Embla Medical (EMBLA) Q4 2016 earnings summary

Executive summary

• Q4 sales were $138m, up 13% in local currency and 4% organically; FY sales were $521m, up 9% in local currency with 4% organic growth.

• FY adjusted EBITDA was $98m, with a 19% margin; net profit was $51m, broadly in line with 2015. Prosthetics growth and acquisitions supported sales, while FX pressured results and margins.

Financial highlights

• Q4 gross profit was $87m, with a 63% margin; EBITDA was $26m, up 15% in local currency, and net profit was $14m versus $13m.

• FY gross profit was $328m, with a 63% margin; reported EBITDA was $94m versus $97m, and adjusted EBITDA was $98m versus $99m.

• FY EBIT was $77m versus $79m; net profit was $51m in both years.

• Cash generated by operations was $88m versus $84m; free cash flow was $42m, unchanged year over year.

Outlook and guidance

• 2017 sales growth guidance is 7%-8% in local currency, including 4%-5% organic growth; adjusted EBITDA margin guidance is 19%-20%.

• 2017 CapEx is expected at ~4% of net sales and the effective tax rate at ~26%.

• At prevailing FX rates, currency is expected to reduce 2017 EBITDA margin by ~60 bps year over year, all else equal; profitability is expected to be stronger in H2, with Q1 seasonally weakest.

• Medi Prosthetics synergies are expected to be fully realized in H2 2017 and Touch Bionics synergies in 2018.