Conference Jay Saccaro, EVP & CFO March 5, 2019 Safe Harbor - - PowerPoint PPT Presentation
Conference Jay Saccaro, EVP & CFO March 5, 2019 Safe Harbor - - PowerPoint PPT Presentation
Raymond James Institutional Investors Conference Jay Saccaro, EVP & CFO March 5, 2019 Safe Harbor Statement This presentation includes forward- looking statements concerning Baxters financial results, business development activities, ca
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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, Baxter’s long range plan (which includes financial outlook for 2019, 2020, and 2023) and other growth strategies. The statements are based on assumptions about many important factors, including the following, which could cause actual results to differ materially from those in the forward-looking statements: demand for and market acceptance of risks for new and existing products; product development risks; product quality or patient safety concerns; continuity, availability and pricing of acceptable raw materials and component supply; inability to create additional production capacity in a timely manner
- r the occurrence of other manufacturing or supply difficulties (including as a result of a natural disaster or otherwise); breaches or failures of
the company’s information technology systems or products, including by cyberattack, unauthorized use or theft; future actions of regulatory bodies and other governmental authorities, including FDA, the Department of Justice, the New York Attorney General and foreign regulatory agencies; failures with respect to compliance programs; future actions of third parties, including payers; U.S. healthcare reform and other global austerity measures; pricing, reimbursement, taxation and rebate policies of government agencies and private payers; the impact of competitive products and pricing, including generic competition, drug reimportation and disruptive technologies; global, trade and tax policies; accurate identification of and execution on business development and R&D opportunities and realization of anticipated benefits (including the acquisitions of Claris Injectables and two surgical products from Mallinckrodt plc); the ability to enforce owned or in-licensed patents or the patents of third parties preventing or restricting manufacture, sale or use of affected products or technology; the impact of global economic conditions (including potential trade wars); fluctuations in foreign exchange and interest rates; any change in law concerning the taxation of income (including current or future tax reform), including income earned outside the United States and potential taxes associated with the Base Erosion and Anti-Abuse Tax; actions taken by tax authorities in connection with ongoing tax audits; loss of key employees or inability to identify and recruit new employees; the outcome of pending or future litigation; the adequacy of the company’s cash flows from operations to meet its
- ngoing cash obligations and fund its investment program; and other risks identified in Baxter’s most recent filing on Form 10-K and other
Securities and Exchange Commission filings, all of which are available on Baxter’s website. Baxter does not undertake to update its forward- looking statements.
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Baxter Profile: A Diversified And Global Portfolio1
Acute Therapies
~$0 $0.5B .5B
Advanced Surgery
~$0 $0.8B .8B
Clinical Nutrition
~$0 $0.9B .9B ~$2 $2.7B .7B
Medication Delivery
~$ ~$2. 2.1B ~$3 $3.7B .7B
Renal Care Pharmaceuticals
$11.1B 11.1B
2018 Global Revenue
1Sales and related figures represent FY 2018; Other sales represent ~$0.5B. Totals may not foot due to rounding.
Americas 54% EMEA 27% APAC 20%
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Strengthen our portfolio and extend our impact through transformative innovation that spans prevention to recovery
Ou Our St Strat rategy egy
Industry leading performance Best place to work Product safety and Quality Growth through innovation
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Delivering On Our Strategy
2018 Business Highlights
Executing Disciplined Focus On Business Transformation Building Momentum With Strong Focus on Operational Performance
► Implementing optimized organizational structure, transforming cost
structure, and simplifying processes
► Establishing global centers of excellence to drive efficiencies in
functional areas
► Simplifying portfolio and optimizing manufacturing footprint ► Delivered solid fourth-quarter 2018 earnings growth, largely driven
by operational performance and business transformation initiatives
► Continuing momentum with new product launches, geographic
expansion, and evidence generation
► Focused on meeting long-term financial goals through strategic
execution and rigorous financial management
Capitalizing On New Product Launches And Geographic Expansion Significantly Enhancing Balance Sheet Flexibility To Deliver Value
► Focusing on operational improvement and effective working capital
management to improve cash flow
► Returned value directly to shareholders via 19% dividend increase
and over $2.4 billion of share repurchases in 2018
► Maintaining financial optionality while thoroughly assessing
capital investment opportunities
► Reallocating investment to higher-margin, faster-growing
businesses
► Executing on a robust pipeline to provide meaningful innovations
for patients and providers
► Enhanced capabilities along with increasing R&D efficiency enable
accelerating launch cadence
$
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Market Development Enter Adjacencies Portfolio Innovation
Executing on pipeline
- pportunities and geographic
expansion Driving growth through evidence generation, physician education, and targeted market investments Expanding beyond the core to unlock new therapies and markets
Strategic Execution Allows Long-Term Acceleration
Strengthening And Extending Our Impact
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Executing On Near-Term Launches To Fuel Growth1
New Product Highlights
2019 2018
Prismax Spectrum IQ Infusion System Point of Care New Pump Platform Floseal Fast Prep
2020
Olimel N12
1All references to “new products” and “launches” in this presentation include new product launches, line extensions and geographic
expansions, unless otherwise noted.
2016 2018 2020 2023
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Driving Operational Excellence Through Business Transformation
Zero-Based Organization
Rightsizing organization with reduced spans and layers
Zero-Based Spending
Employing disciplined cost assessment to eliminate waste
Portfolio Management
Optimizing manufacturing footprint, R&D operations and supply chain network
Global Business Services
Centralizing and streamlining support functions
Cumulative Savings vs. 2015
~$ ~$0.4B ~$1.0B ~$1.1B ~$1.2B Focused on sustainability
- f business
transformation initiatives1 2024+
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Creating Incremental Value Through Capital Deployment Strategic M&A
BAX
Share Repurchases Reinvestment in Business Dividends
Increased annual dividend rate by 19% in 2018; currently targeting ~35% dividend payout ratio
- ver time
Repurchased ~36 million Baxter shares in 2018 Continuing rigorous assessment of business development and licensing opportunities Strategically investing in higher-margin
- pportunities to drive innovation
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Thoroughly Assessing Business Development Opportunities
Drive Category Leadership Rigorous Financial Criteria Preserve Investment Grade Credit Rating Capitalize On Core Capabilities
M& M&A Ob Objecti jectives ves
Disciplined Assessment Of Opportunities Considering Both Strategic Fit And Financial Criteria
2018 Actual 2019 Guidance 2020 Outlook
Adjusted Operating Margin
~300bps
18.0% - 18.4% 20% - 21% 17.4%
2018 Actual 2019 Guidance 2020 Outlook
Adjusted Diluted EPS
~20%
$3.22 – $3.30 $3.60 – $3.75 $3.05
2018 Actual 2019 Guidance 2020 Outlook
Free Cash Flow3
~$1.6B ~$2.1B $1.4B
~1.5x
Constant Revenue Growth
2% 2% - 3% 3%
2019 Guidance
4% 4% - 5% 5%
2018 – 2020 CAGR Outlook
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Delivering A Solid Financial Outlook1,2
1See www.baxter.com for information regarding non-GAAP financial metrics used in this presentation, including constant currency sales,
adjusted operating margin, adjusted diluted EPS, and free cash flow. 22019 figures reflect guidance provided in Q4 2018 Earnings Call (1/31/19); 2020 figures reflect guidance provided in 2018 Investor Conference (5/21/18). 3Operating cash flow less capital expenditures.
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- Increasing innovation to drive accelerated
revenue growth
- Maintaining strong cadence of product launches
and geographic expansions
- Realizing ongoing benefits of business
transformation initiatives
- Strategically deploying capital to enhance value
and improve profitability
Continuing Momentum In 2019 And Beyond
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