Non-GAAP Financial Measures
This presentation includes the presentation and discussion of certain financial information that differs from what is reported under U.S. GAAP. These non-GAAP financial measures, including, but not limited to, adjusted gross margins, adjusted R&D as % of total revenues, adjusted SG&A as % of total revenues, adjusted EBITDA, adjusted net earnings, adjusted EPS, adjusted net cash provided by operating activities, adjusted free cash flow, capital expenditures, net of proceeds from sale of certain property, plant and equipment, adjusted effective tax rate and adjusted segment profitability for NorthAmerica and constant currency figures are presented in order to supplement investors' and other readers' understanding and assessment of thefinancial performance of Mylan N.V. ("Mylan" or the "Company"). In the Appendix, Mylan has provided reconciliations of such non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures. Investors and other readers are encouraged to review the related U.S. GAAP financial measures and the reconciliations of the non-GAAP measures to their most directly comparable U.S. GAAP measures set forth below, and investors and other readers should consider non-GAAP measures only as supplements to, not as substitutes for or as superior measures to, the measures of financial performance prepared in accordance with U.S. GAAP.
2019 Guidance
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, restructuring expenses, asset impairments, litigation settlements and other contingencies, including changes to contingent consideration and certain other gains or losses. These items are uncertain, depend on various factors, and could have a material impact on U.S. GAAP reported results for the guidance period.
Mylan N.V. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
(Unaudited; in millions)
Adjusted Net Earnings and Adjusted EPS
Three Months Ended December 31,
Year Ended December 31,
(in millions, except per share amounts)
2018
2017
2018
2017
U.S. GAAP net earnings and U.S. GAAP diluted earnings per share
$ 51.2
$ 0.10 $ 244.3
$ 0.46 $
352.5
$ 0.68 $
696.0
$ 1.30
Purchase accounting related amortization (primarily included in cost of sales)(a)Litigation settlements and other contingencies, net
551.5
454.8
1,833.9 1,529.7
1.1
12.7
(49.5) (13.1)
Interest expense (primarily clean energy investment financing and accretion of contingent consideration) Clean energy investments pre-tax loss
8.7
10.1
39.7 47.3
20.1
(19.2)
78.7 47.1
Acquisition related costs (primarily included in SG&A and cost of sales)(b)Restructuring related costs(c)
4.0
12.6
21.4 72.8
37.9
75.2
240.2 188.0
Other special items included in:
Cost of sales(d)
85.7
24.3
225.1 63.5
Research and development expense(e)Selling, general and administrative expense(f)Other expense, net(g)
17.9
27.8
118.2 117.7
10.5
(1.0)
43.7 11.7
(0.1)
8.9
25.4 13.8
Tax effect of the above items and other income tax related items Adjusted net earnings and adjusted EPS
(118.8)
(85.2)
(564.5)
(329.7)
$ 669.7
$ 1.30 $ 765.3
$ 1.43 $ 2,364.8
$ 4.58 $ 2,444.8
$ 4.56
Weighted average diluted ordinary shares outstanding
516.5
535.7
516.5
536.7
(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, and the current year impact of the 2018 product rights acquisitions. The year ended December 31, 2018 includes impairment charges of $224.0 million.
(b) Acquisition related costs incurred in 2017 and 2018 consist primarily of integration activities.
(c) For the year ended December 31, 2018, approximately $118.4 million is included in cost of sales, approximately $17.6 million is included in R&D and approximately $104.5 million is included in SG&A. Refer to Note 17 Restructuring included in Item 8 in the Annual Report on Form 10-K for the year ended December 31, 2018 for additional information.
(d) The three months and year ended December 31, 2018 include expenses for certain incremental manufacturing variances and site remediation activities as a result of the activities at the Company's Morgantown plant of $50.8 million and 155.8 million, respectively. The three months and year ended December 31, 2018 also include $22.6 million for costs related to the recall of Valsartan products.
(e) Adjustment primarily relates to non-refundable payments related to development collaboration agreements.
(f) The increase for the year ended December 31, 2018 is primarily related to bad debt expense of approximately $26.5 million primarily related to a special business interruption event for one customer.
(g) The increase for the year ended December 31, 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.
Mylan N.V. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
(Unaudited; in millions)
Net Earnings to Adjusted EBITDAThree Months Ended
December 31,2018
U.S. GAAP net earnings Add / (deduct) adjustments:
Net contribution attributable to equity method investments Income tax provision (benefit)
Interest expense Depreciation and amortization
EBITDA
Add / (deduct) adjustments:
Share-based compensation (income) expense Litigation settlements and other contingencies, net Restructuring & other special items
Adjusted EBITDA
$
51.2 $
20.1
25.8
135.2
608.9
$
841.2 $
5.3
1.1 158.9
$
1,006.5
2017
244.3 $
(19.2)
82.8
128.3
526.0
962.2 $
10.5
12.7 138.2
$
1,123.6
Year Ended December 31,2018
2017
352.5 $ 696.0
78.7 58.0
(54.1) 207.0
542.3 534.6
2,109.9
1,805.8
3,029.3 $ 3,301.4
(3.3) 74.7
(49.5) (13.1)
646.4 428.0
$
3,622.9
$
3,791.0
Mylan N.V. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
(Unaudited; in millions)
Total Revenues by Segment
Three Months Ended
December 31,2018
Net sales
North America Europe
Rest of World
Total net salesOther revenues
(3)
Consolidated total revenuesNet sales
North America Europe
Rest of World
Total net salesOther revenues
(3)
Consolidated total revenues
(1) Currency impact is shown as unfavorable (favorable).
$
1,097.1 $ 1,087.0
851.4 3,035.5
43.2
(4)
2017
1,302.9 1,071.2
815.7 3,189.8
49.1
$
3,078.7
% Change
2018 Currency Impact(1)
2018 Constant Currency RevenuesConstant Currency % Change(2)
(16)%
$
1 %
2.5 $ 39.5
4 % (5)%
55.2 97.2
(12)%
1,099.6 1,126.5
906.6
(16)%
5 % 11 %
3,132.7 (2)%
0.6
$
3,238.9
43.8 (11)%
(5)%$
97.8
$
3,176.5(2)%
Year Ended December 31,2018
2018
$
4,095.6 $ 4,157.3 3,015.8 11,268.7
165.2
(4)
2017
4,969.6 3,958.3 2,832.1 11,760.0
147.7
$ 11,433.9
% Change
2018 Currency Impact(1)
Constant Currency Revenues
Constant Currency % Change(2)
(18)%
$
(0.8) $
5 %
4,094.8 4,012.8 3,104.4
(144.5)
7 % (4)%
88.6
(56.7) 11,212.0
12 % (4)%
(2.0)
$ 11,907.7
163.2
$
(58.7)
(18)%
1 % 10 % (5)%
$ 11,375.2
10 % (4)%
(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 December 31, 2018, other revenues in North America, Europe, and Rest of World were approximately $27.9 million, $7.3 million, and $8.0 million, respectively. For the year ended December 31, 2018, other revenues in North America, Europe, and Rest of World were approximately $112.4 million, $27.1 million, and $25.7 million, respectively.
(4) Amounts exclude intersegment revenue that eliminates on a consolidated basis.
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Mylan NV published this content on 26 February 2019 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 26 February 2019 23:17:08 UTC