Baxter International Inc. · NYSE:BAX
Baxter International — Q4 2023 Earnings Presentation
44 slides from Baxter International's earnings presentation, Feb 8, 2024
Slide 1: Fourth-Quarter 2023 Earnings
FO U R T H - Q UA R T E R 2023 EARNINGS Baxter International Inc. February 8, 2024 1
Slide 2: Forward-Looking Statements
FO RWA R D - LO O K I N G S TAT E M E N T S This presentation includes forward-looking statements concerning the company’s financial results (including the outlook for first-quarter and full-year 2024) and business development and regulatory activities. These forward-looking statements are based on
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: Table of Contents
TA B L E O F C O N T E N T S Performance Summary 5 Financial Results 15 2024 Outlook 22 Non-GAAP Reconciliations 26 Supplemental Historical 40 Financial Statements 4
Slide 5: Performance Summary
P E R FO R M A N C E S U M M A RY Fourth-Quarter 2023 Earnings February 8, 2024 5
Slide 6: Executing on Our Strategy for Value Creation: Recent Highlights
E X E C U T I N G O N O U R S T R AT E GY FO R VA LU E C R E AT I O N RECENT HIGHLIGHTS Q4 2023 Results1 Constant currency sales increased 3% exceeding previously announced guidance, driven by strong performance in Healthcare Systems and Technologies, Pharmaceuticals and Medical Products and Thera
Slide 7: Executing on Our Strategy for Value Creation: Recent Highlights
E X E C U T I N G O N O U R S T R AT E GY FO R VA LU E C R E AT I O N RECENT HIGHLIGHTS Investing In Growth Opportunities And Executing On A Robust Pipeline Of Launches1 Pharmaceuticals Launched ZOSYN (piperacillin and tazobactam) in the U.S. Zosyn premix is indicated for the treatment of multip
Slide 8: Performance Highlights
P E R FO R M A N C E H I G H L I G H T S C O N T I N U I N G O P E R AT I O N S 1 Fourth-Quarter 2023 Full-Year 2023 $3.9B +4% Reported +3% Constant Currency2 $14.8B +2% Reported +3% Constant Currency2 Sales Sales Key Metrics GAAP Adjusted3 Key Metrics GAAP Adjusted3 Gross Margin 37.9% 42.0% Gross M
Slide 9: Key Financial Metrics: Fourth-Quarter Snapshot
KEY FINANCIAL METRICS F O U R T H - Q U A R T E R 2 0 2 3 S N A P S H O T ( C O N T I N U I N G O P E R AT I O N S ) 1 Global Reported Sales Adjusted Operating Margin Adjusted Diluted EPS2 $3.7B $3.9B $0.88 15.9% 16.2% $0.78 +3% Constant Growth 3 +30 bps +13% Q4 2022 Q4 2023 Q4 2022 Q4 2023 Q4 2022
Slide 10: Fourth-Quarter Adjusted Financial Results
FO U R T H - Q UA R T E R 2 0 2 3 A DJ U S T E D F I N A N C I A L R E S U LT S 1 ( C O N T I N U I N G O P E R AT I O N S ) Q4 2022 Q4 2023 Change Adjusted Gross Margin 41.2% 42.0% +80 bps Adjusted SG&A Expense 21.1% 21.3% +20 bps (% of Sales) Adjusted R&D Expense 4.2% 4.4% +20 bps (% of Sales) Adj
Slide 11: Key Financial Metrics: Full-Year Snapshot
KEY FINANCIAL METRICS F U L L - Y E A R 2 0 2 3 S N A P S H O T ( C O N T I N U I N G O P E R AT I O N S ) 1 Global Reported Sales Adjusted Operating Margin Adjusted Diluted EPS2 $14.8 B $3.03 $14.5 B 15.7% 14.3% $2.60 +3% Constant Growth 3 (140 bps) (14%) FY 2022 FY 2023 FY 2022 FY 2023 FY 2022 FY
Slide 12: Full-Year Adjusted Financial Results
F U L L -Y E A R 2 0 2 3 A DJ U S T E D F I N A N C I A L R E S U LT S 1 ( C O N T I N U I N G O P E R AT I O N S ) FY 2022 FY 2023 Change Adjusted Gross Margin 42.5% 41.2% (130 bps) Adjusted SG&A Expense 22.7% 22.5% (20 bps) (% of Sales) Adjusted R&D Expense 4.1% 4.4% +30 bps (% of Sales) Adjusted
Slide 13: Fourth-Quarter Performance vs Guidance
FO U R T H - Q UA R T E R 2 0 2 3 P E R FO R M A N C E 1 ( C O N T I N U I N G O P E R AT I O N S ) Metric Q4 2023 Q4 2023 Guidance Actual Sales Growth 1% - 2% +4% Reported Sales Growth ~1% +3% Constant Currency GAAP Diluted EPS N/A $0.14 Growth vs. Prior-Year Period (50%) Adjusted Diluted EPS $0.85
Slide 14: Executing Portfolio Management Actions to Accelerate Capital Allocation Strategy
E X E C U T I N G P O R T FO L I O M A N AG E M E N T AC T I O N S TO AC C E L E R AT E D I S C I P L I N E D C A P I TA L A L LO C AT I O N S T R AT E GY PORTFOLIO SHARE MANAGEMENT DEBT REPAYMENT DIVIDENDS REPURCHASES At the end Q3 2023, Baxter Utilizing after-tax proceeds from Paid quarterly divid
Slide 15: Financial Results by Operating Segment
F I N A N C I A L R E S U LT S BY O P E R AT I N G S E G M E N T Fourth-Quarter 2023 Earnings February 8, 2024 15
Slide 16: Fourth-Quarter Sales by Product Category
FO U R T H - Q UA R T E R 2 0 2 3 S A L E S BY P RO D U C T C AT E G O RY 1 Q4 2023 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Infusion Therapies & Technologies $573 $469 $1,042 +5% +4% Advanced Surgery $149 $129 $278 +7% +6% Medical Products & Therapies $722 $598
Slide 17: Fourth-Quarter Business Drivers
FO U R T H - Q UA R T E R 2 0 2 3 B U S I N E S S D R I V E R S 1 Product Category Sales CC Growth2 Quarterly Performance Drivers Infusion Therapies & Sales in the quarter benefited from strength in IV solutions portfolio, particularly outside the U.S., as $1,042M +4% Technologies well as solid perf
Slide 18: Fourth-Quarter Segment Results
FO U R T H - Q UA R T E R 2 0 2 3 S E G M E N T R E S U LT S Q4 2023 Results1 Segment Segment Reported Reported Constant Operating Operating YoY Margin $ In Millions Revenue Growth Growth Income Margin Change2 Medical Products & Therapies $1,320 +6% +4% $266 20.2% (60 bps) Healthcare Systems & $795
Slide 19: Full-Year Sales by Product Category
F U L L -Y E A R 2 0 2 3 S A L E S BY P RO D U C T C AT E G O RY 1 FY 2023 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Infusion Therapies & Technologies $2,227 $1,733 $3,960 +4% +4% Advanced Surgery $582 $469 $1,051 +5% +6% Medical Products & Therapies $2,809 $2,202
Slide 20: Full-Year Segment Results
F U L L -Y E A R 2 0 2 3 S E G M E N T R E S U LT S FY 2023 Results1 Segment Segment Reported Reported Constant Operating Operating YoY Margin $ In Millions Revenue Growth Growth Income Margin Change2 Medical Products & Therapies $5,011 +4% +4% $972 19.4% (60 bps) Healthcare Systems & $3,013 +3% +3%
Slide 21: Fourth-Quarter and Full-Year Results
FO U R T H - Q UA R T E R A N D F U L L -Y E A R 2 0 2 3 R E S U LT S 1 Q4 2023 Results Adjusted Adjusted Reported Reported Constant Operating Operating YoY Margin $ In Millions Revenue Growth Growth Income Margin Change2 Total Baxter $3,885 +4% +3% $630 16.2% +30 bps FY 2023 Results Adjusted Adjust
Slide 22: 2024 Outlook
2 0 24 O U T LO O K Fourth-Quarter 2023 Earnings February 8, 2024 22
Slide 23: First-Quarter Guidance
F I R S T- Q UA R T E R 2 0 24 G U I DA N C E 1 Q1 2024 Guidance Sales Growth ~1% Reported Foreign Exchange <50 bps Sales Growth 1% - 2% Constant Currency Adjusted Diluted EPS $0.59 - $0.62 1Non-GAAP financial metrics referenced in this slide include constant currency sales growth and adjusted dilut
Slide 24: Full-Year Guidance
F U L L -Y E A R 2 0 24 G U I DA N C E 1 FY 2024 Guidance Sales Growth ~2% Reported Foreign Exchange NM2 Sales Growth ~2% Constant Currency Adjusted Diluted EPS $2.85 - $2.95 1Non-GAAP financial metrics referenced in this slide include constant currency sales growth and adjusted diluted EPS. 24 Info
Slide 25: Full-Year Guidance by Segment
F U L L -Y E A R 2 0 24 G U I DA N C E BY S E G M E N T 1 Sales Growth FY 2024 Constant Currency Guidance Medical Products & Therapies 3% - 4% Healthcare Systems & Technologies ~3% Pharmaceuticals 4% - 5% Baxter (Excluding Kidney Care) 3% - 4% Kidney Care (1%) – (2%) Total Baxter ~2% 1Non-GAAP finan
Slide 26: Non-GAAP Reconciliations
NON-GAAP R E C O N C I L I AT I O N S Fourth-Quarter 2023 Earnings February 8, 2024 26
Slide 27: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS See the slide entitled “Use of Non-GAAP Financial Measures” for information about non-GAAP financial measures included herein. The reconciliations set forth below reconcile non-GAAP measures included in this presentation to the most directly comparable U.S. GAAP measures. 27
Slide 28: Description of Adjustments and Reconciliations: Three Months Ended Dec 31, 2023
DESCRIPTION OF ADJUSTMENTS AND RECONCILIATIONS OF U.S. GAAP TO NON-GAAP MEASURES Three Months Ended December 31, 2023 (unaudited) (in millions, except per share and percentage data) The company’s U.S. GAAP results for the three months ended December 31, 2023 included special items which impacted the
Slide 29: Description of Adjustments and Reconciliations: Three Months Ended Dec 31, 2022
DESCRIPTION OF ADJUSTMENTS AND RECONCILIATIONS OF U.S. GAAP TO NON-GAAP MEASURES Three Months Ended December 31, 2022 (unaudited) (in millions, except per share and percentage data) The company’s U.S. GAAP results for the three months ended December 31, 2022 included special items which impacted the
Slide 30: Description of Adjustments and Reconciliations: Three Months Ended Dec 31, 2023 and 2022
DESCRIPTION OF ADJUSTMENTS AND RECONCILIATIONS OF U.S. GAAP TO NON-GAAP MEASURES Three Months Ended December 31, 2023 and 2022 (unaudited) For more information on the company's use of non-GAAP financial measures in this presentation, please see the company's Current Report on Form 8-K filed with the
Slide 31: Description of Adjustments and Reconciliations: Twelve Months Ended Dec 31, 2023
DESCRIPTIONS OF ADJUSTMENTS AND RECONCILIATIONS OF U.S. GAAP TO NON-GAAP MEASURES Twelve Months Ended December 31, 2023 (unaudited) (in millions, except per share and percentage data) The company’s U.S. GAAP results for the twelve months ended December 31, 2023 included special items which impacted
Slide 32: Description of Adjustments and Reconciliations: Twelve Months Ended Dec 31, 2022
DESCRIPTION OF ADJUSTMENTS AND RECONCILIATIONS OF U.S. GAAP TO NON-GAAP MEASURES Twelve Months Ended December 31, 2022 (unaudited) (in millions, except per share and percentage data) The company’s U.S. GAAP results for the twelve months ended December 31, 2022 included special items which impacted t
Slide 33: Description of Adjustments and Reconciliations: Twelve Months 2023 and 2022
DESCRIPTION OF ADJUSTMENTS AND RECONCILIATIONS OF U.S. GAAP TO NON-GAAP MEASURES Twelve Months Ended December 31, 2023 and 2022 (unaudited) For more information on the company's use of non-GAAP financial measures in this presentation, please see the company's Current Report on Form 8-K filed with th
Slide 34: Description of Adjustments and Reconciliations: Twelve Months 2023 and 2022
DESCRIPTION OF ADJUSTMENTS AND RECONCILIATIONS OF U.S. GAAP TO NON-GAAP MEASURES Twelve Months Ended December 31, 2023 and 2022 (unaudited) For more information on the company's use of non-GAAP financial measures in this presentation, please see the company's Current Report on Form 8-K filed with th
Slide 35: Reconciliation: Operating Cash Flow to Free Cash Flow
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE Operating Cash Flow to Free Cash Flow (unaudited) (in millions) Free cash flow is a non-GAAP measure. For more information on the company's use of non-GAAP financial measures in this presentation, please see the company's Current Report on Form 8-K filed
Slide 36: Reconciliation: Net Sales Growth to Constant Currency, Three Months
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE Change in Net Sales Growth As Reported to Constant Currency Sales Growth From The Three Months Ended December 31, 2022 to The Three Months Ended December 31, 2023 (unaudited) Sales By Product Category: *Totals may not add across due to rounding Change in
Slide 37: Reconciliation: Net Sales Growth to Constant Currency, Twelve Months
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE Change in Net Sales Growth As Reported to Constant Currency Sales Growth From The Twelve Months Ended December 31, 2022 to The Twelve Months Ended December 31, 2023 (unaudited) Sales By Product Category: *Totals may not add across due to rounding Change i
Slide 38: Reconciliation: Projected 2024 Sales Growth to Constant Currency
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE Projected First Quarter and Full Year 2024 U.S. GAAP Sales Growth to Projected Constant Currency Sales Growth and Full Year 2024 U.S. GAAP Sales Growth to Projected Constant Currency Sales Growth by Segment (unaudited) 38 *Totals may not foot due to round
Slide 39: Projected 2024 Adjusted Operating Margin, Tax Rate and EPS
Projected Full Year 2024 Projected Adjusted Operating Margin, Projected Full Year 2024 Projected Adjusted Tax Rate, and Projected First Quarter and Full Year 2024 Projected Adjusted Earnings Per Share (unaudited) Baxter calculates forward-looking non-GAAP financial measures based on forecasts that o
Slide 40: Supplemental Historical Financial Statements
S U P P L E M E N TA L HISTORICAL FINANCIAL S TAT E M E N T S Fourth-Quarter 2023 Earnings February 8, 2024 40
Slide 41: Net Sales by Segment
BAXTER INTERNATIONAL INC. Net Sales by Segment (unaudited, in millions) Quarterly Results Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Net sales by segment: Infusion Therapies and $ 1,042 $ 1,003 $ 1,004 $ 911 $ 988 $ 956 $ 940 $ 933 Technologies Advanced Surgery 278 255 272 246 2
Slide 42: Operating Income by Segment
BAXTER INTERNATIONAL INC. Operating Income by Segment (unaudited, in millions) Quarterly Results Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 2023 2023 2023 2023 2022 2022 2022 2022 Medical Products and Therapies $ 266 $ 245 $ 264 $ 197 $ 259 $ 257 $ 203 $ 243 Healthcare Systems and Technologies 156 115 100 112 127 108
Slide 43: Operating Income by Segment, continued
BAXTER INTERNATIONAL INC Operating Income by Segment, continued (unaudited, in millions) Years ended December 31, 2023 2022 2021 Medical Products and Therapies $ 972 $ 962 $ 955 Healthcare Systems and Technologies 483 494 60 Pharmaceuticals 401 391 523 Kidney Care 300 408 488 Other 18 77 59 Total 2,
Slide 44: Fourth-Quarter 2023 Earnings
FO U R T H - Q UA R T E R 2023 EARNINGS Baxter International Inc. February 8, 2024 44