Sonova(SONVY) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a growth of 29% for the year in local currency, with a two-year compound annual growth rate (CAGR) of 9.7% [13][47] - Adjusted EBITDA margin increased by 180 basis points in local currency, reaching 39.3% [26][49] - Earnings per share (EPS) adjusted increased by 38.7% to 10.76 [50] - Operating free cash flow rose by 26.8% to 764 million [50] Business Line Data and Key Metrics Changes - Hearing Instruments segment grew by 25.4%, with an organic growth rate of 23.4% year-over-year [29][41] - Cochlear Implants showed strong demand for new sound processors, regaining market share despite some supply chain headwinds [32][46] - Consumer Hearing segment faced challenges in the first month post-acquisition of Sennheiser, resulting in low revenue and negative EBITDA contribution [31] Market Data and Key Metrics Changes - The U.S. market was the fastest-growing region, with strong performance in the first half driven by pent-up demand [34] - All regions experienced growth in the second half, with rates between 14% to 16% [35] - The company noted that foot traffic in many markets was not as strong historically, leading to increased lead generation costs [27] Company Strategy and Development Direction - The company aims to continue driving growth initiatives while balancing margin expansion [11][15] - The acquisition of Sennheiser is expected to enhance consumer reach and expand the product offering from regular hearing aids to early hearing loss devices [12][66] - The company is focusing on innovation in Cochlear Implants and Hearing Instruments, with new product launches planned [18][19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing market recovery but noted that it is not fully realized yet, with challenges from supply chain issues and inflation [7][64] - The company expects sales growth of 17% to 21% year-over-year and EBITDA growth of 12% to 18% for the upcoming year [15][63] - Management remains optimistic about the strategic direction and believes the current strategy is effective [15][66] Other Important Information - The company achieved carbon neutrality last year and is committed to science-based targets for emissions [24][25] - A new three-year share buyback program of 1.5 billion was announced, following the completion of a previous 700 million buyback [51][60] Q&A Session Summary Question: About OTC hearing aids and market fundamentals - Management discussed the potential of hearable devices with speech enhancement, emphasizing a focus on this segment rather than traditional OTC devices [75][76] Question: Marketing spend for Sennheiser consumer business - Management indicated that while there is a ramp-up in marketing spend due to product launches, significant increases are not planned for the full year [79][80] Question: Sales and profitability performance in H1 vs H2 - Management noted that the second half is typically stronger due to seasonal factors and product cycles, with pent-up demand gradually normalizing [83][86] Question: Pricing strategies and challenges with large accounts - Management acknowledged that pricing adjustments are more challenging with large accounts like government contracts, which have fixed timelines for price changes [97][98]