Solventum Corporation (NYSE:SOLV) Q4 2024 Earnings Conference Call February 27, 2025 4:30 PM ET Company Participants Amy Wakeham - Senior Vice President of Investor Relations and External Finance Communications Bryan Hanson - Chief Executive Officer Wayde McMillan - Chief Financial Officer Conference Call Participants Jason Bednar - Piper Sandler & Co. Patrick Wood - Morgan Stanley David Roman - Goldman Sachs Group, Inc. Travis Steed - Bank of America Vikramjeet Chopra - Wells Fargo Securities Frederick Wis ...

Q4 FY24 earnings presentation The above list is not exhaustive or necessarily set forth in the order of importance. Forward-looking statements are based on certain assumptions and expectations of future events and trends, and actual future results and trends may differ materially from historical results or those reflected in any such forward-looking statements depending on a variety of factors. Solventum assumes no obligation to update or revise such statement, whether as a result of new information, future ...

Financial Data and Key Metrics Changes - Fourth quarter 2024 sales reached $2.1 billion, reflecting a 2.3% increase on an organic basis and a 1.9% increase on a reported basis, indicating positive momentum [40] - Gross margin was 56.2%, slightly ahead of expectations but down 100 basis points year-over-year, impacted by increased costs paid to 3M [45] - Adjusted operating income was $422 million, translating to an operating margin of 20.4%, slightly above expectations [47] - Earnings per share (EPS) for the quarter was $1.41, exceeding expectations [48] Business Segment Data and Key Metrics Changes - MedSurg segment delivered $1.2 billion in sales, a 1.8% organic growth driven by higher OEM and advanced wound care [42] - Dental segment generated $315 million in revenue, a 4.2% organic increase, benefiting from recent product launches [43] - Health Information Systems segment contributed $336 million, with a 1.1% organic growth, supported by the adoption of the revenue cycle management platform [44] - Purification & Filtration segment achieved $235 million in sales, a 3.5% organic growth, driven by strong demand in bioprocessing filtration [44] Market Data and Key Metrics Changes - The company experienced a foreign exchange headwind of 60 basis points due to a stronger U.S. dollar against major currencies [41] - The overall market environment remains complex, with the company focusing on improving commercial excellence and leveraging R&D for growth [96][102] Company Strategy and Development Direction - The company is undergoing a transformation with a focus on establishing a foundation as an independent entity and improving business performance for profitable revenue growth [12][29] - The divestiture of the Purification & Filtration business is part of a strategy to streamline focus, reduce leverage, and improve key metrics [33] - A long-term strategic plan will be unveiled at the upcoming Investor Day on March 20, 2025, to outline the company's growth strategy [30][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to sustain volume growth and improve margins, despite challenges from the separation process [62] - The focus for 2025 includes organic sales growth guidance of 1% to 2%, with expectations for improved volume across business segments [55][56] - Management emphasized the importance of commercial excellence and R&D innovation as key drivers for future growth [94][96] Other Important Information - The company ended the year with $762 million in cash and equivalents, with no outstanding borrowings on its credit facility [50] - Free cash flow for Q4 was $92 million, bringing the year-to-date total to $805 million, just above initial guidance [51] - The anticipated net proceeds from the Purification & Filtration divestiture will primarily be used to pay down debt [51] Q&A Session Summary Question: Can you provide organic growth breakdown by segment? - Management stated that they are not providing segment-level guidance but expect improvements across all segments due to ongoing initiatives [67][69] Question: What explains the lighter free cash flow guidance? - The lighter guidance is attributed to increased separation costs, with a focus on modeling based on Q4 exit rates of non-GAAP separation-related costs [72][75] Question: Will the SKU rationalization impact operating margins? - Management indicated that while there will be a small benefit in sales growth and margins, the primary goal of SKU rationalization is simplification [80][82] Question: How ready is the organization for M&A after the divestiture? - The divestiture allows for an accelerated timeline for M&A, with the organization building capacity to pursue smaller transactions [85][87] Question: What factors are influencing topline performance as you exit 2024? - Management highlighted three vectors for growth: commercial excellence, R&D innovation, and M&A, with a current focus on commercial excellence [94][96] Question: How much of your manufacturing is in Mexico and how flexible is production? - The company has two plants in Mexico and believes it has less exposure to tariffs compared to others, with limited imports from China [138][140] Question: Are there plans for dividends or stock buybacks post-divestiture? - Management confirmed that proceeds from the divestiture will primarily be used to pay down debt, with no current plans for dividends or stock buybacks due to restrictions [141][143]

Reported sales increased 1.9% to $2.074 billion; organic sales increased 2.3% GAAP diluted Earnings Per Share (EPS) of $0.17; adjusted EPS1 of $1.41 Generated $219 million in cash from operations; free cash flow of $92 million Introduces full-year 2025 organic sales growth, adjusted EPS and free cash flow guidanceST. PAUL, Minn., Feb. 27, 2025 /PRNewswire/ -- Solventum (NYSE: SOLV) today reported financial results for the fourth quarter ended December 31, 2024."Solventum executed another quarter of solid p ...

Learn more about Solventum's long-term strategy to accelerate growth Join in person or via virtual webcastST. PAUL, Minn., Feb. 26, 2025 /PRNewswire/ -- Solventum (NYSE: SOLV) will host an investor day on Thursday, March 20, 2025, beginning at approximately 1:00 p.m. Eastern Standard Time. The event will be held in New York City and simultaneously webcast online.More information about this event, including registration information, may be accessed by visiting https://investors.solventum.com. The webcast r ...

Core Viewpoint - Trian Fund Management commends Solventum Corporation for the sale of its Purification & Filtration business to Thermo Fisher Scientific, viewing it as a significant step in the company's value creation journey [1][2] Group 1: Sale Details - Solventum's Purification & Filtration business was sold to Thermo Fisher Scientific, with Trian noting the high valuation multiple attracted by the division's differentiated technology and material science [1] - Thermo Fisher anticipates that the acquisition will be accretive by $0.28, indicating strong cost synergies from replacing Solventum's allocated segment costs with lower costs within Thermo Fisher [2] Group 2: Financial Performance and Growth Potential - Trian highlighted that Solventum has the opportunity to right-size costs and achieve higher margins while reinvesting in growth [3] - Historically, while part of 3M, Solventum achieved 3-4% organic growth and a 26-27% EBIT margin, and Trian believes that as a standalone company, Solventum can deliver faster organic growth and higher margins [4]

Core Viewpoint - Trian Fund Management commends Solventum Corporation for the sale of its Purification & Filtration business to Thermo Fisher Scientific, viewing it as a significant step in the company's value creation journey [1] Group 1: Sale of Purification & Filtration Business - The sale of the Purification & Filtration business is seen as a strategic move that highlights the division's differentiated technology and material science, which are believed to be underappreciated by the market [1] - Thermo Fisher anticipates that the transaction will be accretive by $0.28, indicating strong cost synergies from the acquisition [2] - Thermo Fisher believes it can more than double the profitability of the Purification & Filtration business compared to its current profit level at Solventum, primarily through lower allocated costs [2] Group 2: Financial Performance and Growth Potential - Trian's previous communications indicated that Solventum has opportunities to optimize costs and achieve higher margins while reinvesting in growth [3] - Historically, while part of 3M, Solventum achieved 3-4% organic growth and a 26-27% EBIT margin, and Trian believes that as a standalone entity, Solventum can deliver faster growth and higher margins [4] - Trian looks forward to Solventum's Long Range Plan presentation during its investor day in March, which is expected to reflect the company's potential [4]

报名：首届全球眼科大会 | 展位有限 报名：首届全球心血管大会 | 奖项评选 报名：首届全球骨科大会 | 奖项评选 2025年2月25日，赛默飞世尔科技公司 （纽交所代码：TMO） 宣布，计划以 41亿美元现金 （ 合约 298亿人民币） 收购3M分拆公司舒万诺Solventum （纽交所代码：SOLV） 的净化和过滤业务。 受此消息影响，Solventum股价在早盘交易中上涨超过 8% ，至每股82.76美元。赛默飞世尔股价则基本 持平，报每股 536.30美元 。 Solventum的净化和过滤业务为医疗科技及其他生物和工业应用提供生产技术。2024年，该业务创造了 约 10亿美元 的收入。 # 收 购详情 合作伙伴征集：2025全球手术机器人大会 Solventum首席执行官Bryan Hanson在一份新闻稿中表示： "纯化与过滤业务的出售是我们 转型计划第三阶段的一部分 ，这是在对我们各业务的价值和战略契合度 进行深入分析后做出的决定，此次交易将 增强我们的战略聚焦和关键绩效指标，同时 降低杠杆率 并显著 强化我们的资产负债表 。这也使我们能够投资于创新、项目以及人才。" Solventum的高管计 ...

Group 1 - The core viewpoint emphasizes that companies require time to recover from mismanagement, indicating that significant turnarounds cannot be achieved within a year [1] Group 2 - No additional relevant content available for further summarization.

Core Viewpoint - Solventum has entered into a definitive agreement to sell its Purification & Filtration business to Thermo Fisher Scientific for $4.1 billion, aiming to enhance strategic focus and strengthen its balance sheet [1][2]. Group 1: Transaction Details - The sale is expected to be neutral to Solventum's 2025 EPS and will generate approximately $3.4 billion in net proceeds, primarily for debt repayment [1][2]. - The transaction is anticipated to close by the end of 2025, pending regulatory approval and customary closing conditions [1]. Group 2: Strategic Implications - This divestiture is part of the third phase of Solventum's transformation plan, which aims to sharpen focus on strategic growth areas and improve key metrics [2][5]. - The CEO emphasized that the transaction will allow Solventum to invest in innovation and talent necessary for executing its mission and delivering shareholder value [2]. Group 3: Future Engagements - Solventum plans to discuss the transaction in its upcoming fourth quarter and full-year 2024 earnings call on February 27, 2025 [2]. - An Investor Day is scheduled for March 20, 2025, in New York City to update investors on the company's progress and long-term plans following the significant portfolio change [2].