Slide 1: Second-Quarter 2022 Earnings
Second-Quarter 2022 Earnings Baxter International Inc. July 28, 2022 Hillrom is a part of Baxter
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation includes forward-looking statements concerning the company’s financial results company’s financial results (including the outlook for third- quarter and full-year 2022) and business development and regulatory activities (including the December 2021 acquis
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
Table of Contents Performance Summary 5 Financial Results 11 2022 Outlook 19 Non-GAAP Reconciliations 22
Slide 5: Performance Highlights
Performance Highlights Second-Quarter 2022 First-Half 2022 $3.7B +26% Constant Currency $7.5B +21% Reported +23% Reported 1 +27% Constant Currency1 Sales +3% Operational2 Sales +3% Operational2 Key Metrics GAAP Adjusted3 Key Metrics GAAP Adjusted3 Gross Margin 38.8% 42.5% Gross Margin 37.6% 43.8% YO
Slide 6: Executing On Our Strategy For Value Creation
Executing On Our Strategy For Value Creation Recent Highlights Demonstrating Portfolio Resilience In Dynamic Environment1 ▪ Operational sales growth of 3% and adjusted diluted EPS growth of 9% in Q2 2022 driven by improving rates of hospital admission and elective procedures and the contribution fro
Slide 7: Key Financial Metrics: Second-Quarter 2022 Snapshot
Key Financial Metrics Second-Quarter 2022 Snapshot1 Global Reported Sales Adjusted Operating Margin Adjusted Diluted EPS $3.7B $3.1B 17.2% $0.87 16.2% $0.80 +3% Operational Growth 2 (100 bps) +9% Q2 2021 Q2 2022 Q2 2021 Q2 2022 Q2 2021 Q2 2022 1Non-GAAP financial metrics referenced in this slide inc
Slide 8: Key Financial Metrics: First-Half 2022 Snapshot
Key Financial Metrics First-Half 2022 Snapshot1 Global Reported Sales Adjusted Operating Margin Adjusted Diluted EPS $7.5B $1.80 $6.0B 17.1% 17.1% $1.56 +3% Operational Growth 2 Flat +15% H1 2021 H1 2022 H1 2021 H1 2022 H1 2021 H1 2022 1Non-GAAP financial metrics referenced in this slide include ope
Slide 9: Second-Quarter 2022 Performance
Second-Quarter 2022 Performance1 Metric Q2 2022 Q2 2022 Guidance Actual Sales Growth ~26% +21% Reported Sales Growth 29% - 30% +26% Constant Currency Sales Growth ~4% +3% Operational Adjusted Diluted EPS $0.86 - $0.89 $0.87 Growth vs. Prior-Year Period 8% –11% +9% 1Non-GAAP financial metrics referen
Slide 10: Performance Driven By Pandemic Recovery
Performance Driven By Pandemic Recovery Second-Quarter 2022 Business Drivers1 Product Category Sales CC Growth2 Quarterly Performance Drivers Performance driven by growth in our PD business reflecting sequential and year Renal Care $931M +2% over year improvement in global patient volumes; partially
Slide 11: Financial Results
Financial Results Second-Quarter 2022 Earnings July 28, 2022 11
Slide 12: Second-Quarter 2022 Sales By Product Category
Second-Quarter 2022 Sales By Product Category1 Q2 2022 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Renal Care $225 $706 $931 (3%) +2% +2% Medication Delivery $459 $251 $710 +2% +4% +4% Pharmaceuticals $164 $364 $528 (3%) +3% +3% Clinical Nutrition $90 $1
Slide 13: First-Half 2022 Sales By Product Category
First-Half 2022 Sales By Product Category1 H1 2022 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Renal Care $450 $1,375 $1,825 (3%) +1% +1% Medication Delivery $931 $485 $1,416 +5% +7% +7% Pharmaceuticals $321 $728 $1,049 (4%) +1% +1% Clinical Nutrition $1
Slide 14: Second-Quarter 2022 Sales By Operating Segment
Second-Quarter 2022 Sales By Operating Segment1 Q2 2022 Revenue Total Growth $ In Millions Reported Reported Constant Operational Americas $1,646 +1% +2% +2% (North and South America) EMEA (Europe, Middle East and $738 (6%) +6% +6% Africa) APAC $647 (6%) +1% +1% (Asia Pacific) Hillrom $715 N/A N/A N
Slide 15: First-Half 2022 Sales By Operating Segment
First-Half 2022 Sales By Operating Segment1 H1 2022 Revenue Total Growth $ In Millions Reported Reported Constant Operational Americas $3,272 +3% +4% +4% (North and South America) EMEA (Europe, Middle East and $1,437 (6%) +4% +4% Africa) APAC $1,274 (5%) +1% +1% (Asia Pacific) Hillrom $1,470 N/A N/A
Slide 16: Second-Quarter 2022 Adjusted Financial Results
Second-Quarter 2022 Adjusted Financial Results1 Q2 2021 Q2 2022 Change Adjusted Gross Margin 42.6% 42.5% (10 bps) Adjusted SG&A Expense 20.9% 22.4% +150 bps (% of Sales) Adjusted R&D Expense 4.5% 4.0% (50 bps) (% of Sales) Adjusted Operating Margin 17.2% 16.2% (100 bps) Adjusted Diluted EPS $0.80 $0
Slide 17: First-Half 2022 Adjusted Financial Results
First-Half 2022 Adjusted Financial Results1 H1 2021 H1 2022 Change Adjusted Gross Margin 42.3% 43.8% +150 bps Adjusted SG&A Expense 20.8% 22.7% +190 bps (% of Sales) Adjusted R&D Expense 4.4% 4.0% (40 bps) (% of Sales) Adjusted Operating Margin 17.1% 17.1% Flat Adjusted Diluted EPS $1.56 $1.80 +15%
Slide 18: Committed To Generating Strong Cash Flows And Maintaining Investment Grade Rating
Committed To Generating Strong Cash Flows And Maintaining Investment Grade Rating Strong Liquidity And Deleveraging Focus ~$1.9 billion of cash and cash equivalents on hand with access to $2.5 billion and €200 million of undrawn credit facilities as of June 30, 2022; $690 million of deleveraging yea
Slide 19: 2022 Outlook
2022 Outlook Second-Quarter 2022 Earnings July 28, 2022 19
Slide 20: Full-Year 2022 Guidance
Full-Year 2022 Guidance1 FY 2022 Guidance Sales Growth High Teens Reported Foreign Exchange 550+ bps Sales Growth Mid 20s Constant Currency Hillrom 2100+ bps Sales Growth 2% - 3% Operational GAAP Diluted EPS $1.82 - $1.92 Growth vs. Prior-Year Period (28%) – (24%) Adjusted Diluted EPS $3.60 - $3.70
Slide 21: Third-Quarter 2022 Guidance
Third-Quarter 2022 Guidance1 Q3 2022 Guidance Sales Growth High Teens Reported Foreign Exchange 750+ bps Sales Growth Mid 20s Constant Currency Hillrom ~2300 bps Sales Growth Low Single Digits Operational GAAP Diluted EPS $0.46 - $0.50 Growth vs. Prior-Year Period (48%) – (44%) Adjusted Diluted EPS
Slide 22: Non-GAAP Reconciliations
Non-GAAP Reconciliations Second-Quarter 2022 Earnings July 28, 2022 22
Slide 23: Non-GAAP Reconciliation as of July 28, 2022
Non-GAAP Reconciliation as of July 28, 2022 Non-GAAP Reconciliations: As part of its Q2 2022 earnings announcement on July 28, 2022, Baxter presented its financial results for the second quarter of 2022. Baxter also presented guidance for the third quarter and full year of 2022. In these presentatio
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 June 30, 2022 and 2021 (unaudited) (in millions, except per share and percentage data) The company’s U.S. GAAP results for the three months ended June 30, 2022 included special items which impacted the
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 June 30, 2022 and 2021 (unaudited) 1 The company’s results in 2022 and 2021 included intangible asset amortization expense of $193 million ($146 million, or $0.29 per diluted share, on an after-tax bas
Slide 26: Reconciliation of U.S. GAAP to Non-GAAP Measures: Six Months
Description of Adjustments and Reconciliation of U.S. GAAP to Non-GAAP Measures Six Months Ended June 30, 2022 and 2021 (unaudited) (in millions, except per share and percentage data) The company’s U.S. GAAP results for the six months ended June 30, 2022 included special items which impacted the U.S
Slide 27: Reconciliation of U.S. GAAP to Non-GAAP Measures: Six Months Footnotes
Description of Adjustments and Reconciliation of U.S. GAAP to Non-GAAP Measures Six Months Ended June 30, 2022 and 2021 (unaudited) 1 The company’s results in 2022 and 2021 included intangible asset amortization expense of $410 million ($315 million, or $0.62 per diluted share, on an after-tax basis
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) Six Months Ended June 30, 2022 2021 Cash flows from operations – continuing operations $ 482 $ 854 Cash flows from investing activities (491) (726) Cash flows from financing activities (1,017
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 June 30, 2021 to The Three Months Ended June 30, 2022 (unaudited) Sales By Product Category: Net Sales Growth Operational As Reported Hillrom FX Sales Growth* R
Slide 30: Net Sales Growth As Reported to Operational: Six Months
Reconciliation of Non-GAAP Financial Measure Change in Net Sales Growth As Reported to Operational Sales Growth From The Six Months Ended June 30, 2021 to The Six Months Ended June 30, 2022 (unaudited) Net Sales Growth Operational Sales By Product Category: As Reported Hillrom FX Sales Growth* Renal
Slide 31: Projected Sales Growth and Operating Margin Reconciliation
Reconciliation of Non-GAAP Financial Measure Projected Third Quarter and Full Year 2022 U.S. GAAP Sales Growth to Projected Operational Sales Growth, and Projected Third Quarter and Full Year 2022 U.S. GAAP Operating Margin to Projected Adjusted Operating Margin (unaudited) Sales Growth Guidance Q3
Slide 32: Projected Tax Rate and Earnings Per Share Reconciliation
Reconciliation of Non-GAAP Financial Measure Projected Full Year 2022 U.S. GAAP Tax Rate to Projected Adjusted Tax Rate, and Projected Third Quarter and Full Year 2022 U.S. GAAP Earnings Per Share to Projected Adjusted Earnings Per Share (unaudited) The projected FY 2022 U.S. GAAP tax rate of approx
Slide 33: Second-Quarter 2022 Earnings
Second-Quarter 2022 Earnings Baxter International Inc. July 28, 2022 Hillrom is a part of Baxter