Embla Medical (EMBLA) Q4 2019 TU earnings summary

Executive summary

• Preliminary FY2019 sales were $686 million, up 5% organically and 16% in local currency including acquisitions; EBITDA before special items was $150 million, or 22% of sales.

• Softer-than-expected Q4 Prosthetics sales prompted lower FY2019 organic-growth and EBITDA-margin guidance; the slowdown was viewed as largely temporary.

Financial highlights

• Preliminary Q4 2019 sales were $180 million, up 1% organically and 10% in local currency; EBITDA before special items was $37 million, or 21% of sales.

• FY2019 EBITDA before special items was $150 million, or 22% of sales; preliminary results were unaudited.

• Lower-than-expected Q4 sales drove most of the EBITDA shortfall; slightly higher costs and lower Prosthetics sales also weighed on profitability.

Outlook and guidance

• FY2019 guidance was revised to ~5% organic growth from ~6%, and ~22% EBITDA margin before special items from ~23%; other guidance parameters were unchanged.

• For 2020, organic growth was expected to be in line with or slightly above estimated market growth of 3%–5%.

• Underlying profitability was expected to improve gradually in 2020 through product-mix scalability and efficiency savings; reported margin outcome depended partly on M&A.