1Q19 Trading Update 1Q19 ading Update May 16, 2019 1 Legal - - PowerPoint PPT Presentation

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1Q19 Trading Update 1Q19 ading Update May 16, 2019 1 Legal - - PowerPoint PPT Presentation

1Q19 Trading Update 1Q19 ading Update May 16, 2019 1 Legal Disclaimers Legal Disclaimers Forward-Looking Statements This presentation contains forward - looking statements within the meaning of the safe harbor provisions of the United


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1Q19 1Q19 Trading Update ading Update

May 16, 2019

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Forward-Looking Statements

This presentation contains “forward-looking statements” within the meaning of the safe harbor provisions of the United States 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,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Forward-looking statements are neither historical facts nor assurances of future

  • performance. Instead, they are based only on Alcon’s current beliefs, expectations and assumptions regarding the future of its 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 forward-looking statements

are subject to various risks and uncertainties facing Alcon, including: the commercial success of its products and its ability to maintain and strengthen its position in its markets; the success of its research and development efforts; uncertainties regarding the success of Alcon’s separation and spin-off from Novartis; pricing pressure from changes in third party payor coverage and reimbursement methodologies; global economic, financial, legal, tax, political, and social change; ongoing industry consolidation; its ability to maintain relationships in the healthcare industry; changes in inventory levels or buying patterns of its customers; its reliance on sole or limited sources of supply; its reliance on outsourcing key business functions; its ability to protect its intellectual property; the impact on unauthorized importation of its products from countries with lower prices to countries with higher prices; its success in completing and integrating strategic acquisitions; the effects of litigation, including product liability lawsuits; its ability to comply with all laws to which it may be subject; effect of product recalls or voluntary market withdrawals, including CyPass; data breaches; the implementation of its enterprise resource planning system; its ability to attract and retain qualified personnel; the sufficiency of its insurance coverage; the accuracy of its accounting estimates and assumptions, including pension plan obligations and the carrying value of intangible assets; the ability to obtain regulatory clearance and approval of its products as well as compliance with any post-approval obligations; legislative 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; ability to service its debt obligations; the need for additional financing; its ability to operate as a stand-alone company; whether the transitional services Novartis has agreed to provide Alcon are sufficient; the impact of the spin-off from Novartis on Alcon’s shareholder base; the ability to declare and pay dividends; and the effect of maintaining or losing its foreign private issuer status under U.S. securities laws. Additional factors are discussed in Alcon’s filings with the United States Securities and Exchange Commission, including its 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 speak only as of the date of its filing, and Alcon assumes no obligation to update forward-looking statements as a result of new information, future events or otherwise. Intellectual property This report may contain reference to our proprietary intellectual property. All product names in this presentation are trademarks owned by or licensed to Alcon. Non-IFRS Measures Alcon uses certain non-IFRS metrics when measuring performance, especially when measuring current period results against prior periods, including core results and constant

  • currencies. 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 non-IFRS measures are presented solely to permit investors to more fully understand how Alcon management assesses underlying performance. These non-IFRS

measures are not, and should not be viewed as, a substitute for IFRS measures.

Legal Legal Disclaimers Disclaimers

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Age Agenda nda

Highlights Select financial results 2019 guidance

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Highl Highlights ights

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  • Alcon became an independent public

company on April 9, 2019 and started trading under the ticker ALC

  • Swiss SIX exchange and the NYSE listing
  • Alcon is domiciled in Switzerland
  • Included in 14 global and regional

indices

Su Successful ccessful spin spin-of

  • ff
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$7b

sales

growing eye care device leader

$23b

market

growing at 4% favorable market trends with significant opportunities to grow and expand

140+

countries served by over 20,000 employees in all categories within Surgical & Vision Care strong & experienced management team

#1 or #2

Alco Alcon n at at a Gl a Glance ance

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Aging population with growing eye care needs Innovation improving the quality of eye care Population over age 60 will double by 2050 (>1b people)1 Patients have more

  • ptions and

better outcomes Increasing wealth and growth from emerging economies Middle class will grow by ~1.5b people in the next 10-15 years2 By 2050, half the world, ~5b people, will be myopic3 Myopia prevalence is growing; increased screen time and mobile device use is impacting vision

  • 1. United Nations (UN), http://www.un.org/en/sections/issues-depth/ageing/
  • 2. The unprecedented expansion of the global middle class an update, Kharas 2017
  • 3. Global Prevalence of Myopia and High Myopia and Temporal Trends from 2000 through 2050, Holden, Brien A. et al., Ophthalmology , Volume 123 , Issue 5 , 1036 - 1042

St Stron

  • ng

g mega mega-tr trends ends

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Maximize the potential of near-term portfolio by growing key products Accelerate innovation and deliver next wave of technologies Capture opportunities to expand markets and pursue adjacencies Support new business models to improve the customer experience Leverage existing infrastructure to improve

  • perating efficiencies

Our five Our five-year year str strategy ategy sets sets us up fo us up for r susta sustainable inable and pr and profita

  • fitable

ble gr growth wth ... ...

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PowerVision

Advancing Advancing our

  • ur inno

innovat vation ion agenda agenda

  • New accommodating AT-IOL technology
  • Fluid filled lens uses natural contraction of

eye muscles

  • Advancing development of potentially

breakthrough technology

  • Acquisition completed 3/19

iLux and NGenuity

  • iLux: Device for treating Meibomian Gland

Dysfunction (MBG), a leading cause of dry eye

  • NGenuity: 3D heads-up digital visualization

system that expands the view of the surgical field

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Select Financi Select Financial al Results Results

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16% 31% 9% 17% 27% 41% 59%

Diversified portfolio across businesses and geographies

$7.1B Vision Care $3.1B Surgical $4.0B $7.1B International $4.2B U.S. $2.9B

Implantables Consumables Equipment / Other Ocular Health Contact Lenses

Gl Globa

  • bal

l sal sales in 20 es in 2018 18

Numbers are rounded for presentation purposes

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16% 31% 9% 16% 28% 41% 59%

Diversified portfolio across businesses and geographies

$1.8B Vision Care $0.8B Surgical $1.0B $1.8B International $1.0B U.S. $0.8B

Implantables Consumables Equipment/ Other Ocular Health Contact Lenses

Global sales in 1Q19

Numbers are rounded for presentation purposes

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Surgical

30%

Implantables

  • Monofocal Intra-ocular lenses
  • Advanced technology IOLs

Consumables

  • Dedicated consumables
  • Custom surgical packs
  • Procedural products

55%

Equipment/Other

  • Cataract equipment (Centurion)
  • Retinal equipment (Constellation)
  • Refractive Lasik equipment
  • Diagnostic and visualization
  • Equipment service

15% 65%

Contact Lenses

  • Daily lenses
  • Reusable lenses
  • Cosmetic lenses

Ocular Health

  • Dry eye products
  • Contact lens solution

35%

Numbers are rounded for presentation purposes

Vision Care

1Q19 details by franchise and product category

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  • Flat reported net sales vs

prior year

  • +4%1 constant-currency growth
  • 400 bps foreign currency

impact due to the strengthening US dollar

Net Sales (USD $M)

$1,779 $1,777 1Q18 1Q19

1Q19 net sales at a glance

1Constant currencies (cc) are 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 prior year and comparing them to prior year values in US dollars. An explanation of non-IFRS measures can be found in the appendix.

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  • Strong demand for AT-IOLs, primarily

driven by international sales of PanOptix

+ +

  • Consumable pull-through from next gen equipment
  • Innovation in smaller gauge instruments
  • Core capital equipment grew in-line with market
  • Strong demand from equipment services/other

+

$157 $164 $541 $551 $279 $285 1Q18 1Q19 $977 $1,000 Implantables Consumables Equipment/Other

+8% (CC)1 +6% +9% Net Sales (USD $M) +2% (USD) +2% +4%

Surgical sales

1 Constant currencies (cc) are 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 prior year and comparing them to prior year values in US dollars. An explanation of non-IFRS measures can be found in the appendix.

+2% +7%

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$293 $279 $509 $498 1Q19 1Q18 $802 $777

Contact lenses Ocular health

Net Sales (USD $M) +1% (CC)1 0%

  • 2%

(USD)

  • 5%
  • Continued demand for DT1 lenses
  • Double digit growth in U.S., APAC, Japan

+ +

  • Strong Systane performance driven by continued

rollout and demand for Systane Complete

  • Legacy lens category slightly down
  • Solutions business declining with market
  • 1 Constant currencies (cc) are 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 prior year and comparing them to prior year values in US dollars. An explanation of non-IFRS measures can be found in the appendix.

Vision Care sales

  • 3%

+1%

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Co Core e oper

  • perating

ating mar margin gin bridge bridge1

1.3 0.7 0.5 SAP 1Q19 1Q18 R&D Other 19.2% 17.7%

1Q19 vs 1Q18 (% of sales)

1 Core results are a non-IFRS measure. Refer to the appendix for additional information, including a reconciliation for such core results to the most directly comparable measures presented in accordance with IFRS.

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2019 Gui 2019 Guidance dance

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  • 1. Constant currency sales growth (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 prior year and

comparing them to prior year values in US dollars. An explanation of non-IFRS measures can be found in appendix.

  • 2. Core results are a non-IFRS measure. Refer to the appendix for additional information, including a reconciliation for such core results to the most directly comparable measures presented in accordance with IFRS.
  • 3. Core effective tax rate, a non-IFRS measure, is the applicable annual tax rate on core taxable income.

Full year 2019 Sales growth (1) 3% – 5% Core operating margin (2) 17% - 18% Core effective tax rate (3) 17% - 19%

Full-year 2019 guidance

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  • Organization ready to operate as independent company
  • Industry tailwinds from strong megatrends
  • Balanced cash pay and reimbursement markets
  • Robust product pipeline and improving product flow
  • Positive growth in all categories of Surgical
  • Strong performance in key Vision Care growth drivers
  • Expanding manufacturing capacity to support product initiatives
  • Solid core operating margin performance

Alcon is well positioned Solid top line growth and margin performance

Su Summary mmary

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Appendix Appendix

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Alcon uses certain non-IFRS metrics when measuring performance, especially when measuring current period results against prior periods, including core results and constant

  • currencies. 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 non-IFRS measures are presented solely to permit investors to more fully understand how Alcon management assesses underlying performance. These 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, 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, impairments of property, plant and equipment and financial assets, 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. 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-U.S. currencies to the U.S. dollar can affect Alcon financial results and financial position. To provide additional information that may be useful to investors, including changes in sales volume, Alcon presents information about its 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 combined income statement excluding: the impact of translating the income statements of combined entities from their non-U.S. dollar functional currencies to the U.S. dollar; and the impact of exchange rate movements on the major transactions of combined 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 U.S. dollars, using the average exchange rates from the prior year and comparing them to the prior year values in U.S. dollars.

Reconciliation of guidance for forward-looking non-IFRS measures

The forward-looking guidance included in this presentation cannot be reconciled to the comparable IFRS measures without unreasonable efforts, because Alcon is not able to predict with reasonable certainty the ultimate amount or nature of extraordinary items in the fiscal year. These items are uncertain, depend on many factors and could have a material impact

  • n its IFRS results for the guidance period.

Non Non-IFRS IFRS meas measur ures es

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In millions 1Q19 1Q18 IFRS Operating (loss)/income ($48) $73 Add: Amortization of certain intangible assets (1) $255 $253 Legal items (2) $32 $9 Other Items (3) $75 $7 Core Operating income $314 $342

1 Includes recurring amortization for all intangible assets other than software. 2 Q1 2019 includes settlement costs and certain external legal fees. Q1 2018 includes legal costs related to an investigation. 3 Q1 2019 includes $88 million related to spin-off readiness costs, amortization of option rights, and integration related expenses for recent acquisitions and

  • ther items, partially offset by $13 million related to the fair value adjustment of a contingent consideration liability and fair value adjustment on a financial
  • asset. Q1 2018 includes $17 million related to option rights and other items, partially offset by $10 million in fair value adjustments on a financial asset.

Reconciliatio Reconciliation n of

  • f IFRS to

IFRS to Co Core Result e Results

% of sales 1Q19 1Q18 IFRS Operating margin (2.7%) 4.1% Core Operating margin 17.7% 19.2%

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