Alcon (SIX/NYSE:ALC), the global leader in eye care, reported its financial results for the three months ended March 31, 2021. For the first quarter of 2021, worldwide sales were $1.9 billion, an increase of 5% on a reported basis and 2% on a constant currency basis(2), as compared to the same quarter of the previous year. First quarter 2021 diluted earnings per share were $0.17 and core diluted earnings per share were $0.49.
First quarter 2021 key figures
Three months ended March 31
2021
2020
Net sales ($ millions)
1,910
1,822
Operating margin (%)
7.8%
(1.5)%
Core operating margin (%)(1)
18.0%
16.6%
Earnings/(loss) per share ($)
0.17
(0.12)
Core diluted earnings per share ($)(1)
0.49
0.45
"The first quarter was a solid start to the year, with healthy sales, a return to 2019 core margin levels and the substantial completion of our separation activities. Strong commercial execution of our new product launches continues to drive market share gains despite the continued impacts of COVID-19," said David Endicott, Chief Executive Officer.
Mr. Endicott continued, "I want to thank the hundreds of Alcon associates who have spent the past two years working to complete our separation and establish our independence as the global leader in eye care. Their extraordinary work is allowing us to devote more time to accelerating innovation and driving above-market sales growth. Our recent success validates our continued investment in a robust product pipeline that will meet the future needs of eye care professionals and their patients."
First quarter 2021 results
Worldwide sales for the first quarter were $1.9 billion, an increase of 5% on a reported basis and 2% on a constant currency basis, compared to the first quarter of 2020.
The following table highlights net sales by segment for the first quarter of 2021:
Three months ended March 31
Change %
($ millions unless indicated otherwise)
2021
2020
$
cc(2)
Surgical
Implantables
344
310
11
9
Consumables
535
519
3
—
Equipment/other
198
155
28
25
Total Surgical
1,077
984
9
7
Vision Care
Contact lenses
509
502
1
(1)
Ocular health
324
336
(4)
(5)
Total Vision Care
833
838
(1)
(3)
Net sales to third parties
1,910
1,822
5
2
Surgical momentum driven by equipment and implantables
Surgical net sales of $1.1 billion, which include implantables, consumables and equipment/other, increased 9%, or 7% on a constant currency basis, compared to the first quarter of 2020. Sales growth was primarily driven by demand for cataract and refractive equipment and other refractive products, as well as continued strength in PanOptix and the launch of Vivity. In the prior year period, implantables sales in Japan benefited from the PanOptix launch and favorable market conditions. Consumables sales were similar to the previous year's levels due to the continued impact of COVID-19 on surgical procedures.
Vision Care impacted by prior year stocking activity
Vision Care net sales of $0.8 billion, which include contact lenses and ocular health, declined 1%, or 3% on a constant currency basis, compared to the first quarter of 2020. Contact lens sales benefited from the recent launch of Precision1 sphere and toric, but were more than offset by declines in international markets. Ocular health net sales reflected strong demand for Pataday and the recent launch of Pataday Extra Strength. Sales in the prior year period benefited from higher than normal demand in the US for ocular health products at the beginning of the COVID-19 pandemic.
Operating income
First quarter 2021 operating income was $149 million, which includes charges of $125 million from the amortization of certain intangible assets and a $45 million impairment of an intangible asset. Excluding these and other adjustments, first quarter 2021 core operating income was $344 million. First quarter core operating margin of 18.0% increased by 140 bps, due to an increase in sales partially offset by increased investment in research and development and marketing and sales spend. The prior year period was impacted by increased provisions for expected credit losses due to the COVID-19 pandemic. Foreign exchange had a positive 40 bps impact on core operating margin.
Diluted earnings per share (EPS)
First quarter 2021 diluted earnings per share were $0.17 and core diluted earnings per share were $0.49. The company declared its first dividend of CHF 0.10 per share, which is expected to be paid on May 6, 2021.
Balance sheet highlights
The Company ended the first quarter with a cash position of $1.6 billion. Cash flow from operations totaled $156 million and free cash flow(3) amounted to $48 million compared to an outflow of $60 million in the previous year. Higher cash flow from operations was partially offset by increased capital spending. Financial debts totaled $4.1 billion, in line with prior year end. The Company ended the first quarter with a net debt(4) position of $2.5 billion. The Company continues to have $1.0 billion available in its existing revolving credit facility as of May 4, 2021.
Financial outlook
The Company provided its full year outlook as follows. This assumes markets return to historical levels in the third quarter and grow in the second half of the year.
Net sales
$7.8 to $8.0 billion
Core operating margin(1)
approximately 17%
Core diluted EPS(1)
$1.85 to $1.95
Webcast and Conference Call Instructions
The Company will host a conference call on May 5 at 2:00 p.m. Central European Time / 8:00 a.m. Eastern Time to discuss its first quarter 2021 earnings results. The webcast can be accessed online through Alcon's Investor Relations website, investor.alcon.com. Listeners should log on approximately 10 minutes in advance. A replay will be available online within 24 hours after the event.
The Company's interim financial report and supplemental presentation materials can be found online through Alcon's Investor Relations website at the beginning of the conference, or by clicking on the link:
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