Slide 1: First-Quarter 2020 Earnings
First-Quarter 2020 Earnings Baxter International Inc. April 30, 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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. These forward-looking
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: Our Strategy: Top Quartile Goals
Top Quartile Goals Patient safety and Quality Best place to work Growth through innovation Industry leading performance Our Strategy Strengthen our portfolio and extend our impact through transformative innovation that spans prevention to recovery 4
Slide 5: Table of Contents
Table of Contents Performance Summary 6 Financial Results 12 Non-GAAP Reconciliations 18
Slide 6: Performance Highlights First-Quarter 2020
Performance Highlights First-Quarter 2020 $2.8B +6% Reported +8% Constant Currency1 Sales +8% Operational2 Key Metrics U.S. GAAP Adjusted3 Gross Margin 41.5% 44.3% YOY Change +60 bps +70 bps Operating Margin 14.6% 18.8% YOY Change +10 bps +180 bps Earnings Per Share $0.64 $0.82 YOY Change (3%) +9% 1
Slide 7: Executing On Our Strategy
Executing On Our Strategy Recent Highlights Building Momentum With Strong Focus On Operational Performance1 ▪ Delivered 8% operational sales growth in Q1, driven by underlying business strength and increased demand for select products related to COVID-19 pandemic ▪ Adjusted diluted EPS growth of 9%
Slide 8: Continuing Momentum Of Key Financial Metrics
Continuing Momentum Of Key Financial Metrics First-Quarter 2020 Snapshot1 Global Reported Sales Adjusted Operating Margin Adjusted Diluted EPS $2.8B 18.8% $0.82 $2.6B 17.0% $0.75 +8% Operational Growth 2 +180 bps +9% Q1 2019 Q1 2020 Q1 2019 Q1 2020 Q1 2019 Q1 2020 as restated as restated as restated
Slide 9: First-Quarter 2020 Performance
First-Quarter 2020 Performance1 Metric Q1 2020 Q1 2020 Guidance Actual Sales Growth 4% - 5% +6% Reported Sales Growth 5% - 6% +8% Constant Currency Sales Growth 5% - 6% +8% Operational Adjusted Diluted EPS $0.72 - $0.74 $0.82 Growth vs. Prior-Year Period (4%) – (1%) +9% Strong Q1 Results Reflect ~$4
Slide 10: Front-Line Response To COVID-19 Pandemic
Front-Line Response To COVID-19 Pandemic1 Increasing Product Supply And Supporting Extraordinary Efforts Of Distribution Employees ▪ Boosting capacity and maximizing production to ▪ Executing on staged pandemic response plan to address surges in demand for certain products protect employee safety gl
Slide 11: Meeting Increased Demand For Durable Portfolio
Meeting Increased Demand For Durable Portfolio First-Quarter 2020 Business Drivers1,2 Renal Care Medication Delivery $870M, +4% Constant Currency $690M, +10% Constant Currency Q1 2020 COVID-19 Impact: $5M - $10M Q1 2020 COVID-19 Impact: ~$15M PD therapies HSD3 growth benefitting from Strong executio
Slide 12: Financial Results
Financial Results First-Quarter 2020 Earnings April 30, 2020 12
Slide 13: First-Quarter 2020 Sales By Global Business Unit
First-Quarter 2020 Sales By Global Business Unit1 Q1 2020 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Renal Care $204 $666 $870 +2% +4% +4% Medication Delivery $461 $229 $690 +9% +10% +10% Pharmaceuticals $231 $296 $527 +3% +6% +6% Clinical Nutrition $82
Slide 14: First-Quarter 2020 Sales By Operating Segment
First-Quarter 2020 Sales By Operating Segment1 Q1 2020 Revenue Total Growth $ In Millions Reported Reported Constant Operational Americas $1,499 +6% +8% +7% (North and South America) EMEA (Europe, Middle East and $754 +7% +10% +10% Africa) APAC $549 +5% +9% +8% (Asia Pacific) Total Baxter $2,802 +6%
Slide 15: First-Quarter 2020 Adjusted Financial Results
First-Quarter 2020 Adjusted Financial Results1 Q1 2019 Q1 2020 Change as restated Adjusted Gross Margin 43.6% 44.3% +70 bps Adjusted SG&A Expense 22.3% 21.1% (120 bps) (% of Sales) Adjusted R&D Expense 4.3% 4.4% +10 bps (% of Sales) Adjusted Operating Margin 17.0% 18.8% +180 bps Adjusted Diluted EPS
Slide 16: Maintaining Focus On Cash Flow Generation
Maintaining Focus On Cash Flow Generation1 Operating Cash Flow2 Capital Expenditures Free Cash Flow3 $274M $193M $172M $134M $102M ($59M) Q1 2019 Q1 2020 Q1 2019 Q1 2020 Q1 2019 Q1 2020 as restated as restated as restated 1Non-GAAP financial metrics referenced in this slide include free cash flow. A
Slide 17: Prioritizing Financial Flexibility While Driving Value For Shareholders
Prioritizing Financial Flexibility While Driving Value For Shareholders Reinvestment in Business Meeting the needs of patients and providers globally while continuing to invest in long-term innovation and accelerated launch cadence Continued Dividend Issuance Announced quarterly dividend of $0.22 pe
Slide 18: Non-GAAP Reconciliations
Non-GAAP Reconciliations First-Quarter 2020 Earnings April 30, 2020 18
Slide 19: Non-GAAP Reconciliation as of April 30, 2020
Non-GAAP Reconciliation as of April 30, 2020 Non-GAAP Reconciliations: As part of its Q1 2020 earnings announcement on April 30, 2020, Baxter presented its financial results for the first quarter of 2020. In these presentations, Baxter used non-GAAP financial measures of sales growth (on a constant
Slide 20: Description of Adjustments and Reconciliation of U.S. GAAP to Non-GAAP Measures
Description of Adjustments and Reconciliation of U.S. GAAP to Non-GAAP Measures Three Months Ended March 31, 2020 and 2019 (unaudited) (in millions, except per share and percentage data) The company’s U.S. GAAP results for the three months ended March 31, 2020 included special items which impacted t
Slide 21: Description of Adjustments and Reconciliation of U.S. GAAP to Non-GAAP Measures
Description of Adjustments and Reconciliation of U.S. GAAP to Non-GAAP Measures Three Months Ended March 31, 2020 and 2019 (unaudited) 1 The company’s results in 2020 and 2019 included intangible asset amortization expense of $52 million ($41 million, or $0.08 per diluted share, on an after-tax basi
Slide 22: Reconciliation of Change in Net Sales As Reported to Operational Sales
Reconciliation of Non-GAAP Financial Measure Change in Net Sales As Reported to Operational Sales From The Three Months Ended March 31, 2019 to The Three Months Ended March 31, 2020 (unaudited) Q1 2 0 2 0 * Sales By Global Business Unit: N et Sales Operational As Reported Seprafilm FX Sales Renal Ca
Slide 23: First-Quarter 2020 Earnings
First-Quarter 2020 Earnings Baxter International Inc. April 30, 2020