Embla Medical (EMBLA) Q4 2019 earnings summary

Executive summary

• FY 2019 sales reached $686m, up 12% reported, 16% in local currency and 5% organically; EBITDA before special items was $150m, up 30% reported.

• Q4 sales were $180m, up 1% organically; EBITDA before special items rose 13% to $37m, with growth affected by one fewer selling day and softer Americas sales.

Financial highlights

• FY gross margin was 64%, up from 63% in 2018; stronger sales, favorable product mix and efficiency savings supported the increase.

• FY net profit was $68.9m versus $79.8m; Q4 net profit was $17.6m versus $33.9m, with prior-year comparisons benefiting from a $21m revaluation gain.

• FY free cash flow before special items, acquisitions and changes in financial assets was $72m versus $46m in 2018.

• Q4 gross margin was 63%; EBITDA margin was 21% reported and 18% excluding IFRS 16.

Outlook and guidance

• FY 2020 organic sales growth guidance is 3%–5%; long-term growth is expected at the upper end or slightly above market estimates.

• FY 2020 EBITDA margin before special items is expected at 21%–23%; acquisitions are expected to slightly reduce margins.

• CapEx guidance is 4%–5% of sales, above the normalized 3%–4% range, reflecting supply-chain changes, maintenance and CRM implementation.

• FY 2020 effective tax rate is expected at 23%–24%; seasonality is expected to increase slightly, with Q1 historically the weakest quarter.