Baxter International Inc. · NYSE:BAX
Baxter International — Q4 2017 Earnings Presentation
24 slides from Baxter International's earnings presentation, Feb 1, 2018
Slide 1: Fourth-Quarter And Full-Year 2017 Earnings
Fourth-Quarter And Full-Year 2017 Earnings Baxter International Inc. February 1, 2018
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation includes forward-looking statements concerning Baxter’s financial results, business development activities, capital structure, cost savings initiatives, R&D pipeline, including results of clinical trials and planned product launches, and financial outlook for
Slide 3: Table Of Contents
Table Of Contents Performance Summary 5 Financial Results 9 2018 Outlook 19 IV Solutions R&D Alliance Park, Belgium
Slide 4: Executing A Disciplined Strategy To Deliver Top-Quartile Shareholder Returns
Executing A Disciplined Strategy To Deliver Top- Quartile Shareholder Returns Focused, market-leading product portfolio Quality and patient safety Leaner, more efficient operating model Best place to work Strengthened profitability and returns Industry-leading performance Strong capital structure De
Slide 5: Delivering On Our Strategy: Business Highlights
Delivering On Our Strategy Business Highlights Building Momentum With Strong Capitalizing On New Product Launches Operational Performance And Geographic Expansions ► Delivered solid fourth-quarter and full-year 2017 sales and ► Reallocating investment to higher-margin, faster-growing adjusted earnin
Slide 6: Continuing Momentum Of Key Metrics
Continuing Momentum Of Key Metrics Full-Year 2017 Financial Snapshot1 Global Reported Adjusted Adjusted Revenues Operating Margin Diluted EPS $10,561M $2.48 16.0% $10,163M 13.6% $1.96 +5% Operational Growth2 +240bps +27% FY 2016 FY 2017 FY 2016 FY 2017 FY 2016 FY 2017 1See www.baxter.com for informa
Slide 7: Fourth-Quarter & Full-Year 2017 Sales And Adjusted Earnings
Fourth-Quarter & Full-Year 2017 Sales And Adjusted Earnings1 Reported Operational Metric Q4 2017 Q4 2016 Growth Growth Sales $2,774 $2,645 +5% +2% (Millions) Adjusted $0.64 $0.57 +12% -- Diluted EPS Reported Operational Metric FY 2017 FY 2016 Growth Growth Sales $10,561 $10,163 +4% +5% (Millions) Ad
Slide 8: Advancing Our New Product Portfolio
Advancing Our New Product Portfolio Full-Year 2017 R&D Milestones Hospital Products Renal ► Completed the acquisition of Claris Injectables, ► Launched oXiris, the first 3-In-1 set for use in broadening generic injectables product platform CRRT and sepsis management protocols2 ► Expanding surgical p
Slide 9: Financial Results
Financial Results Fourth-Quarter And Full-Year 2017 Earnings February 1, 2018 SIGMA SPECTRUM Manufacturing Medina, New York
Slide 10: Fourth-Quarter 2017 Sales
Fourth-Quarter 2017 Sales1 Historic Commercial Franchise Structure Q4 2017 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Fluid Systems $379 $253 $632 +3% +1% +2% I.P.S.2 $250 $352 $602 +7% +4% +0% Surgical Care $209 $154 $363 +4% +3% +3% Other $58 $50 $108
Slide 11: Full-Year 2017 Sales
Full-Year 2017 Sales1 Historic Commercial Franchise Structure FY 2017 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Fluid Systems $1,472 $962 $2,434 +6% +6% +7% I.P.S.2 $1,074 $1,275 $2,349 +5% +4% +4% Surgical Care $806 $581 $1,387 +5% +5% +5% Other $256
Slide 12: Fourth-Quarter 2017 Sales
Fourth-Quarter 2017 Sales1 Updated Global Business Unit (GBU) Structure Q4 2017 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Renal Care $193 $748 $941 +4% +2% +3% Medication Delivery $408 $264 $672 (2%) (4%) (3%) Pharmaceuticals $240 $268 $508 +15% +13% +
Slide 13: Full-Year 2017 Sales
Full-Year 2017 Sales1 Updated Global Business Unit (GBU) Structure FY 2017 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Renal Care $754 $2,726 $3,480 +2% +2% +3% Medication Delivery $1,698 $1,000 $2,698 +4% +4% +5% Pharmaceuticals $892 $991 $1,883 +9% +9%
Slide 14: Fourth-Quarter And Full-Year 2017 Adjusted Financial Results
Fourth-Quarter And Full-Year 2017 Adjusted Financial Results1 Metric Q4 2017 Q4 2016 Change FY 2017 FY 2016 Change Adjusted 44.3% 44.5% (20 bps) 44.8% 43.9% +90 bps Gross Margin Adjusted SG&A Expense2 22.6% 23.4% (80 bps) 23.0% 24.7% (170 bps) (% of Sales) Adjusted R&D Expense 6.6% 5.7% +90 bps 5.8%
Slide 15: Full-Year and Quarterly 2017 Adjusted Financial Results
Full-Year and Quarterly 2017 Adjusted Financial Results1 Metric Q1 2017 Q2 2017 Q3 2017 Q4 2017 FY 2017 Sales (Millions) $2,475 $2,605 $2,707 $2,774 $10,561 Reported Growth +4% +1% +6% +5% +4% Operational Growth +7% +3% +6% +2% +5% Adjusted 44.3% 45.2% 45.2% 44.3% 44.8% Gross Margin Adjusted 16.4% 1
Slide 16: Driving Operational Excellence Across The Company
Driving Operational Excellence Across The Company1 Adjusted Operating Margin Full-Year 2017 Highlights FY 2017 vs. FY 2016 Improved adjusted gross margin of 44.8% driven by enhanced manufacturing performance, +150 bps portfolio mix and modest price improvements in +90 bps select areas 16.0% Busi
Slide 17: Disciplined Financial Execution Drives Significant Improvements In Cash Flow Generation
Disciplined Financial Execution Drives Significant Improvements In Cash Flow Generation1 Operating Cash Flow Capital Expenditures Free Cash Flow2 Improved working capital and Investment prioritization and Enhanced flexibility allows operational performance disciplined spending control strategic capi
Slide 18: Strategically Deploying Capital To Fuel Growth And Create Value
Strategically Deploying Capital To Fuel Growth And Create Value Reinvestment in Net debt to EBITDA ratio near zero1; targeting Business steady state of ~2.0x Increased dividend by 23% in 2017; targeting Dividends ~35% dividend payout ratio BAX Repurchased approximately $564 million of Share Re
Slide 19: 2018 Outlook
2018 Outlook Fourth-Quarter And Full-Year 2017 Earnings February 1, 2018 Baxter Center for Spectroscopy and Imaging Round Lake, Illinois
Slide 20: Full-Year 2018 Financial Guidance
Full-Year 2018 Financial Guidance1 Metric FY 2018 FY 2018 Sales Impacts: Sales Growth [Constant Currency] ~4% • Foreign exchange [~250 bps] Sales Growth 6% - 7% • Cyclo competition [~100 bps] [Reported] Adjusted • Claris acquisition2 [~100 bps] Operating Margin 16.8% - 17.0% Adjusted Diluted EPS Gro
Slide 21: Full-Year 2018 Sales Guidance
Full-Year 2018 Sales Guidance1 FY 2018 FY 2018 Sales Growth Constant Currency Operational Renal Care 3% - 4% 3% - 4% Medication Delivery 6% - 7% 6% - 7% Pharmaceuticals Flat Flat Nutrition 4% - 5% 4% - 5% Advanced Surgery 3% - 4% 3% - 4% Acute Therapies 8% - 9% 8% - 9% Other LSD2 Decline LSD2 Declin
Slide 22: First-Quarter 2018 Financial Guidance
First-Quarter 2018 Financial Guidance1 Metric Q1 2018 Q1 2018 Sales Impacts: • Foreign exchange [~400 bps] Sales Growth [Constant Currency] 1% - 2% • Cyclo competition [<50 bps] • Claris acquisition2 [~100 bps] Sales Growth 5% - 6% [Reported] Q1 2018 Sales Guidance: Adjusted 5% - 6% 0% - 1% $0.60 -
Slide 23: Continuing Strong Momentum In 2018
Continuing Strong Momentum In 2018 ► Increasing innovation to drive accelerated revenue growth ► Maintaining strong cadence of product launches and geographic expansions ► Realizing ongoing benefits of cost reduction initiatives and organization optimization ► Strategically deploying capital to enha
Slide 24: Fourth-Quarter And Full-Year 2017 Earnings
Fourth-Quarter And Full-Year 2017 Earnings Baxter International Inc. February 1, 2018