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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 2021 2022e 2023e
Sales 721 777 835
Sales growth (%) 14,5 7,8 7,5
EBITDA 150 167 185
EBITDA margin (%) 20,8 21,5 22,1
EBIT adj 102 122 140
EBIT adj margin (%) 14,2 15,7 16,8
Pretax profit 90 116 134
EPS rep 0,16 0,21 0,25
EPS growth (%) 904,7 29,5 15,6
EPS adj 0,16 0,21 0,25
DPS 0 0,04 0,04
EV/EBITDA (x) 18,1 15,9 14
EV/EBIT adj (x) 26,5 21,6 18,5
P/E (x) 34,7 26,8 23,2
P/E adj (x) 34,7 26,8 23,2
EV/sales (x) 3,8 3,4 3,1
FCF yield (%) 3,2 4,7 5,3
Dividend yield (%) 0 0,6 0,7
Net IB debt/EBITDA 2,1 1,6 1,1
Lease adj. FCF yield (%) 3,2 4,7 5,3
Lease adj. ND/EBITDA 1,4 0,9 0,5
USDm 2021 2022e 2023e
Sales 721 777 835
COGS -265 -280 -300
Gross profit 456 497 535
Other operating items -306 -330 -351
EBITDA 150 167 185
Depreciation on tangibles -18 -18 -18
Depreciation on intangibles -9 -9 -9
EBITA 102 122 140
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 102 122 140
Other financial items 0 0 0
Net financial items -13 -7 -7
Associated income 1 1 1
Other EO items 0 0 0
Pretax profit 90 116 134
Tax -21 -27 -31
Net profit 69 90 103
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 69 90 103
EPS 0,16 0,21 0,25
EPS Adj 0,16 0,21 0,25
Total extraordinary items after tax 0 0 0
Tax rate (%) -23 -23 -23
Gross margin (%) 63,3 64 64,1
EBITDA margin (%) 20,8 21,5 22,1
EBITA margin (%) 14,2 15,7 16,8
EBIT margin (%) 14,2 15,7 16,8
Pretax margin (%) 12,4 14,8 15,9
Net margin (%) 9,5 11,4 12,3
Growth rates Y/Y 2021 2022 2023
Sales growth (%) 14,5 7,8 7,5
EBITDA growth (%) 61,4 11,2 10,7
EBIT growth (%) 260,9 19,8 14,5
Net profit growth (%) 775,8 29,2 15,3
EPS growth (%) 904,7 29,5 15,6
Profitability 2021 2022 2023
ROE (%) 11,4 13,5 14,2
ROE Adj (%) 11,4 13,5 14,2
ROCE (%) 9,6 10,9 11,8
ROCE Adj(%) 9,6 10,9 11,8
ROIC (%) 8 9,5 10,8
ROIC Adj (%) 8 9,5 10,8
Adj earnings numbers 2021 2022 2023
EBITDA Adj 150 167 185
EBITDA Adj margin (%) 20,8 21,5 22,1
EBITA Adj 102 122 140
EBITA Adj margin (%) 14,2 15,7 16,8
EBIT Adj 102 122 140
EBIT Adj margin (%) 14,2 15,7 16,8
Pretax profit Adj 90 116 134
Net profit Adj 69 90 103
Net profit to shareholders Adj 69 90 103
Net Adj margin (%) 9,5 11,4 12,3
Depreciation and amortisation -48 -45 -45
Of which leasing depreciation -18 -18 -18
EO items 0 0 0
Impairment and PPA amortisation 0 0 0
EBITDA lease Adj 150 167 185
EBITDA lease Adj margin (%) 20,8 21,5 22,1
Leasing payments 0 0 0
USDm 2021 2022e 2023e
EBITDA 150 167 185
Net financial items -13 -7 -7
Paid tax 0 0 0
Non-cash items 0 0 0
Cash flow before change in WC 137 160 178
Change in WC -30 -16 -16
Operating cash flow 107 144 161
CAPEX tangible fixed assets -29 -31 -33
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals 0 0 0
Free cash flow 78 113 128
Dividend paid -11 0 -15
Share issues and buybacks 0 -29 -29
Other non cash items -20 -27 -32
Decrease in net IB debt 41 50 58
Balance Sheet (USDm) 2021 2022 2023
Goodwill 612 612 612
Indefinite intangible assets 0 0 0
Definite intangible assets 51 43 34
Tangible fixed assets 67 80 96
Other fixed assets 46 47 48
Fixed assets 870 857 847
Inventories 109 118 126
Receivables 116 125 134
Other current assets 33 33 33
Cash and liquid assets 149 206 259
Total assets 1276 1339 1399
Shareholders equity 635 696 755
Minority 0 0 0
Total equity 635 696 755
Long-term debt 340 340 340
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 26 26 25
Other long-term liabilities 16 16 16
Short-term debt 18 18 18
Accounts payable 23 25 27
Other current liabilities 110 110 110
Total liabilities and equity 1276 1339 1399
Net IB debt 317 260 208
Net IB debt excl. pension debt 317 260 208
Capital invested 994 998 1004
Working capital 125 140 157
EV breakdown 2021 2022 2023
Market cap. diluted (m) 2411 2405 2399
Net IB debt Adj 317 260 208
Market value of minority 0 0 0
Reversal of shares and participations -18 -19 -20
Reversal of conv. debt assumed equity 0 0 0
EV 2710 2646 2587
Capital efficiency (%) 2021 2022 2023
Total assets turnover (%) 57,9 59,4 61
Capital invested turnover (%) 73,1 76,9 81,3
Capital employed turnover (%) 67,6 68,3 69
Inventories / sales (%) 14 14,7 14,7
Customer advances / sales (%) 0 0 0
Payables / sales (%) 3 3,1 3,1
Working capital / sales (%) 15,2 17,1 17,8
Financial risk and debt service 2021 2022 2023
Net debt / equity (%) 50 37,4 27,5
Net debt / market cap (%) 10,5 10,8 8,7
Equity ratio (%) 49,8 52 54
Net IB debt adj. / equity (%) 50 37,4 27,5
Current ratio (%) 268,8 314,6 356,4
EBITDA / net interest (%) 1154,6 2383,7 2638
Net IB debt / EBITDA (%) 211,5 155,9 112,5
Interest cover (%) 785,4 1748 2002,2
Lease liability amortisation 0 0 0
Other intangible assets 50 41 33
Right-of-use asset 95 77 59
Total other fixed assets 46 47 48
Leasing liability 109 109 109
Total other long-term liabilities 42 42 41
Net IB debt excl. leasing 208 151 99
Net IB debt / EBITDA lease Adj (%) 138,9 90,6 53,4
USDm 2021 2022e 2023e
Shares outstanding adj. 422 421 420
Fully diluted shares Adj 422 421 420
EPS 0,16 0,21 0,25
Dividend per share Adj 0 0 0
EPS Adj 0,16 0,21 0,25
BVPS 1,51 1,65 1,8
BVPS Adj -0,06 0,1 0,26
Net IB debt / share 0,8 0,6 0,5
Share price 7,16 5,71 5,71
Market cap. (m) 3023 2405 2399
Valuation 2021 2022 2023
P/E 34,7 26,8 23,2
EV/sales 3,76 3,4 3,1
EV/EBITDA 18,1 15,9 14
EV/EBITA 26,5 21,6 18,5
EV/EBIT 26,5 21,6 18,5
Dividend yield (%) 0 0,6 0,7
FCF yield (%) 3,2 4,7 5,3
P/BVPS 3,8 3,46 3,18
P/BVPS Adj -90,8 56,52 21,69
P/E Adj 34,7 26,8 23,2
EV/EBITDA Adj 18,1 15,9 14
EV/EBITA Adj 26,5 21,6 18,5
EV/EBIT Adj 26,5 21,6 18,5
EV/cap. employed 2,5 2,3 2,1
Investment ratios 2021 2022 2023
Capex / sales 4 4 4
Capex / depreciation 96,1 117,3 126
Capex tangibles / tangible fixed assets 42,9 38,7 34,9
Capex intangibles / definite intangibles 0 0 0
Depreciation on intangibles / definite intangibles 20,2 20,7 26,2
Depreciation on tangibles / tangibles 29,7 22,4 18,8
Lease adj. FCF yield (%) 3,2 4,7 5,3

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Media

Össur - Company presentation with President & CEO Jon Sigurdsson
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 7.4 % 7.4 % 31 Dec 2020
Arbejdsmarkedets Tillægspension (ATP) 5.4 % 5.4 % 30 Jun 2021
LSR Pension Fund 4.9 % 4.9 % 31 Dec 2020
Gildi Pension Fund 4.5 % 4.5 % 31 Dec 2020
SEB Fonder 4.1 % 4.1 % 31 Dec 2021
Invesco 3.2 % 3.2 % 30 Sep 2021
Lannebo Fonder 2.4 % 2.4 % 31 Dec 2021
Handelsbanken Fonder 1.3 % 1.3 % 31 Dec 2021
ODIN Fonder 1.2 % 1.2 % 31 Dec 2021
Source: Holdings by Modular Finance AB