HERTFORDSHIRE, England and
PITTSBURGH, Feb. 26, 2019
/PRNewswire/ -- Mylan N.V. (NASDAQ: MYL) today announced its
financial results for the fourth quarter and the year ended
December 31, 2018 and provided 2019 guidance.
Fourth Quarter 2018 Financial Highlights
- Total revenues of $3.08 billion,
down 5% compared to the prior year period
-
- Rest of World segment net sales of $851.4 million, up 4%, up 11% on a constant
currency basis
- Europe segment net sales of
$1.09 billion, up 1%, up 5% on a
constant currency basis
- North America segment net
sales of $1.10 billion, down 16%, on
an actual and constant currency basis, primarily due to lower
volumes on existing products, which was primarily driven by actions
associated with the restructuring and remediation activities at the
Morgantown plant and the timing of
purchases of our products by customers, as well as the impact of
the implementation of new accounting standards
- U.S. GAAP diluted earnings per ordinary share ("U.S. GAAP EPS")
of $0.10, down 78% over the prior
year period
- Adjusted diluted earnings per ordinary share ("adjusted EPS")
of $1.30, down 9% over the prior year
period
Full Year 2018 Financial Highlights
- Total revenues of $11.43 billion,
down 4% compared to the prior year
-
- Rest of World segment net sales of $3.02
billion, up 7%, up 10% on a constant currency basis
- Europe segment net sales of
$4.16 billion, up 5%, up 1% on a
constant currency basis
- North America segment net
sales of $4.10 billion, down 18%, on
an actual and constant currency basis, primarily due to lower
volumes on existing products, including the EpiPen® Auto-Injector
sales, which was primarily driven by the divestiture of certain
contract manufacturing assets, the loss of exclusivity of certain
products, actions associated with the restructuring and remediation
activities at the Morgantown plant
and the timing of purchases of our products by customers, as well
as the impact of the implementation of new accounting
standards
- U.S. GAAP EPS of $0.68, down 47%
compared to the prior year
- Adjusted EPS of $4.58, up
slightly when compared to the prior year
- U.S. GAAP net cash provided by operating activities of
$2.34 billion, up 13% compared to
$2.06 billion in the prior year
period
- Adjusted free cash flow of $2.71
billion, up 3% compared to $2.63
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 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 CEO Heather
Bresch commented: "Our 2018 results were strong,
especially in light of the fact that we had lower than expected
uptake on generic Copaxone and did not receive our generic Advair
approval, demonstrating once again the resiliency of our business
model. We adapted quickly and strategically to market conditions,
while at the same time remained a leader for the generics industry
and an advocate for changes to the current structural issues in the
U.S. healthcare system that hinder access to generics.
"Looking forward, I can confidently say, through leveraging the
diversification across our commercial, operational and scientific
platforms, we feel incredibly positive about our ability to deliver
a strong top-line financial performance in 2019. Specifically, we
expect to generate total revenues of between $11.5 billion and $12.5
billion, reflecting top-line growth across all three of our
geographic segments.
"Our business model is predicated on prioritizing long-term
sustainable growth. Therefore, we will be making incremental
investments in our sales and marketing and research and development
efforts. As a result, we expect to deliver 2019 adjusted EPS in the
range of $3.80 to $4.80. Additionally, we expect to generate
adjusted free cash flows between $1.9
billion and $2.3 billion. At
the same time, we are putting a highly disciplined financial lens
to unlock latent value from the assets we've integrated as we
transition to a business model that is predominantly driven by
organic growth."
Mylan President Rajiv Malik added: "We're pleased with our
results from 2018 and continue to be extremely proud of our
scientific achievements over the past year. In 2019, you can expect
us to move our portfolio and pipeline up the value chain, invest
organically in our key brands and execute on our impressive
commercial assets around the world. We anticipate growth of more
than $1 billion in new launches,
nearly all of which have already been approved, and which reflects
a heavier weighting on specialty and complex generic products
aligned with the evolution of the pharmaceutical industry."
Mylan CFO Ken Parks added: "Mylan
continued to generate strong cash flow with more than $2.7
billion of adjusted free cash flow for 2018, an increase of
$86 million compared to the prior
year and above the high-end of our initial guidance range for 2018.
2018 adjusted free cash flow conversion was healthy at
approximately 115 percent of adjusted net earnings of $2.4 billion, another measure of the strength and
durability of the cash flow generating capabilities of our
business. In 2019, we remain committed to deleveraging and intend
to repay at least $1.1 billion of
debt during the year. We also remain fully committed to maintaining
our investment grade credit rating."
Financial Summary
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
(Unaudited; in
millions, except per share amounts and %s)
|
2018
|
|
2017
|
|
Percent
Change
|
|
2018
|
|
2017
|
|
Percent
Change
|
Total Revenues
(1)
|
$
|
3,078.7
|
|
|
$
|
3,238.9
|
|
|
(5)%
|
|
$
|
11,433.9
|
|
|
$
|
11,907.7
|
|
|
(4)%
|
North America Net
Sales
|
1,097.1
|
|
|
1,302.9
|
|
|
(16)%
|
|
4,095.6
|
|
|
4,969.6
|
|
|
(18)%
|
Europe Net
Sales
|
1,087.0
|
|
|
1,071.2
|
|
|
1%
|
|
4,157.3
|
|
|
3,958.3
|
|
|
5%
|
Rest of World Net
Sales
|
851.4
|
|
|
815.7
|
|
|
4%
|
|
3,015.8
|
|
|
2,832.1
|
|
|
7%
|
Other
Revenues
|
43.2
|
|
|
49.1
|
|
|
(12)%
|
|
165.2
|
|
|
147.7
|
|
|
12%
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Gross
Profit
|
$
|
1,015.6
|
|
|
$
|
1,294.6
|
|
|
(22)%
|
|
$
|
4,001.6
|
|
|
$
|
4,783.1
|
|
|
(16)%
|
U.S. GAAP Gross
Margin
|
33.0
|
%
|
|
40.0
|
%
|
|
|
|
35.0
|
%
|
|
40.2
|
%
|
|
|
Adjusted Gross Profit
(2)
|
$
|
1,681.1
|
|
|
$
|
1,797.5
|
|
|
(6)%
|
|
$
|
6,181.3
|
|
|
$
|
6,419.2
|
|
|
(4)%
|
Adjusted Gross Margin
(2)
|
54.6
|
%
|
|
55.5
|
%
|
|
|
|
54.1
|
%
|
|
53.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Net
Earnings
|
$
|
51.2
|
|
|
$
|
244.3
|
|
|
(79)%
|
|
$
|
352.5
|
|
|
$
|
696.0
|
|
|
(49)%
|
U.S. GAAP
EPS
|
$
|
0.10
|
|
|
$
|
0.46
|
|
|
(78)%
|
|
$
|
0.68
|
|
|
$
|
1.30
|
|
|
(47)%
|
Adjusted Net Earnings
(2)
|
$
|
669.7
|
|
|
$
|
765.3
|
|
|
(12)%
|
|
$
|
2,364.8
|
|
|
$
|
2,444.8
|
|
|
(3)%
|
Adjusted EPS
(2)
|
$
|
1.30
|
|
|
$
|
1.43
|
|
|
(9)%
|
|
$
|
4.58
|
|
|
$
|
4.56
|
|
|
—%
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
(2)
|
$
|
841.2
|
|
|
$
|
962.2
|
|
|
(13)%
|
|
$
|
3,029.3
|
|
|
$
|
3,301.4
|
|
|
(8)%
|
Adjusted EBITDA
(2)
|
$
|
1,006.5
|
|
|
$
|
1,123.6
|
|
|
(10)%
|
|
$
|
3,622.9
|
|
|
$
|
3,791.0
|
|
|
(4)%
|
|
|
|
|
|
|
|
|
|
|
(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.
|
Fourth Quarter 2018 Financial Results
Total revenues were $3.08
billion in the fourth quarter of 2018, compared to
$3.24 billion in the prior year
period, representing a decrease of $160.2
million, or 5%. Total revenues include both net sales and
other revenues from third parties. Net sales for the current
quarter were $3.04 billion compared
to $3.19 billion for the prior year
period, a decrease of $154.3 million,
or 5%. Other revenues for the current quarter ended
December 31, 2018 were $43.2
million, compared to $49.1
million for the comparable prior year period, a decrease of
$5.9 million.
The decrease in net sales included a decrease in the
North America segment of 16% which
was partially offset by increases in the Europe segment of 1% and in the Rest of World
segment of 4%. The overall decrease in net sales was primarily
driven by a decrease in net sales from existing products. Net sales
from existing products, partially offset by new product launches,
decreased on a constant currency basis by approximately
$17.2 million primarily as a result
of lower volumes and pricing. Net sales were also negatively
impacted by approximately $40.0
million due to the adoption of new accounting standards.
Mylan's net sales were unfavorably impacted by the effect of
foreign currency translation, primarily reflecting changes in the
U.S. Dollar as compared to the currencies of Mylan's subsidiaries
in the European Union (EU), India,
and Australia. The unfavorable
impact of foreign currency translation on current quarter net sales
was approximately $97.2 million,
resulting in a decrease in constant currency net sales of
approximately $57.1 million, or 2%.
Below is a summary of net sales in each of our segments for the
three months ended December 31, 2018:
- Net sales in the North
America segment totaled $1.10
billion in the current quarter, a decrease of $205.8 million or 16% when compared to the prior
year period. Net sales were negatively impacted in the current
quarter due to a decline in sales of existing products, driven by
lower volumes, and to a lesser extent, lower pricing, partially
offset by new product sales. The decline in volumes was primarily
driven by actions associated with the restructuring and remediation
activities at the Morgantown
manufacturing plant and the timing of purchases of our products by
customers. In addition, net sales were negatively impacted by
approximately $50.6 million related
to the implementation of new accounting standards. The impact of
foreign currency translation on current period net sales was
insignificant within North
America.
- Net sales in the Europe
segment totaled $1.09 billion in the
current quarter, an increase of $15.8
million or 1% when compared to the prior year period.
The increase was primarily the result of higher volumes
on existing products and new product sales. These were partially
offset by the unfavorable impact of foreign currency translation
and lower pricing on existing products. The unfavorable impact of
foreign currency translation on the current period was
approximately $39.5 million,
or 4%. Constant currency net sales increased by approximately
$55.3 million, or 5% when compared to
the prior year.
- Net sales in the Rest of World segment
totaled $851.4 million in the current quarter, an
increase of $35.7 million or 4%
when compared to the prior year period. This increase was
primarily driven by new product sales and, to a lesser extent,
higher volumes of existing products including higher sales of key
brands in China. The increase in
net sales as a result of new products was primarily due to new
product sales in China,
Australia, and Japan. The increase in net sales was partially
offset by the unfavorable impact of foreign currency translation
and lower pricing in the region. The unfavorable impact
of foreign currency translation was $55.2 million, or 7%.
Constant currency net sales increased by approximately $90.9 million, or 11% when compared to the prior
year.
U.S. GAAP gross profit for the three months ended
December 31, 2018 was $1.02
billion and U.S. GAAP gross margins were 33%. For the three
months ended December 31, 2017, U.S. GAAP gross profit was
$1.29 billion and U.S. GAAP gross
margins were 40%. U.S. GAAP gross margins were negatively impacted
by approximately 270 basis points related to the incremental
amortization from product acquisitions and intangible asset
impairment charges and by approximately 240 basis points as a
result of incremental manufacturing expenses, site remediation
expenses and incremental restructuring charges incurred during the
current quarter principally as a result of the activities at the
Company's Morgantown plant. U.S.
GAAP gross margins were also negatively impacted as a result of
lower gross profit from the sales of existing products partially
offset by gross margins on new product introductions primarily in
North America. Adjusted gross
profit was $1.68 billion and adjusted gross margins
were 55% for the three months ended December 31,
2018 compared to adjusted gross profit of $1.80 billion
and adjusted gross margins of 55% in the prior year period.
Adjusted gross margins were negatively impacted by lower gross
profit from sales of existing products partially offset by gross
margins on new product introductions primarily in North America.
R&D expense for the three months ended
December 31, 2018 was $148.8
million, compared to $202.4
million for the prior year period. This decrease was
primarily due to lower expenditures related to the Company's
respiratory programs, lower expenses due to the reprioritization of
global programs and higher payments in the prior year period
related to licensing arrangements for products in development.
SG&A expense for the three months ended
December 31, 2018 was $632.9
million, compared to $659.0
million for the prior year period. The decrease is
primarily due to lower restructuring charges and the benefits of
integration activities.
During the three months ended December 31, 2018, the
Company recorded a net charge of $1.1
million for litigation settlements and other
contingencies, net, compared to a net charge of $12.7 million in the comparable prior year
period. The decrease from the comparable prior year period was
primarily a result of the prior year's fair value adjustment to the
contingent consideration related to the 2016 acquisition of the
non-sterile, topicals-focused business of Renaissance Acquisition
Holdings, LLC.
U.S. GAAP net earnings decreased by $193.1
million to $51.2 million for the three months
ended December 31, 2018, compared to U.S. GAAP net
earnings of $244.3 million for the
prior year period and U.S. GAAP EPS decreased to
$0.10 from $0.46 in the prior year period. The Company
recognized a U.S. GAAP income tax provision of $25.8 million for the three months ended
December 31, 2018, compared to a U.S. GAAP income tax
provision of $82.8 million for the
comparable prior year period. Adjusted net
earnings decreased by $95.6
million to $669.7 million as
compared to $765.3 million for the prior year period and
adjusted EPS decreased to $1.30 from $1.43 in
the prior year period.
EBITDA was $841.2
million for the current quarter and $962.2 million for the comparable prior year
period. After adjusting for certain items as further detailed in
the reconciliation below, adjusted EBITDA was $1.01 billion for the current quarter and
$1.12 billion for the comparable
prior year period.
Year Ended December 31, 2018
Financial Results
For the year ended December 31, 2018, Mylan reported
total revenues of $11.43
billion, compared to $11.91
billion for the prior year period, representing a decrease
of $473.8 million, or 4%. Net
sales for the year ended December 31, 2018 were
$11.27 billion, compared to
$11.76 billion for the prior year
period, representing a decrease of $491.3
million, or 4%. Other revenues for the year ended
December 31, 2018 were $165.2
million, compared to $147.7
million for the prior year period, an increase of
$17.5 million. The increase in other
revenues was primarily the result of consideration received from
the licensing of intellectual property during the current year.
The decrease in net sales included a decrease in the
North America segment of 18%. This
decrease was partially offset by increases in the Europe segment of 5% and in the Rest of World
segment of 7%. The overall decrease in net sales was primarily
driven by a decrease in net sales from existing products. Net sales
from existing products, partially offset by new product sales,
decreased on a constant currency basis by approximately
$443.6 million primarily as a result
of lower volumes, and to a lesser extent, pricing. Net sales were
also negatively impacted by approximately $104.5 million due to the adoption of new
accounting standards. Mylan's net sales were favorably impacted by
the effect of foreign currency translation, primarily reflecting
changes in the U.S. Dollar as compared to the currencies of Mylan's
subsidiaries in the EU, which was partially offset by the
unfavorable impact from changes in the Indian Rupee and the
Australian Dollar. The favorable impact of foreign currency
translation on current year net sales was approximately
$56.7 million resulting in a decrease
in constant currency net sales of approximately $548.0 million, or 5%. Below is a summary of net
sales in each of our segments for the year ended December 31,
2018.
- Net sales in the North
America segment totaled $4.10
billion, a decrease of $874.0
million or 18% from the prior year. 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 divestiture of
certain contract manufacturing assets, the loss of exclusivity of
certain products, actions associated with the restructuring and
remediation activities at the Morgantown manufacturing plant and the timing
of purchases of our products by customers. In addition, net sales
were negatively impacted by $149.7
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 within North
America.
- Net sales in the Europe
segment totaled $4.16 billion, an
increase of $199.0 million or 5% from
the prior year. 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 $144.5 million, or 4%.
Partially offsetting these items was lower pricing on existing
products. Constant currency net sales increased by approximately
$54.5 million, or 1% when compared to
the prior year.
- Net sales in the Rest of World segment totaled
$3.02 billion, an increase of
$183.7 million or 7% from the prior
year. 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 in China. 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 in Australia,
Japan and China. The increase in net sales 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 $88.6
million, or 3%. Constant currency net sales increased by
approximately $272.3 million, or
10%.
U.S. GAAP gross profit for the year ended
December 31, 2018 was $4.00
billion and U.S. GAAP gross margins were 35%. For the year
ended December 31, 2017, U.S. GAAP gross profit was
$4.78 billion and U.S. GAAP gross
margins were 40%. U.S. GAAP gross margins were negatively impacted
by approximately 270 basis points related to the incremental
amortization from product acquisitions and intangible asset
impairment charges. U.S. GAAP gross margins were also negatively
affected by approximately 220 basis points as a result of
incremental manufacturing expenses, site remediation expenses and
incremental restructuring charges incurred during the year
principally as a result of the activities at the Company's
Morgantown plant. In addition,
U.S. GAAP gross margins were negatively impacted as a result of
lower gross profit from the sales of existing products partially
offset by gross margins on new product introductions primarily in
North America. Adjusted gross
profit was $6.18 billion and
adjusted gross margins were approximately 54% for the year ended
December 31, 2018, compared to adjusted gross profit of
$6.42 billion and adjusted gross
margins of approximately 54% for the year ended December 31,
2017. Adjusted gross margins were negatively impacted by lower
gross profit from sales of existing products partially offset by
gross margins on new product introductions primarily in
North America.
R&D expense for the year ended December 31, 2018
was $704.5 million, compared to
$783.3 million for the prior year, a
decrease of $78.8 million.
This decrease was primarily due to lower expenditures
related to the Company's respiratory programs and lower expenses
due to the reprioritization of global programs.
SG&A expense for the year ended
December 31, 2018 was $2.44
billion, compared to $2.58
billion for the prior year, a decrease of $134.7 million. The decrease is
primarily due to the benefits of integration activities, lower
restructuring charges, lower acquisition-related costs of
approximately $48.0 million, and reduced share-based
compensation expense primarily due to the reversal of all of the
cumulative expense totaling $70.6
million related to the Company's One-Time Special
Performance-Based Five-Year Realizable Value Incentive Program
during the year ended December 31, 2018. These decreases
were partially offset by an increase in bad debt expense of
approximately $26.5 million related to a special business
interruption event for one customer, and $20.0 million of compensation expense as an
additional discretionary bonus for a certain group of employees.
None of the employees eligible for this bonus are named executive
officers.
During the year ended December 31, 2018, the Company
recorded a net gain of $49.5 million
for litigation settlements and other contingencies, net,
compared to a net gain of $13.1
million in the prior year. The increase is due to lower
charges for litigation settlements partially offset by lower gains
on contingent consideration adjustments in 2018 compared to the
prior year.
U.S. GAAP net earnings decreased by $343.5 million to $352.5
million for the year ended December 31, 2018, compared
to $696.0 million for the prior year.
U.S. GAAP EPS decreased from $1.30 to
$0.68 in the current year. The
Company recognized an income tax benefit of $54.1 million in the current year, compared to an
income tax provision of $207.0
million for the prior year period. Adjusted net
earnings decreased to $2.36
billion in the current year from $2.44 billion in the prior year and adjusted
EPS increased to $4.58 in the
current year from $4.56 in the prior
year.
EBITDA was $3.03
billion for the year ended December 31, 2018, and
$3.30 billion for the prior year
period. After adjusting for certain items as further detailed in
the reconciliation below, adjusted EBITDA was $3.62 billion for the year ended
December 31, 2018 and $3.79
billion for the prior year period.
Cash Flow
U.S. GAAP net cash provided by operating
activities was $2.34 billion
for the year ended December 31, 2018 compared to $2.06 billion for the prior year period. Capital
expenditures were approximately $252.1
million for the year ended December 31, 2018 compared
to approximately $275.9 million for
the comparable prior year. Adjusted net cash provided by
operating activities was $2.97
billion for the year ended December 31, 2018 compared
to $2.88 billion for the prior year
period. Adjusted free cash flow, defined as adjusted net
cash provided by operating activities less capital expenditures,
was $2.71 billion for the year ended
December 31, 2018, compared to $2.63
billion in the prior year period.
Guidance
Mylan expects 2019 total revenues in the range of $11.50 billion to $12.50
billion, the midpoint of which represents an increase of 5%
versus 2018. As discussed in the "Non-GAAP Financial Measures"
section below, Mylan is not otherwise 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.
Adjusted EPS is expected to be in the range of $3.80 to $4.80, the
midpoint of which represents a decrease of 6% versus 2018.
The following table provides a summary of Mylan's 2019 full year
guidance ranges.
Full Year 2019 Financial Guidance
(In millions,
except for Adjusted EPS and %s)
|
|
2019 Guidance
Range
|
|
2019
Midpoint
|
Total
Revenues
|
|
$11,500 -
$12,500
|
|
$12,000
|
Adjusted Gross
Margins
|
|
53.0% -
54.0%
|
|
53.5%
|
Adjusted R&D as %
of Total Revenues
|
|
4.5% -
5.5%
|
|
5.0%
|
Adjusted SG&A as
% of Total Revenues
|
|
21.0% -
22.0%
|
|
21.5%
|
Adjusted
EBITDA
|
|
$3,300 -
$3,900
|
|
$3,600
|
Adjusted Net
Earnings
|
|
$2,000 -
$2,500
|
|
$2,250
|
Adjusted
EPS
|
|
$3.80 -
$4.80
|
|
$4.30
|
Capital
Expenditures
|
|
$250 -
$400
|
|
$325
|
Adjusted Free Cash
Flow
|
|
$1,900 -
$2,300
|
|
$2,100
|
Adjusted Effective
Tax Rate
|
|
19.0% -
20.0%
|
|
19.5%
|
Average Diluted
Shares Outstanding
|
|
515.0 -
519.0
|
|
517.0
|
|
|
|
|
|
|
|
|
|
|
Key Exchange Rates
Used for 2019 Guidance
|
|
|
|
|
Australian Dollar ($
/ AUD)
|
|
|
|
1.38
|
British Pound ($ /
GBP)
|
|
|
|
0.76
|
Canadian Dollar ($ /
CAD)
|
|
|
|
1.30
|
Euro ($ /
EUR)
|
|
|
|
0.85
|
Indian Rupee (INR /
$)
|
|
|
|
70.00
|
Japanese Yen (JPY /
$)
|
|
|
|
112.97
|
Q4 2018 Earnings Call and 2019 Guidance
As previously announced, Mylan N.V. will host a webcast
at 5:00 p.m. ET today to discuss the Company's financial
results for the fourth quarter and year ended December 31,
2018, along with financial guidance for 2019. The webcast can be
accessed live by calling 855.493.3607
or 346.354.0950 for international callers (ID#: 9783018)
or at the following address on the Company's website:
investor.mylan.com. The "Q4 2018 Earnings Call & 2019
Guidance" presentation, which will be referenced during the call
can be found at investor.mylan.com. A replay of the webcast also
will be available on the website.
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 the United States ("U.S. GAAP"). These
non-GAAP financial measures, including, but not limited to,
adjusted EPS, constant currency net sales, constant currency total
revenues, adjusted gross profit, adjusted gross margins, adjusted
net earnings, EBITDA, adjusted EBITDA, adjusted R&D, adjusted
SG&A, adjusted R&D as a % of total revenues, adjusted
SG&A as a % of total revenues, adjusted earnings from
operations, adjusted interest expense, adjusted other expense
(income), net, adjusted effective tax rate, notional debt to Credit
Agreement Adjusted EBITDA, long-term average debt to Credit
Agreement Adjusted EBITDA leverage ratio, adjusted net cash
provided by operating activities and adjusted free cash flow are
presented in order to supplement investors' and other readers'
understanding and assessment of the financial performance of Mylan
N.V. ("Mylan" or the "Company"). Management uses these measures
internally for forecasting, budgeting, measuring its operating
performance, and incentive-based awards. Primarily due to
acquisitions and other significant events which may impact
comparability of our periodic operating results, Mylan believes
that an evaluation of its ongoing operations (and comparisons of
its current operations with historical and future operations) would
be difficult if the disclosure of its financial results was limited
to financial measures prepared only in accordance with U.S. GAAP.
We believe that non-GAAP financial measures are useful supplemental
information for our investors and when considered together with our
U.S. GAAP financial measures and the reconciliation to the most
directly comparable U.S. GAAP financial measure, provide a more
complete understanding of the factors and trends affecting our
operations. The financial performance of the Company is measured by
senior management, in part, using adjusted metrics included herein,
along with other performance metrics. Management's annual incentive
compensation is derived, in part, based on the adjusted EPS metric
and the adjusted free cash flow metric. In addition, the Company
believes that including EBITDA and supplemental adjustments applied
in presenting adjusted EBITDA and Credit Agreement Adjusted EBITDA
(as defined below) pursuant to our Credit Agreements is appropriate
to provide additional information to investors to demonstrate the
Company's ability to comply with financial debt covenants and
assess the Company's ability to incur additional indebtedness. We
also report sales performance using the non-GAAP financial measures
of "constant currency" total revenues and net sales. These measures
provide information on the change in total revenues and net sales
assuming that foreign currency exchange rates had not changed
between the prior and current period. The comparisons presented at
constant currency rates reflect comparative local currency sales at
the prior year's foreign exchange rates. We routinely evaluate our
net sales and total revenues performance at constant currency so
that sales results can be viewed without the impact of foreign
currency exchange rates, thereby facilitating a period-to-period
comparison of our operational activities, and believe that this
presentation also provides useful information to investors for the
same reason. The "Summary of Total Revenues by Segment" table below
compares net sales on an actual and constant currency basis for
each reportable segment for the quarters and years ended
December 31, 2018 and 2017 as well as for total revenues.
Also, set forth below, 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.
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 Annual Report on
Form 10-K for the year ended December 31, 2018.
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.
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 months and
year ended December 31, 2018 compared to the prior year
period:
|
|
|
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)
|
551.5
|
|
|
|
|
454.8
|
|
|
|
|
1,833.9
|
|
|
|
|
1,529.7
|
|
|
|
Litigation
settlements and other contingencies, net
|
1.1
|
|
|
|
|
12.7
|
|
|
|
|
(49.5)
|
|
|
|
|
(13.1)
|
|
|
|
Interest expense
(primarily clean energy investment financing and accretion of
contingent consideration)
|
8.7
|
|
|
|
|
10.1
|
|
|
|
|
39.7
|
|
|
|
|
47.3
|
|
|
|
Clean energy
investments pre-tax loss
|
20.1
|
|
|
|
|
(19.2)
|
|
|
|
|
78.7
|
|
|
|
|
47.1
|
|
|
|
Acquisition related
costs (primarily included in SG&A and cost of sales)
(b)
|
4.0
|
|
|
|
|
12.6
|
|
|
|
|
21.4
|
|
|
|
|
72.8
|
|
|
|
Restructuring related
costs (c)
|
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)
|
17.9
|
|
|
|
|
27.8
|
|
|
|
|
118.2
|
|
|
|
|
117.7
|
|
|
|
Selling, general and
administrative expense (f)
|
10.5
|
|
|
|
|
(1.0)
|
|
|
|
|
43.7
|
|
|
|
|
11.7
|
|
|
|
Other expense, net
(g)
|
(0.1)
|
|
|
|
|
8.9
|
|
|
|
|
25.4
|
|
|
|
|
13.8
|
|
|
|
Tax effect of the
above items and other income tax related items
|
(118.8)
|
|
|
|
|
(85.2)
|
|
|
|
|
(564.5)
|
|
|
|
|
(329.7)
|
|
|
|
Adjusted net earnings
and adjusted EPS
|
$
|
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
|
|
|
|
_____________
|
Significant items for
the three months and year ended December 31, 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, 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.
|
Below is a
reconciliation of U.S. GAAP net earnings to EBITDA and adjusted
EBITDA for the three months and year ended December 31, 2018
compared to the prior year period (in millions):
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
U.S. GAAP net
earnings
|
$
|
51.2
|
|
|
$
|
244.3
|
|
|
$
|
352.5
|
|
|
$
|
696.0
|
|
Add / (deduct)
adjustments:
|
|
|
|
|
|
|
|
Net contribution
attributable to equity method investments
|
20.1
|
|
|
(19.2)
|
|
|
78.7
|
|
|
58.0
|
|
Income tax provision
(benefit)
|
25.8
|
|
|
82.8
|
|
|
(54.1)
|
|
|
207.0
|
|
Interest
expense
|
135.2
|
|
|
128.3
|
|
|
542.3
|
|
|
534.6
|
|
Depreciation and
amortization
|
608.9
|
|
|
526.0
|
|
|
2,109.9
|
|
|
1,805.8
|
|
EBITDA
|
$
|
841.2
|
|
|
$
|
962.2
|
|
|
$
|
3,029.3
|
|
|
$
|
3,301.4
|
|
Add / (deduct)
adjustments:
|
|
|
|
|
|
|
|
Share-based
compensation (income) expense
|
5.3
|
|
|
10.5
|
|
|
(3.3)
|
|
|
74.7
|
|
Litigation
settlements and other contingencies, net
|
1.1
|
|
|
12.7
|
|
|
(49.5)
|
|
|
(13.1)
|
|
Restructuring & other special
items
|
158.9
|
|
|
138.2
|
|
|
646.4
|
|
|
428.0
|
|
Adjusted
EBITDA
|
$
|
1,006.5
|
|
|
$
|
1,123.6
|
|
|
$
|
3,622.9
|
|
|
$
|
3,791.0
|
|
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, our
2019 guidance; looking forward, we can confidently say, through
leveraging the diversification across our commercial, operational
and scientific platforms, we feel incredibly positive about our
ability to deliver a strong top-line financial performance in 2019;
we expect to generate total revenues of between $11.5 billion and $12.5
billion, reflecting top-line growth across all three of our
geographic segments; our business model is predicated on
prioritizing long-term sustainable growth; we will be making
incremental investments in our sales and marketing and research and
development efforts; we expect to deliver 2019 adjusted EPS in the
range of $3.80 to $4.80; we expect to generate adjusted free cash
flows between $1.9 billion and
$2.3 billion; we are putting a highly
disciplined financial lens to unlock latent value from the assets
we've integrated as we transition to a business model that is
predominantly driven by organic growth; in 2019, you can expect us
to move our portfolio and pipeline up the value chain, invest
organically in our key brands and execute on our impressive
commercial assets around the world; we anticipate growth of more
than $1 billion in new launches,
nearly all of which have already been approved, and which reflects
a heavier weighting on specialty and complex generic products
aligned with the evolution of the pharmaceutical industry; in 2019,
we remain committed to deleveraging and intend to repay at least
$1.1 billion of debt during the year;
we remain fully committed to maintaining our investment grade
credit rating; and any other statements about Mylan's future
operations, anticipated business levels, future earnings, planned
activities, anticipated growth, market opportunities, strategies,
competition, and other expectations and targets for future periods.
These may often be identified by the use of words such as "will,"
"may," "could," "should," "would," "project," "believe,"
"anticipate," "expect," "plan," "estimate," "forecast,"
"potential," "pipeline," "intend," "continue," "target," "seek,"
and variations of these words or comparable words. Because
forward-looking statements inherently involve risks and
uncertainties, actual future results may differ materially from
those expressed or implied by such forward-looking statements.
Factors that could cause or contribute to such differences include,
but are not limited to: actions and decisions of healthcare and
pharmaceutical regulators; failure to achieve expected or targeted
future financial and operating performance and results;
uncertainties regarding future demand, pricing and reimbursement
for our products; any regulatory, legal or other impediments to
Mylan's ability to bring new products to market, including, but not
limited to, where Mylan uses its business judgment and decides to
manufacture, market and/or sell products, directly or through third
parties, notwithstanding the fact that allegations of patent
infringement(s) have not been finally resolved by the courts (i.e.,
an "at-risk launch"); success of clinical trials and Mylan's
ability to execute on new product opportunities; any changes in or
difficulties with our manufacturing facilities, including with
respect to our remediation and restructuring activities, supply
chain or inventory or our ability to meet anticipated demand; the
scope, timing and outcome of any ongoing legal proceedings,
including government investigations, and the impact of any such
proceedings on our financial condition, results of operations
and/or cash flows; the ability to meet expectations regarding the
accounting and tax treatments of acquisitions, including Mylan's
acquisition of Mylan Inc. and Abbott Laboratories' non-U.S.
developed markets specialty and branded generics business; changes
in relevant tax and other laws, including but not limited to
changes in the U.S. tax code and healthcare and pharmaceutical laws
and regulations in the U.S. and abroad; any significant breach of
data security or data privacy or disruptions to our information
technology systems; the ability to protect intellectual property
and preserve intellectual property rights; the effect of any
changes in customer and supplier relationships and customer
purchasing patterns; the ability to attract and retain key
personnel; the impact of competition; identifying, acquiring, and
integrating complementary or strategic acquisitions of other
companies, products, or assets being more difficult, time-consuming
or costly than anticipated; the possibility that Mylan may be
unable to achieve expected synergies and operating efficiencies in
connection with strategic acquisitions, strategic initiatives or
restructuring programs within the expected time-frames or at all;
uncertainties and matters beyond the control of management,
including but not limited to general political and economic
conditions and global exchange rates; and inherent uncertainties
involved in the estimates and judgments used in the preparation of
financial statements, and the providing of estimates of financial
measures, in accordance with U.S. GAAP and related standards or on
an adjusted basis. For more detailed information on the risks and
uncertainties associated with Mylan's business activities, see the
risks described in Mylan's Annual Report on Form 10-K for
the year ended December 31, 2018 and our other filings with
the Securities and Exchange Commission (the "SEC"). You can
access Mylan's filings with the SEC through the SEC
website at www.sec.gov or through our website,
and Mylan strongly encourages you to do so. Mylan
routinely posts information that may be important to investors on
our website at investor.mylan.com, and we use this website
address as a means of disclosing material information to the public
in a broad, non-exclusionary manner for purposes of the SEC's
Regulation Fair Disclosure (Reg FD). The contents of our website
are not incorporated into this release. Mylan undertakes no
obligation to update any statements herein for revisions or changes
after the date of this release.
Mylan N.V. and
Subsidiaries Consolidated Statements of
Operations (Unaudited; in millions, except per share
amounts)
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenues:
|
|
|
|
|
|
|
|
Net sales
|
$
|
3,035.5
|
|
|
$
|
3,189.8
|
|
|
$
|
11,268.7
|
|
|
$
|
11,760.0
|
|
Other
revenues
|
43.2
|
|
|
49.1
|
|
|
165.2
|
|
|
147.7
|
|
Total
revenues
|
3,078.7
|
|
|
3,238.9
|
|
|
11,433.9
|
|
|
11,907.7
|
|
Cost of
sales
|
2,063.1
|
|
|
1,944.3
|
|
|
7,432.3
|
|
|
7,124.6
|
|
Gross
profit
|
1,015.6
|
|
|
1,294.6
|
|
|
4,001.6
|
|
|
4,783.1
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development
|
148.8
|
|
|
202.4
|
|
|
704.5
|
|
|
783.3
|
|
Selling, general and
administrative
|
632.9
|
|
|
659.0
|
|
|
2,441.0
|
|
|
2,575.7
|
|
Litigation
settlements and other contingencies, net
|
1.1
|
|
|
12.7
|
|
|
(49.5)
|
|
|
(13.1)
|
|
Total operating
expenses
|
782.8
|
|
|
874.1
|
|
|
3,096.0
|
|
|
3,345.9
|
|
Earnings from
operations
|
232.8
|
|
|
420.5
|
|
|
905.6
|
|
|
1,437.2
|
|
Interest
expense
|
135.2
|
|
|
128.3
|
|
|
542.3
|
|
|
534.6
|
|
Other expense
(income), net
|
20.6
|
|
|
(34.9)
|
|
|
64.9
|
|
|
(0.4)
|
|
Earnings before
income taxes
|
77.0
|
|
|
327.1
|
|
|
298.4
|
|
|
903.0
|
|
Income tax (benefit)
provision
|
25.8
|
|
|
82.8
|
|
|
(54.1)
|
|
|
207.0
|
|
Net
earnings
|
51.2
|
|
|
244.3
|
|
|
352.5
|
|
|
696.0
|
|
Earnings per ordinary
share attributable to Mylan N.V. ordinary shareholders
|
|
|
|
|
|
|
|
Basic
|
$
|
0.10
|
|
|
$
|
0.46
|
|
|
$
|
0.69
|
|
|
$
|
1.30
|
|
Diluted
|
$
|
0.10
|
|
|
$
|
0.46
|
|
|
$
|
0.68
|
|
|
$
|
1.30
|
|
Weighted average
ordinary shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
514.6
|
|
|
533.3
|
|
|
514.5
|
|
|
534.5
|
|
Diluted
|
516.5
|
|
|
535.7
|
|
|
516.5
|
|
|
536.7
|
|
Mylan N.V. and
Subsidiaries Condensed Consolidated Balance
Sheets (Unaudited; in millions)
|
|
|
December 31,
2018
|
|
December 31,
2017
|
ASSETS
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
388.1
|
|
|
$
|
292.1
|
|
Accounts receivable,
net
|
2,881.0
|
|
|
3,612.4
|
|
Inventories
|
2,580.2
|
|
|
2,542.7
|
|
Prepaid expenses and
other current assets
|
518.4
|
|
|
766.1
|
|
Total current
assets
|
6,367.7
|
|
|
7,213.3
|
|
Intangible assets,
net
|
13,664.6
|
|
|
15,245.8
|
|
Goodwill
|
9,747.8
|
|
|
10,205.7
|
|
Other non-current
assets
|
2,954.8
|
|
|
3,141.5
|
|
Total
assets
|
$
|
32,734.9
|
|
|
$
|
35,806.3
|
|
LIABILITIES AND
EQUITY
|
Liabilities
|
|
|
|
Current portion of
long-term debt and other long-term obligations
|
$
|
699.8
|
|
|
$
|
1,808.9
|
|
Current
liabilities
|
3,888.0
|
|
|
4,576.4
|
|
Long-term
debt
|
13,161.2
|
|
|
12,865.3
|
|
Other non-current
liabilities
|
2,818.8
|
|
|
3,248.1
|
|
Total
liabilities
|
20,567.8
|
|
|
22,498.7
|
|
Mylan N.V.
shareholders' equity
|
12,167.1
|
|
|
13,307.6
|
|
Total liabilities and
equity
|
$
|
32,734.9
|
|
|
$
|
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
|
|
December
31,
|
|
2018
|
|
2017
|
|
%
Change
|
|
2018 Currency
Impact (1)
|
|
2018
Constant
Currency
Revenues
|
|
Constant
Currency %
Change (2)
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
1,097.1
|
|
|
$
|
1,302.9
|
|
|
(16)
|
%
|
|
$
|
2.5
|
|
|
$
|
1,099.6
|
|
|
(16)
|
%
|
Europe
|
1,087.0
|
|
|
1,071.2
|
|
|
1
|
%
|
|
39.5
|
|
|
1,126.5
|
|
|
5
|
%
|
Rest of
World
|
851.4
|
|
|
815.7
|
|
|
4
|
%
|
|
55.2
|
|
|
906.6
|
|
|
11
|
%
|
Total net
sales
|
3,035.5
|
|
|
3,189.8
|
|
|
(5)
|
%
|
|
97.2
|
|
|
3,132.7
|
|
|
(2)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenues
(3)
|
43.2
|
|
|
49.1
|
|
|
(12)
|
%
|
|
0.6
|
|
|
43.8
|
|
|
(11)
|
%
|
Consolidated total
revenues (4)
|
$
|
3,078.7
|
|
|
$
|
3,238.9
|
|
|
(5)
|
%
|
|
$
|
97.8
|
|
|
$
|
3,176.5
|
|
|
(2)
|
%
|
|
|
Year
Ended
|
|
December
31,
|
|
2018
|
|
2017
|
|
%
Change
|
|
2018 Currency
Impact (1)
|
|
2018
Constant
Currency
Revenues
|
|
Constant Currency
% Change (2)
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
4,095.6
|
|
|
$
|
4,969.6
|
|
|
(18)
|
%
|
|
$
|
(0.8)
|
|
|
$
|
4,094.8
|
|
|
(18)
|
%
|
Europe
|
4,157.3
|
|
|
3,958.3
|
|
|
5
|
%
|
|
(144.5)
|
|
|
4,012.8
|
|
|
1
|
%
|
Rest of
World
|
3,015.8
|
|
|
2,832.1
|
|
|
7
|
%
|
|
88.6
|
|
|
3,104.4
|
|
|
10
|
%
|
Total net
sales
|
11,268.7
|
|
|
11,760.0
|
|
|
(4)
|
%
|
|
(56.7)
|
|
|
11,212.0
|
|
|
(5)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenues
(3)
|
165.2
|
|
|
147.7
|
|
|
12
|
%
|
|
(2.0)
|
|
|
163.2
|
|
|
10
|
%
|
Consolidated total
revenues (4)
|
$
|
11,433.9
|
|
|
$
|
11,907.7
|
|
|
(4)
|
%
|
|
$
|
(58.7)
|
|
|
$
|
11,375.2
|
|
|
(4)
|
%
|
________________
|
(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 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.
|
Reconciliation of
Income Statement Line Items
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
U.S. GAAP cost of
sales
|
$
|
2,063.1
|
|
|
$
|
1,944.3
|
|
|
$
|
7,432.3
|
|
|
$
|
7,124.6
|
|
Deduct:
|
|
|
|
|
|
|
|
Purchase accounting
amortization and other related items
|
(551.5)
|
|
|
(468.9)
|
|
|
(1,833.3)
|
|
|
(1,523.8)
|
|
Acquisition related
items
|
(0.5)
|
|
|
(0.9)
|
|
|
(2.9)
|
|
|
(2.8)
|
|
Restructuring and
related costs
|
(21.2)
|
|
|
(8.8)
|
|
|
(118.4)
|
|
|
(46.0)
|
|
Other special
items
|
(92.3)
|
|
|
(24.3)
|
|
|
(225.1)
|
|
|
(63.5)
|
|
Adjusted cost of
sales
|
$
|
1,397.6
|
|
|
$
|
1,441.4
|
|
|
$
|
5,252.6
|
|
|
$
|
5,488.5
|
|
|
|
|
|
|
|
|
|
Adjusted gross profit
(a)
|
$
|
1,681.1
|
|
|
$
|
1,797.5
|
|
|
$
|
6,181.3
|
|
|
$
|
6,419.2
|
|
|
|
|
|
|
|
|
|
Adjusted gross margin
(a)
|
55
|
%
|
|
55
|
%
|
|
54
|
%
|
|
54
|
%
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
U.S. GAAP
R&D
|
$
|
148.8
|
|
|
$
|
202.4
|
|
|
$
|
704.5
|
|
|
$
|
783.3
|
|
Deduct:
|
|
|
|
|
|
|
|
Acquisition related
costs
|
(0.3)
|
|
|
(0.2)
|
|
|
(1.1)
|
|
|
(1.6)
|
|
Restructuring and
related costs
|
(0.6)
|
|
|
(5.9)
|
|
|
(17.6)
|
|
|
(8.4)
|
|
Other special
items
|
(17.7)
|
|
|
(27.9)
|
|
|
(118.2)
|
|
|
(118.0)
|
|
Adjusted
R&D
|
$
|
130.2
|
|
|
$
|
168.4
|
|
|
$
|
567.6
|
|
|
$
|
655.3
|
|
|
|
|
|
|
|
|
|
Adjusted R&D as %
of total revenues
|
4
|
%
|
|
5
|
%
|
|
5
|
%
|
|
6
|
%
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
U.S. GAAP
SG&A
|
$
|
632.9
|
|
|
$
|
659.0
|
|
|
$
|
2,441.0
|
|
|
$
|
2,575.7
|
|
Add /
(deduct):
|
|
|
|
|
|
|
|
Acquisition related
costs
|
(3.2)
|
|
|
(11.5)
|
|
|
(17.5)
|
|
|
(67.5)
|
|
Restructuring and
related costs
|
(16.0)
|
|
|
(60.6)
|
|
|
(104.5)
|
|
|
(133.6)
|
|
Other special items
and reclassifications
|
(4.2)
|
|
|
15.2
|
|
|
(44.3)
|
|
|
(11.7)
|
|
Adjusted
SG&A
|
$
|
609.5
|
|
|
$
|
602.1
|
|
|
$
|
2,274.7
|
|
|
$
|
2,362.9
|
|
|
|
|
|
|
|
|
|
Adjusted SG&A as
% of total revenues
|
20
|
%
|
|
19
|
%
|
|
20
|
%
|
|
20
|
%
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
U.S. GAAP total
operating expenses
|
$
|
782.8
|
|
|
$
|
874.1
|
|
|
$
|
3,096.0
|
|
|
$
|
3,345.9
|
|
Add /
(deduct):
|
|
|
|
|
|
|
|
Litigation
settlements and other contingencies, net
|
(1.1)
|
|
|
(12.7)
|
|
|
49.5
|
|
|
13.1
|
|
R&D
adjustments
|
(18.6)
|
|
|
(34.0)
|
|
|
(136.9)
|
|
|
(128.0)
|
|
SG&A
adjustments
|
(23.4)
|
|
|
(56.9)
|
|
|
(166.3)
|
|
|
(212.8)
|
|
Adjusted total
operating expenses
|
$
|
739.7
|
|
|
$
|
770.5
|
|
|
$
|
2,842.3
|
|
|
$
|
3,018.2
|
|
|
|
|
|
|
|
|
|
Adjusted earnings
from operations (b)
|
$
|
941.4
|
|
|
$
|
1,027.0
|
|
|
$
|
3,339.0
|
|
|
$
|
3,401.0
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
U.S. GAAP interest
expense
|
$
|
135.2
|
|
|
$
|
128.3
|
|
|
$
|
542.3
|
|
|
$
|
534.6
|
|
Deduct:
|
|
|
|
|
|
|
|
Interest expense
related to clean energy investments
|
(1.7)
|
|
|
(2.9)
|
|
|
(8.2)
|
|
|
(12.2)
|
|
Accretion of
contingent consideration liability
|
(5.0)
|
|
|
(5.4)
|
|
|
(21.3)
|
|
|
(27.6)
|
|
Other special
items
|
(2.0)
|
|
|
(1.8)
|
|
|
(10.2)
|
|
|
(7.5)
|
|
Adjusted interest
expense
|
$
|
126.5
|
|
|
$
|
118.2
|
|
|
$
|
502.6
|
|
|
$
|
487.3
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
U.S. GAAP other
expense (income), net
|
$
|
20.6
|
|
|
$
|
(34.9)
|
|
|
$
|
64.9
|
|
|
$
|
(0.4)
|
|
(Add) /
deduct:
|
|
|
|
|
|
|
|
Clean energy
investments pre-tax income (loss) (c)
|
(20.1)
|
|
|
19.2
|
|
|
(78.7)
|
|
|
(47.1)
|
|
Acquisition related
costs
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.8)
|
|
Other items
(d)
|
0.1
|
|
|
(8.9)
|
|
|
(25.2)
|
|
|
(19.5)
|
|
Adjusted other
expense (income), net
|
$
|
0.6
|
|
|
$
|
(24.6)
|
|
|
$
|
(39.0)
|
|
|
$
|
(67.8)
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
U.S. GAAP earnings
before income taxes
|
$
|
77.0
|
|
|
$
|
327.1
|
|
|
$
|
298.4
|
|
|
$
|
903.0
|
|
Total pre-tax
non-GAAP adjustments
|
737.3
|
|
|
606.2
|
|
|
2,576.8
|
|
|
2,078.5
|
|
Adjusted earnings
before income taxes
|
$
|
814.3
|
|
|
$
|
933.3
|
|
|
$
|
2,875.2
|
|
|
$
|
2,981.5
|
|
|
|
|
|
|
|
|
|
U.S. GAAP income
tax provision (benefit)
|
$
|
25.8
|
|
|
$
|
82.8
|
|
|
$
|
(54.1)
|
|
|
$
|
207.0
|
|
Adjusted tax
expense
|
118.8
|
|
|
85.2
|
|
|
564.5
|
|
|
329.7
|
|
Adjusted income tax
provision
|
$
|
144.6
|
|
|
$
|
168.0
|
|
|
$
|
510.4
|
|
|
$
|
536.7
|
|
|
|
|
|
|
|
|
|
Adjusted effective
tax rate
|
17.8
|
%
|
|
18.0
|
%
|
|
17.8
|
%
|
|
18.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
U.S. GAAP net cash
provided by operating activities
|
|
|
|
|
|
|
|
|
$
|
2,341.7
|
|
|
$
|
2,064.8
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and
related costs (e)
|
|
|
|
|
|
|
|
|
277.0
|
|
|
152.4
|
|
Corporate
contingencies
|
|
|
|
|
|
|
|
|
194.2
|
|
|
582.2
|
|
Acquisition related
costs
|
|
|
|
|
|
|
|
|
4.8
|
|
|
29.5
|
|
R&D
expense
|
|
|
|
|
|
|
|
|
147.5
|
|
|
54.6
|
|
Adjusted net cash
provided by operating activities
|
|
|
|
|
|
|
|
|
$
|
2,965.2
|
|
|
$
|
2,883.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add /
(deduct):
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
|
|
|
|
|
|
(252.1)
|
|
|
(275.9)
|
|
Proceeds from sale of
certain property, plant and equipment
|
|
|
|
|
|
|
|
|
—
|
|
|
19.3
|
|
Adjusted free cash
flow
|
|
|
|
|
|
|
|
|
$
|
2,713.1
|
|
|
$
|
2,626.9
|
|
___________
|
(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 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 year ended
December 31, 2018 includes approximately $155.8 million of certain
incremental manufacturing variances and site remediation expenses
as a result of the activities at the Company's Morgantown
plant.
|
December 31,
2018 Notional Debt to Year Ended December 31, 2018 Mylan N.V.
Adjusted EBITDA as calculated under our Credit Agreements ("Credit
Agreement Adjusted EBITDA") Leverage Ratio
|
|
The stated non-GAAP
financial measure December 31, 2018 notional debt to year
ended December 31, 2018 Credit Agreement Adjusted EBITDA
leverage ratio is based on the sum of (i) Mylan's adjusted EBITDA
for the year ended December 31, 2018 and (ii) certain
adjustments permitted to be included in Credit Agreement Adjusted
EBITDA as of December 31, 2018 pursuant to the
revolving credit facility dated as of July 27, 2018 (as amended,
supplemented or otherwise modified from time to time), among Mylan
Inc., as borrower, the Company, as guarantor, certain affiliates
and subsidiaries of the Company from time to time party thereto as
guarantors, each lender from time to time party thereto and Bank of
America, N.A., as administrative agent and the Company's term loan
credit facility dated as of November 22, 2016 (as amended,
supplemented or otherwise modified from time to time), among the
Company, certain affiliates and subsidiaries of the Company from
time to time party thereto as guarantors, each lender from time to
time party thereto and Goldman Sachs Bank USA, as administrative
agent (together, the "Credit Agreements") as compared to
Mylan's December 31, 2018 total debt and other
current obligations at notional amounts.
|
|
|
Year
Ended
|
|
December 31,
2018
|
Mylan N.V. Adjusted
EBITDA
|
$
|
3,622.9
|
|
Add: other
adjustments including estimated synergies
|
89.8
|
|
Credit Agreement
Adjusted EBITDA
|
$
|
3,712.7
|
|
|
|
Reported debt
balances:
|
|
Long-term debt,
including current portion
|
$
|
13,816.4
|
|
Short-term borrowings
and other current obligations
|
264.9
|
|
Total
|
$
|
14,081.3
|
|
Add /
(deduct):
|
|
Net discount on
various debt issuances
|
36.6
|
|
Deferred financing
fees
|
74.6
|
|
Fair value adjustment
for hedged debt
|
(2.9)
|
|
Total debt at
notional amounts
|
$
|
14,189.6
|
|
|
|
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 Mylan N.V.