Cardinal Health, Inc. · NYSE:CAH
Cardinal Health — Investor Day (June 2005)
25 slides from Cardinal Health's investor day presentation, Jun 29, 2005
Slide 1: Forward-Looking and Adjusted Information
Forward-Looking and Adjusted Information Except for historical information, all other information in these presentations consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward- looking statements are subject to risks and uncer
Slide 2: Introduction and Guidance Overview - 2005 Investor Conference
Jeff Henderson Chief Financial Officer Cardinal Health June 29, 2005 Introduction and Guidance Overview 2005 Investor Conference
Slide 3: Introduction
Introduction Jeff Henderson Chief Financial Officer
Slide 4: New finance team
New finance team Linda Harty - Treasurer Eric Slusser - Controller, CAO
Slide 5: Consolidated results - FY 2005 YTD
Consolidated results - FY 2005 YTD Q1 Q2 Q3 YTD % Change Revenue $17,796 $18,555 $19,103 $55,454 15% Operating Earnings* 390 424 628 1,441 (19%) Net Earnings* 238 275 396 909 (20%) Diluted EPS* $ 0.55 $ 0.63 $ 0.90 $ 2.08 (19%) Non-recurring Charges ** $ 0.06 $ 0.10 $ 0.04 $ 0.20 * Presented before
Slide 6: Segment results - FY 2005 YTD
Segment results - FY 2005 YTD Segment revenue Revenue Growth Mix $45,068 16% 80% 7,292 8% 13% 2,194 6% 4% 1,593 41% 3% Segment earnings Earnings Growth Mix $ 721 (8%) 43% 508 (3%) 31% 252 (24%) 15% 187 (25%) 11% Results in $000's First nine months through March 31, 2005 Pharmaceutical Distribution a
Slide 7: Consolidated results - FY 2005 YTD cash flow and ROE
Consolidated results - FY 2005 YTD Q1 Q2 Q3 YTD Operating Cash Flow * $893 $626 $532 $2,051 Free Cash Flow * 777 506 460 1,742 ROE ** 11.7% 13.0% 18.3% 14.4% ** Excludes special items * Includes $800 of A/R securitization Results in $000's First nine months through March 31, 2005 Free cash flow and
Slide 8: Guidance - FY 2005
Guidance - FY 2005 Q1 Q2 Q3 YTD % Change Diluted EPS * $0.55 $0.63 $0.90 $2.08 (19%) Non-recurring Charges ** $0.06 $0.10 $0.04 $0.20 Cardinal Health expects full-year earnings per share to reach the upper half of the $3.10 to $3.20 range it previously announced, excluding special items and non- rec
Slide 9: Financial Targets & Goals
Financial Targets & Goals Long-Term Financial Goals Over any rolling 3 year period: ‘One Year Targets Fiscal Year 2006 Revenue +8-10% In ine with long-term goal EPs ' +12- 15% {$3.30 - $3.85 per share * Operating |FY06 OE * growth [segment Revenue_| Eamings’ vs. long-term target_|privers POPS +8-10%
Slide 10: Financial Targets & Goals - Long-term
Financial Targets & Goals - Long-term Consolidated results: Revenue + 8 - 10% Diluted EPS* + 12 - 15% ROE ** 15 - 20% Operating CF > 100% of Net Income Cash returned to shareholders ~ 50% of OCF (via share repurchases and dividends) Credit rating "A-" or better Long-term defined as "over any rolling
Slide 11: Financial Targets & Goals - Long-term segment results
Segment results: Revenue growth growth + 8 - 10% + 10 - 13% + 4 - 7% + 6 - 9% + 8 - 10% + 12 - 18% + 10 - 15% + 15 - 20% Financial Targets & Goals - Long-term Long-term defined as "over any rolling 3 year period" Pharmaceutical Distribution and Provider Services Medical Products and Services Pharmac
Slide 12: Financial Targets & Goals - Short-term
Financial Targets & Goals - Short-term Consolidated results: Long-term FY 2006 target target Revenue + 8 - 10% In line Diluted EPS* + 12 - 15% $3.30 - $3.55 ROE** 15 - 20% In line Operating CF > 100% of Net Income Above Cash returned to shareholders ~ 50% of OCF > 50% of OCF Credit rating "A-" or be
Slide 13: Financial Targets & Goals - Short-term segment results
Segment results: Long-term FY 2006 target target Drivers + 10 - 13% Below FFS transition essentially complete with continued reduction in capital usage; lower starting point for branded buy margin (FFS) and lower inflation assumptions; lower pharma market growth + 6 - 9% In range Re-pricings are ann
Slide 14: Reconciliation
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Slide 15: Reconciliation — con't
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Slide 16: Cardinal Health
CardinalHealth Working together. For life.”
Slide 17: Capital Plan - 2005 Investor Conference
Jeff Henderson Chief Financial Officer Cardinal Health June 29, 2005 Capital Plan 2005 Investor Conference
Slide 18: Financial Targets & Goals
Financial Targets & Goals Long-Term Financial Goals ‘One Year Targets ‘ver anyrolling? year peri: Fizol Yesr 2008 Revenue: +810% tne with longterm goal ers 12-18%, s.s0 $9.46 per share * Opening |FVO6 OF growth seamen Revenue | Earrings * |us.lengterm target _lovivers rors +8 10%] +10- 19 [Below IFF
Slide 19: Company transition
Company transition Historical Deployment of resources supported working capital growth in excess of revenue growth and significant acquisitions Shareholder return driven by consistently exceptional sales and EPS growth, enhanced by acquisitions Future Rising returns on capital driven by changing dru
Slide 20: How we measure success - ROIC
How we measure success - ROIC Increased operating margins and declining capital requirements generating rising ROIC Operating Capital ROIC Margin Required Trend Pharmaceutical Distribution and Provider Services neutral declining rising Medical Products and Services rising stable rising Pharmaceutica
Slide 21: Key questions for management
Key questions for management How do we maximize shareholder return as we look to the future of Cardinal Health? How do we allocate cash flow among investment priorities? Organic growth (i.e. capital investment) Acquisitions Return to shareholders (dividends and share buy-backs) How should we return
Slide 22: Capital Deployment
Capital Deployment Capital expenditures - < 25% of operating cash flow Tuck-in acquisitions - < 20% of operating cash flow Total cash returned to shareholders - approximately 50% of operating cash flow Dividends - increase to 20% payout ratio Share repurchases - the balance Always maintain flexibili
Slide 23: Re-allocation of corporate costs
Re-allocation of corporate costs Beginning in FY 2006, Cardinal Health will change the way in which certain corporate and other costs are allocated to the business segments Intent is to better align corporate spending with business segments based on benefits May shift individual segment returns and/
Slide 24: Summary
Summary Cardinal Health = Strong growth company with high cash flow yield to shareholders Disciplined allocation of cash flow 2006: Year of execution, investment and significant returns
Slide 25: Cardinal Health
CardinalHealth Working together. For life.”