Baxter International Inc. · NYSE:BAX
Baxter International — Q3 2020 Earnings Presentation
32 slides from Baxter International's earnings presentation, Oct 29, 2020
Slide 1: Third-Quarter 2020 Earnings
Third-Quarter 2020 Earnings Baxter International Inc. October 29, 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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 outlook for full-
Slide 3: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures To supplement Baxter’s consolidated financial statements presented on a U.S. GAAP basis, the Company discloses certain non-GAAP financial measures. These non-GAAP financial measures are not in accordance with generally accepted accounting principles in the United S
Slide 4: Top Quartile Goals / Our Strategy
Top Quartile Goals Patient safety and Quality Best place to work Growth through innovation Industry leading performance Our Strategy Strengthen our portfolio and extend our impact through transformative innovation that spans prevention to recovery 4
Slide 5: Table of Contents
Table of Contents Performance Summary 6 Financial Results 11 2020 Outlook 20 Non-GAAP Reconciliations 22
Slide 6: Performance Highlights
Performance Highlights Third-Quarter 2020 Year-To-Date 2020 $2.97B +4% Constant Currency $8.49B +4% Reported +2% Reported 1 +3% Constant Currency1 Sales +3% Operational2 Sales +3% Operational2 Key Metrics GAAP Adjusted3 Key Metrics GAAP Adjusted3 Gross Margin 40.2% 42.6% Gross Margin 40.0% 42.8% YOY
Slide 7: Executing On Our Strategy
Executing On Our Strategy Recent Highlights Demonstrating Underlying Portfolio Resilience In Dynamic Environment1 ▪ Operational sales growth of 3% in Q3, driven by underlying business strength and ongoing demand for medically essential products ▪ Adjusted diluted EPS growth of 12% in Q3 reflects sol
Slide 8: Key Financial Metrics: Third-Quarter 2020 Snapshot
Key Financial Metrics Third-Quarter 2020 Snapshot1 Global Reported Sales Adjusted Operating Margin Adjusted Diluted EPS $2.85B $2.97B 19.5% 19.2% $0.83 $0.74 +3% Operational Growth 2 (30 bps) +12% Q3 2019 Q3 2020 Q3 2019 Q3 2020 Q3 2019 Q3 2020 1Non-GAAP financial metrics referenced in this slide in
Slide 9: Key Financial Metrics: Year-To-Date 2020 Snapshot
Key Financial Metrics Year-To-Date 2020 Snapshot1 Global Reported Sales Adjusted Operating Margin Adjusted Diluted EPS $8.32B $8.49B 18.2% $2.34 $2.29 18.1% +3% Operational Growth 2 (10 bps) (2%) YTD 2019 YTD 2020 YTD 2019 YTD 2020 YTD 2019 YTD 2020 1Non-GAAP financial metrics referenced in this sli
Slide 10: Demonstrating Portfolio Resiliency Amid COVID-19
Demonstrating Portfolio Resiliency Amid COVID-19 Third-Quarter 2020 Business Drivers1,2 Renal Care Medication Delivery $955M, +4% Constant Currency $680M, (3%) Constant Currency Growth in both PD and HD businesses globally; PD Strong execution of infusion pumps, led by Evo IQ sales benefitted from 6
Slide 11: Financial Results
Financial Results Third-Quarter 2020 Earnings October 29, 2020 11
Slide 12: Third-Quarter 2020 Sales By Global Business Unit
Third-Quarter 2020 Sales By Global Business Unit1 Q3 2020 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Renal Care $216 $739 $955 +4% +4% +4% Medication Delivery $434 $246 $680 (3%) (3%) (3%) Pharmaceuticals $210 $330 $540 +2% +1% +1% Clinical Nutrition $9
Slide 13: Year-To-Date 2020 Sales By Global Business Unit
Year-To-Date 2020 Sales By Global Business Unit1 YTD 2020 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Renal Care $629 $2,115 $2,744 +2% +5% +5% Medication Delivery $1,296 $686 $1,982 (2%) (1%) (1%) Pharmaceuticals $653 $899 $1,552 (1%) (1%) (1%) Clinical
Slide 14: Third-Quarter 2020 Sales By Operating Segment
Third-Quarter 2020 Sales By Operating Segment1 Q3 2020 Revenue Total Growth $ In Millions Reported Reported Constant Operational Americas $1,549 +1% +2% +1% (North and South America) EMEA (Europe, Middle East and $777 +6% +3% +3% Africa) APAC $646 +10% +7% +5% (Asia Pacific) Total Baxter $2,972 +4%
Slide 15: Year-To-Date 2020 Sales By Operating Segment
Year-To-Date 2020 Sales By Operating Segment1 YTD 2020 Revenue Total Growth $ In Millions Reported Reported Constant Operational Americas $4,455 (0%) +2% +1% (North and South America) EMEA (Europe, Middle East and $2,262 +4% +4% +4% Africa) APAC $1,775 +6% +7% +5% (Asia Pacific) Total Baxter $8,492
Slide 16: Third-Quarter 2020 Adjusted Financial Results
Third-Quarter 2020 Adjusted Financial Results1 Q3 2019 Q3 2020 Change Adjusted Gross Margin 45.7% 42.6% (310 bps) Adjusted SG&A Expense 21.5% 19.3% (220 bps) (% of Sales) Adjusted R&D Expense 4.7% 4.1% (60 bps) (% of Sales) Adjusted Operating Margin 19.5% 19.2% (30 bps) Adjusted Diluted EPS $0.74 $0
Slide 17: Year-To-Date 2020 Adjusted Financial Results
Year-To-Date 2020 Adjusted Financial Results1 YTD 2019 YTD 2020 Change Adjusted Gross Margin 44.6% 42.8% (180 bps) Adjusted SG&A Expense 21.8% 20.5% (130 bps) (% of Sales) Adjusted R&D Expense 4.7% 4.3% (40 bps) (% of Sales) Adjusted Operating Margin 18.2% 18.1% (10 bps) Adjusted Diluted EPS $2.34 $
Slide 18: Maintaining Focus On Cash Flow Generation
Maintaining Focus On Cash Flow Generation1 Operating Cash Flow2 Capital Expenditures Free Cash Flow3 $1,281M $1,158M $776M $686M $505M $472M YTD 2019 YTD 2020 YTD 2019 YTD 2020 YTD 2019 YTD 2020 1Non-GAAP financial metrics referenced in this slide include free cash flow. A reconciliation to comparab
Slide 19: Prioritizing Financial Flexibility While Driving Value For Shareholders
Prioritizing Financial Flexibility While Driving Value For Shareholders Over The Long-Term Reinvestment In Business Meeting the needs of patients and providers globally while continuing to invest in long-term innovation and accelerated launch cadence Dividend Issuance Announced a quarterly dividend
Slide 20: Full-Year 2020 Outlook
Full-Year 2020 Outlook Third-Quarter 2020 Earnings October 29, 2020 20
Slide 21: Full-Year 2020 Guidance
Full-Year 2020 Guidance1 Full-Year 2020 Guidance Sales Growth Low Single Digit Reported Foreign Exchange <100 bps Sales Growth Low Single Digit Constant Currency Seprafilm Acquisition ~80 bps Sales Growth Low Single Digit Operational Adjusted Diluted EPS $3.02 - $3.05 Growth vs. Prior-Year Period (9
Slide 22: Non-GAAP Reconciliations
Non-GAAP Reconciliations Third-Quarter 2020 Earnings October 29, 2020 22
Slide 23: Non-GAAP Reconciliation as of October 29, 2020
Non-GAAP Reconciliation as of October 29, 2020 Non-GAAP Reconciliations: As part of its Q3 2020 earnings announcement on October 29, 2020, Baxter presented its financial results for the third quarter of 2020 and the related year-to-date period. Baxter also presented guidance for FY 2020. In these pr
Slide 24: Reconciliation of U.S. GAAP to Non-GAAP Measures: Three Months
Description of Adjustments and Reconciliation of U.S. GAAP to Non-GAAP Measures Three Months Ended September 30, 2020 and 2019 (unaudited) (in millions, except per share and percentage data) The company’s U.S. GAAP results for the three months ended September 30, 2020 included special items which im
Slide 25: Reconciliation of U.S. GAAP to Non-GAAP Measures: Three Months Footnotes
Description of Adjustments and Reconciliation of U.S. GAAP to Non-GAAP Measures Three Months Ended September 30, 2020 and 2019 (unaudited) 1 The company’s results in 2020 and 2019 included intangible asset amortization expense of $57 million ($42 million, or $0.08 per diluted share, on an after-tax
Slide 26: Reconciliation of U.S. GAAP to Non-GAAP Measures: Nine Months
Description of Adjustments and Reconciliation of U.S. GAAP to Non-GAAP Measures Nine Months Ended September 30, 2020 and 2019 (unaudited) (in millions, except per share and percentage data) The company’s U.S. GAAP results for the nine months ended September 30, 2020 included special items which impa
Slide 27: Reconciliation of U.S. GAAP to Non-GAAP Measures: Nine Months Footnotes
Description of Adjustments and Reconciliation of U.S. GAAP to Non-GAAP Measures Nine Months Ended September 30, 2020 and 2019 (unaudited) 1 The company’s results in 2020 and 2019 included intangible asset amortization expense of $165 million ($127 million, or $0.25 per diluted share, on an after-tax
Slide 28: Operating Cash Flow to Free Cash Flow
Reconciliation of Non-GAAP Financial Measure Operating Cash Flow to Free Cash Flow (unaudited) (in millions) N ine M onths Ended Septem ber 3 0 , 2020 2019 C ash flow s from operations - continuing operations $ 1 ,1 5 8 $ 1 ,2 8 1 Capital expenditures (472) (505) F ree cash flow - continuing operati
Slide 29: Net Sales Growth As Reported to Operational: Three Months
Reconciliation of Non-GAAP Financial Measure Change in Net Sales Growth As Reported to Operational Sales Growth From The Three Months Ended September 30, 2019 to The Three Months Ended September 30, 2020 (unaudited) Sales By Global Business Unit: N et Sales Grow th Operational As Reported Seprafilm
Slide 30: Net Sales Growth As Reported to Operational: Nine Months
Reconciliation of Non-GAAP Financial Measure Change in Net Sales Growth As Reported to Operational Sales Growth From The Nine Months Ended September 30, 2019 to The Nine Months Ended September 30, 2020 (unaudited) Sales By Global Business Unit: N et Sales Grow th Operational As Reported Seprafilm FX
Slide 31: Projected Full Year 2020 GAAP EPS to Adjusted EPS
Reconciliation of Non-GAAP Financial Measure Projected Full Year 2020 U.S. GAAP Earnings Per Share to Projected Adjusted Earnings Per Share (unaudited) Earnings Per Share Guidance FY 2020* Earnings per Diluted Share – U.S. GAAP $2.41 - $2.44 Estimated intangible asset amortization $0.33 Estimated bu
Slide 32: Third-Quarter 2020 Earnings
Third-Quarter 2020 Earnings Baxter International Inc. October 29, 2020