- Strong quarterly sales of $2.2 billion, up 14% or 18%
constant currency
- Double-digit growth in net sales in both Surgical and Vision
Care
- Updated 2022 full year outlook
Ad Hoc Announcement Pursuant to Art. 53 LR
Regulaotry News:
Alcon (SIX/NYSE:ALC), the global leader in eye care, reported
its financial results for the first quarter ended March 31, 2022.
For the first quarter of 2022, worldwide sales were $2.2 billion,
an increase of 14% on a reported basis and 18% on a constant
currency basis(2), as compared to the same quarter of the previous
year. Alcon reported diluted earnings per share of $0.34 and core
diluted earnings per share of $0.68.
First quarter 2022 key figures
Three months ended March
31
2022
2021
Net sales ($ millions)
2,175
1,910
Operating margin (%)
11.3%
7.8%
Core operating margin (%)(1)
20.6%
18.0%
Diluted earnings per share ($)
0.34
0.17
Core diluted earnings per share ($)(1)
0.68
0.49
"We saw a strong start to the year and our first quarter results
demonstrate the continued strength of our innovative product
portfolio and commercial execution," said David J. Endicott,
Alcon's Chief Executive Officer. "The Alcon team delivered
double-digit sales growth in both our franchises, which drove
operating leverage and improved profitability across the
business."
Mr. Endicott continued, "While we are pleased with these
results, we continue to expect broader headwinds, including
inflation and foreign exchange pressures, to persist. Despite this,
we are increasing our constant currency growth outlook for 2022
based on our strong underlying business and growing market shares.
I want to thank our 24,000 associates for their continued
commitment and dedication to helping people see brilliantly."
First quarter 2022 results
Worldwide sales for the first quarter 2022 were $2.2 billion, an
increase of 14% on a reported basis and 18% on a constant currency
basis, compared to the first quarter of 2021. Sales in both
Surgical and Vision Care benefited from product innovation,
improvements across geographies reflecting continuing recovery from
the COVID-19 pandemic and sales from recent acquisitions. Surgical
sales also included a one-time benefit related to implantables.
The following table highlights net sales by segment for the
first quarter of 2022:
Three months ended March
31
Change %
($ millions unless indicated
otherwise)
2022
2021
$
cc(2)
Surgical
Implantables
455
344
32
38
Consumables
601
535
12
16
Equipment/other
203
198
3
7
Total Surgical
1,259
1,077
17
22
Vision Care
Contact lenses
557
509
9
14
Ocular health
359
324
11
13
Total Vision Care
916
833
10
14
Net sales to third parties
2,175
1,910
14
18
Double-digit growth in Surgical driven by implantables and
consumables
Surgical net sales of $1.3 billion, which include implantables,
consumables and equipment/other, increased 17%, or 22% on a
constant currency basis, compared to the first quarter of 2021.
Implantables growth reflected ongoing adoption of advanced
technology intraocular lenses, led by Vivity, and sales of the
Hydrus Microstent following the recent acquisition of Ivantis.
Implantables sales also included a one-time benefit in South Korea
ahead of an insurance reimbursement change for presbyopia
correcting intraocular lenses that accounted for approximately 8%
(cc) of implantables growth during the quarter. Consumables growth
primarily reflected higher procedure volumes due to improving
market conditions. Growth in equipment/other was primarily driven
by demand for cataract equipment.
Double-digit growth in Vision Care driven by contact lenses and
Systane
Vision Care net sales of $0.9 billion, which include contact
lenses and ocular health, increased 10%, or 14% on a constant
currency basis, compared to the first quarter of 2021. Contact lens
sales benefited from growth in silicone hydrogel contact lenses,
including the Precision1 and Dailies Total1 product families and
Total30. Growth in ocular health was led by demand for Systane dry
eye and Simbrinza glaucoma eye drops, as well as improvements in
select international markets, partially offset by declines in
contact lens care.
Operating income
First quarter 2022 operating income was $246 million and
operating margin was 11.3%. Operating margin increased as a result
of improved operating leverage from higher sales, including the
one-time benefit in South Korea referenced above. This was
partially offset by increased inflationary impacts, higher
amortization for intangible assets due to recent acquisitions and a
provision for a legal settlement.
First quarter 2022 operating income includes net charges of $146
million for the amortization of certain intangible assets, as well
as a provision for a legal settlement. Excluding these and other
adjustments, first quarter 2022 core operating income was $448
million.
First quarter 2022 core operating margin of 20.6% increased
versus the first quarter of 2021 due to operating leverage from
higher sales, including the one-time benefit in South Korea,
partially offset by increased inflationary impacts. Foreign
exchange had a negative 1.3% impact on first quarter 2022 core
operating margin.
Diluted earnings per share (EPS)
First quarter 2022 diluted earnings per share of $0.34 increased
100% on a reported basis and 144% on a constant currency basis.
Core diluted earnings per share of $0.68 increased 39% on a
reported basis and 56% on a constant currency basis.
Dividend
On April 27, 2022 at the Company's Annual General Meeting, the
shareholders approved a dividend of CHF 0.20 per share, which was
paid in May 2022 for an amount of $100 million.
Balance sheet and cash flow highlights
The Company ended the first quarter with a cash position of $1.0
billion. Cash flows from operations for the first quarter of 2022
totaled $66 million, compared to cash flows from operations of $156
million in the prior year. The current year includes increased cash
outflows from changes in net working capital and the timing of tax
payments, partially offset by higher sales.
Free cash flow(3) amounted to an outflow of $52 million in the
first three months of 2022, compared to an inflow of $48 million in
the previous year. The decrease in free cash flow was primarily
driven by lower cash flows from operating activities.
Net cash flows used in investing activities amounted to an
outflow of $603 million in the first quarter of 2022, compared to
an outflow of $131 million in the prior year, primarily due to the
acquisition of Ivantis. Financial debts totaled $4.1 billion, in
line with prior year-end. The Company ended the first quarter with
a net debt(4) position of $3.1 billion.
2022 outlook
The Company updated its full year 2022 outlook as per the table
below. This outlook assumes that global markets grow over 2021
reflecting the ongoing market recovery; that current levels of
inflation persist for the remainder of the year; and that exchange
rates as of mid-April 2022 prevail through year-end.
2022 outlook as of
February
2022 outlook as of May
Comments
Net sales (USD)
$8.7 to $8.9 billion
$8.7 to $8.9 billion
Maintain
CC net sales growth vs. 2021(2)
+7% to +9%
+9% to +11%
Increase
Core operating margin(1)
18% to 19%
18% to 19%
Maintain
Interest expense and Other financial
income & expense
$180 to $190 million
$200 to $210 million
Increase
Core effective tax rate(5)
17% to 19%
17% to 19%
Maintain
Core diluted EPS(1)
$2.35 to $2.45
$2.35 to $2.45
Maintain
CC core diluted EPS growth vs. 2021(2)
+13% to +18%
+19% to +24%
Increase
Webcast and Conference Call Instructions
The Company will host a conference call on May 11, 2022 at 2:00
p.m. Central European Time / 8:00 a.m. Eastern Time to discuss its
first quarter 2022 earnings results. The webcast can be accessed
online through Alcon's Investor Relations website,
investor.alcon.com. Listeners should log on approximately 10
minutes in advance. A replay will be available online within 24
hours after the event.
The Company's interim financial report and supplemental
presentation materials can be found online through Alcon's Investor
Relations website at the beginning of the conference, or by
clicking on the link:
https://investor.alcon.com/news-and-events/events-and-presentations/event-details/2022/Alcons-First-Quarter-2022-Earnings-Conference-Call/default.aspx
Footnotes (pages 1-4)
(1)
Core results, such as core operating
margin and core EPS, are non-IFRS measures. For additional
information, including a reconciliation of such core results to the
most directly comparable measures presented in accordance with
IFRS, see the explanation of non-IFRS measures and reconciliation
tables in the 'Non-IFRS measures as defined by the Company' and
'Financial tables' sections.
(2)
Constant currency (cc) is a non-IFRS
measure. Growth in constant currency (cc) is calculated by
translating the current year’s foreign currency items into US
dollars using average exchange rates from the historical
comparative period and comparing them to the values from the
historical comparative period in US dollars. An explanation of
non-IFRS measures can be found in the 'Non-IFRS measures as defined
by the Company' section.
(3)
Free cash flow is a non-IFRS measure. For
additional information regarding free cash flow, see the
explanation of non-IFRS measures and reconciliation tables in the
'Non-IFRS measures as defined by the Company' and 'Financial
tables' sections.
(4)
Net (debt)/liquidity is a non-IFRS
measure. For additional information regarding net (debt)/liquidity,
see the explanation of non-IFRS measures and reconciliation tables
in the 'Non-IFRS measures as defined by the Company' and 'Financial
tables' sections.
(5)
Core effective tax rate, a non-IFRS
measure, is the applicable annual tax rate on core taxable income.
For additional information, see the explanation regarding
reconciliation of forward-looking guidance in the 'Non-IFRS
measures as defined by the Company' section.
Cautionary Note Regarding Forward-Looking Statements
This press release contains, and our officers and
representatives may from time to time make, certain
“forward-looking statements” within the meaning of the safe harbor
provisions of the US Private Securities Litigation Reform Act of
1995. Forward-looking statements can be identified by words such as
“anticipate,” “intend,” “commitment,” “look forward,” “maintain,”
“plan,” “goal,” “seek,” “target,” “assume,” “believe,” “project,”
“estimate,” “expect,” “strategy,” “future,” “likely,” “may,”
“should,” “will” and similar references to future periods. Examples
of forward-looking statements include, among others, statements we
make regarding our liquidity, revenue, gross margin, operating
margin, effective tax rate, foreign currency exchange movements,
earnings per share, our plans and decisions relating to various
capital expenditures, capital allocation priorities and other
discretionary items, market growth assumptions, and generally, our
expectations concerning our future performance and the effects of
the COVID-19 pandemic on our businesses.
Forward-looking statements are neither historical facts nor
assurances of future performance. Instead, they are based only on
our current beliefs, expectations and assumptions regarding the
future of our business, future plans and strategies, and other
future conditions. Because forward-looking statements relate to the
future, they are subject to inherent uncertainties and risks that
are difficult to predict such as: cybersecurity breaches or other
disruptions of our information technology systems; compliance with
data privacy, identity protection and information security laws;
our ability to comply with the US Foreign Corrupt Practices Act of
1977 and other applicable anti-corruption laws, particularly given
that we have entered into a three-year Deferred Prosecution
Agreement with the U.S. Department of Justice; our success in
completing and integrating strategic acquisitions; the impact of a
disruption in our global supply chain or important facilities; the
effect of the COVID-19 pandemic as well as other viral or disease
outbreaks; global and regional economic, financial, legal, tax,
political and social change; Russia’s invasion of Ukraine and the
resulting global response; the commercial success of our products
and our ability to maintain and strengthen our position in our
markets; the success of our research and development efforts,
including our ability to innovate to compete effectively; pricing
pressure from changes in third party payor coverage and
reimbursement methodologies; ongoing industry consolidation; our
ability to properly educate and train healthcare providers on our
products; the impact of unauthorized importation of our products
from countries with lower prices to countries with higher prices;
our reliance on outsourcing key business functions; changes in
inventory levels or buying patterns of our customers; our ability
to attract and retain qualified personnel; our ability to service
our debt obligations; the need for additional financing through the
issuance of debt or equity; our ability to protect our intellectual
property; the effects of litigation, including product liability
lawsuits and governmental investigations; our ability to comply
with all laws to which we may be subject; effect of product recalls
or voluntary market withdrawals; the implementation of our
enterprise resource planning system; the accuracy of our accounting
estimates and assumptions, including pension and other
post-employment benefit plan obligations and the carrying value of
intangible assets; the ability to obtain regulatory clearance and
approval of our products as well as compliance with any
post-approval obligations, including quality control of our
manufacturing; legislative, tax and regulatory reform; the ability
of Alcon Pharmaceuticals Ltd. to comply with its investment tax
incentive agreement with the Swiss State Secretariat for Economic
Affairs in Switzerland and the Canton of Fribourg, Switzerland; our
ability to manage environmental, social and governance matters to
the satisfaction of our many stakeholders, some of which may have
competing interests; the impact of being listed on two stock
exchanges; the ability to declare and pay dividends; the different
rights afforded to our shareholders as a Swiss corporation compared
to a U.S. corporation; and the effect of maintaining or losing our
foreign private issuer status under U.S. securities laws.
Additional factors are discussed in our filings with the United
States Securities and Exchange Commission, including our Form 20-F.
Should one or more of these uncertainties or risks materialize, or
should underlying assumptions prove incorrect, actual results may
vary materially from those anticipated. Therefore, you should not
rely on any of these forward-looking statements. Forward-looking
statements in this press release speak only as of the date of its
filing, and we assume no obligation to update forward-looking
statements as a result of new information, future events or
otherwise.
Intellectual Property
This report may contain references to our proprietary
intellectual property. All product names appearing in italics or
ALL CAPS are trademarks owned by or licensed to Alcon Inc. Product
names identified by a "®" or a "™" are trademarks that are not
owned by or licensed to Alcon or its subsidiaries and are the
property of their respective owners.
Non-IFRS measures as defined by the Company
Alcon uses certain non-IFRS metrics when measuring performance,
including when measuring current period results against prior
periods, including core results, percentage changes measured in
constant currencies, free cash flow, and net (debt)/liquidity.
Because of their non-standardized definitions, the non-IFRS
measures (unlike IFRS measures) may not be comparable to the
calculation of similar measures of other companies. These
supplemental non-IFRS measures are presented solely to permit
investors to more fully understand how Alcon management assesses
underlying performance. These supplemental non-IFRS measures are
not, and should not be viewed as, a substitute for IFRS
measures.
Core results
Alcon core results, including core operating income and core net
income, exclude all amortization and impairment charges of
intangible assets, excluding software, net gains and losses on fund
investments and equity securities valued at fair value through
profit and loss ("FVPL"), fair value adjustments of financial
assets in the form of options to acquire a company carried at FVPL,
obligations related to product recalls, and certain acquisition
related items. The following items that exceed a threshold of $10
million and are deemed exceptional are also excluded from core
results: integration and divestment related income and expenses,
divestment gains and losses, restructuring charges/releases and
related items, legal related items, gains/losses on early
extinguishment of debt or debt modifications, past service costs
for post-employment benefit plans, impairments of property, plant
and equipment and software, as well as income and expense items
that management deems exceptional and that are or are expected to
accumulate within the year to be over a $10 million threshold.
Taxes on the adjustments between IFRS and core results take into
account, for each individual item included in the adjustment, the
tax rate that will finally be applicable to the item based on the
jurisdiction where the adjustment will finally have a tax impact.
Generally, this results in amortization and impairment of
intangible assets and acquisition-related restructuring and
integration items having a full tax impact. There is usually a tax
impact on other items, although this is not always the case for
items arising from legal settlements in certain jurisdictions.
Alcon believes that investor understanding of its performance is
enhanced by disclosing core measures of performance because, since
they exclude items that can vary significantly from period to
period, the core measures enable a helpful comparison of business
performance across periods. For this same reason, Alcon uses these
core measures in addition to IFRS and other measures as important
factors in assessing its performance.
A limitation of the core measures is that they provide a view of
Alcon operations without including all events during a period, such
as the effects of an acquisition, divestment, or
amortization/impairments of purchased intangible assets and
restructurings.
Constant currencies
Changes in the relative values of non-US currencies to the US
dollar can affect Alcon's financial results and financial position.
To provide additional information that may be useful to investors,
including changes in sales volume, we present information about
changes in our net sales and various values relating to operating
and net income that are adjusted for such foreign currency
effects.
Constant currency calculations have the goal of eliminating two
exchange rate effects so that an estimate can be made of underlying
changes in the Consolidated Income Statement excluding:
- the impact of translating the income statements of consolidated
entities from their non-US dollar functional currencies to the US
dollar; and
- the impact of exchange rate movements on the major transactions
of consolidated entities performed in currencies other than their
functional currency.
Alcon calculates constant currency measures by translating the
current year's foreign currency values for sales and other income
statement items into US dollars, using the average exchange rates
from the historical comparative period and comparing them to the
values from the historical comparative period in US dollars.
Free cash flow
Alcon defines free cash flow as net cash flows from operating
activities less cash flow associated with the purchase or sale of
property, plant and equipment. Free cash flow is presented as
additional information because Alcon management believes it is a
useful supplemental indicator of Alcon's ability to operate without
reliance on additional borrowing or use of existing cash. Free cash
flow is not intended to be a substitute measure for net cash flows
from operating activities as determined under IFRS.
Net (debt)/liquidity
Alcon defines net (debt)/liquidity as current and non-current
financial debt less cash and cash equivalents, current investments
and derivative financial instruments. Net (debt)/liquidity is
presented as additional information because management believes it
is a useful supplemental indicator of Alcon's ability to pay
dividends, to meet financial commitments and to invest in new
strategic opportunities, including strengthening its balance
sheet.
Growth rate and margin
calculations
For ease of understanding, Alcon uses a sign convention for its
growth rates such that a reduction in operating expenses or losses
compared to the prior year is shown as a positive growth.
Gross margins, operating income/(loss) margins and core
operating income margins are calculated based upon net sales to
third parties unless otherwise noted.
Reconciliation of guidance for
forward-looking non-IFRS measures
The forward-looking guidance included in this press release
cannot be reconciled to the comparable IFRS measures without
unreasonable efforts, because we are not able to predict with
reasonable certainty the ultimate amount or nature of exceptional
items in the fiscal year. These items are uncertain, depend on many
factors and could have a material impact on our IFRS results for
the guidance period.
Financial tables
Net sales by region
Three months ended March
31
($ millions unless indicated
otherwise)
2022
2021
United States
939
43
%
835
44
%
International
1,236
57
%
1,075
56
%
Net sales to third parties
2,175
100
%
1,910
100
%
Consolidated Income Statement
(unaudited)
Three months ended March
31
($ millions except earnings per share)
2022
2021
Net sales to third parties
2,175
1,910
Other revenues
14
20
Net sales and other revenues
2,189
1,930
Cost of net sales
(967
)
(880
)
Cost of other revenues
(14
)
(19
)
Gross profit
1,208
1,031
Selling, general & administration
(741
)
(699
)
Research & development
(166
)
(166
)
Other income
9
9
Other expense
(64
)
(26
)
Operating income
246
149
Interest expense
(29
)
(31
)
Other financial income & expense
(17
)
(9
)
Income before taxes
200
109
Taxes
(32
)
(25
)
Net income
168
84
Earnings per share ($)
Basic
0.34
0.17
Diluted
0.34
0.17
Weighted average number of shares
outstanding (millions)
Basic
490.9
489.7
Diluted
494.0
492.8
Balance sheet highlights
($ millions)
March 31, 2022
December 31, 2021
Cash and cash equivalents
961
1,575
Current financial debts
140
114
Non-current financial debts
3,916
3,966
Free cash flow
The following is a summary of free cash
flow for the three months ended March 31, 2022 and 2021, together
with a reconciliation to net cash flows from operating activities,
the most directly comparable IFRS measure:
Three months ended March
31
($ millions)
2022
2021
Net cash flows from operating
activities
66
156
Purchase of property, plant &
equipment
(118
)
(108
)
Free cash flow
(52
)
48
Net (debt)/liquidity
($ millions)
At March 31, 2022
Current financial debt
(140
)
Non-current financial debt
(3,916
)
Total financial debt
(4,056
)
Less liquidity:
Cash and cash equivalents
961
Derivative financial instruments
2
Total liquidity
963
Net (debt)
(3,093
)
Reconciliation of IFRS Results to Core
Results
Three months ended March 31,
2022
($ millions except earnings per share)
IFRS results
Amortization of certain
intangible assets(1)
Transformation
costs(4)
Legal items(5)
Other items(6)
Core results
Gross profit
1,208
140
—
—
9
1,357
Selling, general & administration
(741
)
—
—
—
7
(734
)
Research & development
(166
)
6
—
—
—
(160
)
Other income
9
—
—
—
(1
)
8
Other expense
(64
)
—
15
20
6
(23
)
Operating income
246
146
15
20
21
448
Income before taxes
200
146
15
20
21
402
Taxes(7)
(32
)
(25
)
(2
)
(5
)
—
(64
)
Net income
168
121
13
15
21
338
Basic earnings per share ($)
0.34
0.69
Diluted earnings per share ($)
0.34
0.68
Basic - weighted average shares
outstanding (millions)(8)
490.9
490.9
Diluted - weighted average shares
outstanding (millions)(8)
494.0
494.0
Refer to the associated explanatory
footnotes at the end of the 'Reconciliation of IFRS Results to Core
Results' tables.
Three months ended March 31,
2021
($ millions except earnings per share)
IFRS results
Amortization of certain
intangible assets(1)
Impairments (2)
Separation costs(3)
Transformation
costs(4)
Other items(6)
Core results
Gross profit
1,031
125
45
—
—
—
1,201
Selling, general & administration
(699
)
—
—
7
—
—
(692
)
Research & development
(166
)
—
—
—
—
5
(161
)
Other income
9
—
—
—
—
(1
)
8
Other expense
(26
)
—
—
3
11
—
(12
)
Operating income
149
125
45
10
11
4
344
Income before taxes
109
125
45
10
11
4
304
Taxes(7)
(25
)
(23
)
(10
)
(2
)
(2
)
(1
)
(63
)
Net income
84
102
35
8
9
3
241
Basic earnings per share ($)
0.17
0.49
Diluted earnings per share ($)
0.17
0.49
Basic - weighted average shares
outstanding (millions)(8)
489.7
489.7
Diluted - weighted average shares
outstanding (millions)(8)
492.8
492.8
Refer to the associated explanatory
footnotes at the end of the 'Reconciliation of IFRS Results to Core
Results' tables.
Explanatory footnotes to IFRS to Core reconciliation
tables
(1)
Includes recurring amortization for all
intangible assets other than software.
(2)
Includes impairment charges related to
intangible assets.
(3)
Separation costs, primarily related to IT
and third party consulting fees, following completion of the
spin-off.
(4)
Transformation costs, primarily related to
restructuring and third party consulting fees, for the multi-year
transformation program.
(5)
Includes a provision for a legal
settlement.
(6)
For the three months ended March 31, 2022,
Gross profit includes charges related to the conflict in Ukraine
and amortization of inventory fair value adjustments related to a
recent acquisition. Selling, general & administration includes
charges related to the conflict in Ukraine. Other income includes
fair value adjustments of financial assets. Other expense includes
integration related expenses for a recent acquisition and fair
value adjustments of financial assets.
For the three months ended March 31, 2021,
Research & development includes the amortization of option
rights. Other income includes a fair value adjustment of a
financial asset.
(7)
For the three months ended March 31, 2022,
total tax adjustments of $32 million include tax associated with
operating income core adjustments, partially offset by discrete tax
items. Tax associated with operating income core adjustments of
$202 million totaled $35 million with an average tax rate of
17.3%.
For the three months ended March 31, 2021,
total tax associated with operating income core adjustments of $195
million totaled $38 million with an average tax rate of 19.5%.
(8)
Core basic earnings per share is
calculated using the weighted-average shares of common stock
outstanding during the period. Core diluted earnings per share also
contemplate dilutive shares associated with unvested equity-based
awards as described in Note 4 to the Condensed Consolidated Interim
Financial Statements.
About Alcon
Alcon helps people see brilliantly. As the global leader in eye
care with a heritage spanning over 75 years, we offer the broadest
portfolio of products to enhance sight and improve people’s lives.
Our Surgical and Vision Care products touch the lives of more than
260 million people in over 140 countries each year living with
conditions like cataracts, glaucoma, retinal diseases and
refractive errors. Our more than 24,000 associates are enhancing
the quality of life through innovative products, partnerships with
Eye Care Professionals and programs that advance access to quality
eye care. Learn more at www.alcon.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20220508005068/en/
Investor Relations Daniel
Cravens Allen Trang + 41 589 112 110 (Geneva) + 1 817 615 2789
(Fort Worth) investor.relations@alcon.com
Media Relations Lisa Gilbert
+ 41 589 112 111 (Geneva) + 1 817 615 2666 (Fort Worth)
globalmedia.relations@alcon.com
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