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Össur

Össur

Reykjavik, Iceland based Ossur is a leading innovator, developer and manufacturer of non-invasive orthopaedic products such as prosthetics and braces. Ossur’s core competency lies within working with silicones, carbon composites, textiles and mechatronics to help patients live according to its motto “Life without Limitations”. Best known for its world leading lower limb prosthetics, Ossur is at the forefront in incorporating electronics into prosthetics and thereby creating products that more naturally mimic normal gait, increasing amputees' quality of life.

Underappreciated aspects of Össur’s business include: 1) the company is driving product innovation within high-tech, high margin bionics and thereby higher profitability (currently bionics accounts for ~23% of prosthetics revenue but only ~2% of volume), 2) a further-improved product mix, with the acquisition of less technologically advanced, lower-priced prosthetics which are optimal for high growth, emerging markets and 3) improving efficiencies in the organisation, which is running at structurally excessive cost levels e.g. G&A-to-sales ratio above 10% vs. best of breed at 3-4%.

Primary risks include: 1) competitive product launches, with segments operating in highly competitive industries, 2) the growth in Prosthetics is currently driven primarily by increased units prices as consumers trade up, while the volume growth is minimal. Failure by Össur to prove its products’ value to payors and patients and thereby accept higher prices for innovation leaves Össur vulnerable to growth disappointments. 3) Össur is facing a balancing act, to improve efficiencies in its operations while not disrupting its product quality, and 4) high dependency on reimbursement changes (government and insurance) can trigger reduced spending and change product choices.

USDm 2020 2021e 2022e
Sales 630 725 772
Sales growth (%) -8,3 15,1 6,5
EBITDA 92 162 179
EBITDA margin (%) 14,6 22,3 23,1
EBIT adj 34 117 134
EBIT adj margin (%) 5,3 16,2 17,4
Pretax profit 16 108 128
EPS rep 0,02 0,2 0,23
EPS growth (%) -85,5 741 18,8
EPS adj 0,03 0,2 0,23
DPS 0,03 0,03 0,04
EV/EBITDA (x) 40,6 20,6 18,3
EV/EBIT adj (x) 111,4 28,4 24,4
P/E (x) 341,6 36,3 30,6
P/E adj (x) 278,5 36,3 30,6
EV/sales (x) 5,9 4,6 4,2
FCF yield (%) 2,1 3 4
Dividend yield (%) 0,3 0,4 0,5
Net IB debt/EBITDA 4 2 1,5
Lease adj. FCF yield (%) 2,1 3 4
Lease adj. ND/EBITDA 2,8 1,3 0,9
USDm 2020 2021e 2022e
Sales 630 725 772
COGS -238 -258 -270
Gross profit 391 467 502
Other operating items -299 -305 -323
EBITDA 92 162 179
Depreciation on tangibles -18 -18 -18
Depreciation on intangibles -23 -9 -9
EBITA 33 117 134
Goodwill impairment charges -5 0 0
Other impairment and amortisation 1 0 0
EBIT 28 117 134
Other financial items 1 0 0
Net financial items -14 -10 -7
Associated income 0 1 1
Other EO items 1 0 0
Pretax profit 16 108 128
Tax -5 -25 -29
Net profit 11 83 99
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 11 83 99
EPS 0,02 0,2 0,23
EPS Adj 0,03 0,2 0,23
Total extraordinary items after tax 2 0 0
Tax rate (%) -30,5 -23 -23
Gross margin (%) 62,1 64,4 65
EBITDA margin (%) 14,6 22,3 23,1
EBITA margin (%) 5,2 16,2 17,4
EBIT margin (%) 4,5 16,2 17,4
Pretax margin (%) 2,5 14,8 16,5
Net margin (%) 1,7 11,3 12,7
Growth rates Y/Y 2020 2021 2022
Sales growth (%) -8,3 15,1 6,5
EBITDA growth (%) -34,9 75,7 10,5
EBIT growth (%) -71,1 314 14,5
Net profit growth (%) -84,1 662,2 18,5
EPS growth (%) -85,5 741 18,8
Profitability 2020 2021 2022
ROE (%) 1,9 13,7 14,9
ROE Adj (%) 2,3 13,7 14,9
ROCE (%) 3,2 11 12
ROCE Adj(%) 3,5 11 12
ROIC (%) 2,1 9,1 10,3
ROIC Adj (%) 2,5 9,1 10,3
Adj earnings numbers 2020 2021 2022
EBITDA Adj 92 162 179
EBITDA Adj margin (%) 14,6 22,3 23,1
EBITA Adj 33 117 134
EBITA Adj margin (%) 5,2 16,2 17,4
EBIT Adj 34 117 134
EBIT Adj margin (%) 5,3 16,2 17,4
Pretax profit Adj 19 108 128
Net profit Adj 13 83 99
Net profit to shareholders Adj 13 83 99
Net Adj margin (%) 2,1 11,3 12,7
Depreciation and amortisation -59 -45 -45
Of which leasing depreciation -18 -18 -18
EO items 0 0 0
Impairment and PPA amortisation -4 0 0
EBITDA lease Adj 92 162 179
EBITDA lease Adj margin (%) 14,6 22,3 23,1
Leasing payments 0 0 0
USDm 2020 2021e 2022e
EBITDA 92 162 179
Net financial items -14 -10 -7
Paid tax -17 0 0
Non-cash items 0 0 0
Cash flow before change in WC 61 152 172
Change in WC 31 -31 -13
Operating cash flow 92 120 158
CAPEX tangible fixed assets -24 -29 -39
CAPEX intangible fixed assets 2 0 0
Acquisitions and disposals 0 0 0
Free cash flow 70 91 120
Dividend paid -9 -11 -13
Share issues and buybacks -17 -15 -29
Other non cash items -129 -24 -29
Decrease in net IB debt -79 41 50
Balance Sheet (USDm) 2020 2021 2022
Goodwill 612 612 612
Indefinite intangible assets 1 0 0
Definite intangible assets 60 51 43
Tangible fixed assets 58 69 90
Other fixed assets 45 46 47
Fixed assets 889 873 868
Inventories 93 110 117
Receivables 98 116 124
Other current assets 33 33 33
Cash and liquid assets 102 144 192
Total assets 1215 1275 1334
Shareholders equity 577 634 691
Minority 0 0 0
Total equity 577 634 691
Long-term debt 340 340 340
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 26 26 26
Other long-term liabilities 16 16 16
Short-term debt 18 18 18
Accounts payable 20 23 25
Other current liabilities 110 110 110
Total liabilities and equity 1215 1275 1334
Net IB debt 364 323 275
Net IB debt excl. pension debt 364 323 275
Capital invested 983 999 1007
Working capital 94 126 139
EV breakdown 2020 2021 2022
Market cap. diluted (m) 3389 3024 3017
Net IB debt Adj 365 323 275
Market value of minority 0 0 0
Reversal of shares and participations -17 -18 -19
Reversal of conv. debt assumed equity 0 0 0
EV 3737 3329 3272
Capital efficiency (%) 2020 2021 2022
Total assets turnover (%) 54,6 58,2 59,2
Capital invested turnover (%) 66,9 73,1 76,9
Capital employed turnover (%) 64,3 67,6 68,3
Inventories / sales (%) 16,3 14 14,7
Customer advances / sales (%) 0 0 0
Payables / sales (%) 3,7 3 3,1
Working capital / sales (%) 16,6 15,2 17,1
Financial risk and debt service 2020 2021 2022
Net debt / equity (%) 63,1 50,9 39,8
Net debt / market cap (%) 12,2 10,7 9,1
Equity ratio (%) 47,5 49,7 51,8
Net IB debt adj. / equity (%) 63,3 50,9 39,8
Current ratio (%) 220,1 265,7 304,3
EBITDA / net interest (%) 631,4 1616,1 2551,6
Net IB debt / EBITDA (%) 395,9 199,9 153,8
Interest cover (%) 215,4 1171,1 1915,9
Lease liability amortisation 2 0 0
Other intangible assets 61 51 43
Right-of-use asset 113 95 77
Total other fixed assets 45 46 47
Leasing liability 109 109 109
Total other long-term liabilities 42 42 42
Net IB debt excl. leasing 256 214 166
Net IB debt / EBITDA lease Adj (%) 278,5 132,4 92,8
USDm 2020 2021e 2022e
Shares outstanding adj. 423 422 421
Fully diluted shares Adj 423 422 421
EPS 0,02 0,2 0,23
Dividend per share Adj 0 0 0
EPS Adj 0,03 0,2 0,23
BVPS 1,36 1,5 1,64
BVPS Adj -0,22 -0,07 0,09
Net IB debt / share 0,9 0,8 0,7
Share price 7,03 7,17 7,17
Market cap. (m) 2974 3024 3017
Valuation 2020 2021 2022
P/E 341,6 36,3 30,6
EV/sales 5,94 4,59 4,24
EV/EBITDA 40,6 20,6 18,3
EV/EBITA 114,9 28,4 24,4
EV/EBIT 132,1 28,4 24,4
Dividend yield (%) 0,3 0,4 0,5
FCF yield (%) 2,1 3 4
P/BVPS 5,87 4,77 4,37
P/BVPS Adj -35,86 -104,7 83,37
P/E Adj 278,5 36,3 30,6
EV/EBITDA Adj 40,6 20,6 18,3
EV/EBITA Adj 114,9 28,4 24,4
EV/EBIT Adj 111,4 28,4 24,4
EV/cap. employed 3,6 3 2,8
Investment ratios 2020 2021 2022
Capex / sales 3,5 4 5
Capex / depreciation 53,5 109,4 145,6
Capex tangibles / tangible fixed assets 40,9 41,7 42,9
Capex intangibles / definite intangibles -3,4 0 0
Depreciation on intangibles / definite intangibles 38,1 16,7 20
Depreciation on tangibles / tangibles 31,3 25,9 20
Lease adj. FCF yield (%) 2,1 3 4

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Media

Össur - Company presentation with CFO Sveinn Sölvason

Main shareholders - Össur

Main shareholders Share capital % Voting shares % Verified
William Demant Invest A/S 51.8 % 51.8 % 31 Dec 2020
Live Pension Fund 7.5 % 7.5 % 31 Dec 2019
Arbejdsmarkedets Tillægspension (ATP) 5.5 % 5.5 % 31 Dec 2020
The Pension Fund for State Employees 5.0 % 5.0 % 21 Aug 2020
Gildi Pension Fund 4.6 % 4.6 % 31 Dec 2019
Invesco 4.6 % 4.6 % 18 Aug 2020
SEB Fonder 3.1 % 3.1 % 31 Mar 2021
Lannebo Fonder 2.3 % 2.3 % 31 Mar 2021
ODIN Fonder 1.2 % 1.2 % 31 Mar 2021
Handelsbanken Fonder 1.1 % 1.1 % 31 Mar 2021
Source: Holdings by Modular Finance AB