Baxter International Inc. · NYSE:BAX
Baxter International — Q3 2017 Earnings Presentation
21 slides from Baxter International's earnings presentation, Oct 25, 2017
Slide 1: Third-Quarter 2017 Earnings
Third-Quarter 2017 Earnings Baxter International Inc. October 25, 2017
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation includes forward-looking statements concerning Baxter’s financial results, business development activities (including the recent acquisition of Claris Injectables in July 2017), capital structure, cost savings initiatives, R&D pipeline including results of cli
Slide 3: Table Of Contents
Table Of Contents Performance Summary 5 Financial Results 9 2017 Outlook 16 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 third-quarter sales and earnings performance; ► Reallocating investment to higher-margin, faster-growing increased ful
Slide 6: Continuing Momentum Of Key Metrics
Continuing Momentum Of Key Metrics Third-Quarter 2017 Financial Snapshot1 Global Reported Adjusted Adjusted Revenues Operating Margin Diluted EPS $2,707M 16.3% $0.64 16.0% $2,558M $0.56 +6% Operational Growth2 +30bps +14% Q3 2016 Q3 2017 Q3 2016 Q3 2017 Q3 2016 Q3 2017 1See www.baxter.comfor informa
Slide 7: Third-Quarter 2017 Sales And Adjusted Earnings
Third-Quarter 2017 Sales And Adjusted Earnings1 Q3 2017 Q3 2017 Metric Guidance2 Actual Operational ~6% +6% Sales Growth Reported ~4% +6% Sales Growth Adjusted Diluted EPS $0.58 - $0.60 $0.64 Growth vs. Prior-Year Period 4% - 7% +14% Delivering Accelerated Top And Bottom-Line Performance 1See www.ba
Slide 8: Advancing Our New Product Portfolio: Third-Quarter 2017 R&D Milestones
Advancing Our New Product Portfolio Third-Quarter 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 protocols in Europe ► Announc
Slide 9: Financial Results
Financial Results Third-Quarter 2017 Earnings October 25, 2017 SIGMA SPECTRUM Manufacturing Medina, New York
Slide 10: Third-Quarter 2017 Sales By Franchise
Third-Quarter 2017 Sales By Franchise1 Q3 2017 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Fluid Systems $369 $241 $610 +6% +6% +7% I.P.S.2 $283 $344 $627 +11% +11% +8% Surgical Care $191 $147 $338 +6% +5% +6% Other $76 $46 $122 0% (2%) (2%) Hospital Pro
Slide 11: Year-To-Date 2017 Sales By Franchise
Year-To-Date 2017 Sales By Franchise1 YTD 2017 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Fluid Systems $1,093 $709 $1,802 +7% +7% +9% I.P.S.2 $824 $923 $1,747 +4% +5% +5% Surgical Care $597 $427 $1,024 +5% +6% +6% Other $198 $142 $340 +1% +1% +1% Hospi
Slide 12: Third-Quarter And Year-To-Date 2017 Adjusted Financial Results
Third-Quarter And Year-To-Date 2017 Adjusted Financial Results1 Metric Q3 2017 Q3 2016 Change YTD 2017 YTD 2016 Change Adjusted Gross 45.2% 44.9% +30 bps 44.9% 43.7% +120bps Margin Adjusted SG&A Expense2 23.4% 23.9% (50 bps) 23.1% 25.2% (210 bps) (% of Sales) Adjusted R&D Expense 5.5% 5.0% +50 bps 5
Slide 13: Driving Operational Excellence Across The Company
Driving Operational Excellence Across The Company1 Adjusted Operating Margin2 Year-To-Date Highlights YTD 2017 vs. YTD 2016 20% Improved adjusted gross margin of 44.9% driven by enhanced manufacturing performance, 15% +200 bps portfolio mix and modest price improvements in +120 bps select areas 10
Slide 14: 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 15: 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 just below zero; Business targeting steady state of ~2.0x Targeting ~35% dividend payout ratio of Dividends adjusted net income over the long term BAX Selective share repurchase of approxim
Slide 16: 2017 Outlook
2017 Outlook Third-Quarter 2017 Earnings October 25, 2017 Baxter Center for Spectroscopy and Imaging Round Lake, Illinois
Slide 17: Updated 2017 Full-Year Financial Guidance
Updated 2017 Full-Year Financial Guidance1 FY 2017 FY 2017 Metric Current Prior FY 2017 Sales Impacts: Sales Growth ~4% ~4% • Foreign exchange [~0 bps] [Constant Currency] Sales Growth • Cyclo competition [<50 bps] ~4% ~3% [Reported] • Strategic market exits [~100 bps] Adjusted Operating Margin 15.5
Slide 18: Updated 2017 Full-Year Sales Guidance
Updated 2017 Full-Year Sales Guidance1 FY 2017 FY 2017 Sales Growth Constant Currency Operational Total Baxter ~4% 4% - 5% Renal ~3% ~4% Hospital Products ~4% 4% - 5% Fluid Systems 5% - 6% ~7% I.P.S. 3% - 4% ~2% Surgical Care ~4% 4% - 5% Other Low single-digit increase Low single-digit increase 1See
Slide 19: Fourth-Quarter 2017 Financial Guidance
Fourth-Quarter 2017 Financial Guidance1 Metric Q4 2017 Q4 2017 Sales Impacts: • Foreign exchange [250+ bps] Sales Growth • Cyclo competition [<50 bps] [Constant Currency] ~2% • Strategic market exits [~50 bps] • Claris acquisition2 [~100 bps] Sales Growth [Reported] 4% - 5% Q4 2017 Sales Guidance: A
Slide 20: Continuing Strong Momentum In 2017
Continuing Strong Momentum In 2017 ► 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 ► Opportunistically deploying capital to
Slide 21: Third-Quarter 2017 Earnings
Third-Quarter 2017 Earnings Baxter International Inc. October 25, 2017