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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 719 749 814
Sales growth (%) 14,2 4,2 8,7
EBITDA 149 144 167
EBITDA margin (%) 20,7 19,2 20,5
EBIT adj 97 95 118
EBIT adj margin (%) 13,6 12,7 14,4
Pretax profit 87 86 112
EPS rep 0,16 0,16 0,2
EPS growth (%) 850,9 1,2 29,8
EPS adj 0,16 0,16 0,2
DPS 0 0 0
EV/EBITDA (x) 20,4 13,1 11
EV/EBIT adj (x) 31,2 19,9 15,6
P/E (x) 41,4 25,5 19,6
P/E adj (x) 41,4 25,5 19,6
EV/sales (x) 4,2 2,5 2,2
FCF yield (%) 2,7 5,7 6,6
Dividend yield (%) 0 0 0
Net IB debt/EBITDA 2,2 1,5 1
Lease adj. FCF yield (%) 2,7 5,7 6,6
Lease adj. ND/EBITDA 1,5 0,8 0,3
USDm 2021 2022e 2023e
Sales 719 749 814
COGS -263 -279 -298
Gross profit 455 470 516
Other operating items -306 -326 -350
EBITDA 149 144 167
Depreciation on tangibles -18 -18 -18
Depreciation on intangibles -23 -9 -9
EBITA 97 95 118
Goodwill impairment charges -5 0 0
Other impairment and amortisation 1 0 0
EBIT 97 95 118
Other financial items 1 0 0
Net financial items -11 -10 -7
Associated income 0 1 1
Other EO items 1 0 0
Pretax profit 87 86 112
Tax -21 -20 -26
Net profit 66 66 86
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 66 66 86
EPS 0,16 0,16 0,2
EPS Adj 0,16 0,16 0,2
Total extraordinary items after tax 0 0 0
Tax rate (%) -24,2 -23 -23
Gross margin (%) 63,4 62,8 63,4
EBITDA margin (%) 20,7 19,2 20,5
EBITA margin (%) 13,6 12,7 14,4
EBIT margin (%) 13,5 12,7 14,4
Pretax margin (%) 12,1 11,4 13,6
Net margin (%) 9,1 8,7 10,4
Growth rates Y/Y 2021 2022 2023
Sales growth (%) 14,2 4,2 8,7
EBITDA growth (%) 60,2 -3,3 15,6
EBIT growth (%) 244 -2,3 23,6
Net profit growth (%) 728,9 1 29,5
EPS growth (%) 850,9 1,2 29,8
Profitability 2021 2022 2023
ROE (%) 10,9 10,1 12,1
ROE Adj (%) 10,9 10,1 12,1
ROCE (%) 9,3 9 10,5
ROCE Adj(%) 9,3 9 10,5
ROIC (%) 7,7 7,8 9,7
ROIC Adj (%) 7,7 7,8 9,7
Adj earnings numbers 2021 2022 2023
EBITDA Adj 149 144 167
EBITDA Adj margin (%) 20,7 19,2 20,5
EBITA Adj 97 95 118
EBITA Adj margin (%) 13,6 12,7 14,4
EBIT Adj 97 95 118
EBIT Adj margin (%) 13,6 12,7 14,4
Pretax profit Adj 87 86 112
Net profit Adj 66 66 86
Net profit to shareholders Adj 66 66 86
Net Adj margin (%) 9,1 8,7 10,4
Depreciation and amortisation -52 -49 -49
Of which leasing depreciation -21 -20 -20
EO items 0 0 0
Impairment and PPA amortisation 0 0 0
EBITDA lease Adj 149 144 167
EBITDA lease Adj margin (%) 20,7 19,2 20,5
Leasing payments 0 0 0
USDm 2021 2022e 2023e
EBITDA 149 144 167
Net financial items -11 -10 -7
Paid tax -16 0 0
Non-cash items 0 0 0
Cash flow before change in WC 122 134 160
Change in WC -22 -8 -16
Operating cash flow 100 127 143
CAPEX tangible fixed assets -27 -30 -33
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals 0 0 0
Free cash flow 74 97 111
Dividend paid 0 0 0
Share issues and buybacks 0 -10 -29
Other non cash items -54 27 -26
Decrease in net IB debt -79 41 50
Balance Sheet (USDm) 2021 2022 2023
Goodwill 612 612 612
Indefinite intangible assets 1 0 0
Definite intangible assets 60 51 43
Tangible fixed assets 67 77 91
Other fixed assets 45 46 47
Fixed assets 873 855 839
Inventories 104 108 118
Receivables 103 107 116
Other current assets 26 26 26
Cash and liquid assets 85 198 254
Total assets 1191 1295 1354
Shareholders equity 627 683 740
Minority 0 0 0
Total equity 627 683 740
Long-term debt 262 262 262
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 46 46 46
Accounts payable 27 28 30
Other current liabilities 114 114 114
Total liabilities and equity 1237 1295 1354
Net IB debt 332 219 163
Net IB debt excl. pension debt 332 219 163
Capital invested 941 931 932
Working capital 93 100 116
EV breakdown 2021 2022 2023
Market cap. diluted (m) 2720 1687 1683
Net IB debt Adj 332 219 163
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 3035 1889 1828
Capital efficiency (%) 2021 2022 2023
Total assets turnover (%) 59,7 60,3 61,5
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 (%) 13 12,9 13,3
Financial risk and debt service 2021 2022 2023
Net debt / equity (%) 53 32,1 22
Net debt / market cap (%) 11 13 9,7
Equity ratio (%) 52,6 52,7 54,6
Net IB debt adj. / equity (%) 53 32,1 22
Current ratio (%) 169,8 233,4 269,5
EBITDA / net interest (%) 1395,9 1440,9 2378,7
Net IB debt / EBITDA (%) 222,9 151,9 97,8
Interest cover (%) 913 950,9 1678,7
Lease liability amortisation 0 0 0
Other intangible assets 59 49 39
Right-of-use asset 92 72 52
Total other fixed assets 44 45 46
Leasing liability 109 109 109
Total other long-term liabilities 53 53 53
Net IB debt excl. leasing 223 110 54
Net IB debt / EBITDA lease Adj (%) 149,7 76,2 32,3
USDm 2021 2022e 2023e
Shares outstanding adj. 422 421 420
Fully diluted shares Adj 422 421 420
EPS 0,16 0,16 0,2
Dividend per share Adj 0 0 0
EPS Adj 0,16 0,16 0,2
BVPS 1,48 1,62 1,76
BVPS Adj -0,11 0,05 0,21
Net IB debt / share 0,8 0,5 0,4
Share price 7,16 4,01 4,01
Market cap. (m) 3023 1687 1683
Valuation 2021 2022 2023
P/E 41,4 25,5 19,6
EV/sales 4,22 2,52 2,25
EV/EBITDA 20,4 13,1 11
EV/EBITA 31,2 19,9 15,6
EV/EBIT 31,2 19,9 15,6
Dividend yield (%) 0 0 0
FCF yield (%) 2,7 5,7 6,6
P/BVPS 4,34 2,47 2,28
P/BVPS Adj -61,38 76,8 18,95
P/E Adj 41,4 25,5 19,6
EV/EBITDA Adj 20,4 13,1 11
EV/EBITA Adj 31,2 19,9 15,6
EV/EBIT Adj 31,2 19,9 15,6
EV/cap. employed 2,9 1,7 1,6
Investment ratios 2021 2022 2023
Capex / sales 3,7 4 4
Capex / depreciation 88 103,3 112,3
Capex tangibles / tangible fixed assets 40 38,7 35,8
Capex intangibles / definite intangibles 0 0 0
Depreciation on intangibles / definite intangibles 19,8 20,5 25,7
Depreciation on tangibles / tangibles 27,9 24,5 20,9
Lease adj. FCF yield (%) 2,7 5,7 6,6

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Media

Össur - Company presentation with CFO Sveinn Sölvason
Össur - Company presentation with President & CEO Jon Sigurdsson

Main shareholders - Össur

Main shareholders Share capital % Voting shares % Verified
William Demant Fonden 51.8 % 51.8 % 31 Dec 2021
Live Pension Fund 5.6 % 5.6 % 31 Dec 2021
Arbejdsmarkedets Tillægspension (ATP) 5.2 % 5.2 % 31 Dec 2021
LSR Pension Fund 4.6 % 4.6 % 31 Dec 2021
SEB Fonder 4.2 % 4.2 % 30 Jun 2022
Invesco 3.2 % 3.2 % 31 May 2022
Gildi Pension Fund 2.9 % 2.9 % 31 Dec 2021
Lannebo Fonder 1.9 % 1.9 % 30 Jun 2022
Handelsbanken Fonder 1.4 % 1.4 % 30 Jun 2022
ODIN Fonder 1.2 % 1.2 % 30 Jun 2022
Source: Holdings by Modular Finance AB