Baxter International Inc. · NYSE:BAX
Baxter International — Q1 2023 Earnings Presentation
28 slides from Baxter International's earnings presentation, Apr 27, 2023
Slide 1: First-Quarter 2023 Earnings
F I R S T - Q UA R T E R 2023 EARNINGS Baxter International Inc. April 27, 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 second quarter and full-year 2023) and business development and regulatory activities (including anticipated cost savings). These fo
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 New Operating Model 5 Performance Summary 6 Financial Results 12 2023 Outlook 17 Non-GAAP Reconciliations 20 4
Slide 5: Actioning Simplification Plans to Drive Strategic Clarity, Improve Operational Efficiencies and Accelerate Growth
A C T I O N I N G S I M P L I F I C AT I O N P L A N S T O D R I V E S T R AT E G I C C L A R I T Y, I M P R O V E O P E R AT I O N A L E F F I C I E N C I E S A N D A C C E L E R AT E G R O W T H Q1 2023 Baxter Sales1 Upon completion, segments will be responsible for: Medication Delivery $0.7B Medi
Slide 6: Performance Summary
P E R FO R M A N C E S U M M A RY First-Quarter 2023 Earnings April 27, 2023 6
Slide 7: 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 Q1 2023 Results1 Q1 2023 constant currency sales increased 2% and adjusted diluted EPS declined 37% reflecting increased supply chain related costs due to inflationary pressures, the negative impact of foreign
Slide 8: Performance Highlights
P E R FO R M A N C E H I G H L I G H T S First-Quarter 2023 $3.6B (2%) Reported +2% Constant Currency 1 Sales Key Metrics GAAP Adjusted2 Gross Margin 36.9% 41.2% YOY Change +50 bps (380 bps) Operating Margin 5.1% 13.8% YOY Change +70 bps (420 bps) Diluted EPS $0.09 $0.59 YOY Change (36%) (37%) 1Cons
Slide 9: Key Financial Metrics: First-Quarter 2023 Snapshot
KEY FINANCIAL METRICS FIRST-QUARTER 2023 SNAPSHOT1 Global Reported Sales Adjusted Operating Margin Adjusted Diluted EPS $3.7B $3.6B 18.0% $0.93 13.8% $0.59 +2% Constant Growth 2 (420 bps) (37%) Q1 2022 Q1 2023 Q1 2022 Q1 2023 Q1 2022 Q1 2023 1Non-GAAP financial metrics referenced in this slide inclu
Slide 10: First-Quarter Performance
F I R S T- Q UA R T E R 2 0 2 3 P E R FO R M A N C E 1 Metric Q1 2023 Q1 2023 Guidance Actual Sales Growth ~(3%) (2%) Reported Sales Growth ~(1%) +2% Constant Currency GAAP Diluted EPS $0.14 - $0.18 $0.09 Growth vs. Prior-Year Period 0% - 29% (36%) Adjusted Diluted EPS $0.46 - $0.50 $0.59 Growth vs.
Slide 11: First-Quarter Business Drivers
F I R S T- 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 Sales2 CC Growth3 Quarterly Performance Drivers Performance driven by solid growth in PD business partially offset by lower U.S. sales Renal Care $892M +4% for In-Center HD products following the exit of a distribution
Slide 12: Financial Results
F I N A N C I A L R E S U LT S First-Quarter 2023 Earnings April 27, 2023 12
Slide 13: First-Quarter Sales by Product Category
F I R S T- 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 Q1 2023 Sales Total Growth $ In Millions U.S. International Total Reported Constant Renal Care $232 $660 $892 (0%) +4% Medication Delivery $436 $251 $687 (3%) (0%) Pharmaceuticals $173 $350 $523 +0% +5% Clinical Nutrition $78
Slide 14: First-Quarter Sales by Operating Segment
F I R S T- Q UA R T E R 2 0 2 3 S A L E S BY O P E R AT I N G S E G M E N T 1 Q1 2023 Sales Total Growth $ In Millions Reported Reported Constant Americas $1,602 (1%) (1%) (North and South America) EMEA (Europe, Middle East and $714 +2% +9% Africa) APAC $602 (4%) +3% (Asia Pacific) Hillrom $731 (3%)
Slide 15: First-Quarter Adjusted Financial Results
F I R S T- 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 Q1 2022 Q1 2023 Change Adjusted Gross Margin 45.0% 41.2% (380 bps) Adjusted SG&A Expense 23.1% 23.2% +10 bps (% of Sales) Adjusted R&D Expense 4.0% 4.3% +30 bps (% of Sales) Adjusted Operating Margin 18.0% 13.8% (420 bps
Slide 16: Executing Portfolio Management Actions to Accelerate Disciplined 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 Currently pursuing strategic Committed to deleveraging with Paid quarterly divide
Slide 17: 2023 Outlook
2 0 2 3 O U T LO O K First-Quarter 2023 Earnings April 27, 2023 17
Slide 18: Second-Quarter Guidance
S E C O N D - Q UA R T E R 2 0 2 3 G U I DA N C E 1 Q2 2023 Guidance Sales Growth 1% - 2% Reported Foreign Exchange <(100) bps Sales Growth 2% - 3% Constant Currency GAAP Diluted EPS $0.18 - $0.20 Growth vs. Prior-Year Period (64%) – (60%) Adjusted Diluted EPS $0.59 - $0.61 Growth vs. Prior-Year Per
Slide 19: 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 Foreign Exchange <50 bps Sales Growth ~1% Constant Currency GAAP Diluted EPS $1.16 - $1.31 Growth vs. Prior-Year Period NM2 Adjusted Diluted EPS $2.85 - $3.00 Growth vs. Prior-Year Period (19%) - (14%) 1Non-GAAP
Slide 20: Non-GAAP Reconciliations
NON-GAAP R E C O N C I L I AT I O N S First-Quarter 2023 Earnings April 27, 2023 20
Slide 21: Non-GAAP Reconciliations as of April 27, 2023
NON-GAAP RECONCILIATIONS AS OF APRIL 27, 2023 Non-GAAP Reconciliations: As part of its Q1 2023 earnings announcement on April 27, 2023, Baxter presented its financial results for the first quarter of 2023. Baxter also presented guidance for the second quarter and full year of 2023. In these presenta
Slide 22: Description of Adjustments and Reconciliations of U.S. GAAP to Non-GAAP Measures (Q1 2023)
DESCRIPTION OF ADJUSTMENTS AND RECONCILIATIONS OF U.S. GAAP TO NON-GAAP MEASURES Three Months Ended March 31, 2023 (unaudited) (in millions, except per share and percentage data) The company’s U.S. GAAP results for the three months ended March 31, 2023 included special items which impacted the U.S.
Slide 23: Description of Adjustments and Reconciliations of U.S. GAAP to Non-GAAP Measures (Q1 2022)
DESCRIPTION OF ADJUSTMENTS AND RECONCILIATIONS OF U.S. GAAP TO NON-GAAP MEASURES Three Months Ended March 31, 2022 (unaudited) (in millions, except per share and percentage data) The company’s U.S. GAAP results for the three months ended March 31, 2022 included special items which impacted the U.S.
Slide 24: Description of Adjustments and Reconciliations of U.S. GAAP to Non-GAAP Measures
DESCRIPTION OF ADJUSTMENTS AND RECONCILIATIONS OF U.S. GAAP TO NON-GAAP MEASURES Three Months Ended March 31, 2023 and 2022 (unaudited) 1 The company’s results in 2023 and 2022 included intangible asset amortization expense of $162 million ($126 million, or $0.25 per diluted share, on an after-tax b
Slide 25: Reconciliation of Non-GAAP Financial Measure: Operating Cash Flow to Free Cash Flow
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE Operating Cash Flow to Free Cash Flow (unaudited) (in millions) Three Months Ended March 31, 2023 2022 Cash flows from operations – continuing operations $ 479 $ 208 Cash flows from investing activities (170) (304) Cash flows from financing activities (37
Slide 26: Reconciliation of Non-GAAP Financial Measure: Projected Sales Growth and Operating Margin
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE Projected Second Quarter and Full Year 2023 U.S. GAAP Sales Growth to Projected Constant Currency Sales Growth, and Projected Full Year 2023 U.S. GAAP Operating Margin to Projected Adjusted Operating Margin (unaudited) Sales Growth Guidance Q2 2023* FY 20
Slide 27: Reconciliation of Non-GAAP Financial Measure: Projected Tax Rate and EPS
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE Projected Full Year 2023 U.S. GAAP Tax Rate to Projected Adjusted Tax Rate, and Projected Second Quarter and Full Year 2023 U.S. GAAP Earnings Per Share to Projected Adjusted Earnings Per Share (unaudited) The projected FY 2023 U.S. GAAP tax rate of appro
Slide 28: First-Quarter 2023 Earnings
F I R S T - Q UA R T E R 2023 EARNINGS Baxter International Inc. April 27, 2023 28