BAX - Earnings call transcript Q1 2022 | Baxter International Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to Baxter International's First Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded by Baxter and is copyrighted material. It cannot be recorded or rebroadcast without Baxter's pression.

If you have any objections, please disconnect at this time. I would now like to turn the call over to Ms. Investor Baxter President, Vice Trachtman, Relations International. at Clare Ms. you may begin. Trachtman,

Clare Trachtman

first and earnings welcome morning, quarter to Good our XXXX conference call.

Joining Chairman and Baxter's Joe Borzi, Baxter's Almeida, Officer; and Chain Operating are Giuseppe Saccaro, Officer. Supply Chief Officer; Chief me Jay Financial Jim Baxter's Officer; Chief Chief today Executive Accogli, Baxter's

and morning, outlook financial for this we Baxter's call year be the discussing quarter full first On will XXXX financial results XXXX.

year including financial financial we from current will matters concerning for be that forward-looking Baxter's contains of Hillrom, results our course, our factors could call and let the to infusion differ full release XXXX product more full press everyone the that that, prepared cause results materially. actual uncertainties. of this business morning, that SEC With comments this related On our to of presentation, for refer statements IQ NOVUM new and development, outlook year quarter remarks filings ones actual outlook the detail And financial reminding first XXXX. and discussing the our XXX(k) start for results the XXXX, including expectations. development acquisition materially quarter regulatory me our Please review to second platform regarding today's involve by could and risks and differ recent

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

of Hillrom. exchange adjusts discussing be for and we the On the the this morning, of operational sales call growth, acquisition which foreign impact will

I that, event. Glenview, Conference, over is know being Wednesday, register on turn available to let Please Investor of now I'll Illinois visit on to link in the Relations registration held Joe? website Investor to wanted I call everyone Before the is May which for for over our now XXXX Baxter's With Joe. call to the the XX that section website. turn our the Joe,

Joe Almeida

everyone, quick investor take at upcoming year. Good Jay will morning, overview a first in Clare. financials trajectory can May. the quarter get performance, our with closer and expect of well and an will balance look outlook you for conference quarter as Then what you, of our close a joining Thank call. preview thank our questions. and started I we our current today's with the your of will as you for

quarter first promise integration. and legacy of our top the reflecting solid quarter close full know, on company acquisition. the ongoing pleased early well line, I'm Hero of potential and bond of represents the our as XXXX since first Baxter the results the Hillrom you both report As for combined as momentum businesses to

XX% grew the basis $XXX sales total at Hillrom reported our for legacy quarter on sales a $X.X sales contributing and million in reported First XX% billion With constant quarter. currency. to

quarter of an exchange, the on Excluding sales basis. operational first rose and impact Hillrom foreign X%

guidance our earnings $X.XX. bottom contribution of quarter the $X.XX of $X.XX Performance reflects exceeding the Hillrom. increased line, adjusted the share XX%, in On per to from

performance quarter in First demand businesses, some fueled of ongoing reflect pandemic, COVID-XX erratic dragging which while continued impact of performance the to on our others. the in

help As only factors footprint, us global our through opportunity with ever, these at addition the as scope and are the with of add the Hillrom. diversity our in and created combination of in bolstered extremes portfolio durability its weather that buffers

legacy demand Baxter solid across businesses. both see continue and Hillrom We to

freight access increased made experiencing have a at electromechanical between components, We costs, the challenges materials of experience Russia. particularly and continue only components. orders times backlogs raw chain and back significant of have war we difficult the Similarly, rising it to Ukraine wake and intensified to are due range still and pockets the of which supply to increasingly in inflationary that pressures

which disciplined the has multiple sustained efficiency long meet chain focus and our are strategic of moves that favorable rates. to expense to vaccines. and needs at team way was management proud clinicians the and support integrated gone by helping for COVID-XX a on was revenues in by patients value Taking a dive biopharma constant year-over-year challenges. performance partially related of led to a its our by procurement This supply Our manufacture and while growth deeper And helping logistics shareholders. offset of driven business, from I'm XX% solutions, us comparison of these advanced

constant in Our Medication at XX% increased business by growth rates, driven Delivery IV therapies.

morning's in update for IT large-volume we by a been those We additional has received letter infusion this the safety agency which request a software, pump our As you IQ with the last review shared from on information. status saw Friday under release, NOVUM with FDA.

respond can to result plans a FDA second can in The calendar placed on or that address I responses We on for review team remain submit quarter As the of to speak currently has the so track pump syringe IQ to want FDA the team XXX(k) year. the outcome eventual to process. XXXX. our the window on within to accordingly. their of hold emphasize filing review of NOVUM FDA why we been

technology. leading-edge our NOVUM confident are We IQ

Advanced rates improvement the at to bringing clinicians at committed year-over-year was the NOVUM home procedures dialyzers internationally. our quarter IQ patients rate the surgical responding in low offset Care X% the by internationally. global lower depressed following was by request rates, performance decline to mid-single-digit and in Renal of rose sales currency constant in Growth to by partially beyond. and U.S., the U.S. offset demand to up of driven partially products, are dialysis a for driven benefits Surgery due rates, and constant FDA's the We peritoneal with of single-digit a pandemic. growth by X% in

disease new that patients confident for make volumes and generics a in grew We nutrition the patients renewed have the continued impact and reflecting for by kidney Clinical constant of growth diagnosis. discussed for demand pandemic the upcoming the has globally. been factors constraints as in competitive lifestyle years parenteral driven activity that declined the supply as due products, uptake was lower X% certain increased constraints therapy demand currency, ongoing home-based mortality clinicians. As health in supply Pharmaceuticals the as at also PD well constant dampened reflecting patient therapy, higher of rate including vitamins remain over constrained PD of X% impacted selected for U.S. rates the choice and during quarter we Nutrition currency, quarter. at production compelling well for as factors, improving previously, to patients

molecules to new as well forward. We as accelerate on in opportunities complex the launching help growth in formulations our embracing moving focus performance business international continue to

declined therapy constant products Underlying currency, the therapies to products comparison challenging highlighting renal the or this X% the vital to Finally, CRRT only of amid among legacy our continuous with due the reflecting last pandemic. year's pandemic performance surge CRRT role year-over-year continues for business, replacement at ICU. a category momentum product in in acute further in demand build the

stated to our the connected starting portfolio our growing I course, our businesses is our quarter to to care. contributed proceeding uniting we expand in million to well as sales key presence seize $XXX As in are Hillrom integration opportunities on global as our access and capabilities earlier, global expand acquired to newly our

through for war and the outbreak Ukrainian that ahead, note want disrupting locally, our and XXXX a outlook refugees partially our of I although partners. aid is The to Ukraine. patients did not anticipate directly tragic our hard serve regional Looking we serve are in ability working patients to conflict to humanitarian

although this a with We to make many products conflict material there other across chain are the also our are in resulting health oil negatively are effect ripple caused that impact as line current to a profile utility supply in which care available network patients and we company, Russia, prices, also, year. freight has like companies, certain in to sanctions. globally life-sustaining we assessing expect continuing rising costs The

have made adjustments any in decision In guidance to in These the will IQ, balance time sales the review moment. Jay our addition, increased As NOVUM pressures inflationary anticipated in with related resulted the line given have the coupled year we to remove factors, of contribution ongoing XXXX. current a for for

increased diligently where pass last through it geographies. quarter, potential some opportunities have these to possible in working these of as be are identified And may we to we find mentioned teams offsets select to Our expenses. costs

deeper continues macroeconomic present to insights make forward giving challenges, trajectory global look nonetheless XXXX our the overall our to to conference. landscape We are about and your unique investor momentum our next at our on While many for stakeholders. excited a we capacity prospects, month difference

look therapeutic a growth share broader in as innovation. our will advances care well We by connected strategy, fueled our commitment to ongoing as at

growth. profitable and on how detail We portfolio will contribute also expanded provide management uncompromising should to access global more

today's In work rapid future. on address integrated addition, as chain function we the will highlight of for operational challenges our evolution continue and the we head supply to evolve to

see Baxter's you the time interactive You'll leadership person plenty networking be I viewing. team. look first-hand always, for including and innovations of your for our to in at we'll webcast forward innovation many hall. questions with -- event care senior online and health be our informal seeing of as will in also

at who our Jay 'XX closer look results a outlook. take to it will first pass will quarter I Now and

Jay Saccaro

morning, and good Thanks, everyone. Joe,

headwinds freight chain with first mentioned, and our and Joe challenges, costs. unrest especially and geopolitical supply macroeconomic quarter disciplined in headwinds incremental As consistent focus working the pressures on we're through efficiency expense of We're with performance elevated these management. light pleased causing operational inflationary

our to Turning performance. financial

reported medication sales from strength benefited during the quarter elective quarter, of therapies basis. delivery which range the rates admission quarter. basis reflecting XX% our and of vaccines lower a billion hospital constant an high and in in rebate First our costs recovery with IV X% in a growth global the as basis, end benefit customer manufacturing well associated advanced on of at as COVID revenues $X.X business, on operational from currency the on and surgeries, with Sales growth came of XXXX XX% guidance this

to to execution by driven line, gross disciplined cost synergies the to share, was per $X.XX On XX% mix $X.XX our acquisition. the favorably well bottom as earnings This guidance with margins, of driven increased on associated per as product share. which adjusted better-than-expected by $X.XX compared

lockdowns. region basis Now with resurgence monitor Africa in constant in operating the our legacy Sales basis. a further businesses were and in sales in product in on our to and regional in categories. situation Baxter's quarter Middle were global X% APAC of Starting the on growth key to our APAC all the X impacted I'll region and Sales constant in grew is operations currency X% walk increased equal the on China, segment. Europe, through for currency a operational flat constant regions. impact performance COVID segments we by by negatively in currency sales East our constant Americas geographic the that potential currency growth cases a China in the on sales particularly Sales continuing region basis. are by and from Note

and offset from as Care pace business Moving levels benefited sales solutions. of this Global on mortality category. sets currency Sales growth as by XX% sales increasing in in key customer constant reflects pre-COVID growth a to to well constant IV Performance increased hospital Delivery in by diagnoses from U.S. pressures delays on the on and increased HD $XXX despite Renal persistent the This of staffing global performance driven the in admissions patient million, in administration our our international also lower by X% Sales in ESRD business. basis. was was were on increased PD rebates volumes new $XXX a dialyzer currency quarter in compared in for basis. Strong shortages. in continued Medication growth patients as quarter. lower year-over-year basis business demand patient for increased rates market-wide a product in-center recovery million

X% that For $XXX U.S. constant the digits pre-COVID the of currency molecules pandemic-related increased U.S. manufacturing by negatively for levels. a supply to select were constraints was inhaled quarter we low facilities. portfolio and injectables part basis. our driven declined admissions certain Pharmaceutical down on quarter, shortages impacted estimate compared sales in of single Performance our at in generic hospital by anesthetic competition in of labor sales lower million

the product were were Total Growth million, and in seen in Japan in increasing our a result Omicron February was We've saw variant, recovery new Nutrition. offering. Asia in driven the January in quarter Pacific million, Europe. and reflected basis. sales within currency Korea, procedure pressure into Advanced our region on of basis. a currency of as surgical recovery X% a U.S. product by volumes procedures advancing improving with launches experiencing impact and stall on Australia, Taiwan was $XXX depressed on Sales Clinical somewhat March. surgical volumes. volumes of Surgery the multi-chamber constant under in constant levels the Performance procedural the but the $XXX elective U.S., broad with to quarter Moving X% come short-lived benefit In we the

the when heightened growth given we the incremental to of currency COVID in Our in which of difficult Solutions our U.S. a XXXX basis to for quarter. X% comparison surgical is reflecting related first the constant $XXX cases. were procedures $XXX in Sales quarter totaled sales million, constant pre-COVID the business reflecting approximately declining current levels remain year. of on assumption were the a experienced a the manufacturing vaccines, remainder CRRT for sales COVID and million, rise basis, for demand in in U.S. XX% Acute representing to million BioPharma the on quarter above currency of $XX Therapies the

forecasted in sales quarter, remainder sales Hillrom For in $XXX sales were sales flat sales. of from approximately million of On support QX to compared and contributed the of Care and when vaccine a benefited company, $XXX reflecting in patient a the first of as sales lower currency included $XXX be sales approximately basis XXXX, $XX of prior of Global as quarter $XX the for was sales Frontline are year year-over-year, Surgical a $XX stand-alone challenging services to its XXXX million. sales million million million COVID-related constant year, than which million Hillrom comparison in the Solutions.

rest the P&L. Moving through of the

XX as in and points reflecting XX% the million a $XXX R&D addition operating Hillrom. Hillrom the $XX prior net resulting operating the of quarter the year, a by contribution an quarter, forward of interest first to of Hillrom costs. the over cost prior we're driven million, a in various as was totaled basis sales, as X% points of the We're of pull to factors as I able points margin sales, outstanding of higher discussed. balances an and XX%, within for versus XXX XXX the million $XX.X SG&A expenses decrease quarter contribution points from well lower a the gross in certain benefit the reflecting year, $XX increase in SG&A million basis synergies freight the versus rebate represented versus spend by just adjusted on quarter year, and versus increase driven basis with $XXX first prior track XXX of Our Adjusted our percentage related debt spending an Increased the reflect margin target initiatives of the year, prior basis million the Adjusted of prior higher R&D expense representing levels the increased Adjusted percentage in acquisition expenses. year, increase by year. of to Adjusted of of Hillrom. of quarter.

quarter. due the was prior driven our to diluted expectations tax prior well XX% by per benefit. quarter, be and totaled adjusted in higher XX.X% The mentioned, quarter increase Hillrom advanced the versus exchange an year rate Given was of nonoperating by year-over-year unfavorable environment, period. the to earnings pension million benefits. expense the in the in period. prior amortization had of Other compared $XX to million period, the mix as rate driven forecasted. rate compared reflected previously as And tax the interest increase foreign addition income previously of to year interest expect the within current gains a the The share rate than of to XX% adjusted prior the quarter earnings The tax we $XX discrete in now was as year net $X.XX we the as of

comments for full XXXX, our my Let quarter discussing year around assumptions and certain outlook the year. conclude second for including me key by phasing the

NOVUM sales the As constrained as the remove we Joe reflected Spectrum sales on electromechanical for any supply expected outlook. pump. offset System this mentioned in made in earlier, NOVUM decision is updated certain to our XXXX, to not with are we have sales parts able IQ we which spectrum Infusion are the At time,

the In Russia our outbreaks Ukraine operations. challenges supply disruptions between from across addition, our created chain constraints macro network ongoing and to emerging China, and the in have COVID war new global continued

financial drive inflationary are customers. While expected costs our we throughout our of expenses, increased These through supply some integrated the our as updated these efficiency which have better pressures in continue the chain our to to in pass negatively evaluate impact as year. incremental to are These opportunities in prices resulted to and well results reflected expenses, remainder to increased which of related oil higher outlook. primarily are factors

reported on of earnings, per of XX% we approximately quarter $X.XX global a excluding and basis, expect second currency X% the of XXXX, approximately items, share. we basis XX% expect XX% to diluted And growth sales special constant on $X.XX to operationally. a For adjusted

growth XXXX, a expect XX% basis, an basis we XX% reported year basis. approximately XX% on full on global For on to of now sales and constant a operational X% XX% currency to

Hillrom. As excludes operational of Baxter foreign impact the exchange and for earlier, growth mentioned

Moving P&L. down the

We the expect operating year be similar period. adjusted full to year to margin prior

call full million the these of we $X.XX share to average total interest adjusted that, million and tax With special adjusted we per of on and to XX% approximately year, diluted expense million now expect to excluding items, XXX share. $XXX shares. XXX now diluted now rate to count For up can we $X.XX to earnings, XX.X% a open XXXX the of Q&A. Based expect factors,

Operator

Steed of Our from Instructions] [Operator America Bank Travis at first question Securities. comes

Travis Steed

like the in bridge full the here point year, It to the and bit looks line. on the how get of X like supply bottom just changes a the more for love and top QX as revenue shortages on a both guidance. line reduction looks account of I'd same the bottom line difference thing on just if beat? a for NOVUM the it's Jay, the curious well. guidance that's you It I'm $X.XX how IQ, much much

Jay Saccaro

relates entirety we've Sure. from taken a sales. out guidance roughly really $XXX roughly X% was in of reduction the Previous NOVUM If -- operational. the to revenue standpoint, million

Now takes thought but we always the see NOVUM from guidance, that the put reduction. you as and it so remove of to we're forecast and X%. puts course, prudent we there's our together approximately under was circumstances

driver. $X.XX period we forecast line the circumstances the That's the make some faced did as roughly primary adjustments is more an far Oil bottom As to we in of X light with. currently significant are impact. goes,

We have down increasingly the what of it's fulfill to the incredibly comes at complicated as our is product environment save roughly the around oil to really today. freight headwinds, supply is And the an moment. to excluding of And this $X.XX. impact tumultuous company chain mission world and lives, sustain moving looks

And roughly And then so that securing QX securing inflation. very, experiencing I the result impact headwind is to materials very material finally, also of $X.XX QX incremental described. roughly, just is of the of that of challenging. roughly from And parts we're oil $X.XX raw outside and

certain manufacturing portion And to that in that add and we're offset really of the improvements. impact, change optimization you what guidance taking actions NOVUM and the along You the the back describes to that with is pricing by year.

Travis Steed

doing That's mentioned and actual of kind that price love where of more or taking pricing the little you're you you're freight great. that customers on increases? in and just some actions a that I'd charging cost shipping the more hear and bit to portfolio that color you're

Joe Almeida

much customers don't And customer, actions. into we actions -- we have but did, we different can. pricing geographies and pricing to where but where go our how we We taken taken have in specifics

Operator

We'll Marcus Morgan. at move JP next Robbie to

Robbie Marcus

you integration line. there's the through A moving Maybe that, trying and There's time, to At I to lot on, on. up top line the to are sift a think, well. lot and big both bottom start, same investors a on going of Joe, the follow going on the parts. as for Jay,

Baxter about, about transitory health how back doing feel So feel maybe of us while step to the just all you basically markets you and the is versus and how through, do the let's it, underlying and could call walk the them? performing how market you integration, relative fundamentals end headwinds

Jay Saccaro

durability the our thanks long-term markets. Robbie, So very the Overall, about to outgrow we feel business, question. good of the for the potential

the sure performance, happy a how as to on the which Very solid of you of get we ahead our happy bottom going with some Hillrom, able the and it we'll opens We it Joe think acquisition were described, really terms to was first into line, is right? deliver and the to. about later, quite opportunities illustration that up of If well. great. delivered We growth pursue markets of expectations while, continue is we integration, the -- perform, the All quarter classic with sales to that very that which us of exposes in X%. synergies end I'm us the

a nice all that story. really So of is

the expect there our next see short I our that on chain. coupled think the that, you And about term. an it's are if the short-term I supply We as the with to chain X with certainly case. I costly nor will that our it, more significant do mission, complicated most impacting least creates Do supply hope years? very in But talking supply fraught the continued supply pressure in have I but of factors in the that's think faced seen not, chain we X be chain performance. primary do about already we'll environments, months personally war be will focus, at be Ukraine, X for

prices think oil see I time, eased. we'll over

now, the story that. team complexity choppy product it's I in to the particular, of teams, to I our think all tremendous will know you if And I add accrue over those don't chain are to navigating. the that. all working a think want Joe, all we're benefit doing of moving anything including And job through world supply some for the will the Baxter. of decrease. waters of Right time, that long-term things around of

Joe Almeida

healthy. that our line order, demand, backlog, we our very our healthy, very add back top see Would backlog,

and is microprocessors Northern are the struggling back we all have that to of chips strong high, all-time fulfill we demand, order and Our meaning demand Electronics. because sometimes shortage the

their often to our matter or shipped product deal of time area speaking to CEOs of that top in by more company a executives, great either factories. get to a trying consume this fact, our has As

problem it So see demand, this top has Baxter, is a that not that line, see business the a that you unique just resilience level outlined. but shows of that to Jay I our when

that temporary us with will take may end dynamics. And see with underlying So the this that that I that to think see problem market somehow of Jay previous area. the we They don't this throughout be outlined. I see be are and I year, we quarters the year. short-term a in not the call will issues fixed, towards said some progress in

also trying some we're We redesigning material are raw of place. boards. in secondary -- getting our We're suppliers

So of up that shore resilience there's only create a the us a term for but term, for the the significant to amount with and time. a will work long long company for not also be short

Robbie Marcus

Great. up of pricing. different through contracts. -- business a This products is lot And follow more a your lot on to different that maybe go channels X has of and

Some are capital some items, drugs. are

cetera. the you difficult to But take in. inflation, the there been any different by supplies change this? environment pricing has historically, pricing What's participate to market are -- do pricing? very a shipping, more you into in any the go-forward businesses the given ability et through is put foresee this And the Some due of each

Joe Almeida

not say Clearly, display some Why very markets, that term, long selected and contracts out have a we blanket. to And the neither consumer. in not inflationary case-by-case evaluate the have Baxter, markets you contracts. here, known-to-direct-to in taken is I do on we that company, consumer break pricing We're price pressures this are because we actions? selling markets. take a Sometimes a actions clear staple we selective have -- products to are

think do it And also where that to and to everywhere. prices raise is a raise in that So do we we can't legally blanket just possible. try is fair. the just What is is and we we we prices way customer considered

there's all tough place. market for tough that market we moment. the everyone. and put is in It at it's a those considerations So a

we we're we taking So and it's what do pricing can, possible. where

Operator

our Fargo question. with Biegelsen Larry Wells next has

Larry Biegelsen

guidance of of to quarter on ramp to this upcoming kind then implies half. Jay, year margins like margins, the on down a full -- it meeting. sequentially. the the margins X X second and the analyst second it kind get And the it's Just looks on still the in guidance, year implies

drives have follow-up. are about what So And the thinking correctly? we X cadence ramp? that And I

Jay Saccaro

second you Larry, to second margins than we went at if year. historically, half, impacted half margins Baxter margin thinking from about half respect see think half you about are XX% XXXX, revenue half correctly. of of half some the year. the XX% last And cadence first significant despite looking lot first second margins see issues overall, the incremental down with a that to that comes in the And significant of that we inflation of to second the lower

the in from we'll second that fast So half. half we hundred forward step-up we point the factors. first anticipate several right, half. really as step-up to to XXXX, One, a you're revenue seeing see basis second And there's a contributing few

really the second we'll capture see that half But facilities. those really, our accrues work, is call of team then And of accelerating the the more programs. we about synergy to at half. manufacturing benefit of VIP the second finally, half efficiency benefit incremental pace manufacturing of first Second, our what in increasing the are is the than some and hard what

add of you been those together, it's So you factors margin and point similar X what years. be cadence in to past the as out, correctly will

Larry Biegelsen

is, That's volatile question the analyst it's a helpful. one, And My upcoming meeting. on then environment.

to meeting? calibrate Joe, you given a environment to has volatile us sales you in. Jay the today that you stand-alone and in X% expansion. going what basis deal, kind changed, CAGR you share question going we're outlook So to just or help margin with that guided And can the Hillrom factor long-term assumed Hillrom to how how obviously, kind of is we that did of going X%, And of are know into are -- what my XXX point the approach us that that Baxter you when you've to synergies

Joe Almeida

I Sure. can come you in. can start, please Jay, and

in different disruptions We the of terms plan in in is account into drawn several that XXXX the company takes including short-term that factors, long-range and chain. have a supply affect

have you tell into that going to what we're -- are the things forecast we're assumptions We a going to our meeting. this We're are happening. is tell what going assuming

present, supply all including footing we the what in a terms have numbers, this we we today are what in So world other demand and other commodities have and are things. things, making all you on assumptions the that pricing of the

the will we disclose prepared the to that at be of time game. So meeting,

Jay Saccaro

assuming No, world. is we'll that's today And put what want volatile oil conservative try to are some an that assumption what over intelligence And we but see price right, the we're the the I exactly to around going details incredibly years, assumptions, effect, share have to think forth possible. to Joe. as going we to try that and around best around we're to of

we'll those logistics is like challenges, of issues things oil the chain supply and is massive as far and point In as that sit really well. That say, businesses and have with of chain the combined we're are on this contending have we to try share that feel significant intact, that should short the that very we about and We really, changed, we disruption. the excited different platforms, of and at from that's the that look very we're price, to September fully on good most platform. feature the point, to seen and we've supply As term, factor integrity long-term acquired down. that, like when Things potential global to both the perspective our I really, freight view what's the a today.

in the take, and that's going to forward Chicago we're to look Larry, in we that really, approach a month. seeing you So

Operator

We'll Deutsche come to Bank. Pito with next Chickering

Pito Chickering

you on freight of pressures. material quantify lens the sort to oil, impact lenses going Just question back the oil of from of

some more color the some of give seeing versus And the the on do of today? you back updated you half your guidance we're sort cadence sort of Just sort us timing year? year prices of throughout in can of and the the the relief

Jay Saccaro

be of supply also We could oil see rest benefits year. XXXX. The year. with we this year, oil at time, some really the probably through have complexity materials we're roughly challenges respect $XXX with the there think XXXX that looking taken and and not along are prices the we relief components of to anticipating than procuring some more easing chain, over but of forecasted of of barrel the raw that balance for We've level and way the it,

have price in really that when you oil oil price the period was alleviation to impacts our mind keep from not another QX. the our QX QX, -- we that P&L. a between that there in fact Said see QX occurred during other is by The of way, to and movement lag the in is negatively that impacted that QX

balance think And year. of the we to and challenging towards we're we're this itself into about Pito, see the of So I way then optimistic it, the end but sorts cautious for assume levels that. the we're that going 'XX, 'XX out

Pito Chickering

manufacturing sourcing you of terms both follow-up, COVID you the size in on other give backlogs talked you in And backlog? a guidance for gotten about of Okay. color revenues up size you sort for there? lockdowns with then backlog? of do China can And the like and then China Microchips it the working in us bigger down Can on that occurring assume in products. all and any that April? Has What

Jay Saccaro

impacting as the parts, some able that, commented in we've into we're of remarks. a by product with and nor the NOVUM is into result We past seen you, really delay. get of terms specific respect not in perhaps to line of backlog prepared get product area. and spectrum lines. will that to can specific Sure. we're And I offsets I tell What product as What availability tight don't components very you see tell I we my in

quarter, respect products. to factor. we with the first So have that's Hillrom some backlog In did X the

But always and those we're expect closely. this out the careful availability product, cautious coming about with of things of again, watching to months. We the over course sort

that out the we big it product relates million yeoman's those who a facilities, work to relates roughly China, ensure all from product can As are the manufacturing expect product that $XX impact, and seeing $XX and they go hearts get million, of $XX we've roughly to the plans measures. impact have impact China in in seen doing -- to our a overnight million of are our $XX out employees demand million to sales. as lockdowns so secure that out Obviously, a to staying standpoint but we we we're supply trying it perhaps there, that get folks to in really and

QX. that occurred of in some -- those expect We

We story and really alleviate the to expecting expect the of to we that year some that impact QX in then more that's are later on China.

Operator

We'll move at Danielle Leerink. next SVB Antalffy to

Danielle Antalffy

Hey, good morning, everyone.

the Just potential or this Baxter gains term platform even And X if curious, longer the if share X midterm, in get? in Joe, should question that once then does have market changes you able delay of be on the the follow-up. your to here, NOVUM launch that I just platform. the -- view I'm

Joe Almeida

the our have received year, what We Addressing the not we just towards Danielle, like prepared we said be end product of and the line. change the in understand in the to remarks. does I plan have request to addressed, address latter. we faith the needs

in a this great have from product and Canada perspective, product. We is, currently working my

the on tremendous respect the have behalf agency sells for We I FDA. speak what of and don't

sure them main as address outstanding very the designed end about and designed we're we the It soon the issue by So working product make I very we're we We the of as we resources optimistic was from in year. platform. faith closely at the can can that We Baxter have the stores place put do what to first the the product still electromechanical can in from marketplace. in scratch. in scratch.

that year. is clear I the we hope great end So it's -- get of can and this technology this the opinion, and towards but my a

Danielle Antalffy

are early changes I guys a process just or speaking? product Okay. days been on from if then I was Hillrom, it's you seeing touch part Got That's a know maybe bit it's good sales little to with the still, but any of how sales the it. in And Hillrom how broadly could synergy as more. side today, you hear. wondering just portfolio

Jay Saccaro

really Great. things Danielle, going to with with question. are thanks respect pleased how for Hillrom. the We're

culture finding think a whose we're with Baxter. I well what aligns very is company

line the the portfolio of have, increasingly product they excited some we about that more, products and the we're As explore innovation that undertaking. they're

think ability anticipated. things We're finally, standpoint, we are things excited and our their And or really as well a those products about like commercialize about going then As of originally cost synergy we from than synergies. kinds opportunities. drive to better also

standpoint, very that feel and we are signs put up with we all deal our respect Hillrom, in from the place. So excited to about

There's go, like products of revenue product that the about. I synergies as like we in think some that a we far you see, promotional outline synergies a of we And May, some we'll when safe can for our Things our they're we're it's expansion, Investor of the As increasingly is number we'll geographic see new outline opportunities at few some excited develop. categories that that distribution And time of of there's teams that there. recently all you categories Day international exist. reality the about opportunities that to talking I opportunity. just say but real spent with the some things

of footprint. effort. direct have world global We countries. benefit and a sell those of around that most Hillrom doesn't promotional kind there with from the have products footprint countries in that can really products over select We are presence level that in place, XXX of in

really together you more long-term but to about about excited all I that story in again. these in it's detail, nice we're in categories We'll a putting here. think talk I it. see we're So hope May, of

Operator

has Joanne Wuensch, our question. Citi next

Joanne Wuensch

the how your for to have time, love get X. plan I'd pathway do actually thoughts but you to It there? come, like to about expect it I'm and you renal on recovery. the I over sounds curious know

Joe Almeida

Daniel Joanne, -- you? are how

Joanne Wuensch

well. I'm

Joe Almeida

patients affected at a of X patients. risk years renal of who to who are ESRD the or patients experiencing moment died, and of due in that for are the in number We patients reduction COVID the potential

coming the that The PD see moment. that we as started in of a we effect see still to Europe. to the continue primarily patients We U.S. see need through HD patients, more Americas. more We lingering pandemic. on in in So the of at pickup the the and see that

separate picking peritoneal PD from and XXXX. year dialysis probably or PD we see So hemodialysis in throughout momentum PD from for this recovering HD up

Joanne Wuensch

the And remainder as you're volumes what for about hospital a follow-up, of curious thinking the I'm year?

Joe Almeida

and We a in coming to see recovery it's rebound. the be going

project in do that see volumes volumes rebound today business So we places surgical we a and most in to hospital ex-Asia.

large markets, able pre-COVID back lockdown markets to China, see in and need think or happening X we're to watch of in as volumes the other above ex in with above that those that momentum was last up we and and how at we -- But probably their as up react suppressed what's I well in coming to times. year picking terms demand Japan.

Operator

Ranieri We'll move next to Drew at Stanley. Morgan

Drew Ranieri

Hillrom for second. on Just a to go back

for Support growth. Patient in like benefit, adjust you out business, closer Systems the to it growth. COVID If it X% was even looks the it's And

pulling detail But care maybe given some connected from the of expenditures. expected. well, component about on than can seeing kind you're some hospitals be into light and PSS, better that just of as kind bed So you the might within capital the go what hospital back component

in seeing what Just expecting of kind of those remainder curious quarter you're what and of the franchises? you're kind year this in for the

Joe Almeida

answer Giuseppe ask to that. going We're to Yes.

Giuseppe Accogli

Yes.

very bold it the from come comes strong the communication is continuous coal unique system. Care side. is what that nurse amount communications BSS, a on care system strong to think the features I and to see platform we So when with unique

difficult to demand difficult we impact. to there, COVID over a the see strong This to is So implement being demand. due implement

is code it healthy impacted very but see the our hospital when what and overall care to to a that -- comes PSS So access communication the has we to business. backlog

Operator

We'll move next to Matt Suisse. Miksic at Credit

Matt Miksic

of could, couple Joe, factors guidance. a if is on or of Jay you're it China, talked a thinking your how times. I these some about follow-ups, you in One of Just couple about

back in of So is in second sense have major a others of then quarter? managing maybe easing universe you just would that estimation and that or parts more your you're a described, there? you could has impact expected some significant if been? how to that maybe of moving up FX and changing talk half in the make by is about some what but sort and other little change, our than what the And you're folks a guide bit through Jay, in baking happen happened it the lockdowns sort FX. into sense We've the your Or us the -- give guidance. moves Does how of assumptions other the seen FX, get love you

Jay Saccaro

Sure.

impact some a in not situation the expect million similar QX. and situation for second to level they're quarters. complicated relates roughly of Obviously, just year, quarter, that China, we and into QX, is fourth lockdown with, $XX do our it in dealing benefit, expectation the As impact expect on later the in improvement in the the improves third it's but occurring the we your around and that

we in So improvement year. in baked have the don't until later any

little from relative As several more to than with $X.XX, we're it previous February, prior expectations, about maybe shared which in we're bit a relates to impact, exchange, that. to -- relative $X.XX cents off talking our are of expecting we we foreign year, roughly you And that.

yesterday, We'll Now several situation. closely. were a the euro seeing even the substantial we'll very this. relative of continue this monitor prior we in this And of highly forecast. cents we very point, have impact right this as movements volatile is But to to watch at

Operator

And question we'll Vijay final our take with ISI. from Kumar Evercore

Vijay Kumar

versus the understand is versus at pre-pandemic about at back the both And on to the of then cumulative ask manufacturing quantify none half are we pandemic Jay, Is -- talk they in to half the materials there into IQ the And way I transportation? course me buckets here, out. any has given back had of all half, Thanks a here. of first what part. at chain the Baxter raw Maybe first when cost over cost. that number? X.X different implies pulled part is for -- in incurred If them I there I in simplistic versus levels? the X.X cadence? half investments improving thinking I'll versus a X the X.X first squeezing a operational, the no have why went supply maybe second look annual in when cost look that is was didn't so right utilization the And half, half. is the I that guidance

Jay Saccaro

half of have of NOVUM the relates anticipated, sales as in the it you if we at spectrum And second we comments with Thanks question, intense available year, in because that to to the focus to sales along versus of strong Joe's offset focus lever first a will a think half The Great. have that second sales you drivers don't reduction year, core very we with organization no QX what really and our us of around as and tell get this our as R&D for look I why the approved, the that's is which that primary year. guidance, about removal last is our QX last half NOVUM Vijay. -- vaccine team. are available

are are as So anomalous kind of in of cadence. delivery bit we That medication see did that Most heightened a year. the those of as say, other although far factors as level really the along I the was sales drivers we the first year. would of changing expect moving do we quarter some and similarly, lower this to of back approach portion

the that's sales really, line. on story the So

'XX of that costs, costs that manufacturing very through And despite or interesting XXXX last VIPs, to that pressures costs the number, costs some of to an relates material operational several and incremental billion costs that earlier been about we're inflationary $X.X today. that over experiencing uptick. from we're experiencing. amount earlier. that really, I enormous performance, We're to described able that is, like years we're it the freight increased substantial it's described as this offset we've What's is mechanisms Joe driving through significant of things labor As experiencing talking through increased pricing chain supply

with excited is what even undertaking this get that Vijay, to significant momentum am we're optimistic operational and the all a that efficiencies without those that we're I see -- faced and offset. pressures of really is respect is the with enhancements to and about as frankly, this somewhat So alleviate, you'll number

we're what working towards. that's So

year. start As hopeful Joe of going of we're think and year, contend I some the for I rest am to to mentioned, but -- next with as benefit some I to we pressures the think I move these we don't see that

for question. So thank much you very the

Operator

this this Thank There Baxter participating. call questions further are gentlemen, time. International. and with concludes Ladies for at conference you today's no

Baxter International (BAX) 28 Apr 222022 Q1 Earnings call transcript