Mylan Reports Third Quarter 2018 Results and Reaffirms 2018 Guidance
Third Quarter 2018 Financial Highlights
- U.S. GAAP diluted earnings per ordinary share ("U.S. GAAP EPS") of
$0.34 , up 113% over the prior year period. - Total revenues of
$2.86 billion , down 4% compared to the prior year period and adjusted diluted earnings per ordinary share ("adjusted EPS") of$1.25 , up 14% over the prior year period. - Revenue Highlights:
- Rest of World segment net sales of
$773.7 million , up 4%, up 11% on a constant currency basis. Europe segment net sales of$1.04 billion , flat, up 2% on a constant currency basis.North America segment net sales of$1.01 billion , down 14%, down 13% on a constant currency basis, primarily due to the combined impact of the implementation of new accounting standards, lower volumes including EpiPen® Auto-Injector sales, the divestiture of certain contract manufacturing assets, the loss of exclusivity of a product and actions associated with the restructuring and remediation program at theMorgantown manufacturing facility.
- Rest of World segment net sales of
- U.S. GAAP net cash provided by operating activities for the nine months ended
September 30, 2018 of$1.71 billion , up 9% compared to$1.57 billion in the prior year period. - Adjusted free cash flow for the nine months ended
September 30, 2018 of$2.02 billion , up 6% compared to$1.91 billion in the prior year period. - Mylan is not providing forward looking guidance for U.S. GAAP reported financial measures or a quantitative reconciliation of forward-looking non-GAAP financial measures. Please see "Non-GAAP Financial Measures" for additional information.
Mylan CEO
We remain committed to our full-year 2018 guidance, and this confirmation is not dependent on any single product approval or launch. As we look ahead, we're very optimistic about our long-term growth prospects as we have secured almost all regulatory approvals necessary for our key 2019 product drivers around the world."
Mylan President
Mylan CFO
Financial Summary
Three Months Ended |
Nine Months Ended |
||||||||||||||||||
September 30, |
September 30, |
||||||||||||||||||
(Unaudited; in millions, except per share amounts and %s) |
2018 |
2017 |
Percent |
2018 |
2017 |
Percent |
|||||||||||||
Total Revenues (1) |
$ |
2,862.4 |
$ |
2,987.1 |
(4)% |
$ |
8,355.2 |
$ |
8,668.8 |
(4)% |
|||||||||
North America Net Sales |
1,012.3 |
1,172.2 |
(14)% |
2,998.4 |
3,666.7 |
(18)% |
|||||||||||||
Europe Net Sales |
1,041.3 |
1,040.8 |
—% |
3,070.3 |
2,887.1 |
6% |
|||||||||||||
Rest of World Net Sales |
773.7 |
743.3 |
4% |
2,164.5 |
2,016.4 |
7% |
|||||||||||||
Other Revenues |
35.1 |
30.8 |
14% |
122.0 |
98.6 |
24% |
|||||||||||||
US GAAP Gross Profit |
$ |
1,039.2 |
$ |
1,178.1 |
(12)% |
$ |
2,986.0 |
$ |
3,488.5 |
(14)% |
|||||||||
US GAAP Gross Margin |
36.3 |
% |
39.4 |
% |
35.7 |
% |
40.2 |
% |
|||||||||||
Adjusted Gross Profit (2) |
$ |
1,584.7 |
$ |
1,572.6 |
1% |
$ |
4,500.2 |
$ |
4,621.8 |
(3)% |
|||||||||
Adjusted Gross Margin (2) |
55.4 |
% |
52.6 |
% |
53.9 |
% |
53.3 |
% |
|||||||||||
US GAAP Net Earnings |
$ |
176.7 |
$ |
88.3 |
100% |
$ |
301.3 |
$ |
451.7 |
(33)% |
|||||||||
US GAAP EPS |
$ |
0.34 |
$ |
0.16 |
113% |
$ |
0.58 |
$ |
0.84 |
(31)% |
|||||||||
Adjusted Net Earnings (2) |
$ |
648.0 |
$ |
589.7 |
10% |
$ |
1,695.1 |
$ |
1,679.5 |
1% |
|||||||||
Adjusted EPS (2) |
$ |
1.25 |
$ |
1.10 |
14% |
$ |
3.28 |
$ |
3.13 |
5% |
|||||||||
EBITDA (2) |
$ |
841.6 |
$ |
776.9 |
8% |
$ |
2,188.1 |
$ |
2,339.2 |
(6)% |
|||||||||
Adjusted EBITDA (2) |
$ |
935.9 |
$ |
923.8 |
1% |
$ |
2,616.4 |
$ |
2,667.2 |
(2)% |
___________ |
|
(1) |
Amounts exclude intersegment revenue that eliminates on a consolidated basis. |
(2) |
Non-GAAP financial measures. Please see "Non-GAAP Financial Measures" for additional information. |
Once the remediation and restructuring activities in
The Company has incurred expenses amounting to approximately
On
Third Quarter 2018 Financial Results
Total revenues were
The decrease in total revenues included lower net sales in the
- Net sales in the
North America segment totaled$1.01 billion in the current quarter, a decrease of$159.9 million or 14% when compared to the prior year period. This decrease was due primarily to lower volumes on existing products, including the EpiPen® Auto-Injector, partially offset by new product sales including the recent launch of Fulphila™, a biosimilar to Neulasta® (pegfilgrastim). The decline in volumes was primarily driven by the timing of purchases of our products by customers, the divestiture of certain contract manufacturing assets, the loss of exclusivity of a product, and actions associated with the restructuring and remediation program at theMorgantown manufacturing facility. In addition, net sales were negatively impacted by approximately$50.4 million related to the implementation of new accounting standards. Pricing slightly decreased when compared to the prior year period. The impact of foreign currency translation on current period net sales was insignificant withinNorth America . - Net sales in the
Europe segment totaled$1.04 billion in the current quarter, an increase of$0.5 million , when compared to the prior year period. This increase was primarily the result of new product sales and higher volumes on existing products. These were partially offset by lower pricing and the unfavorable impact of foreign currency translation which was approximately$17.2 million , or 2%. Constant currency net sales increased by approximately$17.7 million , or 2% when compared to the prior year period. - Net sales in the Rest of World segment totaled
$773.7 million in the current quarter, an increase of$30.4 million , or 4% when compared to the prior year period. This increase was primarily the result of new product sales, partially offset by the unfavorable impact of foreign currency translation and lower pricing. The increase in net sales as a result of new products was primarily due to new product sales from the Company's anti-retroviral therapy franchise combined with new product sales inAustralia andChina . Also, volumes were essentially flat as an increase in sales of key brands inChina was offset by decreases in other markets. Overall, net sales from Rest of World were unfavorably impacted by the effect of foreign currency translation by approximately$55.0 million , or 7% during the three months ended September 30, 2018. Constant currency net sales increased by approximately$85.4 million , or 11%.
U.S. GAAP gross profit was
R&D expense for the three months ended September 30, 2018 was
SG&A expense for the three months ended September 30, 2018 was
During the third quarter of 2018, the Company recorded a net gain of
U.S. GAAP net earnings increased by
EBITDA was
Nine Months Ended
Total Revenues for the nine months ended September 30, 2018 were
The decrease in total revenues included lower net sales in the
- Net sales from
North America segment totaled$3.00 billion during the nine months endedSeptember 30, 2018 , a decrease of$668.3 million or 18% when compared to the prior year period. This decrease was due primarily to lower volumes on existing products, including the EpiPen® Auto-Injector, partially offset by new product sales. The decline in volumes was primarily driven by the timing of purchases of our products by customers, the divestiture of certain contract manufacturing assets, the loss of exclusivity of certain products, and actions associated with the restructuring and remediation program at theMorgantown manufacturing facility. In addition, net sales were negatively impacted by$99.1 million related to the implementation of new accounting standards. Pricing also declined when compared to the prior year. The impact of foreign currency translation on current period net sales was insignificant withinNorth America . - Net sales from
Europe segment totaled$3.07 billion during the nine months endedSeptember 30, 2018 , an increase of$183.2 million or 6% when compared to the prior year period. This increase was primarily the result of the favorable impact of foreign currency translation, new product sales, and to a lesser extent, higher volumes of existing products. The favorable impact of foreign currency translation was approximately$184.0 million or 6%. Partially offsetting these items was lower pricing on existing products. Constant currency net sales were essentially flat compared to the prior year period. - Net sales from Rest of World segment totaled
$2.16 billion during the nine months endedSeptember 30, 2018 , an increase of$148.1 million or 7% when compared to the prior year period. This increase was primarily the result of new product sales, and to a lesser extent, higher volumes of existing products including higher sales of key brands inChina . The increase in net sales as a result of new products was primarily due to new product sales from the Company's anti-retroviral therapy franchise combined with new product sales inAustralia ,Japan andChina . This increase was partially offset by lower pricing on existing products and the unfavorable impact of foreign currency translation. Overall, net sales from Rest of World were unfavorably impacted by the effect of foreign currency translation of approximately$33.4 million , or 2%. Constant currency net sales increased by approximately$181.5 million or 9% when compared to the prior year period.
U.S. GAAP gross profit was
R&D expense for the nine months ended September 30, 2018 was
SG&A expense for the nine months ended September 30, 2018 was
During the nine months ended September 30, 2018, the Company recorded a net gain of
U.S. GAAP net earnings decreased by
EBITDA was
Cash Flow
U.S. GAAP net cash provided by operating activities was
Conference Call and Earnings Materials
Non-GAAP Financial Measures
This press release includes the presentation and discussion of certain financial information that differs from what is reported under accounting principles generally accepted in
For additional information regarding the components and uses of Non-GAAP financial measures refer to Management's Discussion and Analysis of Financial Condition and Results of Operations-- Use of Non-GAAP Financial Measures section of Mylan's Quarterly Report on Form 10-Q for the three months ended September 30, 2018 (the "Form 10-Q").
Mylan is not providing forward looking guidance for U.S. GAAP reported financial measures or a quantitative reconciliation of forward-looking non-GAAP financial measures to the most directly comparable U.S. GAAP measure because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items without unreasonable effort. These items include, but are not limited to, acquisition-related expenses including those related to the acquisition of
Reconciliation of Adjusted Net Earnings and Adjusted EPS
Below is a reconciliation of U.S. GAAP net earnings and U.S. GAAP EPS to adjusted net earnings and adjusted EPS for the three and nine months ended September 30, 2018 compared to the prior year period:
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||||||||||
(in millions, except per share amounts) |
2018 |
2017 |
2018 |
2017 |
|||||||||||||||||||||||||||
U.S. GAAP net earnings and U.S. GAAP EPS |
$ |
176.7 |
$ |
0.34 |
$ |
88.3 |
$ |
0.16 |
$ |
301.3 |
$ |
0.58 |
$ |
451.7 |
$ |
0.84 |
|||||||||||||||
Purchase accounting related amortization (primarily included in cost of sales) (a) |
428.7 |
370.7 |
1,282.4 |
1,074.9 |
|||||||||||||||||||||||||||
Litigation settlements and other contingencies, net |
(20.4) |
15.2 |
(50.6) |
(25.8) |
|||||||||||||||||||||||||||
Interest expense (primarily clean energy investment financing and accretion of contingent consideration) |
12.1 |
10.3 |
31.0 |
37.2 |
|||||||||||||||||||||||||||
Clean energy investments pre-tax loss |
12.6 |
22.4 |
58.6 |
66.4 |
|||||||||||||||||||||||||||
Acquisition related costs (primarily included in SG&A and cost of sales) (b) |
4.9 |
15.2 |
17.4 |
60.2 |
|||||||||||||||||||||||||||
Restructuring related costs (c) |
80.8 |
73.4 |
202.3 |
112.8 |
|||||||||||||||||||||||||||
Other special items included in: |
|||||||||||||||||||||||||||||||
Cost of sales (d) |
65.4 |
12.3 |
139.4 |
39.2 |
|||||||||||||||||||||||||||
Research and development expense (e) |
3.2 |
15.1 |
100.3 |
89.9 |
|||||||||||||||||||||||||||
Selling, general and administrative expense (f) |
(0.7) |
4.0 |
33.2 |
12.7 |
|||||||||||||||||||||||||||
Other expense, net (g) |
1.3 |
(3.1) |
25.5 |
4.8 |
|||||||||||||||||||||||||||
Tax effect of the above items and other income tax related items |
(116.6) |
(34.1) |
(445.7) |
(244.5) |
|||||||||||||||||||||||||||
Adjusted net earnings and adjusted EPS |
$ |
648.0 |
$ |
1.25 |
$ |
589.7 |
$ |
1.10 |
$ |
1,695.1 |
$ |
3.28 |
$ |
1,679.5 |
$ |
3.13 |
|||||||||||||||
Weighted average diluted ordinary shares outstanding |
516.5 |
537.0 |
516.5 |
537.0 |
____________ |
|
Significant items for the three and nine months ended September 30, 2018 include the following: |
|
(a) |
The increase in purchase accounting related amortization is primarily due to the increase in amortization expense as a result of the full impact of certain product rights acquisitions which occurred in 2017, the current year impact of the 2018 product rights acquisitions and IPR&D impairment charges of $15.5 million and $87.5 million during the three and nine months ended September 30, 2018, respectively. |
(b) |
Acquisition related costs incurred in 2017 and through the nine months ended September 30, 2018 consist primarily of integration activities. |
(c) |
For the three months ended September 30, 2018, approximately $51.8 million is included in cost of sales, $0.3 million is included in R&D, and $28.7 million is included in SG&A. For the nine months ended September 30, 2018, approximately $97.2 million is included in cost of sales, $17.0 million is included in R&D, and $88.4 million is included in SG&A. Refer to Note 17 Restructuring included in Part I, Item 1 of the Form 10-Q for additional information. |
(d) |
The three and nine months ended September 30, 2018 increases relate primarily to expenses of $48.9 million and $104.9 million, respectively, for certain incremental manufacturing variances and site remediation activities as a result of the activities at the Company's Morgantown facility. |
(e) |
R&D expense for the three months ended September 30, 2018 includes expenses related to on-going collaboration agreements, including Momenta. For the nine months ended September 30, 2018, R&D expense includes $73.5 million related to four non-refundable upfront payments for development agreements entered into during the current period. The remaining expense relates to the on-going collaboration agreements, including Momenta. R&D expense for the three months ended September 30, 2017 includes $8.0 million related to Momenta collaboration expense. For the nine months ended September 30, 2017, R&D expense includes an upfront expense of approximately $50.0 million related to a joint development and marketing agreement for a respiratory product, $22.5 million related to Momenta collaboration expense, and other similar smaller agreements. |
(f) |
The decrease for the three months ended September 30, 2018 is primarily related to a gain from the sale of assets. The increase for the nine months ended September 30, 2018 is primarily related to bad debt expense of approximately $26.5 million related to a special business interruption event for one customer. |
(g) |
The increase for the nine months ended September 30, 2018 is primarily related to mark-to-market losses of investments in equity securities historically accounted for as available-for-sale securities and the cumulative realized gains on such investments. |
Below is a reconciliation of U.S. GAAP net earnings to EBITDA and adjusted EBITDA for the three and nine months ended September 30, 2018 compared to the prior year period (in millions):
Three Months Ended |
Nine Months Ended |
||||||||||||||
September 30, |
September 30, |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
U.S. GAAP net earnings |
$ |
176.7 |
$ |
88.3 |
$ |
301.3 |
$ |
451.7 |
|||||||
Add / (subtract) adjustments: |
|||||||||||||||
Net contribution attributable to equity method investments |
12.6 |
22.4 |
58.6 |
77.2 |
|||||||||||
Income tax provision (benefit) |
15.5 |
91.3 |
(79.9) |
124.2 |
|||||||||||
Interest expense |
136.2 |
131.8 |
407.1 |
406.3 |
|||||||||||
Depreciation and amortization |
500.6 |
443.1 |
1,501.0 |
1,279.8 |
|||||||||||
EBITDA |
$ |
841.6 |
$ |
776.9 |
$ |
2,188.1 |
$ |
2,339.2 |
|||||||
Add / (subtract) adjustments: |
|||||||||||||||
Share-based compensation (income) expense |
(29.2) |
22.2 |
(8.6) |
64.2 |
|||||||||||
Litigation settlements and other contingencies, net |
(20.4) |
15.2 |
(50.6) |
(25.8) |
|||||||||||
Restructuring & other special items |
143.9 |
109.5 |
487.5 |
289.6 |
|||||||||||
Adjusted EBITDA |
$ |
935.9 |
$ |
923.8 |
$ |
2,616.4 |
$ |
2,667.2 |
About Mylan
Mylan is a global pharmaceutical company committed to setting new standards in healthcare. Working together around the world to provide 7 billion people access to high quality medicine, we innovate to satisfy unmet needs; make reliability and service excellence a habit; do what's right, not what's easy; and impact the future through passionate global leadership. We offer a growing portfolio of more than 7,500 marketed products around the world, including antiretroviral therapies on which more than 40% of people being treated for HIV/AIDS globally depend. We market our products in more than 165 countries and territories. We are one of the world's largest producers of active pharmaceutical ingredients. Every member of our approximately 35,000-strong workforce is dedicated to creating better health for a better world, one person at a time. Learn more at Mylan.com. We routinely post information that may be important to investors on our website at investor.mylan.com.
Forward-Looking Statements
This release contains "forward-looking statements." These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include, without limitation, reaffirming our 2018 guidance; that our confidence in the company's bright future extends well beyond any single factor or particular quarter, including the current, short-term macro market turbulence our industry is experiencing; that we remain committed to our full-year 2018 guidance ranges, and this confirmation is not dependent on any single product approval or launch; as we look ahead, we're very optimistic about our long-term growth prospects as we have secured almost all regulatory approvals necessary for our key 2019 product drivers around the world; our recent successes demonstrate the strength of our scientific program and our ability to manage and execute on new products, including complex generics and biologics; these milestones are the culmination of years-long scientific investments and reinforce our dedication to enhance access to patients; the Mylan teams managing the science and working closely with our partners have consistently delivered remarkable results, and we look forward to continuing this momentum as we close out 2018; we remain confident in our full year adjusted free cash flow outlook; as anticipated, our capital deployment priority is focused on deleveraging in the second half of 2018, and we expect this to continue into 2019; we intend to repay at least
Mylan N.V. and Subsidiaries |
|||||||||||||||
Condensed Consolidated Statements of Operations |
|||||||||||||||
(Unaudited; in millions, except per share amounts) |
|||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
September 30, |
September 30, |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
Revenues: |
|||||||||||||||
Net sales |
$ |
2,827.3 |
$ |
2,956.3 |
$ |
8,233.2 |
$ |
8,570.2 |
|||||||
Other revenues |
35.1 |
30.8 |
122.0 |
98.6 |
|||||||||||
Total revenues |
2,862.4 |
2,987.1 |
8,355.2 |
8,668.8 |
|||||||||||
Cost of sales |
1,823.2 |
1,809.0 |
5,369.2 |
5,180.3 |
|||||||||||
Gross profit |
1,039.2 |
1,178.1 |
2,986.0 |
3,488.5 |
|||||||||||
Operating expenses: |
|||||||||||||||
Research and development |
144.1 |
182.3 |
555.7 |
580.9 |
|||||||||||
Selling, general and administrative |
577.3 |
664.1 |
1,808.1 |
1,915.4 |
|||||||||||
Litigation settlements and other contingencies, net |
(20.4) |
15.2 |
(50.6) |
(25.8) |
|||||||||||
Total operating expenses |
701.0 |
861.6 |
2,313.2 |
2,470.5 |
|||||||||||
Earnings from operations |
338.2 |
316.5 |
672.8 |
1,018.0 |
|||||||||||
Interest expense |
136.2 |
131.8 |
407.1 |
406.3 |
|||||||||||
Other expense, net |
9.8 |
5.1 |
44.3 |
35.8 |
|||||||||||
Earnings before income taxes |
192.2 |
179.6 |
221.4 |
575.9 |
|||||||||||
Income tax provision (benefit) |
15.5 |
91.3 |
(79.9) |
124.2 |
|||||||||||
Net earnings |
176.7 |
88.3 |
301.3 |
451.7 |
|||||||||||
Earnings per ordinary share: |
|||||||||||||||
Basic |
$ |
0.34 |
$ |
0.17 |
$ |
0.59 |
$ |
0.84 |
|||||||
Diluted |
$ |
0.34 |
$ |
0.16 |
$ |
0.58 |
$ |
0.84 |
|||||||
Weighted average ordinary shares outstanding: |
|||||||||||||||
Basic |
514.5 |
535.2 |
514.4 |
534.9 |
|||||||||||
Diluted |
516.5 |
537.0 |
516.5 |
537.0 |
Mylan N.V. and Subsidiaries |
|||||||
Condensed Consolidated Balance Sheets |
|||||||
(Unaudited; in millions) |
|||||||
September 30, |
December 31, |
||||||
ASSETS |
|||||||
Assets |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
449.2 |
$ |
292.1 |
|||
Accounts receivable, net |
2,948.7 |
3,612.4 |
|||||
Inventories |
2,560.6 |
2,542.7 |
|||||
Prepaid expenses and other current assets |
583.2 |
766.1 |
|||||
Total current assets |
6,541.7 |
7,213.3 |
|||||
Intangible assets, net |
14,239.0 |
15,245.8 |
|||||
Goodwill |
9,796.6 |
10,205.7 |
|||||
Other non-current assets |
2,878.3 |
3,141.5 |
|||||
Total assets |
$ |
33,455.6 |
$ |
35,806.3 |
|||
LIABILITIES AND EQUITY |
|||||||
Liabilities |
|||||||
Current portion of long-term debt and other long-term obligations |
$ |
1,176.4 |
$ |
1,808.9 |
|||
Current liabilities |
4,005.6 |
4,576.4 |
|||||
Long-term debt |
13,291.4 |
12,865.3 |
|||||
Other non-current liabilities |
2,916.0 |
3,248.1 |
|||||
Total liabilities |
21,389.4 |
22,498.7 |
|||||
Mylan N.V. shareholders' equity |
12,066.2 |
13,307.6 |
|||||
Total liabilities and equity |
$ |
33,455.6 |
$ |
35,806.3 |
Mylan N.V. and Subsidiaries |
|||||||||||||||||||||
Reconciliation of Non-GAAP Financial Measures |
|||||||||||||||||||||
(Unaudited; in millions) |
|||||||||||||||||||||
Summary of Total Revenues by Segment |
|||||||||||||||||||||
Three Months Ended |
|||||||||||||||||||||
September 30, |
|||||||||||||||||||||
(In millions) |
2018 |
2017 |
% Change |
2018 |
2018 |
Constant |
|||||||||||||||
Net sales |
|||||||||||||||||||||
North America |
$ |
1,012.3 |
$ |
1,172.2 |
(14) |
% |
$ |
2.5 |
$ |
1,014.8 |
(13) |
% |
|||||||||
Europe |
1,041.3 |
1,040.8 |
— |
% |
17.2 |
1,058.5 |
2 |
% |
|||||||||||||
Rest of World |
773.7 |
743.3 |
4 |
% |
55.0 |
828.7 |
11 |
% |
|||||||||||||
Total net sales |
2,827.3 |
2,956.3 |
(4) |
% |
74.7 |
2,902.0 |
(2) |
% |
|||||||||||||
Other revenues (3) |
35.1 |
30.8 |
14 |
% |
0.3 |
35.4 |
15 |
% |
|||||||||||||
Consolidated total revenues (4) |
$ |
2,862.4 |
$ |
2,987.1 |
(4) |
% |
$ |
75.0 |
$ |
2,937.4 |
(2) |
% |
|||||||||
Nine Months Ended |
|||||||||||||||||||||
September 30, |
|||||||||||||||||||||
(In millions) |
2018 |
2017 |
% Change |
2018 |
2018 |
Constant |
|||||||||||||||
Net sales |
|||||||||||||||||||||
North America |
$ |
2,998.4 |
$ |
3,666.7 |
(18) |
% |
$ |
(3.2) |
$ |
2,995.2 |
(18) |
% |
|||||||||
Europe |
3,070.3 |
2,887.1 |
6 |
% |
(184.0) |
2,886.3 |
— |
% |
|||||||||||||
Rest of World |
2,164.5 |
2,016.4 |
7 |
% |
33.4 |
2,197.9 |
9 |
% |
|||||||||||||
Total net sales |
8,233.2 |
8,570.2 |
(4) |
% |
(153.8) |
8,079.4 |
(6) |
% |
|||||||||||||
Other revenues (3) |
122.0 |
98.6 |
24 |
% |
(2.6) |
119.4 |
21 |
% |
|||||||||||||
Consolidated total revenues (4) |
$ |
8,355.2 |
$ |
8,668.8 |
(4) |
% |
$ |
(156.4) |
$ |
8,198.8 |
(5) |
% |
____________ |
|
(1) |
Currency impact is shown as unfavorable (favorable). |
(2) |
The constant currency percentage change is derived by translating net sales or revenues for the current period at prior year comparative period exchange rates, and in doing so shows the percentage change from 2018 constant currency net sales or revenues to the corresponding amount in the prior year. |
(3) |
For the three months ended September 30, 2018, other revenues in North America, Europe, and Rest of World were approximately $20.9 million, $7.4 million, and $6.8 million, respectively. For the nine months ended September 30, 2018, other revenues in North America, Europe, and Rest of World were approximately $84.5 million, $19.8 million, and $17.7 million, respectively. |
(4) |
Amounts exclude intersegment revenue that eliminates on a consolidated basis. |
Reconciliation of Income Statement Line Items |
|||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
September 30, |
September 30, |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
U.S. GAAP cost of sales |
$ |
1,823.2 |
$ |
1,809.0 |
$ |
5,369.2 |
$ |
5,180.3 |
|||||||
Deduct: |
|||||||||||||||
Purchase accounting amortization and other related items |
(426.9) |
(361.4) |
(1,275.2) |
(1,054.9) |
|||||||||||
Acquisition related items |
(1.4) |
0.2 |
(2.4) |
(1.9) |
|||||||||||
Restructuring and related costs |
(51.8) |
(21.0) |
(97.2) |
(37.3) |
|||||||||||
Other special items |
(65.4) |
(12.3) |
(139.4) |
(39.2) |
|||||||||||
Adjusted cost of sales |
$ |
1,277.7 |
$ |
1,414.5 |
$ |
3,855.0 |
$ |
4,047.0 |
|||||||
Adjusted gross profit (a) |
$ |
1,584.7 |
$ |
1,572.6 |
$ |
4,500.2 |
$ |
4,621.8 |
|||||||
Adjusted gross margin (a) |
55 |
% |
53 |
% |
54 |
% |
53 |
% |
|||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
September 30, |
September 30, |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
U.S. GAAP R&D |
$ |
144.1 |
$ |
182.3 |
$ |
555.7 |
$ |
580.9 |
|||||||
Deduct: |
|||||||||||||||
Acquisition related costs |
(0.2) |
(0.8) |
(0.7) |
(1.5) |
|||||||||||
Restructuring and related costs |
(0.3) |
(1.1) |
(17.0) |
(2.5) |
|||||||||||
Purchase accounting amortization and other related items |
(0.1) |
(0.2) |
(0.2) |
(0.2) |
|||||||||||
Other special items |
(3.2) |
(15.1) |
(100.3) |
(89.9) |
|||||||||||
Adjusted R&D |
$ |
140.3 |
$ |
165.1 |
$ |
437.5 |
$ |
486.8 |
|||||||
Adjusted R&D as % of total revenues |
5 |
% |
6 |
% |
5 |
% |
6 |
% |
|||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
September 30, |
September 30, |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
U.S. GAAP SG&A |
$ |
577.3 |
$ |
664.1 |
$ |
1,808.1 |
$ |
1,915.4 |
|||||||
Add / (deduct): |
|||||||||||||||
Acquisition related costs |
(3.2) |
(14.5) |
(14.3) |
(56.1) |
|||||||||||
Restructuring and related costs |
(28.7) |
(51.4) |
(88.4) |
(73.0) |
|||||||||||
Purchase accounting amortization and other related items |
(1.7) |
(9.1) |
(7.0) |
(14.1) |
|||||||||||
Other special items |
0.7 |
(4.0) |
(33.2) |
(12.7) |
|||||||||||
Adjusted SG&A |
$ |
544.4 |
$ |
585.1 |
$ |
1,665.2 |
$ |
1,759.5 |
|||||||
Adjusted SG&A as % of total revenues |
19 |
% |
20 |
% |
20 |
% |
20 |
% |
|||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
September 30, |
September 30, |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
U.S. GAAP total operating expenses |
$ |
701.0 |
$ |
861.6 |
$ |
2,313.2 |
$ |
2,470.5 |
|||||||
Add / (deduct): |
|||||||||||||||
Litigation settlements and other contingencies, net |
20.4 |
(15.2) |
50.6 |
25.8 |
|||||||||||
R&D adjustments |
(3.8) |
(17.2) |
(118.2) |
(94.1) |
|||||||||||
SG&A adjustments |
(32.9) |
(79.0) |
(142.9) |
(155.9) |
|||||||||||
Adjusted total operating expenses |
$ |
684.7 |
$ |
750.2 |
$ |
2,102.7 |
$ |
2,246.3 |
|||||||
Adjusted earnings from operations (b) |
$ |
900.0 |
$ |
822.4 |
$ |
2,397.5 |
$ |
2,375.5 |
|||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
September 30, |
September 30, |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
U.S. GAAP interest expense |
$ |
136.2 |
$ |
131.8 |
$ |
407.1 |
$ |
406.3 |
|||||||
Deduct: |
|||||||||||||||
Interest expense related to clean energy investments |
(2.1) |
(3.0) |
(6.5) |
(9.4) |
|||||||||||
Accretion of contingent consideration liability |
(5.3) |
(5.5) |
(16.3) |
(22.2) |
|||||||||||
Acquisition related costs |
— |
— |
— |
(0.2) |
|||||||||||
Other special items |
(4.7) |
(1.8) |
(8.2) |
(5.4) |
|||||||||||
Adjusted interest expense |
$ |
124.1 |
$ |
121.5 |
$ |
376.1 |
$ |
369.1 |
|||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
September 30, |
September 30, |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
U.S. GAAP other expense, net |
$ |
9.8 |
$ |
5.1 |
$ |
44.3 |
$ |
35.8 |
|||||||
Add / (deduct): |
|||||||||||||||
Clean energy investments pre-tax loss (c) |
(12.6) |
(22.4) |
(58.6) |
(66.4) |
|||||||||||
Net loss on Sagent Agila joint venture termination |
— |
— |
— |
(5.7) |
|||||||||||
Acquisition related costs |
— |
— |
— |
(0.8) |
|||||||||||
Restructuring and related costs |
— |
— |
0.3 |
— |
|||||||||||
Other items (d) |
(1.3) |
3.1 |
(25.5) |
(4.8) |
|||||||||||
Adjusted other income |
$ |
(4.1) |
$ |
(14.2) |
$ |
(39.5) |
$ |
(41.9) |
|||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
September 30, |
September 30, |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
U.S. GAAP earnings before income taxes |
$ |
192.2 |
$ |
179.6 |
$ |
221.4 |
$ |
575.9 |
|||||||
Total pre-tax non-GAAP adjustments |
587.8 |
535.5 |
1,839.5 |
1,472.3 |
|||||||||||
Adjusted earnings before income taxes |
$ |
780.0 |
$ |
715.1 |
$ |
2,060.9 |
$ |
2,048.2 |
|||||||
U.S. GAAP income tax (benefit) provision |
$ |
15.5 |
$ |
91.3 |
$ |
(79.9) |
$ |
124.2 |
|||||||
Adjusted tax expense |
116.5 |
34.1 |
445.7 |
244.5 |
|||||||||||
Adjusted income tax provision |
$ |
132.0 |
$ |
125.4 |
$ |
365.8 |
$ |
368.7 |
|||||||
Adjusted effective tax rate |
16.9 |
% |
17.5 |
% |
17.7 |
% |
18.0 |
% |
|||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
September 30, |
September 30, |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
U.S. GAAP net cash provided by operating activities |
$ |
653.6 |
$ |
548.6 |
$ |
1,705.6 |
$ |
1,569.3 |
|||||||
Add: |
|||||||||||||||
Restructuring and related costs (e) |
75.8 |
14.9 |
203.2 |
104.4 |
|||||||||||
Financing related expense |
— |
— |
2.6 |
— |
|||||||||||
Corporate contingencies |
5.5 |
275.2 |
115.7 |
307.7 |
|||||||||||
Acquisition related costs |
— |
2.0 |
3.7 |
54.3 |
|||||||||||
R&D expense |
25.0 |
22.4 |
125.0 |
27.4 |
|||||||||||
Other |
— |
— |
5.0 |
— |
|||||||||||
Adjusted net cash provided by operating activities |
$ |
759.9 |
$ |
863.1 |
$ |
2,160.8 |
$ |
2,063.1 |
|||||||
Deduct: |
|||||||||||||||
Capital expenditures |
(61.5) |
(47.1) |
(137.4) |
(156.4) |
|||||||||||
Adjusted free cash flow |
$ |
698.4 |
$ |
816.0 |
$ |
2,023.4 |
$ |
1,906.7 |
___________ |
|
(a) |
U.S. GAAP gross profit is calculated as total revenues less U.S. GAAP cost of sales. U.S. GAAP gross margin is calculated as U.S. GAAP gross profit divided by total revenues. Adjusted gross profit is calculated as total revenues less adjusted cost of sales. Adjusted gross margin is calculated as adjusted gross profit divided by total revenues. |
(b) |
U.S. GAAP earnings from operations is calculated as U.S. GAAP gross profit less U.S. GAAP total operating expenses. Adjusted net earnings from operations is calculated as adjusted gross profit less adjusted total operating expenses. |
(c) |
Adjustment represents exclusion of activity related to Mylan's clean energy investments, the activities of which qualify for income tax credits under section 45 of the U.S. Internal Revenue Code of 1986, as amended. |
(d) |
Primarily related to mark-to-market losses of investments in equity securities historically accounted for as available-for-sale securities and the cumulative realized gains on such investments. |
(e) |
For the three and nine months ended September 30, 2018 includes approximately $48.9 million and $104.9 million, respectively, of certain incremental manufacturing variances and site remediation expenses as a result of the activities at the Company's Morgantown facility. |
Reconciliation of EBITDA and Adjusted EBITDA
Below is a reconciliation of U.S. GAAP net earnings to EBITDA and adjusted EBITDA for the respective quarterly periods (in millions):
Three Months Ended |
|||||||||||||||
(in millions, except ratio) |
December 31, |
March 31, |
June 30, |
September 30, |
|||||||||||
U.S. GAAP net earnings |
$ |
244.3 |
$ |
87.1 |
$ |
37.5 |
$ |
176.7 |
|||||||
Add / (subtract) adjustments: |
|||||||||||||||
Net contribution attributable to equity method investments |
(19.2) |
23.1 |
22.9 |
12.6 |
|||||||||||
Income tax provision (benefit) |
82.8 |
(76.6) |
(18.8) |
15.5 |
|||||||||||
Interest expense |
128.3 |
131.7 |
139.2 |
136.2 |
|||||||||||
Depreciation and amortization |
526.0 |
498.5 |
501.9 |
500.6 |
|||||||||||
EBITDA |
$ |
962.2 |
$ |
663.8 |
$ |
682.7 |
$ |
841.6 |
|||||||
Add / (subtract) adjustments: |
|||||||||||||||
Share-based compensation expense (income) |
10.5 |
21.4 |
(0.8) |
(29.2) |
|||||||||||
Litigation settlements and other contingencies, net |
12.7 |
16.2 |
(46.4) |
(20.4) |
|||||||||||
Restructuring & other special items |
138.2 |
112.5 |
231.1 |
143.9 |
|||||||||||
Adjusted EBITDA |
$ |
1,123.6 |
$ |
813.9 |
$ |
866.6 |
$ |
935.9 |
September 30, 2018 Notional Debt to Twelve Months Ended September 30, 2018
The stated non-GAAP financial measure September 30, 2018 notional debt to twelve months ended September 30, 2018 Credit Agreement Adjusted EBITDA leverage ratio is based on the sum of (i) Mylan's adjusted EBITDA for the quarters ended December 31, 2017, March 31, 2018, June 30, 2018 and September 30, 2018 and (ii) certain adjustments permitted to be included in Credit Agreement Adjusted EBITDA as of September 30, 2018 pursuant to the Company's revolving credit facility dated as of
Three Months Ended |
Twelve Months Ended |
||||||||||||||||||
December 31, |
March 31, |
June 30, |
September 30, |
September 30, |
|||||||||||||||
Mylan N.V. Adjusted EBITDA |
$ |
1,123.6 |
$ |
813.9 |
$ |
866.6 |
$ |
935.9 |
$ |
3,740.0 |
|||||||||
Add: other adjustments including estimated synergies |
118.7 |
||||||||||||||||||
Credit Agreement Adjusted EBITDA |
$ |
3,858.7 |
|||||||||||||||||
Reported debt balances: |
|||||||||||||||||||
Long-term debt, including current portion |
$ |
14,427.0 |
|||||||||||||||||
Short-term borrowings and other current obligations |
283.4 |
||||||||||||||||||
Total |
$ |
14,710.4 |
|||||||||||||||||
Add: |
|||||||||||||||||||
Net discount on various debt issuances |
38.0 |
||||||||||||||||||
Deferred financing fees |
77.9 |
||||||||||||||||||
Fair value of hedged debt |
11.8 |
||||||||||||||||||
Total debt at notional amounts |
$ |
14,838.1 |
|||||||||||||||||
Notional debt to Credit Agreement Adjusted EBITDA Leverage Ratio |
3.8 |
||||||||||||||||||
Long-term average debt to Credit Agreement Adjusted EBITDA leverage ratio target of ~3.0x
The stated forward-looking non-GAAP financial measure, targeted long term average leverage of ~3.0x debt-to-Credit Agreement Adjusted EBITDA, is based on the ratio of (i) targeted long-term average debt, and (ii) targeted long-term Credit Agreement Adjusted EBITDA. However, the Company has not quantified future amounts to develop the target but has stated its goal to manage long-term average debt and adjusted earnings and EBITDA over time in order to generally maintain the target. This target does not reflect Company guidance.
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SOURCE
Christine Waller (Media) , 724.514.1968 ; Melissa Trombetta (Investors) , 724.514.1813