Baxter(BAX)2022-07-28 15:06Financial Data and Key Metrics Changes - Baxter reported second quarter 2022 sales of 0.87, up 9% year-over-year [12][20][28] - The company adjusted its full-year 2022 guidance, now expecting global sales growth of high teens on a reported basis and mid-20s at constant currency, with operational growth of 2% to 3% [30][31] Business Line Data and Key Metrics Changes - Renal care sales were 710 million, up 4% at constant currency, reflecting strong global demand despite lower sales in APAC due to COVID-related lockdowns [22] - Pharmaceutical sales grew 3% to 263 million, supported by a recovery in elective procedures [24] - Acute therapies and biopharma solutions saw declines of 4% and 5% respectively, reflecting challenging comparisons to the previous year [24] Market Data and Key Metrics Changes - Sales in the Americas increased 2%, while Europe, the Middle East, and Africa grew 6%, and the APAC region saw a 1% increase, impacted by COVID resurgence in China [21] - The company faced significant back orders and backlogs due to supply chain challenges, particularly for electromechanical components [9][25] Company Strategy and Development Direction - The acquisition of Hillrom is seen as a key driver for Baxter's transformation, enhancing connected care innovation and expanding the global reach of its portfolio [8][18] - The company is committed to optimizing its cost structure and is preparing to pass through some of the increased costs to customers in the second half of 2022 [12][19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing supply chain challenges, inflationary pressures, and increased freight costs impacting operations [10][19] - Despite these challenges, management expressed confidence in long-term growth prospects, citing a resilient portfolio and strong demand for products [17][19] Other Important Information - Baxter's adjusted gross margin decreased to 42.5%, and adjusted operating margin was 16.2%, reflecting increased expenses [26][27] - The company is preparing for a second wave of price increases to offset rising costs from suppliers [59][60] Q&A Session Summary Question: What are the biggest changes impacting guidance since January? - The company cited constraints related to electromechanical components and raw materials, impacting sales by over $100 million, along with challenges in pharmaceutical pricing [33][34] Question: Is the capital spending slowdown due to demand issues? - Management clarified that the slowdown is primarily due to staffing shortages affecting installations, not a decrease in demand [46][50] Question: Can you quantify the backlog? - The backlog has reached unprecedented levels, particularly in frontline care, with back orders at an all-time high, approximately sevenfold what is considered normal [67][68]