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August 2020 1
Making a Unique Difference in the World
August 2020
August 2020
Safe Harbor Statement
2
This presentation contains forward-looking information that involves risks and uncertainties, including statements about the Company’s plans, objectives, expectations and intentions. Such statements include, without limitation: financial or other information based upon or otherwise incorporating judgments or estimates relating to future performance, events or expectations; the Company’s strategies, positioning, resources, capabilities, and expectations for future performance; and the Company's outlook and financial and other guidance. These forward-looking statements are based upon assumptions made by the Company as of the date hereof and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those anticipated.
Risks and uncertainties that could adversely affect the Company’s business and prospects, and otherwise cause actual results to differ materially from those anticipated, include without limitation: the severity and duration of the COVID-19 pandemic and its impact on the U.S. healthcare system, the U.S. economy and worldwide economy; the timing, scope and effect of further U.S. and international governmental, regulatory, fiscal, monetary and public health responses to the COVID-19 pandemic; continued demand for the Company’s COVID-19 TMA assay; the Company’s ability to manufacture, on a scale necessary to meet demand, its COVID-19 TMA assay as well as the Panther systems on which the assay runs; U.S., European and general worldwide economic conditions, trade relations, and related uncertainties; manufacturing risks, including the Company’s reliance on a single or limited source of supply for key components, the need to comply with especially high standards for the manufacture of many of its products and risks associated with utilizing third party manufacturers; the Company’s ability to predict accurately the demand for its products, and products under development, and to develop strategies to address its markets successfully; the ability of the Company to successfully manage leadership and organizational changes, including the ability of the Company to attract, motivate and retain key employees and maintain engagement and efficiency in remote work environments; the Company’s reliance on third-party reimbursement policies to support the sales and market acceptance of its products, including the possible adverse impact of government regulation and changes in the availability and amount of reimbursement and uncertainties for new products or product enhancements; changes to applicable laws and regulations, including tax laws, global health care reform, and import/export trade laws; changes in guidelines, recommendations and studies published by various organizations that could affect the use of the Company’s products; uncertainties inherent in the development of new products and the enhancement of existing products, including FDA approval and/or clearance and other regulatory risks, technical risks, cost overruns and delays; the risk that products may contain undetected errors or defects or otherwise not perform as anticipated; risks associated with strategic alliances and the ability of the Company to realize anticipated benefits of those alliances; risks associated with acquisitions, including, without limitation, the Company’s ability to successfully integrate acquired businesses, the risks that the acquired businesses may not operate as effectively and efficiently as expected even if otherwise successfully integrated, and the risks that acquisitions may involve unexpected costs or unexpected liabilities; the risks of conducting business internationally; the risk of adverse exchange rate fluctuations on the Company’s international activities and businesses; the early stage of market development for certain of the Company’s products; the Company’s leverage risks, including the Company’s obligation to meet payment obligations and financial covenants associated with its debt; cybersecurity risks; risks related to the use and protection of intellectual property; expenses, uncertainties and potential liabilities relating to litigation, including, without limitation, commercial, intellectual property, employment and product liability litigation; technical innovations that could render products marketed or under development by the Company obsolete; and competition.
Hologic, Aptima, Aptima Combo 2, Genius, Horizon, MyoSure, NovaSure, Panther, Selenia, Eviva, ATEC, The Science of Sure, Affirm, Brevera, ThinPrep, Tigris, PicoSure, SculpSure, Faxitron, Focal, BioZorb, Clarity HD, SmartCurve, Intelligent 2D, Quantra and associated logos, as may be used in this presentation, are trademarks and/or registered trademarks of Hologic, Inc. and/or its subsidiaries in the United States and/or other countries.
August 2020
Non-GAAP Financial Measures
3
The Company has presented the following non-GAAP financial measures in this presentation: constant currency revenues; organic revenues, non-GAAP gross margin; non-GAAP operating expenses; non-GAAP operating margin; non-GAAP effective tax rate; non-GAAP net income; non-GAAP net margin; non-GAAP EPS; and adjusted EBITDA. The Company defines its non-GAAP net income, EPS, and other non-GAAP financial measures to exclude, as applicable: (i) the amortization of intangible assets and impairment of goodwill, intangible assets and equipment; (ii) additional depreciation expense from acquired fixed assets and accelerated depreciation related to consolidation and closure of facilities; (iii) additional expenses resulting from the purchase accounting adjustment to record inventory at fair value and adjustments to contingent consideration; (iv) restructuring and divestiture charges and facility closure and consolidation charges and costs incurred to integrate acquisitions (including retention, transaction bonuses, legal and professional consulting services) and separate divested businesses from existing operations; (v) expenses related to its divested Cynosure business incurred subsequent to the disposition date primarily related to indemnification provisions for legal and tax matters (vi) transaction related expenses for divestitures and acquisitions; (vii) third-party expenses incurred related to implementing the European MDR/IVDR requirements and obtaining the appropriate approvals for its existing products (viii) debt extinguishment losses and related transaction costs; (ix) the unrealized (gains) losses on the mark-to-market of forward foreign currency contracts and foreign currency option contracts for which the Company has not elected hedge accounting; (x) litigation settlement charges (benefits) and non-income tax related charges (benefits); (xi) other-than-temporary impairment losses on investments and realized gains and losses resulting from the sale of investments; (xii) the one-time discrete impact of tax reform and other one-time impacts related to tax planning and non-operational items; (xiii) other one-time, non-recurring, unusual or infrequent charges, expenses or gains that may not be indicative of the Company's core business results; and (xiv) income taxes related to such adjustments. The Company defines adjusted EBITDA as its non-GAAP net income plus net interest expense, income taxes, and depreciation and amortization expense included in its non-GAAP net income. The Company defines organic revenue to exclude the divested Blood Screening and Cynosure businesses, and the acquired SSI business.
These non-GAAP financial measures should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP. The company's definition of these non-GAAP measures may differ from similarly titled measures used by others.
The non-GAAP financial measures used in this presentation adjust for specified items that can be highly variable or difficult to predict. The company generally uses these non-GAAP financial measures to facilitate management's financial and operational decision-making, including evaluation of Hologic's historical operating results, comparison to competitors' operating results and determination of management incentive compensation. These non-GAAP financial measures reflect an additional way of viewing aspects of the company's operations that, when viewed with GAAP results and the reconciliations to corresponding GAAP financial measures, may provide a more complete understanding of factors and trends affecting Hologic's business.
Because non-GAAP financial measures exclude the effect of items that will increase or decrease the company's reported results of operations, management strongly encourages investors to review the company's consolidated financial statements and publicly filed reports in their entirety. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures is included in the tables accompanying this presentation.
August 2020
Presentation Outline
4
Investment thesis
Purpose, passion, promise
Our journey
Leveraging our strengths
Financials and conclusion
August 2020 5
Investment Thesis• Broad portfolio of market-leading
products for women’s health
• MSD top-line, LDD bottom-line growth compounder over six years
• Divesting Cynosure removed overhang, simplified story
• All businesses strengthened in 2019
• Diagnostics division playing key role in fight against COVID-19 pandemic
• Well-positioned to emerge as a stronger company
August 2020
• Revenue of $3,367 million in fiscal 2019, 5.7% constant currency growth
6
Hologic Overview
Diagnostics40%
Breast and
Skeletal46%Surgical
14%
By Division
Consumables58%
Capital 25%
Service17%
By Type
US78%
OUS22%
By Geography
Note: Percentages in pie charts are for FY19 and exclude Cynosure. *Guidance provided by press release on 7/29/20. Presentation here is not, and should not be, construed as re-affirmation of guidance
• Q420 guidance implies significant acceleration in full-year organic revenue growth and non-GAAP EPS*
August 2020
Breakthrough in Testing for COVID-19
• As one of world’s leading molecular Dx firms, uniquely positioned to help
• Received EUA for Panther Fusion SARS-CoV-2 assay and a second high-throughput Aptima test On track to double molecular Dx test
manufacturing capacity by fall 2020 Enabling greater test volume to run on
~2,000 Panther instruments globally• Dramatically increasing testing
capabilities, helping labs deliver results when and where needed Help re-open economies and save lives
August 2020
Presentation Outline
8
Investment thesis
Purpose, passion, promise
Our journey
Leveraging our strengths
Financials and conclusion
August 2020 9
August 2020
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
1990 2017 -
5
10
15
20
25
30
35
1990 2017
US Cancer Death Rate Trend
Source: National Cancer Institute, Cancer Statistics, 2020. Age-adjusted death rate per 100,000 population, females all ages.
-39%
Breast cancer Cervical cancer
Much Has Been Accomplished, But Much More to Do
-38%
Presentation Outline
11
Investment thesis
Purpose, passion, promise
Our journey
Leveraging our strengths
Financials and conclusion
August 2020 12
Our Journey
TRANSFORMEDUS Sales
Organizations
BUILTInternationalCommercialCapabilities
REVITALIZEDResearch andDevelopment
DIVISIONALIZEDBusiness
Development Capabilities
PURSUINGOpportunities
in Supply Chain, Infrastructure
August 2020 13
Transformed U.S. Sales Organizations
• In Breast Health, overhauled sales talent, structure and process to help key account managers sell a growing product portfolio more strategically
• In Surgical, changed sales rep compensation to 100% commission to incentivize hunting rather than gathering
• In Diagnostics, upgraded talent and aligned structure to help customers of all sizes grow their businesses
August 2020 14
Built International Commercial Capabilities
Note: Percentage changes are in constant currency, $ amounts are as reported.
$533 $510 $491 $538 $634 $671
$-
$100
$200
$300
$400
$500
$600
$700
$800
2014 2015 2016 2017 2018 2019
Core OUS Revenue (ex. Blood, Aesthetics)
0%11%
13%
-5% 5%
11%
August 2020 15
Revitalized Research and Development
Note: New products represent those launched since 2015. Not all revenue is incremental. For example, MyoSure and NovaSure line extensions are included in Surgical.
B&SH
B&SHB&SH
Dx
Dx
Surgical
Surgical
Surgical
$0
$100
$200
$300
$400
$500
$600
$700
2017 2018 2019
Revenue from Recently Launched Products
August 2020 16
Created Divisional Business Development Capabilities
• Building good track record of divisional deals– Distributors– Faxitron– Focal– SuperSonic Imagine
August 2020 17
Growth Products
US Cytology & Perinatal
US NovaSure
Blood
2014
Growth Products
US Cytology & Perinatal
US NovaSure
Blood
2019 Ex-Cynosure
Result: Portfolio Has Shifted Toward Higher Growth
August 2020
Presentation Outline
18
Investment thesis
Purpose, passion, promise
Our journey
Leveraging our strengths
Financials and conclusion
19
Leveraging Our Strengths• In Breast Health, more Genius 3D mammography systems are strengthening our
competitive position and enabling growth across the continuum of care, leading to more diverse, consistent revenue growth
• In Diagnostics, more Panther instruments in more countries, with more menu, leading to strong increases in consumables sales and consistent revenue growth– Uniquely positioned to help fight COVID-19 pandemic with two SARS-COV-2 tests
• In Surgical, best-in-class products, new leadership, new commercial models and new product launches are accelerating growth
20
In Breast, More Genius 3D Mammography Systems …
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2014 2015 2016 2017 2018 2019
Cumulative US Shipments*
+1,098
+1,163
+1,042
+1,086
+1,159
* Bars represent units at end of Hologic fiscal years.
21
… Strengthen Our Competitive Position …
HologicAll
others
2013
Hologic
All others
2019
US Mammography Market Share
R A D I O L O G I S T
S U R G E O N R A D I A T I O N O N C O L O G I S T
P A T H O L O G I S T
S C R E E N D X I M A G E B I O P S Y L O C A L I Z E S L N BR E M O V E ,
F I L L , & M A R K
S P E C I M E N E V A L U A T I O N
R A D I A T I O NT H E R A P Y
APBISpecimen Radiography
… And Enable Growth Across the Continuum of Care …
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
FY'15 FY'19
Breast Conserving Surgery
Total OUS
Service
Interventional
Accessories and Equipment
Gantries
13%
20%
21%
12%
12%
30%
21%
25%
11%
30%
4%
23
… Leading to More Diverse, Consistent Revenue Growth
Note: All except “Total OUS” are US only. Percentages do not add to 100% due to rounding.
24
In Dx, More Panthers in More Countries …
0
500
1000
1500
2000
2014 2015 2016 2017 2018 2019
Cumulative Global Shipments*
US Shipments OUS Shipments
+252
+214
+207
+253
+213
* Bars represent units at end of Hologic fiscal years.
0
5
10
15
20
US Assays Cleared in 2015
25
… Combined with More Menu …
40
5
10
15
20
US Assays Cleared in 2019*
16
* Does not include additional two assays for COVID-19. In March 2020, Hologic received emergency use authorization (EUA) for the Panther Fusion® SARS-CoV-2 assay. In May 2020, Hologic received EUA for its Aptima® SARS-CoV-2 assay for the Panther system.
26
… Lead to Strong Growth in Consumable Sales …
$0
$50
$100
$150
$200
$250
$300
2014 2015 2016 2017 2018 2019
Global Assay Pull-Through per Panther
Global Pull-Through
~$150k
~$240k
1 Assay
2 Assays3+ Assays
Assay Use per Panther in U.S.*
* Data as of end of Hologic 2019 fiscal year.
27
… And Consistent Revenue Growth …
Note: Percentage changes are in constant currency, $ amounts are as reported, less one-time royalties 2014-2017.
$459 $487 $513 $570 $612 $675
$-
$100
$200
$300
$400
$500
$600
$700
$800
2014 2015 2016 2017 2018 2019
Global Molecular Sales Ex. One-Time Royalties
6%12%
7%
-3%7%
11%
… With Two COVID Tests Contributing• Received EUAs for Panther Fusion
SARS-CoV-2 assay and a second high-throughput Aptima test On track to double molecular Dx test
manufacturing capacity by fall 2020 Enabling greater test volume to run on ~2,000
Panther instruments globally• Dramatically increasing testing
capabilities, helping labs deliver results when and where needed Help re-open economies and save lives
• Further strengthening competitive position for Panther, Panther Fusion Creating opportunities for other tests
Watch Hologic COVID-19 response video at www.Hologic.com
29
Surgical Momentum Strong Pre-COVID, Now Recovering
• Best-in-class products
• New leadership
• New sales model
• New launches
• Sales recovering from COVID impact faster than expected
-7% -3%
0% 3% 1% 4% 5% 7%10% 4%
-54%
13%
-60.0%
-50.0%
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20
Surgical Revenue Accelerating Pre-COVID
*
*% change reflects year on year growth through two months of second quarter of fiscal 2020. Final growth rate for the second quarter of fiscal 2020 was 3.6% in constant currency.
• Large markets, low shares present opportunities for under-penetrated businesses• Growth from new leadership, new products, going direct• COVID assay sales to provide upside
30
Realizing International Potential
Note: Percentage changes are in constant currency
5%
13%
11.2%12.8%
10.6%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
2017 2018 2019
Core OUS Revenue (ex. Blood, Aesthetics)
31
Strong Free Cash Flow Also a Strength
• Expect healthy free cash flow in fiscal 2020 due to benefits of COVID assays and other businesses recovering
• Comfortable with leverage ratio 2.5 to 3x in the long-term
• Uncertain market conditions provides opportunity to pursue attractive assets– Still targeting growth-accretive acquisitions
» Division-led tuck-ins, not big deals» Leverage existing channels or expand into near adjacencies» Accretive to growth rate» Attractive ROIC, EPS accretion over time
Presentation Outline
32
Investment thesis
Purpose, passion, promise
Our journey
Leveraging our strengths
Financials and conclusion
$2,511 $2,705 $2,833 $3,059 $3,218 $3,367
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
2014 2015 2016 2017 2018 2019
Total Revenue*
0.4%
6.0% Revenue Growth from 2014 to 2019
33
9.8%
* Total non-GAAP revenue growth in millions. As reported except FY14, which excludes ~$20 million one-time revenue from amending Roka license. FY’17 includes partial year contributions from the divested blood screening and acquired Cynosure businesses, which also affect growth rates. Growth rates in constant currency.
5.4%8.3% 4.3%
5.7%
$1.46 $1.67 $1.96 $2.03 $2.23 $2.43
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
2014 2015 2016 2017 2018 2019
Non-GAAP EPS*
-2.7%
10.7% Annual Growth in Non-GAAP EPS
34
9.0%9.9%
3.6%17.4%
14.4%
* Non-GAAP EPS as reported except FY14, which excludes ~$0.05 one-time contribution from amending Roka license. FY’17 includes partial year contributions from the divested blood screening and acquired Cynosure businesses, which also affect growth rates.
Revenue Highlights 3Q20
35
Non-GAAP
Revenue ($M) 3Q20CC ∆
vs. 3Q19Diagnostics $532.2 74.9%
Excluding Blood $524.4 80.8%
Breast Health $224.0 (30.9%)
Excluding SSI $220.1 (32.1%)
GYN Surgical $51.5 (53.9%)
Skeletal Health $15.2 (37.3%)
Medical Aesthetics* $0.0 N/A
Total Revenue $822.9 (3.1%)
Core (ex. Blood and Aesthetics) $815.1 8.7%Organic (ex. Blood, Aesthetics, SSI) $811.2 8.1%
US Organic $652.6 11.2%OUS Organic $158.6 (2.8%)
* The Cynosure Medical Aesthetics business was divested on 12/30/2019.
Financial Overview 3Q20
36
Non-GAAP$M, except EPS 3Q20 ∆ vs. 3Q19Revenue $822.9 (3.5%), (3.1%) CC
Core (ex. Blood and Aesthetics) $815.1 8.2%, 8.7% CC
Organic (ex. Blood, Aesthetics, SSI) $811.2 7.7%, 8.1% CC
Gross Margin 64.7% 310 bps
Operating Expenses $261.1 (5.5%)
Operating Margin 33.0% 380 bps
Net Margin 23.7% 360 bps
Diluted EPS $0.75 19%
EBITDA $299.0 8.2%
Financial Appendix
38
39
Capitalization as of Q3 FY20
TrancheAmount Leverage Coupon Rating Call Date Maturity
Cash & Equivalents 744
Revolving Facility ($1,500 million) 500 L + 137.5 Ba1 / BBB- 12/17/23Term Loan 1,472 L + 137.5 Ba1 / BBB- 12/17/23Total Secured Debt 1,972 1.8x
Senior Unsecured Notes - 2025 950 4.375% Ba3 / BB- 10/15/20 10/15/25Senior Unsecured Notes - 2028 400 4.625% Ba3 / BB- 02/01/23 02/01/28Total Guaranteed Debt 3,322 3.1xTotal Debt 3,322 3.1xNet Debt 2,578 2.4x
LTM Adjusted EBITDA 1,087
Corporate Rating Ba2 / BB+
Reconciliation of GAAP to Non-GAAP (unaudited)
40
$s in millions, except earnings per shareYears Ended
September 28, 2019 September 29, 2018GROSS PROFITGAAP gross profit $1,170.9 $1,696.7
Adjustments:Amortization of intangible assets 318.5 319.4Incremental depreciation expense 0.3 0.6Integration/consolidation costs - 0.6Impairment of intangible assets and equipment 578.7 -Fair value write-up of acquired inventory 7.1 1.1
Non-GAAP gross profit $2,075.5 $2,018.4GROSS MARGIN PERCENTAGEGAAP gross margin percentage 34.8% 52.7%
Impact of adjustments above 26.8% 10.0%Non-GAAP gross margin percentage 61.6% 62.7%
OPERATING EXPENSESGAAP operating expenses $1,294.7 $1,934.6
Adjustments:Amortization of intangible assets (52.0) (59.3)Incremental depreciation expense (1.1) (7.4)Transaction expenses (4.5) (2.5)Non-income tax benefit (charge) - 4.0Contingent consideration adjustment (1.7) -Integration/consolidation costs (9.8) (3.5)Litigation settlements (4.5) (34.8)Restructuring charges (6.6) (14.2)Purchased research and development asset charges (4.5) (1.7)Impairment of intangible asset and equipment (106.7) (46.0)Impairment of goodwill - (685.7)
Non-GAAP operating expenses $1,103.3 $1,083.5OPERATING MARGINGAAP (loss) income from operations ($123.8) $(237.9)Adjustments to gross profit as detailed above 904.6 321.7Adjustments to operating expenses as detailed above 191.4 851.1Non-GAAP income from operations $972.2 $934.9
Continued on next page
Reconciliation of GAAP to Non-GAAP (unaudited)
41
$s in millions, except earnings per shareYears Ended
September 28, 2019 September 29, 2018OPERATING MARGIN PERCENTAGEGAAP operating margin percentage (3.7%) (7.4%)Impact of adjustments above 32.6% 36.5%Non-GAAP operating margin percentage 28.9% 29.1%INTEREST EXPENSEGAAP interest expense $140.8 $148.7
Adjustments: Non-cash interest expense relating to convertible notes - (3.5)Debt transaction costs (0.8) (4.3)
Non-GAAP interest expense $140.0 $140.9PRE-TAX INCOMEGAAP pre-tax (loss) earnings $(257.7) $(418.6)
Adjustments to pre-tax (loss) earnings as detailed above 1,096.8 1,180.6Debt extinguishment loss 0.8 45.9(Gain) Loss on sale of available-for-sale marketable securities (0.9) 0.6Loss from SSI 1.5 -Unrealized losses (gains) on forward foreign currency contracts 2.1 (6.6)Other charges - 1.1
Non-GAAP pre-tax income $842.6 $803.0NET INCOMEGAAP net (loss) income $(203.6) $(111.3)
Adjustments to GAAP net (loss) income as detailed above 1,100.3 1,219.4Tax benefit of internal reorganization (19.2) -Discrete impact of tax reform 5.0 (346.2)Income tax effect of reconciling items 2 (223.2) (143.6)
Non-GAAP net income $659.3 $618.3EARNINGS PER SHAREGAAP (loss) earnings per share – Diluted $(0.76) $(0.40)
Adjustments to net earnings (as detailed below) 3.19 2.63Non-GAAP earnings per share – Diluted 1 $2.43 $2.23ADJUSTED EBITDANon-GAAP net income $659.3 $618.3
Interest expense, net, not adjusted above 135.3 134.6Provision for income taxes 183.3 184.7Depreciation expense, not adjusted above 91.0 93.6
Adjusted EBITDA $1,068.9 $1,031.21Non-GAAP earnings per share was calculated based on 271,263 and 277,850 weighted average diluted shares outstanding for the years ended September 29, 2019 and September 29,2018 respectively. 2 To reflect an annual effective tax rate of 21.75% and 23.0% on a non-GAAP basis for fiscal 2019 and 2018, respectively.
Reconciliation of GAAP to Non-GAAP (unaudited)
42
$s in millions, except earnings per shareThree Months Ended
June 27, 2020 June 29, 2019GROSS PROFITGAAP gross profit $466.1 $444.8
Adjustments:Amortization of acquired intangible assets 62.9 78.6Incremental depreciation expense - 0.1Integration/consolidation costs 0.2 -Fair value write-up of acquired inventory sold 3.1 1.8
Non-GAAP gross profit $532.3 $525.3GROSS MARGIN PERCENTAGEGAAP gross margin percentage 56.6% 52.2%
Impact of adjustments above 8.1% 9.4%Non-GAAP gross margin percentage 64.7% 61.6%
OPERATING EXPENSESGAAP operating expenses $275.1 $299.5
Adjustments:Amortization of intangible assets (10.2) (11.9)Incremental depreciation expense - (0.3)Transaction expense (0.7) (1.9)Contingent consideration adjustments - -Litigation settlements - -Integration/consolidation costs (1.2) (1.8)Restructuring charges (1.0) (2.7)Additional Cynosure related expenses (0.9) -Purchased research and development asset charges - (4.5)
Non-GAAP operating expenses $261.1 $276.4OPERATING MARGINGAAP income (loss) from operations $191.0 $145.3Adjustments to gross profit as detailed above 66.2 80.5Adjustments to operating expenses as detailed above 14.0 23.1Non-GAAP income from operations $271.2 $248.9
Continued on next page
Reconciliation of GAAP to Non-GAAP (unaudited)
43
$s in millions, except earnings per shareThree Months Ended
June 27, 2020 June 29, 2019OPERATING MARGIN PERCENTAGEGAAP income from operating margin percentage 23.2% 17.0%Impact of adjustments above 9.8% 12.2%Non-GAAP operating margin percentage 33.0% 29.2%INTEREST EXPENSEGAAP interest expense $27.4 $35.1
Adjustments: Non-cash interest expense relating to convertible notes - -Debt transaction costs - -
Non-GAAP interest expense $27.4 $35.1PRE-TAX INCOMEGAAP pre-tax loss $168.4 $114.3
Adjustments to pre-tax earnings as detailed above 80.2 103.6Debt extinguishment losses - -Unrealized gains on forward foreign currency contracts 2.0 2.1Other - -
Non-GAAP pre-tax income $250.6 $220.0NET INCOMEGAAP net income (loss) $136.4 $93.9
Adjustments to GAAP net income as detailed above 80.3 105.7Discrete tax benefit of an internal restructuring - -Net loss attributable to non-controlling interest 1.1 -Income tax effect of reconciling items 2 (23.1) (28.0)
Non-GAAP net income $194.7 $171.6EARNINGS PER SHAREGAAP earnings per share – Diluted $0.53 $0.35
Adjustments to net earnings (as detailed below) 0.22 0.28Non-GAAP earnings per share – Diluted 1 $0.75 $0.63ADJUSTED EBITDANon-GAAP net income $194.7 $171.6
Interest expense, net, not adjusted above 26.9 33.9Provision for income taxes 57.0 48.4Depreciation expense, not adjusted above 20.4 22.5
Adjusted EBITDA $299.0 $276.4
¹Non-GAAP earnings per share was calculated based on 261,047 weighted average diluted shares outstanding for the three ended June 27, 2020 and 270,789 for the three ended June 29, 2019.2 To reflect an effective tax rate of 22.75% and 22.0% respectively on a non-GAAP basis for the three months ended June 27, 2020 and June 29, 2019 respectively.
Reconciliation of GAAP to Non-GAAP EPS Guidance
44
Guidance Range
Quarter Ending September 26, 2020Low High
GAAP Net Income Per Share $0.73 $0.93Amortization of acquired intangible assets $0.28 $0.28Restructuring, Integration and Other charges $0.02 $0.02Intangible asset and equipment impairment charges — —Discrete tax benefit from outside basis difference — —Tax Impact of Exclusions $(0.08) $(0.08)
Non-GAAP Net Income Per Share $0.95 $1.15
