Becton, Dickinson(BDX)2024-11-27 18:36Acquisitions and Divestitures - Completed acquisition of Edwards Lifesciences' Critical Care product group for $3.911 billion, renamed as BD Advanced Patient Monitoring[286][299] - The Company completed the sale of its Interventional segment's Surgical Instrumentation platform in August 2023, recognizing a pre-tax gain of approximately $268 million[356] - The Company completed the spin-off of its Diabetes Care business as Embecta Corp. on April 1, 2022, receiving a cash distribution of approximately $1.266 billion from Embecta[357] - Acquisitions, net of cash acquired, totaled $3,924 million in 2024, compared to $0 in 2023 and $2,070 million in 2022[323] Financial Performance - Revenue increased to $20,178 million in 2024, up 4.2% from $19,372 million in 2023[314] - Net income from continuing operations rose to $1,705 million in 2024, an 11.4% increase from $1,530 million in 2023[314] - Operating income grew to $2,397 million in 2024, a 13.5% increase from $2,111 million in 2023[314] - Comprehensive income was $1,521 million in 2024, a 6.8% increase from $1,424 million in 2023[317] - Diluted earnings per share from continuing operations increased to $5.86 in 2024, up 14.9% from $5.10 in 2023[314] - Net income for 2024 increased to $1,705 million, up from $1,484 million in 2023 and $1,779 million in 2022[323] - Net cash provided by continuing operating activities in 2024 was $3,844 million, compared to $2,990 million in 2023 and $2,471 million in 2022[323] Segment Performance - Medical segment revenues increased to $10,074 million in 2024, up from $9,502 million in 2023 and $8,841 million in 2022[437] - Life Sciences segment revenues grew to $5,191 million in 2024, compared to $5,133 million in 2023 and $5,564 million in 2022[437] - Interventional segment revenues rose to $4,980 million in 2024, up from $4,736 million in 2023 and $4,464 million in 2022[437] - Total company revenues from continuing operations reached $20,178 million in 2024, compared to $19,372 million in 2023 and $18,870 million in 2022[437] - Medical segment operating income increased to $2,742 million in 2024, up from $1,967 million in 2023[441] - Life Sciences segment operating income remained stable at $1,595 million in 2024, compared to $1,585 million in 2023[441] - Interventional segment operating income grew to $1,420 million in 2024, up from $1,217 million in 2023[441] Assets and Liabilities - Total assets increased to $57,286 million in 2024, up 8.5% from $52,780 million in 2023[320] - Cash and equivalents rose to $1,717 million in 2024, a 21.3% increase from $1,416 million in 2023[320] - Long-term debt increased to $17,940 million in 2024, up 21.7% from $14,738 million in 2023[320] - Goodwill increased to $26,465 million in 2024, a 7.9% rise from $24,522 million in 2023[320] - Recorded a liability of $257 million related to uncertain tax positions as of September 30, 2024[300] - Product liability accruals amounted to $1.7 billion and $1.9 billion at September 30, 2024 and 2023, respectively[407] - The company's rebate liabilities were $749 million and $669 million at September 30, 2024 and 2023, respectively[416] - Contract liabilities for unearned revenue were approximately $482 million and $412 million at September 30, 2024 and 2023, respectively[421] Research and Development - Research and development expense decreased to $1,190 million in 2024, down 3.8% from $1,237 million in 2023[314] Share Repurchases and Compensation - The Company executed and settled accelerated share repurchase agreements in fiscal year 2024, repurchasing 2.118 million shares of its common stock for $500 million[374] - In fiscal year 2022, the Company repurchased 1.953 million common shares for $500 million and recorded an additional $150 million as an increase to Treasury stock[375] - Share repurchase program authorized on November 3, 2021 for up to 10 million shares of BD common stock, with no expiration date[376] - Total share-based compensation cost for 2024 was $249 million, compared to $261 million in 2023 and $240 million in 2022[447] - The company issued 0.1 million shares during 2024 to satisfy SARs exercised, with a total intrinsic value of $25 million[450][451] - The weighted average grant date fair value of SARs granted in 2024 was $63.05, up from $57.80 in 2023 and $49.45 in 2022[450] - Performance-based restricted stock units outstanding as of September 30, 2024 were 991 thousand, with a weighted average grant date fair value of $229.02[457] - Time-vested restricted stock units outstanding as of September 30, 2024 were 1,693 thousand, with a weighted average grant date fair value of $227.20[457] - The total fair value of restricted stock units vested during 2024 was $45 million for performance-based and $179 million for time-vested units[458] - Unrecognized compensation expense for all non-vested share-based awards as of September 30, 2024 was approximately $253 million[459] Pension and Postretirement Benefits - Net pension cost for 2024 was $131 million, down from $174 million in 2023 and $143 million in 2022[468] - The company's U.S. pension plan benefit obligation increased to $2,913 million in 2024 from $2,617 million in 2023, with a significant actuarial gain of $241 million in 2024 compared to a loss of $24 million in 2023[472] - International pension plan assets at fair value grew to $880 million in 2024 from $748 million in 2023, while the projected benefit obligations increased to $992 million from $833 million over the same period[472] - The company made a discretionary contribution of $150 million to its U.S. pension plan in fiscal year 2024 and does not anticipate significant required contributions in fiscal year 2025[480] - The discount rate for U.S. pension plans increased to 6.01% in 2024 from 5.62% in 2023, while the expected return on plan assets for U.S. plans slightly increased to 7.29% from 7.25%[476] - The funded status of the U.S. pension plan improved, with the unfunded benefit obligation decreasing to $356 million in 2024 from $488 million in 2023[472] - The company recognized a curtailment gain in 2023 related to the freeze of the U.S. pension plan, while settlement losses were recorded in both 2023 and 2022 due to lump sum benefit payments[471] - The postretirement healthcare and life insurance benefit obligation for domestic retirees increased slightly to $94 million in 2024 from $92 million in 2023[475] - The fair value of U.S. pension plan assets increased to $2,557 million in 2024 from $2,129 million in 2023, driven by an actual return on plan assets of $395 million[472] - The company's international pension plans saw a decrease in the discount rate to 4.52% in 2024 from 4.26% in 2023, while the expected return on plan assets increased to 5.30% from 5.02%[476] - The rate of compensation increase for U.S. pension plans decreased to 4.00% in 2024 from 4.51% in 2023, while international plans saw a slight decrease to 2.81% from 2.86%[476] Legal and Regulatory Matters - The company is defending approximately 6,610 product liability claims involving hernia repair devices as of September 30, 2024, down from 34,845 in 2023 due to a settlement agreement[387] - The company recorded charges of $50 million and $125 million in the third and fourth quarters of 2024, respectively, to accrue an estimated $175 million liability related to SEC discussions[394] - The company received subpoenas from the SEC in February 2021 regarding reporting issues involving BD Alaris infusion pumps, with ongoing discussions and potential monetary penalties[394] - In July 2017, C.R. Bard received a CID from the Department of Justice regarding an investigation into possible violations of the False Claims Act, with ongoing discussions as of July 2024[394] - In April 2019, the Department of Justice served the company and CareFusion with CIDs regarding contracts with the Department of Veteran's Affairs, with ongoing document requests and interviews[394] - In September 2021, the company received a CID related to an inquiry initiated by the Department of Justice in 2018 concerning sales and marketing practices in the urology business, resolved with an adequately accrued amount[394] - The company has approximately 350 lawsuits involving 360 plaintiffs related to ethylene oxide exposure, with a trial date set for April 2025[398] - The company recorded a $62 million reduction in revenues due to Italian medical device payback legislation[398] - The company recorded a $28 million liability for estimated future costs related to an FDA Warning Letter[398] Intangible Assets and Valuation - Developed technology intangible assets valued at $714 million and customer relationships intangible assets valued at $650 million as part of the acquisition[299] - The company used an income approach to measure technology-related intangible assets and certain customer relationship-related assets[299] - Significant assumptions for valuation included discount rates and revenue growth rates, which are forward-looking and subject to future economic and market conditions[299] Internal Controls and Audits - Internal control over financial reporting was effective as of September 30, 2024, excluding BD Advanced Patient Monitoring[286][304] - The company's consolidated financial statements were audited and found to be in conformity with U.S. generally accepted accounting principles[293] - The company's internal control over financial reporting was audited and found to be effective based on COSO criteria[303] - The company's audit included evaluation of controls over accounting for business combinations and uncertain tax positions[299][300] Geographic Revenue Performance - United States revenues increased to $11,663 million in 2024, compared to $11,113 million in 2023 and $10,722 million in 2022[445] - EMEA revenues grew to $4,402 million in 2024, up from $4,244 million in 2023 and $4,043 million in 2022[445] Capital Expenditures and Commitments - Total capital expenditures decreased to $725 million in 2024, down from $874 million in 2023[441] - Future purchase commitments as of September 30, 2024 aggregated to approximately $1.831 billion, to be expended over the next several years[381] Discontinued Operations - The company completed the spin-off of its Diabetes Care business on April 1, 2022, with historical results reflected as discontinued operations[327] - In fiscal year 2023, the Company recorded expenses of $46 million within (Loss) Income from Discontinued Operations, Net of Tax related to a foreign tax associated with the spin-off[362] Tax and Valuation Allowances - The company is permanently reinvested with respect to all historical foreign earnings as of September 30, 2024[347] - The company maintains valuation allowances for deferred tax assets where realization is not more likely than not[349] Shipping and Depreciation Expenses - Shipping expense decreased to $702 million in 2024 from $733 million in 2023 and $751 million in 2022[344] - Depreciation and amortization expense was $676 million in 2024, $696 million in 2023, and $672 million in 2022[335] Goodwill and Impairment - Goodwill impairment review on July 1, 2024, indicated that all reporting units' fair values exceeded their carrying values[336] Share-Based Awards and Plans - The company has 10.0 million shares authorized for future grants under the 2004 Plan as of September 30, 2024[461] - Accumulated other comprehensive income (loss) balance at September 30, 2024 was $(1,732) million, including $(1,244) million from foreign currency translation and $(557) million from benefit plans[376] - Weighted average common shares outstanding for 2024 were 289,763 thousand, with dilutive share equivalents of 1,246 thousand, resulting in 291,009 thousand average common and common equivalent shares outstanding[380] Revenue from Unsatisfied Obligations - The company estimates $2.3 billion in revenue from unsatisfied performance obligations as of September 30, 2024[422] - The company estimates $2.1 billion in revenue from unsatisfied minimum purchase commitments as of September 30, 2024[423]