Baxter International Inc. · NYSE:BAX
Baxter International — Q3 2022 Earnings Presentation
35 slides from Baxter International's earnings presentation, Oct 27, 2022
Slide 1: Third-Quarter 2022 Earnings
Third-Quarter 2022 Earnings Baxter International Inc. October 27, 2022
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation includes forward-looking statements concerning the company’s financial results (including the outlook for fourth quarter and full-year 2022), business development and regulatory activities and portfolio optimization. These forward-looking statements are b
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 Third-Quarter 2022 Year-To-Date 2022 $3.8B +23% Constant Currency $11.2B +26% Constant Currency +17% Reported +21% Reported 1 1 Sales +0% Operational2 Sales +2% Operational2 Key Metrics GAAP Adjusted3 Key Metrics GAAP Adjusted3 Gross Margin 30.0% 42.9% Gross Margin 35.0% 43.5%
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 rose slightly and adjusted diluted EPS declined 20% in Q3 2022 reflecting ongoing macroeconomic headwinds and related supply chain constraints as well as the
Slide 7: Key Financial Metrics: Third-Quarter 2022 Snapshot
Key Financial Metrics Third-Quarter 2022 Snapshot1 Global Reported Sales Adjusted Operating Margin Adjusted Diluted EPS $3.8B 20.2% $1.02 $3.2B 17.2% $0.82 +0% Operational Growth 2 (300 bps) (20%) Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 2021 Q3 2022 1Non-GAAP financial metrics referenced in this slide in
Slide 8: Key Financial Metrics: Year-To-Date 2022 Snapshot
Key Financial Metrics Year-To-Date 2022 Snapshot1 Global Reported Sales Adjusted Operating Margin Adjusted Diluted EPS $11.2B $2.58 $2.61 $9.3B 18.2% 17.1% +2% Operational Growth 2 (110 bps) +1% YTD 2021 YTD 2022 YTD 2021 YTD 2022 YTD 2021 YTD 2022 1Non-GAAP financial metrics referenced in this slid
Slide 9: Third-Quarter 2022 Performance
Third-Quarter 2022 Performance1 Metric Q3 2022 Q3 2022 Guidance Actual Sales Growth High Teens +17% Reported Sales Growth Mid 20s +23% Constant Currency Sales Growth Low Single Digit Grew slightly Operational Adjusted Diluted EPS $0.79 - $0.83 $0.82 Growth vs. Prior-Year Period (23%) –(19%) (20%) 1N
Slide 10: Performance Driven By Pandemic Recovery
Performance Driven By Pandemic Recovery Third-Quarter 2022 Business Drivers1 Product Category Sales CC Growth2 Quarterly Performance Drivers Performance driven by solid growth in PD business with an increase in PD patients Renal Care $942M +4% globally and augmented by two discrete items totaling ~$
Slide 11: Financial Results
Financial Results Third-Quarter 2022 Earnings October 27, 2022 11
Slide 12: Third-Quarter 2022 Sales By Product Category
Third-Quarter 2022 Sales By Product Category1 Q3 2022 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Renal Care $240 $702 $942 (4%) +4% +4% Medication Delivery $475 $250 $725 (3%) (0%) (0%) Pharmaceuticals $173 $352 $525 (11%) (3%) (3%) Clinical Nutrition $
Slide 13: Year-To-Date 2022 Sales By Product Category
Year-To-Date 2022 Sales By Product Category1 YTD 2022 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Renal Care $690 $2,077 $2,767 (3%) +2% +2% Medication Delivery $1,406 $735 $2,141 +2% +4% +4% Pharmaceuticals $494 $1,080 $1,574 (7%) (1%) (1%) Clinical Nut
Slide 14: Third-Quarter 2022 Sales By Operating Segment
Third-Quarter 2022 Sales By Operating Segment1 Q3 2022 Revenue Total Growth $ In Millions Reported Reported Constant Operational Americas $1,703 (1%) +0% +0% (North and South America) EMEA (Europe, Middle East and $692 (11%) +3% +3% Africa) APAC $643 (11%) (2%) (2%) (Asia Pacific) Hillrom $735 N/A N
Slide 15: Year-To-Date 2022 Sales By Operating Segment
Year-To-Date 2022 Sales By Operating Segment1 YTD 2022 Revenue Total Growth $ In Millions Reported Reported Constant Operational Americas $4,975 +1% +2% +2% (North and South America) EMEA (Europe, Middle East and $2,129 (7%) +4% +4% Africa) APAC $1,917 (7%) (0%) (0%) (Asia Pacific) Hillrom $2,205 N/
Slide 16: Third-Quarter 2022 Adjusted Financial Results
Third-Quarter 2022 Adjusted Financial Results1 Q3 2021 Q3 2022 Change Adjusted Gross Margin +44.0% +42.9% (110 bps) Adjusted SG&A Expense +19.8% +21.8% +200 bps (% of Sales) Adjusted R&D Expense +4.0% +3.9% (10 bps) (% of Sales) Adjusted Operating Margin 20.2% 17.2% (300 bps) Adjusted Diluted EPS $1
Slide 17: Year-To-Date 2022 Adjusted Financial Results
Year-To-Date 2022 Adjusted Financial Results1 YTD 2021 YTD 2022 Change Adjusted Gross Margin 42.9% 43.5% +60 bps Adjusted SG&A Expense 20.5% 22.4% +190 bps (% of Sales) Adjusted R&D Expense 4.3% 4.0% (30 bps) (% of Sales) Adjusted Operating Margin 18.2% 17.1% (110 bps) Adjusted Diluted EPS $2.58 $2.
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 ~$1.6 billion of cash and cash equivalents on hand with access to $2.5 billion and €200 million of undrawn credit facilities as of September 30, 2022; nearly $900M of deleveragin
Slide 19: 2022 Outlook
2022 Outlook Third-Quarter 2022 Earnings October 27, 2022 19
Slide 20: Fourth-Quarter 2022 Guidance
Fourth-Quarter 2022 Guidance1 Q4 2022 Guidance Sales Growth Mid-to-High Single Digits Reported Foreign Exchange ~800+ bps Sales Growth Mid-Teens Constant Currency Hillrom ~1500 bps Sales Growth ~Flat Operational GAAP Diluted EPS $0.60 - $0.67 Growth vs. Prior-Year Period 28% – 43% Adjusted Diluted E
Slide 21: Full-Year 2022 Guidance
Full-Year 2022 Guidance1 FY 2022 Guidance Sales Growth 17% - 18% Reported Foreign Exchange 550+ bps Sales Growth ~23% Constant Currency Hillrom ~2100 bps Sales Growth Low Single Digits Operational GAAP Diluted EPS ($4.52) – ($4.45) Growth vs. Prior-Year Period (279%) – (276%) Adjusted Diluted EPS $3
Slide 22: Non-GAAP Reconciliations
Non-GAAP Reconciliations Third-Quarter 2022 Earnings October 27, 2022 22
Slide 23: Non-GAAP Reconciliation as of October 27, 2022
Non-GAAP Reconciliation as of October 27, 2022 Non-GAAP Reconciliations: As part of its Q3 2022 earnings announcement on October 27, 2022, Baxter presented its financial results for the third quarter of 2022. Baxter also presented guidance for the fourth quarter and full year of 2022. In these prese
Slide 24: Reconciliation of U.S. GAAP to Non-GAAP Measures: Three Months Ended Sept 30, 2022
Description of Adjustments and Reconciliation of U.S. GAAP to Non-GAAP Measures Three Months Ended September 30, 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 th
Slide 25: Reconciliation of U.S. GAAP to Non-GAAP Measures: Three Months Ended Sept 30, 2021
Description of Adjustments and Reconciliation of U.S. GAAP to Non-GAAP Measures Three Months Ended September 30, 2021 (unaudited) (in millions, except per share and percentage data) The company’s U.S. GAAP results for the three months ended September 30, 2021 included special items which impacted th
Slide 26: Reconciliation of U.S. GAAP to Non-GAAP Measures: Three Months 2022 and 2021
Description of Adjustments and Reconciliation of U.S. GAAP to Non-GAAP Measures Three Months Ended September 30, 2022 and 2021 (unaudited) 1 The company’s results in 2022 and 2021 included intangible asset amortization expense of $168 million ($126 million, or $0.25 per diluted share, on an after-ta
Slide 27: Reconciliation of U.S. GAAP to Non-GAAP Measures: Nine Months Ended Sept 30, 2022
Description of Adjustments and Reconciliation 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 28: Reconciliation of U.S. GAAP to Non-GAAP Measures: Nine Months Ended Sept 30, 2021
Description of Adjustments and Reconciliation of U.S. GAAP to Non-GAAP Measures Nine Months Ended September 30, 2021 (unaudited) (in millions, except per share and percentage data) The company’s U.S. GAAP results for the nine months ended September 30, 2021 included special items which impacted the
Slide 29: Reconciliation of U.S. GAAP to Non-GAAP Measures: Nine Months 2022 and 2021
Description of Adjustments and Reconciliation of U.S. GAAP to Non-GAAP Measures Nine Months Ended September 30, 2022 and 2021 (unaudited) 1 The company’s results in 2022 and 2021 included intangible asset amortization expense of $578 million ($441 million, or $0.87 per diluted share, on an after-tax
Slide 30: Reconciliation of Operating Cash Flow to Free Cash Flow
Reconciliation of Non-GAAP Financial Measure Operating Cash Flow to Free Cash Flow (unaudited) (in millions) Nine Months Ended September 30, 2022 2021 Cash flows from operations – continuing operations $ 772 $ 1,529 Cash flows from investing activities (675) (933) Cash flows from financing activitie
Slide 31: Reconciliation of 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, 2021 to The Three Months Ended September 30, 2022 (unaudited) Sales By Product Category: Net Sales Growth Operational As Reported Hillrom FX Sales
Slide 32: Reconciliation of 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, 2021 to The Nine Months Ended September 30, 2022 (unaudited) Net Sales Growth Operational Sales By Product Category: As Reported Hillrom FX Sales G
Slide 33: Projected Q4 and Full Year 2022 Sales Growth and Operating Margin Reconciliation
Reconciliation of Non-GAAP Financial Measure Projected Fourth Quarter and Full Year 2022 U.S. GAAP Sales Growth to Projected Operational Sales Growth, and Projected Fourth Quarter and Full Year 2022 U.S. GAAP Operating Margin to Projected Adjusted Operating Margin (unaudited) Sales Growth Guidance Q
Slide 34: Projected Full Year 2022 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 Fourth 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 appro
Slide 35: Third-Quarter 2022 Earnings
Third-Quarter 2022 Earnings Baxter International Inc. October 27, 2022