Baxter International Inc. · NYSE:BAX
Baxter International — Q2 2017 Earnings Presentation
27 slides from Baxter International's earnings presentation, Jul 26, 2017
Slide 1: Second-Quarter 2017 Earnings
Second-Quarter 2017 Earnings Baxter International Inc. July 26, 2017
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation includes forward-looking statements concerning Baxter’s financial results, business development activities (including the proposed acquisition of Claris Injectables in July 2017), capital structure, cost savings initiatives, R&D pipeline including results of c
Slide 3: Table Of Contents
Table Of Contents Performance Summary 5 Financial Results 9 2017 Outlook 16 2020 Update 21 IV Solutions R&D Alliance Park, Belgium
Slide 4: Executing A Disciplined Strategy To Deliver Top-Quartile Shareholder Returns
Executing A Disciplined Strategy To Deliver Top- Quartile Shareholder Returns Focused, market-leading product portfolio Quality and patient safety Leaner, more efficient operating model Best place to work Strengthened profitability and returns Industry-leading performance Strong capital structure De
Slide 5: Delivering On Our Strategy: Business Highlights
Delivering On Our Strategy Business Highlights Building Momentum With Strong Capitalizing On New Product Launches Operational Performance And Geographic Expansions ► Delivered solid second-quarter sales and earnings ► Reallocating investment to higher-margin, faster-growing performance; increased fu
Slide 6: Continuing Momentum Of Key Metrics
Continuing Momentum Of Key Metrics Second-Quarter 2017 Financial Snapshot1 Global Reported Adjusted Adjusted Revenues Operating Margin Diluted EPS 16.1% $0.63 $2,605M 12.3% $2,585M $0.46 +3% Operational Growth2 +380bps +37% Q2 2016 Q2 2017 Q2 2016 Q2 2017 Q2 2016 Q2 2017 1See www.baxter.comfor infor
Slide 7: Second-Quarter 2017 Sales And Adjusted Earnings
Second-Quarter 2017 Sales And Adjusted Earnings1 Q2 2017 Q2 2017 Metric Guidance2 Actual Operational ~3% +3% Sales Growth Reported Flat +1% Sales Growth Adjusted Diluted EPS $0.55 - $0.57 $0.63 Growth vs. Prior-Year Period 20% - 24% +37% Delivering Accelerated Top And Bottom-Line Performance 1See ww
Slide 8: Advancing Our New Product Portfolio
Advancing Our New Product Portfolio Second-Quarter 2017 R&D Milestones Hospital Products Renal ► Secured clearance from all regulatory authorities to ► Presented additional data demonstrating high complete the proposed acquisition of Claris Injectables performance of HDx enabled by Theranova ► Unvei
Slide 9: Financial Results
Financial Results Second-Quarter 2017 Earnings July 26, 2017 SIGMA SPECTRUM Manufacturing Medina, New York
Slide 10: Second-Quarter 2017 Sales By Franchise
Second-Quarter 2017 Sales By Franchise Q2 2017 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Fluid Systems $365 $242 $607 +4% +5% +6% I.P.S.1 $275 $293 $568 +1% +3% +4% Surgical Care $204 $148 $352 +1% +2% +3% Other $62 $48 $110 (11%) (10%) (10%) Hospital
Slide 11: Year-To-Date 2017 Sales By Franchise
Year-To-Date 2017 Sales By Franchise YTD 2017 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Fluid Systems $724 $468 $1,192 +7% +8% +9% I.P.S.1 $541 $579 $1,120 +0% +1% +4% Surgical Care $406 $280 $686 +5% +6% +7% Other $122 $96 $218 +1% +2% +2% Hospital Pr
Slide 12: Second-Quarter And Year-To-Date 2017 Adjusted Financial Results
Second-Quarter And Year-To-Date 2017 Adjusted Financial Results1 Metric Q2 2017 Q2 2016 Change YTD 2017 YTD 2016 Change Adjusted Gross 45.2% 43.8% +140 bps 44.7% 43.1% +160bps Margin Adjusted SG&A Expense2 23.1% 25.6% (250 bps) 22.9% 25.9% (300 bps) (% of Sales) Adjusted R&D Expense 6.0% 5.8% +20 bp
Slide 13: Driving Operational Excellence Across The Company
Driving Operational Excellence Across The Company1 Adjusted Operating Margin2 Quarterly Highlights Q2 2017 vs. Q2 2016 20% Improved adjusted gross margin of 45.2% driven by enhanced manufacturing performance and 15% modest price improvements in select areas +230 bps +140 bps Business transformat
Slide 14: Disciplined Financial Execution Drives Significant Improvements In Cash Flow Generation
Disciplined Financial Execution Drives Significant Improvements In Cash Flow Generation1 Operating Cash Flow Capital Expenditures Free Cash Flow2 Improved working capital and Investment prioritization and Enhanced flexibility allows operational performance disciplined spending control strategic capi
Slide 15: Opportunistically Deploying Capital To Fuel Growth And Create Value
Opportunistically Deploying Capital To Fuel Growth And Create Value Net debt to EBITDA ratio just below zero; targeting steady Reinvestment in state of ~2.0x Business Increased dividend 23% in May 2017; targeting ~35% dividend payout ratio of adjusted net income over the long term Dividends Se
Slide 16: 2017 Outlook
2017 Outlook Second-Quarter 2017 Earnings July 26, 2017 Baxter Center for Spectroscopy and Imaging Round Lake, Illinois
Slide 17: Updated 2017 Full-Year Financial Guidance
Updated 2017 Full-Year Financial Guidance1 FY 2017 FY 2017 Metric Current Prior FY 2017 Sales Impacts: Sales Growth ~4% 2% - 3% • Foreign exchange [<100 bps] [Constant Currency] Sales Growth • Cyclo competition [~60 bps] ~3% 1% - 2% [Reported] • Strategic market exits [~100 bps] Adjusted Operating M
Slide 18: Updated 2017 Full-Year Sales Guidance
Updated 2017 Full-Year Sales Guidance1 FY 2017 FY 2017 Sales Growth Constant Currency Operational Total Baxter ~4% ~5% Renal ~3% ~4% Hospital Products 4% - 5% 5% - 6% Fluid Systems 5% - 6% 7% - 8% I.P.S.2 4% - 5% 4% - 5% Surgical Care ~4% 4% - 5% Other Low single-digit increase Low single-digit incr
Slide 19: Third-Quarter 2017 Financial Guidance
Third-Quarter 2017 Financial Guidance1 Metric Q3 2017 Q3 2017 Sales Impacts: • Foreign exchange [~100 bps] Sales Growth • Cyclo competition [~50 bps] [Constant Currency] ~5% • Strategic market exits [100+ bps] • Claris acquisition2 [<100 bps] Sales Growth [Reported] ~4% Q3 2017 Sales Guidance: Adjus
Slide 20: Continuing Strong Momentum In 2017
Continuing Strong Momentum In 2017 ► Increasing innovation to drive accelerated revenue growth ► Maintaining strong cadence of product launches and geographic expansions ► Realizing ongoing benefits of cost reduction initiatives and organization optimization ► Opportunistically deploying capital to
Slide 21: 2020 Outlook
2020 Outlook Second-Quarter 2017 Earnings July 26, 2017 Baxter Center for Spectroscopy and Imaging Round Lake, Illinois
Slide 22: Updated 2020 Financial Outlook
Updated 2020 Financial Outlook1 Metric FY 2020 FY 2020 Current Prior Sales Growth ~4% CAGR2 ~4% CAGR2 [Constant Currency] Adjusted Operating Margin ~20% 17% - 18% Tax Rate ~21% ~22% Adjusted Diluted EPS $3.25 - $3.40 $2.75 - $3.00 Growth vs. 2015 19% - 20% CAGR 15% - 17% CAGR 1See www.baxter.comfor
Slide 23: Updated 2020 Financial Outlook
Updated 2020 Financial Outlook1 Metric FY 2020 FY 2020 Current Prior Operating Cash Flow ~$2.65B ~$2.5B Capital Expenditures ~$650M ~$750M Free Cash Flow ~$2.0B ~$1.75B 1See www.baxter.comfor information regarding non-GAAP financial metrics used in this presentation, including constant currency and
Slide 24: Focused Strategy To Deliver Incremental Value
Focused Strategy To Deliver Incremental Value1 2020 Adjusted Operating Margin Key Margin Drivers 2016 Investor Conference vs. Updated Outlook Cost Improvement: +50 bps ‒ Incremental cost efficiencies identified through business transformation activities +200 bps ‒ Enhanced manufacturing capabiliti
Slide 25: Disciplined Financial Execution Drives Significant Improvements In Cash Flow Generation
Disciplined Financial Execution Drives Significant Improvements In Cash Flow Generation1 2020 Operating Cash Flow 2020 Capital Expenditures 2020 Free Cash Flow Improved working capital and Investment prioritization and Enhanced flexibility allows operational performance disciplined spending control
Slide 26: Optimizing Utilization Of Capital To Create Value
Optimizing Utilization Of Capital To Create Value Operating Cash Flow Net Debt / EBITDA: ~2.0X Targeted Future Steady State 2016 Actuals 2020 Outlook M&A: Strategic Objectives $1.62B ~$2.65B Drive Category Leadership Improve Baxter’s Weighted Average Market Growth Rate Expand Into Strategic Ad
Slide 27: Second-Quarter 2017 Earnings
Second-Quarter 2017 Earnings Baxter International Inc. July 26, 2017