5–6%; 9M organic growth was 7%.

• FY19 EBITDA margin guidance before special items was ~23% including IFRS 16 and ~20% excluding IFRS 16.

• FY19 capex guidance was 4–5% of sales and effective tax rate guidance was 23–24%.

• Q4 organic growth was expected to be similar to or slightly below Q3, with tougher comparisons after the prior-year PROPRIO FOOT® launch; operating expenses were expected to grow more slowly than in 9M.

• Prosthetics growth was expected to exceed estimated 2019 market growth; Bracing & Supports growth was expected to track market growth.