Baxter International Inc. · NYSE:BAX
Baxter International — Q3 2021 Earnings Presentation
35 slides from Baxter International's earnings presentation, Oct 28, 2021
Slide 1: Third-Quarter 2021 Earnings
Third-Quarter 2021 Earnings Baxter International Inc. October 28, 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 fourt
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 Third-Quarter 2021 Year-To-Date 2021 $3.2B +7% Constant Currency $9.3B +6% Constant Currency +9% Reported +9% Reported 1 1 Sales +6% Operational2 Sales +5% Operational2 Key Metrics GAAP Adjusted3 Key Metrics GAAP Adjusted3 Gross Margin 40.9% 44.0% Gross Margin 39.9% 42.9% YOY
Slide 7: Executing On Our Strategy
Executing On Our Strategy Recent Highlights Demonstrating Ongoing Portfolio Resilience In Dynamic Environment1 ▪ Delivered operational sales growth of 6% and adjusted diluted EPS growth of 23% in Q3 2021, reflecting the steady impact of pandemic recovery and disciplined financial execution Investing
Slide 8: Key Financial Metrics: Third-Quarter 2021 Snapshot
Key Financial Metrics Third-Quarter 2021 Snapshot1 Global Reported Sales Adjusted Operating Margin Adjusted Diluted EPS $1.02 20.2% $3.2B 19.2% $3.0B $0.83 +6% Operational Growth 2 +100 bps +23% Q3 2020 Q3 2021 Q3 2020 Q3 2021 Q3 2020 Q3 2021 1Non-GAAP financial metrics referenced in this slide incl
Slide 9: Key Financial Metrics: Year-To-Date 2021 Snapshot
Key Financial Metrics Year-To-Date 2021 Snapshot1 Global Reported Sales Adjusted Operating Margin Adjusted Diluted EPS $9.3B $2.58 $8.5B $2.29 18.1% 18.2% +5% Operational Growth 2 +10 bps +13% YTD 2020 YTD 2021 YTD 2020 YTD 2021 YTD 2020 YTD 2021 1Non-GAAP financial metrics referenced in this slide
Slide 10: Third-Quarter 2021 Performance vs Guidance
Third-Quarter 2021 Performance1 Metric Q3 2021 Q3 2021 Guidance Actual Sales Growth ~9% +9% Reported Sales Growth ~7% +7% Constant Currency Sales Growth ~6% +6% Operational Adjusted Diluted EPS $0.93 - $0.95 $1.02 Growth vs. Prior-Year Period 12% –14% +23% Positive Sales Mix And Disciplined Expense
Slide 11: Strong Performance Driven By Pandemic Recovery
Strong Performance Driven By Pandemic Recovery Third-Quarter 2021 Business Drivers1 Product Category Sales CC Growth2 Quarterly Performance Drivers Performance driven by global growth in PD business reflecting year over year Renal Care $981M +1% improvement in global patient volumes; partially offse
Slide 12: Financial Results
Financial Results Third-Quarter 2021 Earnings October 28, 2021 12
Slide 13: Third-Quarter 2021 Sales By Product Category
Third-Quarter 2021 Sales By Product Category1 Q3 2021 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Renal Care $222 $759 $981 +3% +1% +1% Medication Delivery $490 $257 $747 +12% +11% +11% Pharmaceuticals $188 $401 $589 +9% +7% +1% Clinical Nutrition $88 $1
Slide 14: Year-To-Date 2021 Sales By Product Category
Year-To-Date 2021 Sales By Product Category1 YTD 2021 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Renal Care $655 $2,212 $2,867 +4% +1% +1% Medication Delivery $1,345 $751 $2,096 +8% +5% +5% Pharmaceuticals $550 $1,137 $1,687 +10% +4% (0%) Clinical Nutri
Slide 15: Third-Quarter 2021 Sales By Operating Segment
Third-Quarter 2021 Sales By Operating Segment1 Q3 2021 Revenue Total Growth $ In Millions Reported Reported Constant Operational Americas $1,727 +8% +7% +7% (North and South America) EMEA (Europe, Middle East and $779 +8% +7% +3% Africa) APAC $720 +11% +8% +8% (Asia Pacific) Total Baxter $3,226 +9%
Slide 16: Year-To-Date 2021 Sales By Operating Segment
Year-To-Date 2021 Sales By Operating Segment1 YTD 2021 Revenue Total Growth $ In Millions Reported Reported Constant Operational Americas $4,911 +6% +5% +5% (North and South America) EMEA (Europe, Middle East and $2,300 +11% +5% +2% Africa) APAC $2,059 +16% +9% +8% (Asia Pacific) Total Baxter $9,270
Slide 17: Third-Quarter 2021 Adjusted Financial Results
Third-Quarter 2021 Adjusted Financial Results1 Q3 2020 Q3 2021 Change Adjusted Gross Margin 42.6% 44.0% +140 bps Adjusted SG&A Expense 19.3% 19.8% +50 bps (% of Sales) Adjusted R&D Expense 4.1% 4.0% (10 bps) (% of Sales) Adjusted Operating Margin 19.2% 20.2% +100 bps Adjusted Diluted EPS $0.83 $1.02
Slide 18: Year-To-Date 2021 Adjusted Financial Results
Year-To-Date 2021 Adjusted Financial Results1 YTD 2020 YTD 2021 Change Adjusted Gross Margin 42.8% 42.9% +10 bps Adjusted SG&A Expense 20.5% 20.5% -- (% of Sales) Adjusted R&D Expense 4.3% 4.3% -- (% of Sales) Adjusted Operating Margin 18.1% 18.2% +10 bps Adjusted Diluted EPS $2.29 $2.58 +13% 1Non-G
Slide 19: Maintaining Focus On Cash Flow Generation
Maintaining Focus On Cash Flow Generation1 Operating Cash Flow2 Capital Expenditures Free Cash Flow3 $1,529M $1,021M $1,158M $686M $472M $508M YTD 2020 YTD 2021 YTD 2020 YTD 2021 YTD 2020 YTD 2021 1Non-GAAP financial metrics referenced in this slide include free cash flow. A reconciliation to compar
Slide 20: Executing Disciplined Capital Allocation Strategy
Executing Disciplined Capital Allocation Strategy Strategic Business Development Announced definitive agreement to acquire Hillrom, which will bring together two leading, global medical technology innovators to advance innovation, expand digital capabilities, and transform healthcare1 Reinvestment I
Slide 21: 2021 Outlook
2021 Outlook Third-Quarter 2021 Earnings October 28, 2021 21
Slide 22: Full-Year 2021 Guidance
Full-Year 2021 Guidance1,2 FY 2021 FY 2021 Prior Guidance Current Guidance Sales Growth ~8% 7% - 8% Reported Foreign Exchange (~250 bps) (~200 bps) Sales Growth 5% - 6% 5% - 6% Constant Currency OUS Caelyx and Doxil (~100 bps) (~100 bps) Sales Growth 4% - 5% 4% - 5% Operational GAAP Diluted EPS $2.8
Slide 23: Fourth-Quarter 2021 Guidance
Fourth-Quarter 2021 Guidance1,2 Q4 2021 Guidance Sales Growth 3% - 4% Reported Foreign Exchange ~100 bps Sales Growth 4% - 5% Constant Currency OUS Caelyx and Doxil (~100 bps) Sales Growth 3% - 4% Operational GAAP Diluted EPS $0.75 - $0.79 Growth vs. Prior-Year Period 127% – 139% Adjusted Diluted EP
Slide 24: Non-GAAP Reconciliations
Non-GAAP Reconciliations Third-Quarter 2021 Earnings October 28, 2021 24
Slide 25: Non-GAAP Reconciliation as of October 28, 2021
Non-GAAP Reconciliation as of October 28, 2021 Non-GAAP Reconciliations: As part of its Q3 2021 earnings announcement on October 28, 2021, Baxter presented its financial results for the third quarter of 2021 and the related year-to-date period. Baxter also presented guidance for the fourth quarter a
Slide 26: 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 September 30, 2021 and 2020 (unaudited) (in millions, except per share and percentage data) The company’s U.S. GAAP results for the three months ended September 30, 2021 included special items which im
Slide 27: 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 September 30, 2021 and 2020 (unaudited) 1 The company’s results in 2021 and 2020 included intangible asset amortization expense of $68 million ($53 million, or $0.10 per diluted share, on an after-tax
Slide 28: Reconciliation of U.S. GAAP to Non-GAAP Measures
Description of Adjustments and Reconciliation of U.S. GAAP to Non-GAAP Measures Nine Months Ended September 30, 2021 and 2020 (unaudited) (in millions, except per share and percentage data) The company’s U.S. GAAP results for the nine months ended September 30, 2021 included special items which impa
Slide 29: Reconciliation of U.S. GAAP to Non-GAAP Measures
Description of Adjustments and Reconciliation of U.S. GAAP to Non-GAAP Measures Nine Months Ended September 30, 2021 and 2020 (unaudited) 1 The company’s results in 2021 and 2020 included intangible asset amortization expense of $199 million ($158 million, or $0.31 per diluted share, on an after-tax
Slide 30: Operating Cash Flow to Free Cash Flow
Reconciliation of Non-GAAP Financial Measure Operating Cash Flow to Free Cash Flow (unaudited) (in millions) Nine Months Ended September 30, 2021 2020 Cash flows from operations – continuing operations $ 1,529 $ 1,158 Cash flows from investing activities (933) (915) Cash flows from financing activit
Slide 31: Net Sales Growth As Reported to Operational: Three Months
Reconciliation of Non-GAAP Financial Measure Change in Net Sales Growth As Reported to Operational Sales Growth From The Three Months Ended September 30, 2020 to The Three Months Ended September 30, 2021 (unaudited) Sales By Product Category: Net Sales Growth Operational As Reported Caelyx and Doxil
Slide 32: Net Sales Growth As Reported to Operational: Nine Months
Reconciliation of Non-GAAP Financial Measure Change in Net Sales Growth As Reported to Operational Sales Growth From The Nine Months Ended September 30, 2020 to The Nine Months Ended September 30, 2021 (unaudited) Sales By Product Category: Net Sales Growth Operational As Reported Caelyx and Doxil F
Slide 33: Projected 2021 Sales Growth and Operating Margin Reconciliation
Reconciliation of Non-GAAP Financial Measure Projected Full Year 2021 U.S. GAAP Sales Growth to Projected Operational Sales Growth, and Projected Full Year 2021 U.S. GAAP Operating Margin to Projected Adjusted Operating Margin (unaudited) Sales Growth Guidance Q4 2021* FY 2021* Sales Growth - U.S. G
Slide 34: Projected 2021 Tax Rate and EPS Reconciliation
Reconciliation of Non-GAAP Financial Measure Projected Full Year 2021 U.S. GAAP Tax Rate to Projected Adjusted Tax Rate, and Projected Full Year 2021 U.S. GAAP Earnings Per Share to Projected Adjusted Earnings Per Share (unaudited) The projected FY 2021 U.S. GAAP tax rate of approximately 13.0% to 1
Slide 35: Third-Quarter 2021 Earnings
Third-Quarter 2021 Earnings Baxter International Inc. October 28, 2021