Baxter International Inc. · NYSE:BAX
Baxter International — Q2 2018 Earnings Presentation
23 slides from Baxter International's earnings presentation, Jul 26, 2018
Slide 1: Second-Quarter 2018 Earnings
Second-Quarter 2018 Earnings Baxter International Inc. July 26, 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 Capitalizing On New Product Launches Operational Performance And Geographic Expansion ► Delivered solid second-quarter 2018 sales and earnings ► Reallocating investment to higher-margin, faster-growing performance and raise
Slide 6: Continuing Momentum Of Key Metrics
Continuing Momentum Of Key Metrics Second-Quarter 2018 Financial Snapshot1 Global Reported Sales Adjusted Operating Margin Adjusted Diluted EPS ~$2.8B 17.1% $0.77 ~$2.6B 16.4% $0.63 +4% Operational Growth2 +70 bps +22% Q2 2017 Q2 2018 Q2 2017 Q2 2018 Q2 2017 Q2 2018 1See www.baxter.com for informati
Slide 7: Second-Quarter 2018 Sales And Adjusted Earnings
Second-Quarter 2018 Sales And Adjusted Earnings1 Q2 2018 Q2 2018 Metric Guidance Actual Sales Growth 3% - 4% +4% Operational Sales Growth ~9% +9% Reported Adjusted Diluted EPS $0.69 - $0.71 $0.77 Growth vs. Prior-Year Period 10% - 13% +22% Delivering Accelerated Top And Bottom-Line Performance 1See
Slide 8: Advancing Our New Product Portfolio
Advancing Our New Product Portfolio Q2 2018 R&D And Commercial Milestones Prismaflex CRRT Monitor Spectrum IQ ► Received FDA clearance and Health Canada approval of the Infusion System Spectrum IQ Infusion System with Dose IQ Safety Software ► Secured CE Marking for the Evo IQ Infusion System in the
Slide 9: Financial Results
Financial Results Second-Quarter 2018 Earnings July 26, 2018
Slide 10: Second-Quarter 2018 Sales By Global Business Unit
Second-Quarter 2018 Sales By Global Business Unit1 Q2 2018 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Renal Care $204 $727 $931 +9% +4% +4% Medication Delivery $426 $255 $681 +0% (2%) (2%) Pharmaceuticals $262 $275 $537 +19% +16% +11% Clinical Nutrition
Slide 11: First-Half 2018 Sales By Global Business Unit
First-Half 2018 Sales By Global Business Unit1 H1 2018 Revenue Total Growth $ In Millions U.S. International Total Reported Constant Operational Renal Care $400 $1,399 $1,799 +9% +4% +4% Medication Delivery $862 $495 $1,357 +1% (1%) (1%) Pharmaceuticals $505 $528 $1,033 +18% +14% +8% Clinical Nutrit
Slide 12: Second-Quarter 2018 Sales By Operating Segment
Second-Quarter 2018 Sales By Operating Segment1 Q2 2018 Revenue Total Growth $ In Millions Reported Reported Constant Americas (North and South America) $1,525 +6% +6% EMEA (Europe, Middle East and Africa) $758 +14% +3% APAC (Asia Pacific) $559 +10% +6% Total Baxter $2,842 +9% +5% 1See www.baxter.co
Slide 13: Second-Quarter 2018 Adjusted Financial Results
Second-Quarter 2018 Adjusted Financial Results1 Q2 2018 Q2 2017 Change Adjusted Gross Margin 45.5% 45.3% +20 bps Adjusted SG&A Expense (% of Sales) 22.6% 23.0% (40 bps) Adjusted R&D Expense (% of Sales) 5.8% 5.9% (10 bps) Adjusted Operating Margin 17.1% 16.4% +70 bps Adjusted Diluted EPS $0.77 $0.63
Slide 14: First-Half 2018 Adjusted Financial Results
First-Half 2018 Adjusted Financial Results1 H1 2018 H1 2017 Change Adjusted Gross Margin 44.6% 44.8% (20 bps) Adjusted SG&A Expense (% of Sales) 22.3% 22.7% (40 bps) Adjusted R&D Expense (% of Sales) 5.5% 5.6% (10 bps) Adjusted Operating Margin 16.9% 16.6% +30 bps Adjusted Diluted EPS $1.47 $1.20 +2
Slide 15: Driving Operational Excellence Across the Company
Driving Operational Excellence Across the Company Q2 2018 vs. Q2 2017 Adjusted Operating Margin1 17.1% Quarterly Highlights: +50 bps Strong operational expansion partially offset by the loss of TSA income and foreign exchange 16.4% +20 bps Business transformation initiatives and focus on optimiz
Slide 16: 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 $852M $541M $767M $311M $488M $279M +$85M +$32M +$53M H1 2017 H1 2018 H1 2017 H1 2018 H1 2017 H1 2018 1See www.baxter.com for information regarding non-GA
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 net in Business debt to EBITDA ratio near zero Targeting ~35% dividend payout ratio over time; Dividends announced ~19% increase in quarterly dividend1 Repurchased ~11.5 millio
Slide 18: 2018 Outlook
2018 Outlook Second-Quarter 2018 Earnings July 26, 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 4% - 5% 4% - 5% Operational US Cyclo Competition <100 bps <100 bps Acquisitions ~100 bps ~100 bps Sales Growth ~5% ~5% Constant Foreign Exchange 100+ bps 250+ bps Sales Growth ~6% 7% - 8% Report
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 17.1% - 17.3% 17.1% - 17.3% Adjusted Diluted EPS $2.94 - $3.00 $2.85 - $2.93 Growth vs. Prior-Year Period 19% - 21% 15% - 18% Operating Cash Flow ~$2.25B $2.2B+ Free Cash Flow ~
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 ~4% ~4% Pharmaceuticals 5% - 6% ~5% Clinical Nutrition ~2% ~2% Advanced Surgery 8% - 9% 3% - 4% Acute Therapies ~10% ~10% Other 4% - 5% 4% - 5% Total
Slide 22: Third-Quarter 2018 Financial Guidance
Third-Quarter 2018 Financial Guidance1 Third-Quarter 2018 Guidance Sales Growth 3% - 4% Operational US Cyclo Competition <100 bps Acquisitions <100 bps Sales Growth 3% - 4% Constant Foreign Exchange ~50 bps Sales Growth ~3% Reported Adjusted Diluted EPS $0.72 - $0.74 Growth vs. Prior-Year Period 13%
Slide 23: Second-Quarter 2018 Earnings
Second-Quarter 2018 Earnings Baxter International Inc. July 26, 2018