Baxter International Inc. · NYSE:BAX
Baxter International — Q3 2018 Earnings Presentation
23 slides from Baxter International's earnings presentation, Oct 31, 2018
Slide 1: Third-Quarter 2018 Earnings
Third-Quarter 2018 Earnings Baxter International Inc. October 31, 2018
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 2018 Outlook 18
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 third-quarter 2018 earnings growth driven by ► Reallocating investment to higher-margin, faster-growing operat
Slide 6: Continuing Momentum Of Key Metrics
Continuing Momentum Of Key Metrics Third-Quarter 2018 Financial Snapshot1 Global Reported Sales Adjusted Operating Margin Adjusted Diluted EPS ~$2.8B 18.3% $0.80 ~$2.7B 16.6% $0.64 +3% Operational Growth2 +170 bps +25% Q3 2017 Q3 2018 Q3 2017 Q3 2018 Q3 2017 Q3 2018 1See www.baxter.com for informati
Slide 7: Third-Quarter 2018 Sales And Adjusted Earnings
Third-Quarter 2018 Sales And Adjusted Earnings1 Q3 2018 Q3 2018 Metric Guidance Actual Sales Growth 3% - 4% +3% Operational Sales Growth ~3% +2% Reported Adjusted Diluted EPS $0.72 - $0.74 $0.80 Growth vs. Prior-Year Period 13% - 16% +25% Delivering Steady Top And Bottom-Line Growth 1See www.baxter.
Slide 8: Advancing Our New Product Portfolio
Advancing Our New Product Portfolio Recent R&D And Commercial Milestones Actifuse ► Secured CE Mark in Europe and submitted a 510(k) to the U.S. Food and Drug Administration (FDA) for PrisMax, our next generation technology for continuous renal replacement therapy (CRRT) ► Received U.S. Food and Dru
Slide 9: Financial Results
Financial Results Third-Quarter 2018 Earnings October 31, 2018
Slide 10: Third-Quarter 2018 Sales By Global Business Unit
Third-Quarter 2018 Sales By Global Business Unit1 Q3 2018 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Renal Care $209 $701 $910 +2% +3% +3% Medication Delivery $418 $234 $652 -4% -3% -3% Pharmaceuticals $240 $279 $519 +4% +5% +5% Clinical Nutrition $80 $
Slide 11: Year-To-Date 2018 Sales By Global Business Unit
Year-To-Date 2018 Sales By Global Business Unit1 YTD 2018 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Renal Care $609 $2,100 $2,709 +7% +4% +4% Medication Delivery $1,280 $729 $2,009 -1% -2% -2% Pharmaceuticals $745 $807 $1,552 +13% +11% +7% Clinical Nut
Slide 12: Third-Quarter 2018 Sales By Operating Segment
Third-Quarter 2018 Sales By Operating Segment1 Q3 2018 Revenue Total Growth $ In Millions Reported Reported Constant Americas (North and South America) $1,497 +3% +4% EMEA (Europe, Middle East and Africa) $707 +4% +4% APAC (Asia Pacific) $563 -1% +0% Total Baxter $2,767 +2% +3% 1See www.baxter.com f
Slide 13: Third-Quarter 2018 Adjusted Financial Results
Third-Quarter 2018 Adjusted Financial Results1 Q3 2018 Q3 2017 Change Adjusted Gross Margin 46.3% 45.3% +100 bps Adjusted SG&A Expense (% of Sales) 22.5% 23.2% (70 bps) Adjusted R&D Expense (% of Sales) 5.5% 5.5% Flat Adjusted Operating Margin 18.3% 16.6% +170 bps Adjusted Diluted EPS $0.80 $0.64 +2
Slide 14: Year-To-Date 2018 Adjusted Financial Results
Year-To-Date 2018 Adjusted Financial Results1 YTD 2018 YTD 2017 Change Adjusted Gross Margin 45.2% 45.0% +20 bps Adjusted SG&A Expense (% of Sales) 22.3% 22.9% (60 bps) Adjusted R&D Expense (% of Sales) 5.5% 5.5% Flat Adjusted Operating Margin 17.4% 16.6% +80 bps Adjusted Diluted EPS $2.27 $1.84 +23
Slide 15: Driving Operational Excellence Across the Company
Driving Operational Excellence Across the Company YTD 2018 vs. YTD 2017 Adjusted Operating Margin1 17.4% Highlights: +60bps Favorable product mix and manufacturing efficiencies partially offset by increased supply 16.6% +20 bps chain costs Business transformation initiatives and focus on optimiz
Slide 16: 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 $1,343M $1,341M $933M $873M $468M $410M YTD 2017 YTD 2018 YTD 2017 YTD 2018 YTD 2017 YTD 2018 1See www.baxter.com for information regarding non-GAAP financial metr
Slide 17: Strategically Deploying Capital To Fuel Growth And Create Value
Strategically Deploying Capital To Fuel Growth And Create Value Reinvestment Maintaining financial flexibility with current in Business net debt to EBITDA ratio near zero Currently targeting ~35% dividend payout Dividends ratio over time Repurchased ~15 million Baxter shares BAX Share year-to-date i
Slide 18: 2018 Outlook
2018 Outlook Third-Quarter 2018 Earnings October 31, 2018 18
Slide 19: Full-Year 2018 Sales Guidance
Full-Year 2018 Sales Guidance1 Full-Year 2018 Full-Year 2018 Current Guidance Prior Guidance Sales Growth ~3% 4% - 5% Operational US Cyclo Competition (<50 bps) (<100 bps) Acquisitions2 ~100 bps ~100 bps Sales Growth ~4% ~5% Constant Foreign Exchange ~100 bps 100+ bps Sales Growth ~5% ~6% Reported 1
Slide 20: Full-Year 2018 Financial Guidance
Full-Year 2018 Financial Guidance1 Full-Year 2018 Full-Year 2018 Current Guidance Prior Guidance Adjusted Operating Margin ~17.3% 17.1% - 17.3% Adjusted Diluted EPS $2.98 - $3.00 $2.94 - $3.00 Growth vs. Prior-Year Period 20% - 21% 19% - 21% Operating Cash Flow ~$2.2B ~$2.25B Free Cash Flow ~$1.5B ~
Slide 21: Full-Year 2018 Sales Guidance By Business
Full-Year 2018 Sales Guidance By Business1 Full-Year 2018 Full-Year 2018 Constant Currency Operational Renal Care 3% - 4% 3% - 4% Medication Delivery LSD Decline LSD Decline Pharmaceuticals HSD Increase ~7% Clinical Nutrition LSD Decline LSD Decline Advanced Surgery ~10% ~4% Acute Therapies 10% - 11
Slide 22: Fourth-Quarter 2018 Financial Guidance
Fourth-Quarter 2018 Financial Guidance1 Fourth-Quarter 2018 Guidance Sales Growth 3% - 4% Operational US Cyclo Competition (<50 bps) Acquisitions2 ~50 bps Sales Growth 3% - 4% Constant Foreign Exchange (200+ bps) Sales Growth ~1% Reported Adjusted Diluted EPS $0.71 - $0.73 Growth vs. Prior-Year Peri
Slide 23: Third-Quarter 2018 Earnings
Third-Quarter 2018 Earnings Baxter International Inc. October 31, 2018