Baxter International Inc. · NYSE:BAX
Baxter International — Q4 2020 Earnings Presentation
34 slides from Baxter International's earnings presentation, Feb 4, 2021
Slide 1: Fourth-Quarter 2020 Earnings
Fourth-Quarter 2020 Earnings Baxter International Inc. February 4, 2021
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, and outlook for full-
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: Top Quartile Goals / Our Strategy
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 2021 Outlook 21 Non-GAAP Reconciliations 24
Slide 6: Performance Highlights
Performance Highlights Fourth-Quarter 2020 Full-Year 2020 $3.2B $11.7B +5% Reported +3% Reported +3% Constant Currency1 +3% Constant Currency1 Sales +2% Operational2 Sales +2% Operational2 Key Metrics GAAP Adjusted3 Key Metrics GAAP Adjusted3 Gross Margin 37.4% 41.4% Gross Margin 39.3% 42.4% YOY Cha
Slide 7: Executing On Our Strategy
Executing On Our Strategy Recent Highlights Demonstrating Underlying Portfolio Resilience In Dynamic Environment1 ▪ Operational sales growth of 2% in Q4 2020, driven by underlying business strength and ongoing demand for medically essential products ▪ Adjusted diluted EPS decline of (18%) in Q4 2020
Slide 8: Key Financial Metrics: Fourth-Quarter 2020 Snapshot
Key Financial Metrics Fourth-Quarter 2020 Snapshot1 Global Reported Sales Adjusted Operating Margin Adjusted Diluted EPS $3.0B $3.2B 20.0% $0.97 17.7% $0.80 +2% Operational Growth 2 (230 bps) (18%) Q4 2019 Q4 2020 Q4 2019 Q4 2020 Q4 2019 Q4 2020 1Non-GAAP financial metrics referenced in this slide i
Slide 9: Key Financial Metrics: Full-Year 2020 Snapshot
Key Financial Metrics Full-Year 2020 Snapshot1 Global Reported Sales Adjusted Operating Margin Adjusted Diluted EPS $11.4B $11.7B $3.31 18.7% $3.09 18.0% +2% Operational Growth 2 (70 bps) (7%) FY 2019 FY 2020 FY 2019 FY 2020 FY 2019 FY 2020 1Non-GAAP financial metrics referenced in this slide includ
Slide 10: Full-Year 2020 Performance
Full-Year 2020 Performance1 Metric FY 2020 FY 2020 Guidance Actual Sales Growth Low Single Digit +3% Reported Sales Growth Low Single Digit +3% Constant Currency Sales Growth Low Single Digit +2% Operational Adjusted Diluted EPS $3.02 - $3.05 $3.09 Growth vs. Prior-Year Period (9%) – (8%) (7%) Durab
Slide 11: Demonstrating Portfolio Resiliency Amid COVID-19
Demonstrating Portfolio Resiliency Amid COVID-19 Fourth-Quarter 2020 Business Drivers1,2 Renal Care Medication Delivery $1,013M, +4% Constant Currency $753M, (3%) Constant Currency Strong performance driven by global growth in PD Sales decline driven by lower hospitalization rates, business; PD sale
Slide 12: Financial Results
Financial Results Fourth-Quarter 2020 Earnings February 4, 2021 12
Slide 13: Fourth-Quarter 2020 Sales By Global Business Unit
Fourth-Quarter 2020 Sales By Global Business Unit1 Q4 2020 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Renal Care $219 $794 $1,013 +6% +4% +4% Medication Delivery $486 $267 $753 (3%) (3%) (3%) Pharmaceuticals $221 $350 $571 (2%) (4%) (4%) Clinical Nutrit
Slide 14: Full-Year 2020 Sales By Global Business Unit
Full-Year 2020 Sales By Global Business Unit1 FY 2020 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Renal Care $848 $2,909 $3,757 +3% +4% +4% Medication Delivery $1,782 $953 $2,735 (2%) (2%) (2%) Pharmaceuticals $874 $1,249 $2,123 (1%) (1%) (1%) Clinical N
Slide 15: Fourth-Quarter 2020 Sales By Operating Segment
Fourth-Quarter 2020 Sales By Operating Segment1 Q4 2020 Revenue Total Growth $ In Millions Reported Reported Constant Operational Americas $1,614 (1%) 0% (1%) (North and South America) EMEA (Europe, Middle East and $867 +10% +5% +5% Africa) APAC $700 +13% +8% +6% (Asia Pacific) Total Baxter $3,181 +
Slide 16: Full-Year 2020 Sales By Operating Segment
Full-Year 2020 Sales By Operating Segment1 FY 2020 Revenue Total Growth $ In Millions Reported Reported Constant Operational Americas $6,069 (0%) +1% 0% (North and South America) EMEA (Europe, Middle East and $3,129 +5% +5% +5% Africa) APAC $2,475 +8% +7% +5% (Asia Pacific) Total Baxter $11,673 +3%
Slide 17: Fourth-Quarter 2020 Adjusted Financial Results
Fourth-Quarter 2020 Adjusted Financial Results1 Q4 2019 Q4 2020 Change Adjusted Gross Margin 45.7% 41.4% (430 bps) Adjusted SG&A Expense 20.6% 19.6% (100 bps) (% of Sales) Adjusted R&D Expense 5.0% 4.1% (90 bps) (% of Sales) Adjusted Operating Margin 20.0% 17.7% (230 bps) Adjusted Diluted EPS $0.97
Slide 18: Full-Year 2020 Adjusted Financial Results
Full-Year 2020 Adjusted Financial Results1 FY 2019 FY 2020 Change Adjusted Gross Margin 44.9% 42.4% (250 bps) Adjusted SG&A Expense 21.4% 20.2% (120 bps) (% of Sales) Adjusted R&D Expense 4.8% 4.2% (60 bps) (% of Sales) Adjusted Operating Margin 18.7% 18.0% (70 bps) Adjusted Diluted EPS $3.31 $3.09
Slide 19: Maintaining Focus On Cash Flow Generation
Maintaining Focus On Cash Flow Generation1 Operating Cash Flow2 Capital Expenditures Free Cash Flow3 $2,110M $1,870M $1,414M $1,161M $696M $709M FY 2019 FY 2020 FY 2019 FY 2020 FY 2019 FY 2020 1Non-GAAP financial metrics referenced in this slide include free cash flow. A reconciliation to comparable
Slide 20: Prioritizing Financial Flexibility While Driving Value For Shareholders
Prioritizing Financial Flexibility While Driving Value For Shareholders Over The Long-Term Reinvestment In Business Meeting the needs of patients and providers globally while continuing to invest in long-term innovation and accelerated launch cadence Dividend Issuance Announced a quarterly dividend
Slide 21: 2021 Outlook
2021 Outlook Fourth-Quarter 2020 Earnings February 4, 2021 21
Slide 22: Full-Year 2021 Guidance
Full-Year 2021 Guidance1 Full-Year 2021 Guidance Sales Growth 7% - 8% Reported Foreign Exchange (~300 bps) Sales Growth 4% - 5% Constant Currency GAAP Diluted EPS $2.91 - $2.99 Growth vs. Prior-Year Period 37% - 40% Adjusted Diluted EPS $3.35 - $3.43 Growth vs. Prior-Year Period 8% – 11% 1Non-GAAP f
Slide 23: First-Quarter 2021 Guidance
First-Quarter 2021 Guidance1 First-Quarter 2021 Guidance Sales Growth ~3% Reported Foreign Exchange (~400 bps) Sales Growth LSD Decline Constant Currency GAAP Diluted EPS $0.53 - $0.55 Growth vs. Prior-Year Period (17%) – (14%) Adjusted Diluted EPS $0.63 - $0.65 Growth vs. Prior-Year Period (23%) –
Slide 24: Non-GAAP Reconciliations
Non-GAAP Reconciliations Fourth-Quarter 2020 Earnings February 4, 2021 24
Slide 25: Non-GAAP Reconciliation as of February 4, 2021
Non-GAAP Reconciliation as of February 4, 2021 Non-GAAP Reconciliations: As part of its Q4 2020 earnings announcement on February 4, 2021, Baxter presented its financial results for the fourth quarter and full year of 2020. Baxter also presented guidance for FY 2021 and Q1 2021. In these presentatio
Slide 26: Reconciliation of U.S. GAAP to Non-GAAP Measures: Three Months
Description of Adjustments and Reconciliation of U.S. GAAP to Non-GAAP Measures Three Months Ended December 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 December 31, 2020 included special items which impa
Slide 27: Reconciliation of U.S. GAAP to Non-GAAP Measures: Three Months
Description of Adjustments and Reconciliation of U.S. GAAP to Non-GAAP Measures Three Months Ended December 31, 2020 and 2019 (unaudited) 27
Slide 28: Reconciliation of U.S. GAAP to Non-GAAP Measures: Years Ended
Description of Adjustments and Reconciliation of U.S. GAAP to Non-GAAP Measures Years Ended December 31, 2020 and 2019 (unaudited) (in millions, except per share and percentage data) The company’s U.S. GAAP results for the year ended December 31, 2020 included special items which impacted the U.S. G
Slide 29: Reconciliation of U.S. GAAP to Non-GAAP Measures: Years Ended
Description of Adjustments and Reconciliation of U.S. GAAP to Non-GAAP Measures Years Ended December 31, 2020 and 2019 (unaudited) 29
Slide 30: Operating Cash Flow to Free Cash Flow Reconciliation
Reconciliation of Non-GAAP Financial Measure Operating Cash Flow to Free Cash Flow (unaudited) (in millions) Y ear Ended Decem ber 3 1 , 2020 2019 C ash flow s from operations - continuing operations $ 1 ,8 7 0 $ 2 ,1 1 0 Capital expenditures (709) (696) F ree cash flow - continuing operations $ 1 ,
Slide 31: Net Sales Growth As Reported to Operational: Q4
Reconciliation of Non-GAAP Financial Measure Change in Net Sales Growth As Reported to Operational Sales Growth From The Three Months Ended December 31, 2019 to The Three Months Ended December 31, 2020 (unaudited) Sales By Global Business Unit: N et Sales Grow th Operational As Reported Seprafilm FX
Slide 32: Net Sales Growth As Reported to Operational: Full Year
Reconciliation of Non-GAAP Financial Measure Change in Net Sales Growth As Reported to Operational Sales Growth From The Year Ended December 31, 2019 to The Year Ended December 31, 2020 (unaudited) Sales By Global Business Unit: N et Sales Grow th Operational As Reported Seprafilm FX Sales Grow th*
Slide 33: Projected U.S. GAAP EPS to Projected Adjusted EPS
Reconciliation of Non-GAAP Financial Measure Projected U.S. GAAP Earnings Per Share to Projected Adjusted Earnings Per Share (unaudited) Earnings Per Share Guidance Q1 2021* FY 2021* Earnings per Diluted Share – U.S. GAAP $0.53 - $0.55 $2.91 - $2.99 Estimated intangible asset amortization $0.09 $0.3
Slide 34: Fourth-Quarter 2020 Earnings
Fourth-Quarter 2020 Earnings Baxter International Inc. February 4, 2021