Baxter International Inc. · NYSE:BAX
Baxter International — Q3 2023 Earnings Presentation
40 slides from Baxter International's earnings presentation, Nov 2, 2023
Slide 1: Third-Quarter 2023 Earnings
T H I R D - Q UA R T E R 2023 EARNINGS Baxter International Inc. November 2, 2023 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 fourth quarter and full-year 2023) and business development and regulatory activities and the company’s ongoing strategic actions. T
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 14 2023 Outlook 21 Non-GAAP Reconciliations 24 4
Slide 5: Performance Summary
P E R FO R M A N C E S U M M A RY Third-Quarter 2023 Earnings November 2, 2023 5
Slide 6: Executing on Our Strategy for Value Creation
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 Q3 2023 Results1 Q3 2023 constant currency sales increased 2% both for continuing operations and in the aggregate (including discontinued operations) exceeding previously announced guidance, driven by new produ
Slide 7: 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 Third-Quarter 2023 Year-To-Date 2023 $3.7B +3% Reported +2% Constant Currency2 $10.9B +2% Reported +3% Constant Currency2 Sales Sales Key Metrics GAAP Adjusted4 Key Metrics GAAP Adjusted4 Gross Margin 30.1% 41.7% Gross
Slide 8: Key Financial Metrics: Third-Quarter Snapshot
KEY FINANCIAL METRICS T H I R D - 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 $3.6B $3.7B 15.7% 15.2% $0.71 $0.68 +2% Constant Growth 3 (50 bps) (4%) Q3 2022 Q3 2023 Q3 2022 Q3 2023 Q3 2022 Q
Slide 9: Third-Quarter Adjusted Financial Results
T H I R D - 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 ) Q3 2022 Q3 2023 Change Adjusted Gross Margin 42.4% 41.7% (70 bps) Adjusted SG&A Expense 22.6% 22.1% (50 bps) (% of Sales) Adjusted R&D Expense 4.1% 4.3% +20 bps (% of Sales) Ad
Slide 10: Key Financial Metrics: Year-To-Date Snapshot
KEY FINANCIAL METRICS Y E A R - T O - D AT E 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 $10.9 B $2.25 $10.8 B 15.6% 13.7% $1.72 +3% Constant Growth 3 (190 bps) (24%) YTD 2022 YTD 2023 YTD 2022 YTD 2023 YT
Slide 11: Year-To-Date Adjusted Financial Results
Y E A R -TO - DAT E 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 ) YTD 2022 YTD 2023 Change Adjusted Gross Margin 43.0% 41.0% (200 bps) Adjusted SG&A Expense 23.2% 22.9% (30 bps) (% of Sales) Adjusted R&D Expense 4.1% 4.4% +30 bps (% of Sales) Adju
Slide 12: Third-Quarter Performance vs Guidance
T H I R D - Q UA R T E R 2 0 2 3 P E R FO R M A N C E 1 Metric Q3 2023 Q3 2023 Guidance Actual Sales Growth ~2% +3% Reported Sales Growth ~1% +2% Constant Currency GAAP Diluted EPS N/A $0.09 Growth vs. Prior-Year Period NM2 Adjusted Diluted EPS $0.65 - $0.67 $0.68 Growth vs. Prior-Year Period (4%) I
Slide 13: Executing Portfolio Management Actions and Disciplined Capital Allocation
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 of the third quarter, Substantially all of the estimated Paid quarterl
Slide 14: 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 Third-Quarter 2023 Earnings November 2, 2023 14
Slide 15: Third-Quarter Sales by Product Category
T H I R D - 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 Q3 2023 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Infusion Therapies & Technologies $570 $433 $1,003 +5% +4% Advanced Surgery $139 $116 $255 +3% +3% Medical Products & Therapies $709 $549 $
Slide 16: Third-Quarter Business Drivers
T H I R D - 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 strong growth in infusion systems portfolio, driven by continued $1,003M +4% Technologies demand for infusion pump
Slide 17: Third-Quarter Segment Results
T H I R D - Q UA R T E R 2 0 2 3 S E G M E N T R E S U LT S 1 Q3 2023 Results Segment Segment Reported Reported Constant Operating Operating YoY Margin $ In Millions Revenue Growth Growth Income Margin Change2 Medical Products & Therapies $1,258 +5% +4% $245 19.5% (190 bps) Healthcare Systems & $744
Slide 18: Year-To-Date Sales by Product Category
Y E A R -TO - DAT E 2 0 2 3 S A L E S BY P RO D U C T C AT E G O RY 1 YTD 2023 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Infusion Therapies & Technologies $1,654 $1,264 $2,918 +3% +4% Advanced Surgery $433 $340 $773 +5% +6% Medical Products & Therapies $2,087 $1,6
Slide 19: Year-To-Date Segment Results
Y E A R -TO - DAT E 2 0 2 3 S E G M E N T R E S U LT S 1 YTD 2023 Results Segment Segment Reported Reported Constant Operating Operating YoY Margin $ In Millions Revenue Growth Growth Income Margin Change2 Medical Products & Therapies $3,691 +3% +4% $706 19.1% (60 bps) Healthcare Systems & $2,218 +1
Slide 20: Third-Quarter and Year-To-Date Results
T H I R D - Q UA R T E R A N D Y E A R -TO - DAT E 2 0 2 3 R E S U LT S 1 Q3 2023 Results Adjusted Adjusted Reported Reported Constant Operating Operating YoY Margin $ In Millions Revenue Growth Growth Income Margin Change2 Baxter Continuing Operations $3,708 +3% +2% $565 15.2% (50 bps) Discontinued
Slide 21: 2023 Outlook
2 0 2 3 O U T LO O K Third-Quarter 2023 Earnings November 2, 2023 21
Slide 22: Fourth-Quarter Guidance
FO U R T H - Q UA R T E R 2 0 2 3 G U I DA N C E 1 Q4 2023 Guidance Sales Growth 1% - 2% Reported (Continuing Operations) Foreign Exchange <(50) bps Sales Growth ~1% Constant Currency (Continuing Operations) Adjusted Diluted EPS $0.85 - $0.88 Continuing Operations 1Non-GAAP financial metrics referen
Slide 23: Full-Year Guidance
F U L L -Y E A R 2 0 2 3 G U I DA N C E 1 FY 2023 Guidance Sales Growth 1% - 2% Reported (Continuing Operations) Foreign Exchange ~50 bps Sales Growth ~2% Constant Currency (Continuing Operations) Adjusted Diluted EPS $2.57 - $2.60 Continuing Operations 1Non-GAAP financial metrics referenced in this
Slide 24: Non-GAAP Reconciliations
NON-GAAP R E C O N C I L I AT I O N S Third-Quarter 2023 Earnings November 2, 2023 24
Slide 25: Non-GAAP Reconciliations as of November 2, 2023
NON-GAAP RECONCILIATIONS AS OF NOVEMBER 2, 2023 Non-GAAP Reconciliations: As part of its Q3 2023 earnings announcement on November 2, 2023, Baxter presented its financial results for the third quarter of 2023. Baxter also presented guidance for the fourth quarter and full year of 2023. In these pres
Slide 26: Reconciliations: Three Months Ended September 30, 2023
DESCRIPTION OF ADJUSTMENTS AND RECONCILIATIONS OF U.S. GAAP TO NON-GAAP MEASURES Three Months Ended September 30, 2023 (unaudited) (in millions, except per share and percentage data) The company’s U.S. GAAP results for the three months ended September 30, 2023 included special items which impacted t
Slide 27: Reconciliations: Three Months Ended September 30, 2022
DESCRIPTION OF ADJUSTMENTS AND RECONCILIATIONS OF U.S. GAAP TO NON-GAAP MEASURES Three Months Ended September, 2022 (unaudited) (in millions, except per share and percentage data) The company’s U.S. GAAP results for the three months ended September 30, 2022 included special items which impacted the
Slide 28: Reconciliations: Three Months Ended September 30, 2023 and 2022
DESCRIPTION OF ADJUSTMENTS AND RECONCILIATIONS OF U.S. GAAP TO NON-GAAP MEASURES Three Months Ended September 30, 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 29: Reconciliations: Three Months Ended September 30, 2023 and 2022
DESCRIPTION OF ADJUSTMENTS AND RECONCILIATIONS OF U.S. GAAP TO NON-GAAP MEASURES Three Months Ended September 30, 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 30: Reconciliations: Nine Months Ended September 30, 2023
DESCRIPTIONS OF ADJUSTMENTS AND RECONCILIATIONS OF U.S. GAAP TO NON-GAAP MEASURES Nine Months Ended September 30, 2023 (unaudited) (in millions, except per share and percentage data) The company’s U.S. GAAP results for the nine months ended September 30, 2023 included special items which impacted th
Slide 31: Reconciliations: Nine Months Ended September 30, 2022
DESCRIPTION OF ADJUSTMENTS AND RECONCILIATIONS OF U.S. GAAP TO NON-GAAP MEASURES Nine Months Ended September 30, 2022 (unaudited) (in millions, except per share and percentage data) The company’s U.S. GAAP results for the nine months ended September 30, 2022 included special items which impacted the
Slide 32: Reconciliations: Nine Months Ended September 30, 2023 and 2022
DESCRIPTION OF ADJUSTMENTS AND RECONCILIATIONS OF U.S. GAAP TO NON-GAAP MEASURES Nine Months Ended September 30, 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 33: Reconciliations: Nine Months Ended September 30, 2023 and 2022
DESCRIPTION OF ADJUSTMENTS AND RECONCILIATIONS OF U.S. GAAP TO NON-GAAP MEASURES Nine Months Ended September 30, 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 34: Reconciliation of Non-GAAP Financial Measure
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE Three and Nine Months Ended September 30, 2023 (unaudited) (in millions, except for percentage data) The following table reconciles U.S. GAAP operating income from discontinued operations to adjusted operating income (including discontinued operations) 1
Slide 35: 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: 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 September 30, 2022 to The Three Months Ended September 30, 2023 (unaudited) Sales By Product Category: *Totals may not add across due to rounding Change i
Slide 37: Net Sales Growth to Constant Currency, Nine Months
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE Change in Net Sales Growth As Reported to Constant Currency Sales Growth From The Nine Months Ended September 30, 2022 to The Nine Months Ended September 30, 2023 (unaudited) Sales By Product Category: *Totals may not add across due to rounding Change in
Slide 38: Projected Q4 and Full Year 2023 Sales Growth and Operating Margin
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE Projected Fourth Quarter and Full Year 2023 Continuing Operations U.S. GAAP Sales Growth to Projected Constant Currency Sales Growth and Projected Full Year 2023 Projected Adjusted Operating Margin (unaudited) *Totals may not foot due to rounding 38
Slide 39: Projected Tax Rate and Adjusted EPS
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE Projected Full Year 2023 Projected Adjusted Tax Rate, and Projected Fourth Quarter and Full Year 2023 Projected Adjusted Earnings Per Share (unaudited) Baxter calculates forward-looking non-GAAP financial measures based on forecasts that omit certain amou
Slide 40: Third-Quarter 2023 Earnings
T H I R D - Q UA R T E R 2023 EARNINGS Baxter International Inc. November 2, 2023 40