Baxter International Inc. · NYSE:BAX
Baxter International — Q4 2018 Earnings Presentation
24 slides from Baxter International's earnings presentation, Jan 31, 2019
Slide 1: Fourth-Quarter 2018 Earnings
Fourth-Quarter 2018 Earnings Baxter International Inc. January 31, 2019
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation includes forward-looking statements concerning Baxter’s financial results, business development activities, capital structure, cost savings initiatives, R&D pipeline, including results of clinical trials and planned product launches, and financial outlook for
Slide 3: Table of Contents
Table of Contents Performance Summary 5 Financial Results 9 2019 Outlook 19
Slide 4: Our Strategy
Our Strategy Strengthen our portfolio and extend our impact through transformative innovation that spans prevention to recovery 4
Slide 5: Delivering On Our Strategy
Delivering On Our Strategy Business Highlights Building Momentum With Strong Focus on Capitalizing On New Product Launches Operational Performance And Geographic Expansion ► Delivered solid fourth-quarter 2018 earnings growth, largely driven ► Reallocating investment to higher-margin, faster-growing
Slide 6: Continuing Momentum Of Key Metrics
Continuing Momentum Of Key Metrics Full-Year 2018 Financial Snapshot1 Global Reported Sales Adjusted Operating Margin Adjusted Diluted EPS ~$11.1B $3.05 ~$10.6B 17.4% $2.48 16.3% +3% Operational Growth2 +110 bps +23% FY 2017 FY 2018 FY 2017 FY 2018 FY 2017 FY 2018 1See www.baxter.com for information
Slide 7: Fourth-Quarter and Full-Year 2018 Sales And Adjusted Earnings
Fourth-Quarter and Full-Year 2018 Sales And Adjusted Earnings1 Q4 2018 Q4 2018 FY 2018 FY 2018 Metric Guidance Actual Guidance Actual Sales Growth 3% - 4% +5% ~3% +3% Operational Sales Growth ~1% +2% ~5% +5% Reported Adjusted Diluted EPS $0.71 - $0.73 $0.78 $2.98 - $3.00 $3.05 Growth vs. Prior-Year
Slide 8: Advancing Our New Product Portfolio
Advancing Our New Product Portfolio Recent R&D And Commercial Milestones ► Announced over 5 million home peritoneal dialysis (PD) treatments performed globally with Sharesource remote patient management platform, which, in recent data from Baxter clinics in Columbia, has been associated with a reduc
Slide 9: Financial Results
Financial Results Fourth-Quarter 2018 Earnings January 31, 2019
Slide 10: Fourth-Quarter 2018 Sales By Global Business Unit
Fourth-Quarter 2018 Sales By Global Business Unit1 Q4 2018 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Renal Care $207 $746 $953 +1% +5% +5% Medication Delivery $410 $250 $660 (2%) (0%) (0%) Pharmaceuticals $251 $289 $540 +6% +9% +11% Clinical Nutrition
Slide 11: Full-Year 2018 Sales By Global Business Unit
Full-Year 2018 Sales By Global Business Unit1 FY 2018 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Renal Care $816 $2,846 $3,662 +5% +4% +4% Medication Delivery $1,690 $979 $2,669 (1%) (2%) (2%) Pharmaceuticals $996 $1,096 $2,092 +11% +10% +8% Clinical Nu
Slide 12: Fourth-Quarter 2018 Sales By Operating Segment
Fourth-Quarter 2018 Sales By Operating Segment1 Q4 2018 Revenue Total Growth $ In Millions Reported Reported Constant Americas (North and South America) $1,495 +3% +4% EMEA (Europe, Middle East and Africa) $772 +3% +6% APAC (Asia Pacific) $574 +2% +6% Total Baxter $2,841 +2% +5% 1See www.baxter.com
Slide 13: Full-Year 2018 Sales By Operating Segment
Full-Year 2018 Sales By Operating Segment1 FY 2018 Revenue Total Growth $ In Millions Reported Reported Constant Americas (North and South America) $5,959 +4% +5% EMEA (Europe, Middle East and Africa) $2,961 +8% +4% APAC (Asia Pacific) $2,207 +5% +4% Total Baxter $11,127 +5% +4% 1See www.baxter.com
Slide 14: Fourth-Quarter 2018 Adjusted Financial Results
Fourth-Quarter 2018 Adjusted Financial Results1 Q4 2018 Q4 2017 Change Adjusted Gross Margin 44.3% 44.4% (10 bps) Adjusted SG&A Expense (% of Sales) 21.0% 22.5% (150 bps) Adjusted R&D Expense (% of Sales) 5.8% 6.5% (70 bps) Adjusted Operating Margin 17.5% 15.4% +210 bps Adjusted Diluted EPS $0.78 $0
Slide 15: Full-Year 2018 Adjusted Financial Results
Full-Year 2018 Adjusted Financial Results1 FY 2018 FY 2017 Change Adjusted Gross Margin 45.0% 44.8% +20 bps Adjusted SG&A Expense (% of Sales) 22.0% 22.8% (80 bps) Adjusted R&D Expense (% of Sales) 5.6% 5.8% (20 bps) Adjusted Operating Margin2 17.4% 16.3% +110 bps Adjusted Diluted EPS $3.05 $2.48 +2
Slide 16: Driving Operational Excellence Across the Company
Driving Operational Excellence Across the Company FY 2018 vs. FY 2017 Adjusted Operating Margin1 17.4% Highlights: ~100bps Favorable product mix and manufacturing efficiencies partially offset by increased supply chain costs 16.3% ~20 bps Business transformation initiatives and focus on optimize
Slide 17: Disciplined Financial Execution Continues to Drive Strong Cash Flow Generation
Disciplined Financial Execution Continues to Drive Strong Cash Flow Generation1 Operating Cash Flow Capital Expenditures Free Cash Flow2 $2,096M $1,415M $1,853M $1,219M $681M $634M +13% +7% +16% FY 2017 FY 2018 FY 2017 FY 2018 FY 2017 FY 2018 1See www.baxter.com for information regarding non-GAAP fi
Slide 18: Strategically Deploying Capital To Fuel Growth And Create Value
Strategically Deploying Capital To Fuel Growth And Create Value Reinvestment Strategically investing in higher-margin in Business opportunities to drive innovation Increased annual dividend rate by 19% in 2018; Dividends currently targeting ~35% dividend payout ratio over time BAX Share Repurchased
Slide 19: 2019 Outlook
2019 Outlook Fourth-Quarter 2018 Earnings January 31, 2019 19
Slide 20: Full-Year 2019 Sales Guidance
Full-Year 2019 Sales Guidance1 Full-Year 2019 Guidance Sales Growth 3% - 4% Operational US Cyclo Competition (<100 bps) Sales Growth 2% - 3% Constant Foreign Exchange (200+ bps) Sales Growth 0% - 1% Reported 1See www.baxter.com for information regarding non-GAAP financial metrics used in this presen
Slide 21: Full-Year 2019 Financial Guidance
Full-Year 2019 Financial Guidance1 Full-Year 2019 Guidance Adjusted Operating Margin 18.0% - 18.4% Adjusted Diluted EPS $3.22 - $3.30 Growth vs. Prior-Year Period 6% - 8% Operating Cash Flow ~$2.3B Free Cash Flow ~$1.6B 1See www.baxter.com for information regarding non-GAAP financial metrics used in
Slide 22: Full-Year 2019 Sales Guidance By Business
Full-Year 2019 Sales Guidance By Business1 Full-Year 2019 Full-Year 2019 Constant Currency Operational Renal Care 2% – 3% 2% – 3% Medication Delivery ~6% ~6% Pharmaceuticals (3%) – (4%) ~0% Clinical Nutrition ~3% ~3% Advanced Surgery 3% – 4% 3% – 4% Acute Therapies 7% – 8% 7% – 8% Other LSD Decline
Slide 23: First-Quarter 2019 Financial Guidance
First-Quarter 2019 Financial Guidance1 First-Quarter 2019 Guidance Sales Growth 1% - 2% Operational US Cyclo Competition (<100 bps) Sales Growth ~1% Constant Foreign Exchange (300+ bps) Sales Growth (~3%) Reported Adjusted Diluted EPS $0.66 - $0.68 Growth vs. Prior-Year Period (6%) – (3%) 1See www.b
Slide 24: Fourth-Quarter 2018 Earnings
Fourth-Quarter 2018 Earnings Baxter International Inc. January 31, 2019