BAX - Earnings call transcript Q4 2019 | Baxter International Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Baxter International Fourth Quarter 2019 Earnings Conference Call.

Your lines will remain in a listen-only mode until the question-and-answer segment of today's call. [Operator Instructions] As a reminder, this call is being recorded by Baxter and is copyrighted material. It cannot be recorded or rebroadcasted without Baxter's permission.

If you have any objections, please disconnect at this time.

to call like to now would turn over the Ms. I at Vice President, Trachtman, Baxter Investor Clare Relations International. Ms. may you Trachtman, begin.

Clare Trachtman

Thanks, Katherine. earnings XXXX our fourth Good morning, and conference welcome call. to quarter

Officer; Baxter's Joining Officer. and me Joe Saccaro, Almeida, today Chief Chief are Executive and Financial Jay Baxter's Chairman

today’s call we financial will results financial and XXXX Baxter's quarter be historical this morning, the to as restated well discussing comprehensive as results full-year as On XX-K in filing. fourth disclosed growth comparisons

quarter our be on We non-GAAP A outlook website. financial of will Investors first this can XXXX. be Baxter's presentation the discussion This provide the in accessed section complement to accessed also website reconciliations can related supplemental Events for under News. our external presentation morning's including on &

me from that and our reminding actual for development, current our start comments and, more our filings regarding and by remarks statements cause of this risks factors uncertainties forward-looking today's Please outlook, contain details including that SEC refer results let new our development, everyone financial expectations. concerning prepared course, involve regulatory With materially. product that results release our business differ to presentation, could that, differ matters, press and to could materially

earnings help Baxter's US GAAP financial financial non-GAAP will addition, today's and today comparable the non-GAAP discussed on release on our to available of In call, financial measures ongoing A the included be investors used reconciliation measures our performance. to understand business measures in website. being is

for the in of generic adjust be the cyclophosphamide Seprafilm, impact the this February foreign of for historical for XX a closed we on for of the impact growth of Operational the year. exchange On sales for which call and exchange period morning, discussing and which guidance U.S. operational growth, acquisition will XXXX sales this foreign adjust competition

like call to turn over I'd the Joe. to Now,

Joe Almeida

us. you and joining morning Good thank for

regarding non-operating review and XXXX, update exchange foreign on income full-year investigation gains I I the related fourth losses. Jay you Before our financials to want internal to and for quarter and

matter and very quickly with forensic As and you advisors know, move it company the the We comprehensively independent seriously. have taken help experienced of accounts. to this address the Board and

We commission the to has with throughout. proactively also maintained SEC the dialogue open communicated and

the to press as restated full-year financial financial This is morning statement indicated investigation audited filed for now Form included in complete our and it release, XX-K internal XXXX the As we XXXX. our XXXX relates which statements impacts.

XX, the discuss current strengthen SEC also are We our environment. the changes XXXX. detail Form our we our filed quarter overall September in have this further with made we XX-Q will control Jay obligations. now filings enhance for to ended With reported and

around patients businesses continues the front relief global on affected Before essential measures outbreak care medical active discussion of of quarter challenge and been the maintain aid health to to coronavirus for results situation important the I have pandemic products. a some with systems and make by evolving employees, organizations, supply the COVID-XX. I proactive providers world. emergence, its feel fourth lines The comments protect we taking At health care our on Baxter, since XXXX, financial it's rapidly the shift of communities, and to to

possible On at our is the the running and supply our currently disruptions manufacturing chain and levels are supply planned assessing front, team globe. mitigating operations around

raw warehouses, materials options and managing transportation We component levels, parts. and availability levels our are the in proactively stock inventory of

team to this delivery those shipping time, help where we epidemic, mitigate APIs, disruptions additional needed. limited methods inventory, our providing to nature with system of a by the have return expedite and working alternate production to our additional to deploying suppliers from some able China and to of been on Italy. global suppliers constraints and support seen At using components them those the has sourced Given especially number

and strengthen to years support few last the position. manufacturing expand over supply network our further our efforts own Our

ability. the extraordinary We And the supplier access to will acknowledge that saving To life patients actions evolving goal around Baxter serve networks end, our taken global address to inclinations to need to help help with have remains this XX,XXX regional I'd sustaining products like been situation. of they world best our access and of ever ensure to to to have colleagues continue our our to our customers and the work the our products. ensure life and closely all of

business this and monitor situation strength we long-term While continue in we pipeline. will potential confident remain disruptions, and to underlying actively its innovation our

compelling We well will investors. opportunities, including to returning our ways also remain directly deploy capital, in impactful value our as most as development the business exploring vigilant to

that, make our comments brief performance. some on XXXX With I'll

which operational As operational was on basis. ongoing driven All QX emphasis six product Baxalta strongest reinvigorated sales global our XXXX segments on be a growth our increased reported X% by X% performance top part strong constant X% fundamental we business at XQ spinoff. January, shared since our this units continue innovation. of and in performance, currency our element contributed a graphic an transformation. new the in pipeline Sales line basis, Baxter's and will reflected our on early to to Advancing of a

$X.XX, Our XX% excellence top a with operational focus line EPS performance and increase financial combined drove of discipline a adjusted on year-over-year.

by growth patients focusing needs providers. to performance demonstrated our drive effectively and diversified of our on meeting the quarter fourth portfolio Our across ability

we of Within growth PD the X% growth patient approximately PD globally, including low U.S. the patient saw quarter, in double-digit

new the to we the final Initiative, House Advancing While the production for increase Kidney American patient required our White publication from the rule needs. Health of actively on planning investments to are capacity we meet await U.S.

that that ESRD overall continue anticipate of outpace home growth. We to growth will PD

we more we recent in have installed in infusion In the the history. quarter during U.S. pumps addition, than

of best one Infusion innovation with and across the along our Spectrum realize libraries benefits in Our EMR to portfolio. Pump the IQ world continue we has the drug integration, bidirectional of

pleased our recent quarter market heightened With surgery, FLOSEAL Enhanced demands OLIMEL by effectively the part in momentum which NXX growing launches. launched our and in note advanced range All all, sustained for XXXX, positioned we rollout Fast in are generic in and fueled we we we growth across out by for was and continue well FINOMEL strong platform of momentum our geographies. to on on nutrition strategic met long-term PrisMax remain are to objectives. a in enhanced XXXX in as acute Prep, close Pharmaceuticals such early therapies focused successfully clinical our was an injectables.

on I pass to to details additional on quarter. it Now will provide some Jay the

Jay Saccaro

morning, and Joe, good Thanks, everyone.

delivered As from ongoing all our performance Joe growth business our three further units solid fourth growth segments. through we across innovation results our goal initiatives. operational benefits geographic six demonstrate mentioned, of robust transformation year, drove with Throughout on and the global and quarter

and to strategies, on initiatives continue to XXXX will growth we our several invest into Moving in beyond, opportunities. accelerated commercial execute while also support

to of number internal environment. Joe our we've As a strengthen control and referenced, overall implemented enhance changes

of feed daily transaction changes, including Karen in on governance of Karen role experience Senior large and corporations. to brings third-party, having recognized exchanges controls. Some changes, rates these Treasury approvals exchange our professional select held intercompany accordance hiring automated hired created treasury rates responsible a leadership, experienced from newly significant new Baxter Under treasury updated for utilizing GAAP, Director roles another we've and in a treasury after Treasurer. her Leets U.S. at as foreign a with policies including personnel several

resources Comptroller related financial to to reporting to we've a as accounting improve appropriate created controls function Treasury within and treasury activities. our Additionally, role our add are continuing

we're performance to of and in moving transformation. on of to clearly leading ongoing demonstrate deliver was forward this While continuing strength our disappointing, our recent execute our support this results objectives goal strategic industry and the

a results, full-year with and to constant beginning $X our basis, operationally. reported of currency sales global XXXX X% X% fourth on quarter increased and Turning fourth on quarter X% the billion,

Our States. the particularly advanced well as by the United quarter medication performance was delivery pharmaceuticals in and in driven primarily surgery, as

and line, XX% a earnings the ongoing strong our diluted share business to from bottom operational adjusted transformation performance the increased lower share count. On per benefit result of and $X.XX as efforts

through our sales region business pharmaceuticals geographic you segments geographic for Note in for to businesses sales by addition currency all business growth operational except walk which currency and for constant I'll provide Now is this growth. will and our that growth performance Americas segments, the for equal quarter, we constant growth and to operational global units.

morning. comparisons published growth rates historical all Additionally, restated this represent to financials our

advanced our our Asia-Pacific geographic and Starting on basis. on EMEA with Sales sales X% sales advanced three in the advanced growth both in currency operational X% constant XX% constant a segment, and the basis. Americas in region sales basis a for on currency constant currency

by $XX which Performance in patient HD business approximately on million, select constant Performance advancing unit, to quarter global products, were volumes year-over-year. of global sales therapies XXXX, in quarter negatively Moving by was by the million. offset approximately advancing with basis. PD care, exited sales currency partially including by in in lower performance is growth in-center on the driven impacted for X% $XXX Bloodline’s globally, business X% the early renal a sales

Sales of constant $XXX by solid systems basis. Strong and in our commercial IV medication infusion across delivery growth currency a grew businesses. on solutions million, level was XX% execution supported

quarter, season. influenza ahead we the $XX U.S. approximately did of During the million distributor of see purchases

than in first Hemodynamic of Monitoring $X Cheetah sales as quarter less to the of SV fourth part Medical, our System also million contributed marked Starling The sales of quarter obtained quarter. which the the of acquisition

currency demand in Pharmaceutical sales increasing hospital pharmacy operationally. for quarter sales increased were and $XXX our benefited constant XX% from services. X% million, international the Strong compounding

sales quarter. generic cyclophosphamide Baxter's partially growth Performance Additionally, the in by competition. offset Transderm of injectables due products quarter. lower for were million to inhaled of Scop anesthesia global $XX to demand contributed sales U.S. portfolio enhance the and expected is in

$XXX constant as by in U.S. new further currency Sales increasing Advanced disruptions. strong on as to and Total million, expectations XX% competitive driven were Moving line $XXX Performance in sales constant in were in this a million, supply commercial our product with from XX% currency basis. supported and business by nutrition. execution was a benefit on Europe. well launches increasing basis the Surgery

to business million, the constant of basis. of Sales in this in be X% on continued demand for growth rollout were continuous by replacement our Therapies Acute global currency continues represent by therapies a our Baxter's supported Performance business increased a platform. renal driven PrisMax $XXX

manufacturing includes Category, decline contract sales in million, X% a basis, of which Finally, comparison our challenging the reflecting a year Other $XXX on our a period. currency were prior services, constant to primarily

as strong P&L, XXX the well manufacturing mix increased Moving margin points rest prior line gross the of as performance, adjusted variations. XX.X% the our basis positive from of through favorable year, benefiting top over

R&D $XXX reported year Strong cost optimizing quarter totaled SG&A the a quarter. structure, Adjusted basis on leverage increased a focus on a the prior X% of X% expense sales versus in million, the drove Adjusted million, with basis. performance, reported along period. in on $XXX spending our increased

XXX to in our investments while strategic Adjusted basis the the and points our optimize from previous and margin prioritizing XX%. above to continue guidance organization, prior our of quarter the innovation range enhance an processes in our efforts to year versus of We see was our XX%, pipeline. increase benefit R&D operating XX.X%

of excludes lower pension company liabilities to GAAP quarter. charge of was as expense outstanding prior million a result amount was million rate the $XXX transaction to quarter adjusted The compared non-cash other transfer recorded of annuitization the in quarter, driven income we debt the approximately and XX.X%. $X.X an from income in the the in an insurance interest results an operating our U.S. interest increased that $XX $XX increase of through billion interest in million $X October. tax a higher non Adjusted in Net expense balances. year, million totaled by fourth That our

Baxter repurchased stock. $XXX X.X Within of shares quarter, fourth we the million approximately and million

$X.X stock. billion For approximately the Baxter million full-year, repurchases our XX.X shares or totaled of

X% basis operational Turning both and a a of sales basis. X% constant to by billion on full-year on and increased $XX.X currency XXXX, reported

increased diluted we $X.XX line, generated cash On to per $X.X the flow XX% basis, share. On bottom full-year billion. earnings of a more free than adjusted

a efficiency. for capital below improve While have implemented our to this several generation as remains cash was actions critical such, flow Baxter. And initial targeted projections, we priority working

focused regarding shareholders. focus to supporting we internal current to flexibility be incredibly and adequate on external particular, market continues and for strategic returning withstand maintaining on scenarios are emerge. maintaining COVID-XX, value might growth uncertainty initiatives investments, that liquidity In Our to the given

pursue to continue to allocation able our are capital strategies. we So

as end our of access cash to which $X accessed includes revolving of the of on billion balance million in We've $XXX of precautionary our have borrowings facility, from which credit February, our measure. have the over also with revolver, billion terms in $X European recently As U.S. provides us credit. which we nearly renewed a sheet, we

currently are we facility necessary. drawn so this able not we While have do if date, on to to

Let our by me financial outlook. near-term conclude discussing my comments

how guidance earnings of April the full-year in provide situation Depending XXXX given high in details COVID-XX, stated press at additional As our impacts today's providing not during scheduled presented call hope potential release, currently guidance the we first to are uncertainty quarter time. degree position unfolds, this on XX. be by around to a we for

X% and Specific to X% quarter X% X% both we currency sales to of operational growth a XXXX, expect the to of a on growth of and first on constant reported basis basis.

For acquisition of impact per XXXX, the adjusted items foreign excluding earnings quarter. Seprafilm. expect first adjusted share And to and of the for we $X.XX be for sales will operational the $X.XX exchange of special diluted

we open With Q&A. that, can to call now the

Operator

you. Thank

We our will replay from Deutsche Chickering www.baxter.com. [Operator now would being remind question will website on begin Baxter participants Bank. digital from And to the this call available days at recorded Instructions] like be for question-and-answer Pito that session. International's I comes XX and is first a

line is Your open.

Pito Chickering

Thanks morning, Good questions. the guys. for taking

site. manufacturing your on is one First

of those supplier, sort [indiscernible] sourced terms not risk And why into the the after issues that Can I’ve detail raw where around to materials of [indiscernible]? you follow-up go you able is sort What to the don't the percent of a are majority in And of in the are of from? other from in China? the offset with believe about sort that. of a supplies. talked coming be your more You that guys script

Clare Trachtman

Yes.

So you refresh, hard I just a for this think is hear Pito. you, to little to

So overall how raw where materials at, chain, what the kind the you’re think you manufacturing that of we're what about is summarize where our are is from, confident asking? in coming we were are supply I talking

Pito Chickering

Yes. Yes. apologize. And I

obviously. phone, cell the On

Joe Almeida

around places globe. from good materials Pito, come of our raw variety the Okay. a And morning.

because your -- a sure question supply me specificity COVID-XX, chain. I'm and for has our Let

from China. We're working getting of primarily we're of come electronics diligently very start to our and parts So components Europe China. and -- out get

of feel of good that the for have late comfortable ability products safety across sold will globe. having have most We guaranteed would our products We spring enough have towards stocks. we --

concerned. So that I'm not

today, we IV bags the factories, not difficult seeing pressure what is don't the to are U.S. Arkansas. in U.S., made bags lanes for materials we're become in are also are in China, comes tremendous What of things the we're are shipping in IV different. our the made Cuernavaca. exclusively that plant the products Carolinas amount back are the can or then our in if conversation bags, the we're getting The really in made But Mexico January to So into was February, up, now. bags? meaning clearing -- under in made make way down products raw and the in feel

are Maria, So that is we a -- backup plant that we more have set there can get up since we future. and in the can now, Hurricane from products -- products getting we get products

we're chain our material XX, probably the we So watching raw But have is very XX components supply coverage hours globe. XX we have that and around closely.

world. set are in parts Our of procurement the departments many

pretty at in So moment, grip this have electronics. the made we between same good that of China, we the which a are feel APIs, in APIs about also and the India

get in But different what with conversation. things now. we was it know spring. late China, worse about If right talking a You’re that's

inventory we demand. can the and with levels comfortable are supply We

Pito Chickering

much. follow-up a those point? each costs Then going you of non Great. the how Thanks THERANOVA new would of Whether How would be many expanded? sites? be can through at is how that Can COVID-XX. the us manufacturing it's units walk fast question so create? and lines those of this manufacturing And much capabilities

Joe Almeida

high the to from REVACLEAR have -- THERANOVA, that, single-digit in production will THERANOVA, be mid the converting to We the to make we can million make digits XX of Pito, conversion millions to So, today. more close the be October, the XX as of them. And This are plans time is, okay? single investment able okay? units, globe, the probably make our lines able ability that in millions date meaning current starting We to lines okay? XX either supply make by units, always know for for think I to to million we're going capacity. can We we one finish million we of to

great you or into may equipment own we how our that currently our spindles [indiscernible],our product are today. U.S. equipment, and we know [ph] proprietary, we fibers know bundle not but outside design you manufacture of As the making very spinning the not and and

years by called [indiscernible], need our period the at and CMS, I prepared, And what's than of that's payment, produce capacity. in they it's of week corrected to the the X So somebody We we're of be. investment the once million add-on by demonstration [indiscernible]. not accelerate if Washington way, got we can $XX last can more

Pito Chickering

so much. Great. Thanks

Joe Almeida

you. Thank

Operator

Marcus Robbie state Please Rob with Thank JPMorgan. your question. you. --

Robbie Marcus

Hi. Thanks for taking the question.

I COVID-XX. curious be about will everyone what So imagine under life is like very

first but here. guidance, completely the pulled we quarter are almost the through You

in could the in from over prepare different weeks? So U.S. I positives the on and and business come the comment Europe what's wondering for in seeing you seeing they if you're of was and as negatives next quarter actions terms in here you're to trends first hospitals any in few

Joe Almeida

let and -- will of your we can Robbie, Jay here, also in. get he chime is me question, part

of buying are this you situation. We that in patterns see kind usually seeing with

pumps. have to some we of sites, of patterns what's all patients So stockpiling a seasons We So happening, therapy, go going okay? is back our and us CRT buying with okay? sudden in replacement have compare that XXXX of our our front respiratory the people from fluids, on line only acute contingency not everywhere, heavy with and in treating infection generalized flu in acute at antibiotics, remember Baxter understanding our

starting probably front feel the of right more quarter. first outbreak first we the buying quarter, through chronic products products, to through we with like we And we China we business, something diseases remember, but China. such saw not half also get which need way now was Because this, in for the an what that more seeing deliver to homes. the treatment in focus are halfway to in that in only people's are the of So patterns as are coherent that and COVID-XX treatment saw lines we we're

an We're governments, for same stockpile of the to products. we've through seen products. state PD, not peritoneal purchasing also state dialysis of in go placing saw we in thing. it's countries China So feds, orders then going asking the the what from acceleration for calls the U.S. getting And government, only probably but

capacity So -- a of We're picking is the we because see up. don't all volume this to restriction, relative. very we're judicious at moment those have we've very but been orders starting capacity

you and by ahead go be you will to we by If buying what make, a we not can able more unit, than amounts hospitals start significant supply business.

Maria. we're may world to the we just we we as think to we products These and So but have. IV have activate have are few we of not supply that that. prepared well go in we business. allocation, equipped our and have actually that don't we plans the products date put place have need We're the production, with solutions, since the to supply -- products in market And major allocations the any we backup that

guidance In terms of the we quarter. close quarter, we're weeks few before the giving

in long-term as I Jay first like elective to to color? process non-elective of the of procedures. shows different side our patterns the the through products said, all the And because care, more a saw sorts think as business well we quarter. this, in from used I So it home any for resilience settings the different products, do different as we acute and have

Jay Saccaro

durability and and commentary of that's think the resiliency portfolio. described great you the I a the Joe,

kind scenario, procedures which in a hospitals. IV, surgery of described. related acute of operating lines then our very actual the I businesses, place number as in take we'll anesthesia mean, to are like Joe them carefully, which We some more antibiotics of that have this advanced And and product watch benefit,

we generally one speaking, that's durable very we're portfolio is area this very that have. watching that a But So carefully.

Robbie Marcus

impact capital maybe to are the equipment one And to Great. People follow-up. worry starting sales. just about

So launch be and cyclers with to weeks set that actually demand, you system, to a next PD over Thanks. few high to pump new months? do your any could you impact which in the expect or

Joe Almeida

dynamics. Robbie. different Very different Very dynamics,

to short-term, capital priorities. potential going think of Class buying First a currently we but so to X but that it may we're the pumps, treat probably little of dramatically we've to be we sequence U.S., who to Remember, all, think impacted Not coming hospitals. will mid-term, don't the for we're in probably sell priority personnel putting and into to their their hospitals the in. to may patterns of product that I place. at pumps are we sending them today But is to not now in into the recall looking today able change patients alter priorities the in changed people supply customers, be bunch the hospitals, sell of that are the competitor. are sending install going by don't our service a bit I we'll

home, really imagine or it a ill of conversation. is functioning. shift know may of So be, actually -- is and will to capital this other to sometimes And because five and it type PD in here with months the the the by change with I different not very a pattern in which dreadful. place the a clinic couple in of with kidneys is the in long-term. the but short-term going to hospital today, mid-term a of diabetes, It safe patients patients. outbreak And think is seven there, are as clinic the it treat the will don't the putting the insufficiency change we priorities to patients PD

there's benefit I'm but the So I on take shape would treated I modality and the going added having reason home right for actually something AAKHI dialysis think is now, government prerogative, people peritoneal not treatment. be this compelling of another a the the that saying say pretty at forward. reinforces this to that home, strong had

Robbie Marcus

Thanks a lot.

Joe Almeida

Robbie. Thanks,

Operator

your question. state Hopkins Bob line. on Bank America you. of is the Thank of Please

Bob Hopkins

and well. quick you questions. is hope Great. good Two I everybody Thank morning.

as as today, sit to demand, like where decrease from heavy right products increased you can products, currently. you sounds now? demand I'm that flu just overall from seeing business seeing curious, a neutral commentary far some and is feel in like directionally do season So you've it you your your got a tell you're you're like where this net in kind some of

Joe Almeida

That's say, out. to to because out tough It's -- there figure thing reason guidance why XXXX the putting we Bob. are the not this long-term we need

As the business. buying anything okay? are I pretty we are equipment. healthy CRT excess our orders a also really said, in have We're for ever strange. getting surgery seen, patterns They of advanced We

understand with have the And hospitals, don't changes impacted procedures surgery. to today. we patterns procedures be on the of instance, imagine some have the we business have I ICU. you some business So other will the in in anesthesia, in our hand, like less at for of significant amount of

So we a I We to when have cannot our if wait. a happening give the neutral what precisely for We're the April is quarter not. to of -- this better we or you by moment. understanding of what's first an guidance rest the answer net or at year results, have going have announce end either hope April,

Bob Hopkins

a Okay. seeing kind this quick at I'm in stabilization you're you of in of kind the there seeing as business, what sort curious China really in point? And then to procedures one surgery in seeing follow-up. that Are business. in Just to return advanced curious particular? what in you're China of

Jay Saccaro

That's business for small a us. very

talking an on think millions. I So basis, annual we're single-digit

very renal different not which in of that size hospitals. illustration China, happening what's comment given us the it's business, business largest procedure in is a business is us China volumes for our in an So And really the small and kind on of to business. difficult for of

Bob Hopkins

to side you. out a hopefully Thank other trying in sense as just for of this. hospitals was the get come China in they Okay. trends I

Joe Almeida

Yes.

Operator

Thank with you. your question And Morgan from state question. Lewis Stanley. Please next our comes David

David Lewis

couple Thanks Good the morning. taking for segment you. for Maybe, guidance first Jay, ones of quick We questions. a the didn't for quarter. get

limited us impact neutral you so first us very, you Can first just obviously, been quarter. an sounds largely if just first X%, for more easier quarter is it fourth guidance COVID could strong, from to anniversarying X% help very far the comp. quarter I quarter, the wonder if So has impact, the bridge

fundamental So in to tailwinds first one weaker, quarter. the the to sort first? kind helpful. so the about businesses we are businesses are be -- that change think get super what should just what about headwinds be or we What Then to bridge, deceleration stronger, of thinking would dynamics of momentum can follow-up. Just and fourth

Jay Saccaro

Sure. geographic and strength we at fourth regions. we've said our Overall, very quarter, the I were in with past the have the discussed, performance across in every you the David, one saw and looking portfolio. as pleased of We

terms also the great sales portfolio saw -- in strength medication great sales We -- each great the of, business across in of delivery, portfolios.

quarter. were of So in components very the strong couple in one-time place quarter. There fourth a

around buying So surgery to advance we some flu million. roughly the did accounting some the true-ups some the have We business end being distributors so. related of to perhaps adjustment benefit our did There business. competitors were in see relative our million off from $XX market, year, or $XX at

So trend we don't see QX. a markedly different going from to QX

business to bit, have that like still down strength the delivery, little but will expect come solid quarter first of in the I a a medication -- area. said, will see given We that we

in So seen what this we've different about past. trends. talked aspirations that about QX if frankly, And our you the shared very with and no guide is long-term, consistent markedly we've think the over

like because a items company growth were of specific said, not this at couple stage. we're there that -- I X% So a

in So there's performance really specific of and a fundamentals. QX great the change that we repeat couple QX, real No primary to items that's in the accentuated in driver. don't that expect

David Lewis

then, the And question, for Jay, the quarter first and just related a Okay. year. both for

for understand 'XX, given or revenue tailwinds about Please activities should inside us the impact, be we Thanks going quarter guidance negative. now help Baxter And thinking So impact give XXXX, quarter a are the first to how first to the customers? positive support that XXXX, there drop spending much. then kind if you is is or just EPS of can guidance for so first just negative be through and on us the the 'XX flattish. quarter, headwind some relatively for there may

Jay Saccaro

Sure.

to As it QX relates year-over-year, you're right.

operational at performance. FAS difference. really driver year-over-year look to year $X.XX roughly year. we had The and I number is had the our benefit earnings we tax rate first one say would $X.XX As of our the QX the in guidance per a large XXXX, is driver is to not very $X.XX. current of quarter Last primary in related share we XXXR

certain for roughly recorded also If see other to restated the in first we We were you income think a $X.XX impact. those I tables. it's in quarter, our financial which adjust items, can

financial So margin by some referenced. and the in that's offset quarter dropping drives is items growth what those the some sales operating performance see really along with through, would just first slight the of what you that improvements improvement I

there to an year, look that means the and we're organization lives. consistently number one and priority is reliably. from seeing of of to is will supply supply, extra there we're balance required And our to to of getting that. are materials are company, chain saving impacted getting standpoint product What the spend to mission the fulfill of customers out situations sustaining raw continuity we support critical where our ensure the to a we the As costs ensure geographies as some and

we about will enhancing be day, to the because of to ongoing cash on have some lot ensuring supply in to expect there will I had got coming that. So end of supply. but also thoughtful spending and work of be do at inventory the disciplined we've targets can supporting that's we in spending, terms our But to consistency ensure everything chain very would some a the related months, that, flow. supply customers And really of we carrying we extra have sufficient

And so to event some will and critical of inventory be have are stockpiled likely the will of think we products in scale pandemic. products a broader we we carry extra --

pieces the imagine as take. can at there you different are this and David, can a lot coronavirus moving manifestations So, of look we

customers employees. about everything our our we also ensuring serving else. are And focused just on the so of safety prioritizing over we're And

So comments. a those are few

David Lewis

much. so Thanks Great.

Operator

Taylor Matt the from you. on Thank Please your state UBS question. is line.

Matt Taylor

Hi. Thanks question. for taking the

just higher So does sure to any worse? make much in managing terms are you're people of that enough, I then, wanted product, you have seem didn't starting you your stockpiling, inventory And on run you your how Are two to to from this are comments on currently. your that and like it to going get to starting ration supply inventory commentary. customers It clarify levels? inventory things towards or

Jay Saccaro

customer question can of wherever So take regarding Joe levels the we to looking I'll are inventory products take Inventory, inventory question on build possible. stockpiles. critical the and

first because around levels? in we about have running the some in have to prepared Matt, that locate but to possible where we for think, we their today. running the highest also we not disruption. full that's could support all, opportunity be build at tilt we of are facilities do are Now, our where globe, inventory creatively cases inventory cases, But the

to We be. have

some up we do ready. And that to prepared so extent way -- disrupting so extra do know build to best is occur, the disruptions the inventory we that are that to that and

So our that's really philosophy.

carry that's that to and You until won't when do willing we Joe, talk talk in watching correct we're something stockpile? absolutely very it about QX see about but cash to flow, and -- you'll situation customer short-term itself. carefully, the we're you the want

Joe Almeida

out systems What and and a the we even in of needs. we approach a Sure. Matt, limit and bulky supply store, more control U.S. otherwise to everybody's place everyone have antibiotics, you're we we their to this items. going hospital more to inventory have are these people They buying prevent at that with tower where buying look will want a time. -- we more going we don’t have Sure. of months is at are consumptions our inventory hoarding because

our to prefer do things we store ourselves, we So ourselves. inventory

we company Our how where and products. operations about operations and Reed -- for put today, runs very Bob supply thoughtful being its our chain the the we

production lines as a starting are We backup.

to instance, for the in production bags started Mexico be for that For going millions of line U.S. producing is U.S. we the

to one things we need gets other first. just what customer that and or they customers put we who sure case. doing that make But want an not have two are everybody in remember, We order

we're So doing making job sure they U.S. that need. triaging making in great gets things. night is sure everybody system a what We're through heather a our

able So to doing allocating correctly them with orders are where just we're thing rationing. ship the same not not What people rational The we'll We're be we're making sure is need. everything. and PrisMax. simply

have have lead components right, the right. period things we hundreds them, doing minute. that We're did in component times, those, ever well supply that need the hundreds? in orders we and countries measured. to for in and can sure You chain need machines machines, instance, Why making sold hang CRT supply we're book make we get so For sure the country, of less that where than another we're and the on do were CRT made our beds sure China PRISMAFLEX, the more you so new time you we making a make coming that the making sure we from comes we're chain other places

our So we're serve here customer. to

sure mission. It's so everything community, is finance to looking our what from employees us. they we the committed to can are comprehend outside, we'll make mission our Our important to sometimes much everyone has need. from how to tough And do

Matt Taylor

one fluid. Maybe comments very I follow-up. ask appreciate the And European right I all Thanks, important on now. could The very it mission, is is guys. just situation

China, encouraging. a commented to little that’s now That's You returned bit on normal.

the your give what might if and seeing infections wondering what's places U.S.? where businesses about could rise that So any color on on and ground the us you or mean going other -- Italy for in we're

Joe Almeida

all, cannot of situation take that granted lot of with for to First isolation. do a because China's has we

communicable I think I that College there. talking there nature papers spread London in read be a disease paper about Imperial from out can of the There's again. are that the yesterday

anything granted. taking We're not are we So cautious. for very

our our the calls with well. daily as Our stress patients safety always the of locations and first servicing employees

we Lombardy employees give in we products So to Italy, when in the primarily have make it letters that area. Italy, comes we special because to

are fluids we're have and making and equipment we're sure making plants three staffed the properly. have plants We we're there making -- and there

and crossing we disruption supplies border happening. have not those much to is plants are of far for had the And -- so the

good. the Italy of so primarily far, well Spain the spot as a so market. at is of Spain in So, south Europe some the factory Spanish really we’ve moment, hot and as And supplying market the

have plants in also England. We

a stress of England, outside They all tell to are attention all you would everybody the in as operating, to their the and And sense Alabama, everywhere that world are committed them. on plants of in heightened and in day everything. plants live which this say, with China. expect they normalcy, the because because has under not homes plants around our five are North normalcy operating by going people world. Australia, the by very of with China you work channels and we news -- significant in of kind in All Carolina, to how every happening the in in in -- normalcy is everything that’s these is just

Matt Taylor

lot. Thanks a

Joe Almeida

You're welcome.

Operator

state on Antalffy the question. Danielle Please you. Leerink SVB is your with line. Thank

Danielle Antalffy

Good everyone's morning, taking during so the hope healthy much guys. Thanks for these I question. staying times. crazy

quick non-COVID-XX Just question. question, a a related

medication to delivery we've the half have that's of QX. not the how On that sustainable XXXX in into delivery you continue, understand different any the the you us that of there help the business, sales Obviously, likely but seeing drivers year? in in operational and back medication business is momentum very strong can been strong beyond? growth the growth And

Joe Almeida

just if the Danielle, in, do. a chime to you business on little color and please want Jay,

organization. U.S. We what -- are marketing we the and transformed is sales done have

was not path. one year This job of accounts, you The in very This easy we fourth not selling in have of of done won. result and pumps a good We months bids done that was placing of is quarter. months preparation something and was crescendo. start get quarter an the a last and pumps that

perform So the they quarter, I fourth well. the did say very the in way that would pumps, they work, they

same we're perform of path currently our currently by or in set a and better don't have a which pump with yet, new don't complete same going more products able business the we because place. FDA, even new because We to have. we pump the platform well have platform, think to in trying as are approved we'll a date XXXX be that the hopefully, when we we And platform going the to have down get

We had not was dangerous. but known some that that little was fourth fluid quarter, At season. coronavirus the anticipation it also anticipation sales. the flu world not a of much, Remember good of to just time, the

that say easy? Is contracts the continue have, going I No, be aim going to we that and SIGMA the I think on and resilience pump, are our that forward. aided trajectory platform to which to perform can SPECTRUM feel a is good sets with we be by market So of will today. tremendous long-term solid a that which not and the think it's pumps more with this X contracts signed, I to with But our have we We easy. well. going and new comfortable version has the business

Jay Saccaro

guide that XXXX were And there challenges to in year set had Danielle that add was with some appreciated do that to an and allowed Well, and in factors prior some then there to of other of comp X% unique to growth. that. us circumstances some part play. Yes and were about just easy to the we

So we were so thrilled.

see lowering basis, exceeded we've that, said the actually we a XXXX X% are. appreciate earlier. don't expectations because growth this by of teamwork anomaly a business. and we again, always long-term allow X% specific described of that all not we we an are that and -- delivered when testament the imagine that means growth incredibly the are to and occur unique we with bit the no it's more circumstances rate what can You But will and growth we for a to XXXX. a bit X% on to full-year of excited But really was Joe the in line Having a said little in that have

Danielle Antalffy

And even how highly business. feels been growth the FDA. like Thanks strong. I dependent come have And portfolio curious or right which sustain business now much. then to just at the relates to that there, as very for business like feel Okay. upon is injectables the follow-up potential quick slow things to asked as the has the do question because you I'm upcoming down the you in growth have products whether I just just to so one new that there's on it to it generic is growth product on dependent And launches?

Joe Almeida

of time. are the ahead curious PrisMaxX process the a the expect But slow there months a now just because approval interesting, we comment the just I just in FDA. got So FDA other on down working people and came day, couple in remotely. our came approval mostly working will

capability significant other we analytics on improved software file going we the with and got be the change in So enable the digital -- portfolio view for machine, some made changes true and we made that hardware, so XXX(k), an some upcoming the Wi-Fi to that things, is approval.

time we So and the surprised, I -- just got that with already I was fast. filed we we accelerated. of Perhaps so But kind for were FDA. the day, other think ahead got just another pipeline in of the came molecule it news

can is going those way control month and things what So the is as And about sent you from we we and we'll hospital more other a now we're thing the things, when delays. happen say and that. of we in we're should of behalf we can't this to I as as the for was a talking curious that posted agents environment, all in to of one purchasing time. to landscape probably only going with fact as and was just But about patterns, The keep like time know approvals much approved with FDA. April, see plan speak on expect with ahead -- of one that the file well ahead you

coming. what's predict to tough it's So,

Quarter

much. so you Thank

Jay Saccaro

Thanks, Danielle.

Operator

is the line. Please Keusch James state Larry Raymond question. with your you. on Thank

Larry Keusch

be we be just done, that allocation some a cash U.S. morning, you obviously I are the the situation believe, Good about may your stock quite around everyone. the asset the what priorities a talked think comments raised, comments, ready. as down thoughts about us about what So the thinking in about capital Jay, revolver. cash how around talk of Could you bit prepared doing you has European valuations company, of to the the little give draw you in bit as there Thanks. on out revolver, market?

Jay Saccaro

Yes. Thanks, Larry.

to will whatever how we for prepared -- can coronavirus The will emerge. We anticipate. that be have

work behalf company. and that, we sheet of on result want a have adequate capital our as the so the support we've absolutely time having been is the thoughtful This be balance on really about to And to ready hand. to

we And cash so to we a facility $XXX in European in used have we've $XXX revolver. million, we from have is our quarter have, borrowings plus but on And time-to-time, borrowing. chosen we in to $X the leave did what that that's nearly million the cash. And billion first we offset

same our redid which feature a other provisions day successfully make best-in-class that recently revolver, $XXX U.S. on also it a has it million and some contemporary withdrawal facility. We

that What operations. And we place. to wanted that would all disruptions in is be we no our of ensure there to so have

But So a ensure all to we of durable for emerge. that adequate then, ready a circumstances our portfolio. We this. objective is there resilient might we want just fact liquidity emerge result primary the could on have have that hand, be are and we despite to opportunities as -- that

seeing come prices quite asset down the of And share price [indiscernible] a in come so we are quite seen down substantially lot. we've MedTech. And

then Joe, as last seeing capital levels. of So capital one, close to that a add allocation of about pleased to great quarter. opportunities. to We we years that? be you in The advantage to are think in kinds moderate and the market deployment, we but was Seprafilm relative deployment, we transaction were see perhaps with bit we've down patients to the I of those do because prices some say, the anything how a quite also fares capital do the deal respect of we to that over want want ready expect the to asset had us environment, current let's prior several as take

Joe Almeida

Yes.

of money it's on the prepared of pricing individual have having stock company I are opportunity patient prices. acquisitions. so for being the I or is values a in PEs very But time First noting of also not asset We are bank the could justify attractive. at sometimes and M&A to patient, landscape. all in good discount and speaking And ensure a to plenty kind look that of for down, is continue I that as our long, were But perhaps to come think we The I think And here. on we all, we are and side liquidity the amount don't -- we midsized that an fact that think the anything us our way. think is I is high. maybe the about first that, acquisitions long as worth also, of took large responsibility pause have we've and

Larry Keusch

Okay.

Joe Almeida

Thanks much. very

Clare Trachtman

one question. Katherine, more for we’ve time

Operator

you. Thank

our Kumar Our question Vijay with next question Evercore. last comes -- from

line Your is open.

Vijay Kumar

not in Hey, going think we free to a to QX, Thanks, thanks, Margins Is Maybe, QX a guys. Looking Quick, heard that cash the the you it's conversion? incremental at for investments XXs? back cash free should expansion. this question, some or maybe I expect guys. slight new is the XXs. restated that normal, numbers, I Jay. step on and guidance for say

Jay Saccaro

getting the there's And fluid a and in to very chain and Vijay, we number rigorous of first But it, to some this watching we're So, that of related across have need terms supply to I incredibly need we a is our our that say, activities. spending spend on carefully. support investments while situation patients supply other like customers to very and in it are quarter areas, impact it.

we will so continue And to do that.

more will So we when this on QX commentary is stay tuned this, results. we report have some

a relates XXXX receivables a our cash factors there it higher I it different conversion, off expectations. you than is at is, One results, to few was our we two and balance business were were mean, there if had mix free As flow we of a One expected. look drivers that. play. in really,

and higher a the result account receivable account December sales Those were And receivable to XXXX. those we is in paid with had we that So DSO. collections. little higher then sales, DSO incredibly a second, strong geographies, and in had bit collections sales an ex-U.S. off more occur leading not of

payable improvements In bit, this than saw did budgeted on little while a tax the I performance. the in flow free performance. enhancing for. is number and and is days higher new vendor base terms our base. normal. And the our there not cash particular looking you cash we on not is the flow What vendor XXXX restructuring was terms inventory addition are off drivers area. days payable. across to can We Those were were in officer the that, procurement finally, that are our incredibly that a make payments new to some in across hand, tell focused days we originally organization We cash you expectations cited led chief progress we And brought entire who enough

Our last to pay significant end dividends. at year. dividends to year, move chain forecasting will the And pay it process supply of as we started this

months, in several our supplying capital are over and do are that if earlier balance on to not inventory, very cash are next will, you carry But we we consistently much on, patients optimistic focused the So performance. as working free have comments to which back improvements that we so incremental performance my incremental we about it I the requires will flow and inventory. which is take

have performance. into board free comes match to going the progress play make But the will over [ph] are factor next across that tremendous that of we we flow to So couple it's this the on quarters. cash going

I can much that, very conclude So with think for it the and appreciate call. support. Vijay question. But thanks we the the We

Vijay Kumar

Thank you.

Joe Almeida

well. all wish all Be Thank you. safe. your be of you you and and Thank we protective health

Operator

call conference today’s Thank concludes International. this gentlemen, for and with Baxter Ladies you participating.

You have may disconnect. day. a now Everyone great

Baxter International (BAX) 17 Mar 202019 Q4 Earnings call transcript