DEERFIELD, Ill., April 19 /PRNewswire-FirstCall/ -- Baxter International Inc. today reported sales and earnings above expectations for the first quarter of 2007, and raised its outlook for the full-year.
First quarter net income increased 43 percent to $403 million compared to $282 million in the first quarter of 2006. Earnings per diluted share of $0.61 increased 42 percent over the $0.43 per diluted share reported last year. Strong sales, improved margins, and lower interest expense drove the company’s financial performance, which compared favorably to the guidance previously provided for the first quarter of $0.54 to $0.56 per diluted share.
Baxter’s worldwide sales totaled $2.7 billion in the first quarter, an increase of 11 percent. Sales within the United States totaled $1.1 billion, an increase of 8 percent over the same period last year, while sales outside of the United States grew 14 percent (or 8 percent excluding the impact of foreign exchange) to $1.5 billion. Excluding the impact of foreign exchange, Baxter’s sales growth of 8 percent exceeded its guidance range of 5 to 6 percent.
During the quarter, momentum continued in Baxter’s BioScience business, with revenues totaling $1.1 billion, an increase of 22 percent. This increase was driven by strength across all product lines, including recombinant products used in the treatment of hemophilia A, antibody therapy products for the treatment of primary immunodeficiencies, and other specialty plasma therapeutics and biosurgery products. The company also posted strong vaccine sales in the quarter as a result of shipments of its candidate H5N1 vaccine for government stockpiles around the world, and strong demand in Europe for its vaccines that prevent tick-borne encephalitis and group C meningococcal meningitis. BioScience results exclude the Transfusion Therapies business, which was divested in the quarter.
Medication Delivery revenues increased 8 percent to $990 million as a result of strong international performance and sales of anesthesia products. Renal revenues increased 6 percent to $525 million as the company continued to post strong gains in peritoneal dialysis patients, primarily in developing countries.
“Our strong first quarter financial results reflect the building momentum in our business and our disciplined focus on driving margin improvements,” said Robert L. Parkinson, Jr., chairman and chief executive officer. “This performance continues to reflect the value inherent in optimizing our current business portfolio and allowed us to continue to accelerate our investment in research and development, which grew 15% in the quarter.”
Second Quarter and Full-Year 2007 Outlook
Given strong first quarter financial results, Baxter is raising its sales and earnings outlook for full-year 2007. The company now expects to achieve sales growth of 4 to 5 percent, excluding the impact of foreign exchange, and earnings per diluted share of $2.60 to $2.65, before any special items. In addition, Baxter continues to expect cash flow from operations for full-year 2007 to total approximately $2.3 billion. For the second quarter of 2007, Baxter expects sales growth of 3 to 4 percent, excluding the impact of foreign exchange, and earnings per diluted share, before any special items, of $0.66 to $0.68.
The financial outlook for the second quarter and full-year 2007 reflects the divestiture of the Transfusion Therapies business and excludes sales of the company’s COLLEAGUE infusion pump in the United States, which may resume before the end of 2007.
A webcast of Baxter’s first quarter conference call for investors can be accessed live from a link on the company’s website at www.baxter.com beginning at 7:30 a.m. CDT on April 19, 2007. Please visit Baxter’s website for more information regarding this and future investor events and webcasts, including investor presentations, and the company’s Annual Meeting for shareholders to be held in Chicago on May 1.
Baxter International Inc., through its subsidiaries, assists healthcare professionals and their patients with the treatment of complex medical conditions, including hemophilia, immune disorders, cancer, infectious diseases, kidney disease, trauma and other conditions. The company applies its expertise in medical devices, pharmaceuticals and biotechnology to make a meaningful difference in patients’ lives.
This release includes forward-looking statements concerning the company’s financial results. The statements are based on assumptions about many important factors, including the following, which could cause actual results to differ materially from those in the forward-looking statements: demand for and market acceptance risks for new and existing products, such as ADVATE, and other technologies; future actions of regulatory bodies and other governmental authorities, including the FDA and foreign counterparts, that could limit or suspend product development, manufacturing or sales or result in sanctions; product quality or patient safety concerns leading to product recalls, withdrawals, launch delays, litigation, or declining sales; product development risks; inventory reductions or fluctuations in buying patterns by wholesalers or distributors; the impact of geographic and product mix on the company’s sales; the impact of competitive products and pricing, including generic competition, drug reimportation and disruptive technologies; reimbursement policies of government agencies and private payers; the availability of acceptable raw materials and component supply; the ability to enforce company patents; patents of third parties preventing or restricting the company’s manufacture, sale or use of affected products or technology; and other risks identified in the company’s most recent filing on Form 10-K and other SEC filings, all of which are available on the company’s website. The company does not undertake to update its forward-looking statements. Financial schedules are attached to this release and available on the company’s website.
BAXTER INTERNATIONAL INC. Consolidated Statements of Income Three Months Ended March 31, 2007 and 2006 (unaudited) (in millions, except per share and percentage data) Three Months Ended March 31, ---------------------- 2007 2006 Change ------ ------ ------ NET SALES $2,675 $2,409 11% COST OF GOODS SOLD 1,409 1,357 4% -------------------------------------------------------------------------- GROSS PROFIT 1,266 1,052 20% -------------------------------------------------------------------------- % of Sales 47.3% 43.7% 3.6 pts MARKETING AND ADMINISTRATIVE EXPENSES 583 526 11% % of Sales 21.8% 21.8% 0 pts RESEARCH AND DEVELOPMENT EXPENSES 159 138 15% % of Sales 5.9% 5.7% 0.2 pts NET INTEREST EXPENSE 5 18 (72%) OTHER (INCOME) EXPENSE, NET (A) (10) 16 (163%) -------------------------------------------------------------------------- PRE-TAX INCOME 529 354 49% -------------------------------------------------------------------------- INCOME TAX EXPENSE 126 72 75% -------------------------------------------------------------------------- NET INCOME $403 $282 43% ========================================================================== BASIC EPS $0.62 $0.44 41% ========================================================================== DILUTED EPS $0.61 $0.43 42% ========================================================================== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic 650 641 Diluted 659 648 -------------------------------------------------------------------------- (A) Other (Income) Expense, Net in 2007 includes income of $23 million, reflecting a gain on the sale of the Transfusion Therapies business of $58 million less related charges of $35 million. The after-tax impact of these items was $6 million of income, or $0.01 per diluted share. Baxter International Inc. Condensed Consolidated Balance Sheets (unaudited) ($ in millions) March 31, December 31, 2007 2006 ------------- ------------- ASSETS Cash and equivalents $2,384 $2,485 Receivables 1,899 1,838 Inventories 2,119 2,066 Other current assets 572 581 ----------------------------- Total current assets 6,974 6,970 ----------------------------- Property, plant and equipment, net 4,047 4,229 Other long-term assets 3,462 3,487 -------------------------------------------------------------------------- Total assets $14,483 $14,686 ========================================================================== LIABILITIES AND SHAREHOLDERS’ EQUITY Short-term debt $596 $234 Other current liabilities 3,028 3,376 Long-term debt 2,124 2,567 Other long-term liabilities 2,131 2,237 Shareholders’ equity 6,604 6,272 -------------------------------------------------------------------------- Total liabilities and shareholders’ equity $14,483 $14,686 ========================================================================== BAXTER INTERNATIONAL INC. Cash Flows from Operations and Changes in Net Debt (unaudited) ($ in millions) -------------------------------------------------------------------------- Cash Flows from Operations -------------------------------------------------------------------------- (Brackets denote cash outflows) Three Months Ended March 31, -------------------------- 2007 2006 ------ ------ Net income $403 $282 Adjustments Depreciation and amortization 140 139 Deferred income taxes (13) 2 Stock compensation 27 18 Other 4 18 Changes in balance sheet items Receivables (98) 38 Inventories (128) (63) Accounts payable and accrued liabilities (158) (105) Restructuring payments (3) (19) Other 41 (5) -------------------------------------------------------------------------- Cash flows from operations $215 $305 ========================================================================== -------------------------------------------------------------------------- Changes in Net Debt -------------------------------------------------------------------------- Increase (decrease) Three Months Ended March 31, -------------------------- 2007 2006 ------ ------ Net debt, beginning of period $316 $2,497 Cash flows from operations (215) (305) Capital expenditures 93 76 Dividends 380 363 Proceeds from sale of Transfusion Therapies business (421) -- Issuances of common stock -- (1,249) Proceeds from stock issued under employee benefit plans (201) (44) Purchases of treasury stock 270 171 Other, including the effect of exchange rate changes 114 15 -------------------------------------------------------------------------- Increase (decrease) in net debt 20 (973) -------------------------------------------------------------------------- Net debt, March 31 $336 $1,524 ========================================================================== -------------------------------------------------------------------------- Key statistics, March 31: Days sales outstanding 55.3 54.8 Inventory turns 2.6 2.6 -------------------------------------------------------------------------- Baxter International Inc. Net Sales Periods Ending March 31, 2007 and 2006 (unaudited) ($ in millions) % Growth % Growth @ @ Q1 Q1 Actual Constant 2007 2006(1) Rates Rates -------------------------------------------------------------------------- BioScience (2) United States $484 $418 16% 16% International 588 458 28% 20% Total $1,072 $876 22% 18% -------------------------------------------------------------------------- Medication Delivery United States $515 $491 5% 5% International 475 425 12% 6% Total $990 $916 8% 6% -------------------------------------------------------------------------- Renal United States $97 $94 3% 3% International 428 399 7% 5% Total $525 $493 6% 4% -------------------------------------------------------------------------- Baxter excluding Transfusion Therapies United States $1,096 $1,003 9% 9% International 1,491 1,282 16% 11% Total $2,587 $2,285 13% 10% -------------------------------------------------------------------------- Transfusion Therapies (2) United States $43 $56 (23%) (23%) International 45 68 (34%) (38%) Total $88 $124 (29%) (31%) -------------------------------------------------------------------------- Baxter International Inc. United States $1,139 $1,059 8% 8% International 1,536 1,350 14% 8% Total $2,675 $2,409 11% 8% -------------------------------------------------------------------------- (1) Prior year sales data has been reclassified to reflect the change that is described in note 2 below. (2) Sales of Transfusion Therapies (TT) products were previously reported in BioScience. Due to Baxter’s expected significant continuing cash flows associated with this business, Baxter continued to include the results of operations of TT in the company’s results of operations through the February 28, 2007 sale date. The amounts reported in Transfusion Therapies reflect sales of TT products until the completion of the sale of the TT business, as well as revenues associated with manufacturing, distribution and other services provided by the company to the buyer post-divestiture. Baxter International Inc. Key Product Line Sales Periods Ending March 31, 2007 and 2006 (unaudited) ($ in millions) % Growth % Growth @ @ Q1 Q1 Actual Constant 2007 2006(1) Rates Rates -------------------------------------------------------------------------- BioScience Recombinants (2) $388 $335 16% 11% Plasma Proteins (3) 225 192 17% 15% Antibody Therapy 222 183 21% 18% Regenerative Medicine (4) 82 69 19% 14% Other (5) 155 97 60% 48% -------------------------------------------------------------------------- Total BioScience (6) $1,072 $876 22% 18% -------------------------------------------------------------------------- Medication Delivery IV Therapies (7) $320 $304 5% 2% Global Injectables (8) 361 353 2% 0% Infusion Systems 209 195 7% 6% Anesthesia (9) 89 54 65% 63% Other (10) 11 10 10% 0% -------------------------------------------------------------------------- Total Medication Delivery $990 $916 8% 6% -------------------------------------------------------------------------- Renal PD Therapy $419 $388 8% 6% HD Therapy 106 105 1% (1%) -------------------------------------------------------------------------- Total Renal $525 $493 6% 4% -------------------------------------------------------------------------- -------------------------------------------------------------------------- Baxter excluding Transfusion Therapies $2,587 $2,285 13% 10% -------------------------------------------------------------------------- -------------------------------------------------------------------------- Transfusion Therapies (11) $88 $124 (29%) (31%) -------------------------------------------------------------------------- -------------------------------------------------------------------------- TOTAL BAXTER $2,675 $2,409 11% 8% -------------------------------------------------------------------------- (1) Prior year sales data has been reclassified to reflect the changes that are described in notes 2, 5, 6, 8, 9 and 11 below. (2) Includes sales of recombinant FVIII products (ADVATE and RECOMBINATE). Sales of recombinant FIX (BeneFIX) were previously reported in Recombinants and are now reported in Other, as detailed below. (3) Includes plasma-derived hemophilia (FVII, FVIII, FIX and FEIBA), albumin, and certain other plasma-based products. (4) Previously referred to as BioSurgery. (5) Principally includes vaccines, sales of plasma to third parties, and recombinant FIX (BeneFIX). Sales of recombinant FIX were previously reported in Recombinants. (6) BioScience sales have been reclassified to reflect the change described in Note 11. (7) Principally includes intravenous solutions and nutritional products. (8) Principally includes sales related to the pharma partnering business, enhanced packaging, premix drugs and generic injectables. Generic injectables were previously reported in Anesthesia. (9) Principally includes proprietary inhaled anesthetics and other anesthesia products. Sales of generic injectables were previously reported in Anesthesia and are now reported in Global Injectables. (10) Principally includes other hospital-distributed products. (11) Sales of Transfusion Therapies (TT) products were previously reported in BioScience. Due to Baxter’s expected significant continuing cash flows associated with this business, Baxter continued to include the results of operations of TT in the company’s results of operations through the February 28, 2007 sale date. The amounts reported above reflect sales of TT products until the completion of the sale of the TT business, as well as revenues associated with manufacturing, distribution and other services provided by the company to the buyer post-divestiture. Baxter International Inc. Key Product Line Sales -- US/International Periods Ending March 31, 2007 and 2006 (unaudited) ($ in millions) Q1 2007 Q1 2006(1) ---------------------------------------------- Inter- Inter- US national Total US national Total ---------------------------------------------- BioScience Recombinants (2) $179 $209 $388 $161 $174 $335 Plasma Proteins (3) 88 137 225 67 125 192 Antibody Therapy 159 63 222 139 44 183 Regenerative Medicine (4) 43 39 82 39 30 69 Other (5) 15 140 155 12 85 97 ---------------------------------------------- Total BioScience (6) $484 $588 $1,072 $418 $458 $876 ---------------------------------------------- Medication Delivery IV Therapies (7) $101 $219 $320 $104 $200 $304 Global Injectables (8) 227 134 361 225 128 353 Infusion Systems 122 87 209 124 71 195 Anesthesia (9) 60 29 89 33 21 54 Other (10) 5 6 11 5 5 10 ---------------------------------------------- Total Medication Delivery $515 $475 $990 $491 $425 $916 ---------------------------------------------- Renal PD Therapy $69 $350 $419 $66 $322 $388 HD Therapy 28 78 106 28 77 105 ---------------------------------------------- Total Renal $97 $428 $525 $94 $399 $493 ---------------------------------------------- ---------------------------------------------- Baxter excluding Transfusion Therapies $1,096 $1,491 $2,587 $1,003 $1,282 $2,285 ---------------------------------------------- ---------------------------------------------- Transfusion Therapies (11) $43 $45 $88 $56 $68 $124 ---------------------------------------------- ---------------------------------------------- TOTAL BAXTER $1,139 $1,536 $2,675 $1,059 $1,350 $2,409 ============================================== % Growth ------------------------------ US International Total ------------------------------ BioScience Recombinants (2) 11% 20% 16% Plasma Proteins (3) 31% 10% 17% Antibody Therapy 14% 43% 21% Regenerative Medicine (4) 10% 30% 19% Other (5) 25% 65% 60% ------------------------------ Total BioScience (6) 16% 28% 22% ------------------------------ Medication Delivery IV Therapies (7) (3%) 10% 5% Global Injectables (8) 1% 5% 2% Infusion Systems (2%) 23% 7% Anesthesia (9) 82% 38% 65% Other (10) 0% 20% 10% ------------------------------ Total Medication Delivery 5% 12% 8% ------------------------------ Renal PD Therapy 5% 9% 8% HD Therapy 0% 1% 1% ------------------------------ Total Renal 3% 7% 6% ------------------------------ ------------------------------ Baxter excluding Transfusion Therapies 9% 16% 13% ------------------------------ ------------------------------ Transfusion Therapies (11) (23%) (34%) (29%) ------------------------------ ------------------------------ TOTAL BAXTER 8% 14% 11% ============================== (1) Prior year sales data has been reclassified to reflect the changes that are described in notes 2, 5, 6, 8, 9 and 11 below. (2) Includes sales of recombinant FVIII products (ADVATE and RECOMBINATE). Sales of recombinant FIX (BeneFIX) were previously reported in Recombinants and are now reported in Other, as detailed below. (3) Includes plasma-derived hemophilia (FVII, FVIII, FIX and FEIBA), albumin, and certain other plasma-based products. (4) Previously referred to as BioSurgery. (5) Principally includes vaccines and sales of plasma to third parties, and recombinant FIX (BeneFIX). Sales of recombinant FIX (BeneFIX) were previously reported in Recombinants. (6) BioScience sales have been reclassified to reflect the change described in Note 11. (7) Principally includes intravenous solutions and nutritional products. (8) Principally includes sales related to pharma partnering business, enhanced packaging, premix drugs and generic injectables. Generic injectables were previously reported in Anesthesia. (9) Principally includes proprietary inhaled anesthetics and other anesthesia products. Sales of generic injectables were previously reported in Anesthesia and are now reported in Global Injectables. (10) Principally includes other hospital-distributed products. (11) Sales of Transfusion Therapies (TT) products were previously reported in BioScience. Due to Baxter’s expected significant continuing cash flows associated with this business, Baxter continued to include the results of operations of TT in the company’s results of operations through the February 28, 2007 sale date. The amounts reported above reflect sales of TT products until the completion of the sale of the TT business, as well as revenues associated with manufacturing, distribution and other services provided by the company to the buyer post-divestiture.
Baxter International Inc.
CONTACT: Media, Deborah Spak, +1-847-948-2349, or Tom Kline,+1-847-948-2251; or Investors, Mary Kay Ladone, +1-847-948-3371, or ClareTrachtman, +1-847-948-3085, all of Baxter International Inc.
Web site: http://www.baxter.com/
