Baxter International Inc. · NYSE:BAX
Baxter International — Q4 2022 Earnings Presentation
40 slides from Baxter International's earnings presentation, Feb 9, 2023
Slide 1: Fourth-Quarter 2022 Earnings
FO U R T H - Q UA R T E R 2022 EARNINGS Baxter International Inc. February 9, 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 first-quarter and full-year 2023) and business development and regulatory activities (including anticipated cost savings). These for
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 8 Financial Results 15 2023 Outlook 23 Non-GAAP Reconciliations 26 4
Slide 5: Redesigning Operating Model to Simplify Baxter's Operations
R E D E S I G N I N G O P E R AT I N G M O D E L TO S I M P L I F Y B A X T E R ’ S O P E R AT I O N S A N D C R E AT E VA LU E FO R A L L S TA K E H O L D E R S As announced in the company’s Jan. 6, 2023, press release, Baxter is working to finalize a new operating model that it will begin to imp
Slide 6: Baxter Actioning GBU Simplification Plans
B A X T E R A C T I O N I N G G B U 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 Baxter1 Upon completion, GBUs will be responsible for: Medication Delivery $2.9B Medi
Slide 7: Optimizing Manufacturing and Supply Chain to Enhance Network Efficiencies
O P T I M I Z I N G M A N U FAC T U R I N G A N D S U P P LY C H A I N TO E N H A N C E N E T WO R K E F F I C I E N C I E S Manufacturing footprint network optimization • Manufacturing sites streamlined and mapped directly to each GBU • Manufacturing & distribution network rationalization • Disenta
Slide 8: Performance Summary
P E R FO R M A N C E S U M M A RY Fourth-Quarter 2022 Earnings February 9, 2023 8
Slide 9: 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 Q4 2022 Results1 Q4 2022 operational sales increased 2% and adjusted diluted EPS declined 15% reflecting increased supply chain related costs due to inflationary pressures, the negative impact of foreign exchan
Slide 10: Performance Highlights
P E R FO R M A N C E H I G H L I G H T S Fourth-Quarter 2022 Full-Year 2022 $3.9B +17% Constant Currency $15.1B +23% Constant Currency +11% Reported +18% Reported 1 1 Sales +2% Operational2 Sales +2% Operational2 Key Metrics GAAP Adjusted3 Key Metrics GAAP Adjusted3 Gross Margin 37.6% 41.6% Gross Ma
Slide 11: Key Financial Metrics: Fourth-Quarter 2022 Snapshot
KEY FINANCIAL METRICS FOURTH-QUARTER 2022 SNAPSHOT1 Global Reported Sales Adjusted Operating Margin Adjusted Diluted EPS $3.9B $3.5B 20.2% $1.03 17.1% $0.88 +2% Operational Growth 2 (310 bps) (15%) Q4 2021 Q4 2022 Q4 2021 Q4 2022 Q4 2021 Q4 2022 1Non-GAAP financial metrics referenced in this slide i
Slide 12: Key Financial Metrics: Full-Year 2022 Snapshot
KEY FINANCIAL METRICS FULL-YEAR 2022 SNAPSHOT 1 Global Reported Sales Adjusted Operating Margin Adjusted Diluted EPS $15.1B $3.61 $3.50 $12.8B 18.7% 17.1% +2% Operational Growth 2 (160 bps) (3%) FY 2021 FY 2022 FY 2021 FY 2022 FY 2021 FY 2022 1Non-GAAP financial metrics referenced in this slide incl
Slide 13: Fourth-Quarter Performance vs. Guidance
FO U R T H - Q UA R T E R 2 0 2 2 P E R FO R M A N C E 1 Metric Q4 2022 Q4 2022 Guidance Actual Sales Growth Mid-to-High +11% Reported Single Digits Sales Growth Mid-Teens +17% Constant Currency Sales Growth ~Flat +2% Operational Adjusted Diluted EPS $0.92 - $0.99 $0.88 Growth vs. Prior-Year Period
Slide 14: Performance Driven by Pandemic Recovery: Q4 Business Drivers
P E R FO R M A N C E D R I V E N BY PA N D E M I C R E C OV E RY FOURTH-QUARTER 2022 BUSINESS DRIVERS1 Product Category Sales2 CC Growth3 Quarterly Performance Drivers Performance driven by solid growth in PD business with an increase in PD patients Renal Care $981M +3% globally and augmented by a d
Slide 15: Financial Results
F I N A N C I A L R E S U LT S Fourth-Quarter 2022 Earnings February 9, 2023 15
Slide 16: Fourth-Quarter Sales by Product Category
FO U R T H - Q UA R T E R 2 0 2 2 S A L E S BY P RO D U C T C AT E G O RY 1 Q4 2022 Revenue Total Growth2 $ In Millions U.S. International Total Reported Constant Operational Renal Care $255 $726 $981 (5%) +3% +3% Medication Delivery $483 $262 $745 (5%) (2%) (2%) Pharmaceuticals $188 $364 $552 (9%)
Slide 17: Full-Year Sales by Product Category
F U L L -Y E A R 2 0 2 2 S A L E S BY P RO D U C T C AT E G O RY 1 FY 2022 Revenue Total Growth2 $ In Millions U.S. International Total Reported Constant Operational Renal Care $945 $2,803 $3,748 (4%) +2% +2% Medication Delivery $1,889 $997 $2,886 +0% +3% +3% Pharmaceuticals $682 $1,444 $2,126 (7%)
Slide 18: Fourth-Quarter Sales by Operating Segment
FO U R T H - Q UA R T E R 2 0 2 2 S A L E S BY O P E R AT I N G S E G M E N T 1 Q4 2022 Revenue Total Growth2 $ In Millions Reported Reported Constant Operational Americas $1,735 (1%) +0% +0% (North and South America) EMEA (Europe, Middle East and $750 (8%) +5% +5% Africa) APAC $668 (9%) +2% +2% (As
Slide 19: Full-Year Sales by Operating Segment
F U L L -Y E A R 2 0 2 2 S A L E S BY O P E R AT I N G S E G M E N T 1 FY 2022 Revenue Total Growth2 $ In Millions Reported Reported Constant Operational Americas $6,710 +1% +2% +2% (North and South America) EMEA (Europe, Middle East and $2,879 (8%) +4% +4% Africa) APAC $2,585 (7%) +0% +0% (Asia Pac
Slide 20: Fourth-Quarter Adjusted Financial Results
FO U R T H - Q UA R T E R 2 0 2 2 A DJ U S T E D F I N A N C I A L R E S U LT S 1 Q4 2021 Q4 2022 Change Adjusted Gross Margin 44.3% 41.6% (270 bps) Adjusted SG&A Expense 20.2% 20.5% +30 bps (% of Sales) Adjusted R&D Expense 3.9% 4.0% +10 bps (% of Sales) Adjusted Operating Margin 20.2% 17.1% (310 b
Slide 21: Full-Year Adjusted Financial Results
F U L L -Y E A R 2 0 2 2 A DJ U S T E D F I N A N C I A L R E S U LT S 1 FY 2021 FY 2022 Change Adjusted Gross Margin 43.3% 43.0% (30 bps) Adjusted SG&A Expense 20.4% 21.9% +150 bps (% of Sales) Adjusted R&D Expense 4.2% 4.0% (20 bps) (% of Sales) Adjusted Operating Margin 18.7% 17.1% (160 bps) Adju
Slide 22: 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 $900 Million of deleveraging in Paid quarterly divid
Slide 23: 2023 Outlook
2 0 2 3 O U T LO O K Fourth-Quarter 2022 Earnings February 9, 2023 23
Slide 24: First-Quarter Guidance
F I R S T- Q UA R T E R 2 0 2 3 G U I DA N C E 1 Q1 2023 Guidance Sales Growth ~(3%) Reported Foreign Exchange 200+ bps Sales Growth ~(1%) Constant Currency GAAP Diluted EPS $0.14 - $0.18 Growth vs. Prior-Year Period 0% - 29% Adjusted Diluted EPS $0.46 - $0.50 Growth vs. Prior-Year Period (51%) - (4
Slide 25: 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 <100 bps Sales Growth 0% - 1% Constant Currency GAAP Diluted EPS $1.43 - $1.63 Growth vs. Prior-Year Period NM2 Adjusted Diluted EPS $2.75 - $2.95 Growth vs. Prior-Year Period (21%) - (16%) Full
Slide 26: Non-GAAP Reconciliations
NON-GAAP R E C O N C I L I AT I O N S Fourth-Quarter 2022 Earnings February 9, 2023 26
Slide 27: Non-GAAP Reconciliations as of February 9, 2023
N O N - G A A P R E C O N C I L I AT I O N S A S O F F E B R U A R Y 9 , 2 0 2 3 Non-GAAP Reconciliations: As part of its Q4 2022 earnings announcement on February 9, 2023, Baxter presented its financial results for the fourth quarter and full year of 2022. Baxter also presented guidance for the Q1
Slide 28: Description of Adjustments: Three Months Ended December 31, 2022
D E S C R I P T I O N O F A D J U S T M E N T S A N D R E C O N C I L I AT I O N S O F U . S . G A A P T O NON-GAAP MEASURES Three Months Ended December 31, 2022 (unaudited) (in millions, except per share and percentage data) The company’s U.S. GAAP results for the three months ended December 31, 20
Slide 29: Description of Adjustments: Three Months Ended December 31, 2021
D E S C R I P T I O N O F A D J U S T M E N T S A N D R E C O N C I L I AT I O N S O F U . S . G A A P T O NON-GAAP MEASURES Three Months Ended December 31, 2021 (unaudited) (in millions, except per share and percentage data) The company’s U.S. GAAP results for the three months ended December 31, 20
Slide 30: Description of Adjustments: Three Months Ended December 31, 2022 and 2021
D E S C R I P T I O N O F A D J U S T M E N T S A N D R E C O N C I L I AT I O N S O F U . S . G A A P T O NON-GAAP MEASURES Three Months Ended December 31, 2022 and 2021 (unaudited) 1 The company’s results in 2022 and 2021 included intangible asset amortization expense of $175 million ($144 million
Slide 31: Description of Adjustments: Year Ended December 31, 2022
D E S C R I P T I O N O F A D J U S T M E N T S A N D R E C O N C I L I AT I O N S O F U . S . G A A P T O NON-GAAP MEASURES Year Ended December 31, 2022 (unaudited) (in millions, except per share and percentage data) The company’s U.S. GAAP results for the year ended December 31, 2022 included spec
Slide 32: Description of Adjustments: Year Ended December 31, 2021
D E S C R I P T I O N O F A D J U S T M E N T S A N D R E C O N C I L I AT I O N S O F U . S . G A A P T O NON-GAAP MEASURES Year Ended December 31, 2021 (unaudited) (in millions, except per share and percentage data) The company’s U.S. GAAP results for the year ended December 31, 2021 included spec
Slide 33: Description of Adjustments: Years Ended December 31, 2022 and 2021
D E S C R I P T I O N O F A D J U S T M E N T S A N D R E C O N C I L I AT I O N S O F U . S . G A A P T O NON-GAAP MEASURES Years Ended December 31, 2022 and 2021 (unaudited) 1 The company’s results in 2022 and 2021 included intangible asset amortization expense of $753 million ($580 million, or $1
Slide 34: Operating Cash Flow to Free Cash Flow
R E C O N C I L I AT I O N O F N O N - G A A P F I N A N C I A L M E A S U R E Operating Cash Flow to Free Cash Flow (unaudited) (in millions, except per share and percentage data) Years Ended December 31, 2022 2021 Cash flows from operations – continuing operations $ 1,211 $ 2,222 Cash flows from i
Slide 35: Net Sales Growth to Operational Sales Growth: Q4
R E C O N C I L I AT I O N O F N O N - G A A P F I N A N C I A L M E A S U R E Change in Net Sales Growth As Reported to Operational Sales Growth From The Three Months Ended December 31, 2021 to The Three Months Ended December 31, 2022 (unaudited) (in millions, except per share and percentage data)
Slide 36: Net Sales Growth to Operational Sales Growth: Full Year
R E C O N C I L I AT I O N O F N O N - G A A P F I N A N C I A L M E A S U R E Change in Net Sales Growth As Reported to Operational Sales Growth From The Year Ended December 31, 2021 to The Year Ended December 31, 2022 (unaudited) (in millions, except per share and percentage data) Net Sales Growth
Slide 37: Hillrom Pro Forma Net Sales Growth at Constant Currency
R E C O N C I L I AT I O N O F N O N - G A A P F I N A N C I A L M E A S U R E Reported Sales Growth to Pro Forma Net Sales Growth at Constant Currency for Hillrom (unaudited) (in millions, except per share and percentage data) Three Months Ended Year Ended December 31, 2022 December 31, 2022 Hillro
Slide 38: Projected 2023 Sales Growth and Operating Margin Reconciliation
R E C O N C I L I AT I O N O F N O N - G A A P F I N A N C I A L M E A S U R E Projected First 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) Sale
Slide 39: Projected 2023 Tax Rate and EPS Reconciliation
R E C O N C I L I AT I O N O F N O N - G A A P F I N A N C I A L M E A S U R E Projected Full Year 2023 U.S. GAAP Tax Rate to Projected Adjusted Tax Rate and Projected First Quarter and Full Year 2023 U.S. GAAP Earnings Per Share to Projected Adjusted Earnings Per Share (unaudited) The projected FY
Slide 40: Fourth-Quarter 2022 Earnings
FO U R T H - Q UA R T E R 2022 EARNINGS Baxter International Inc. February 9, 2023 40