Solventum Corporation(SOLV) - 2024 Q3 - Quarterly Results

Financial Performance - Reported sales for Q3 2024 increased by 0.4% to $2.082 billion, with organic sales growth of 0.3%[1] - GAAP Earnings Per Share (EPS) was $0.70, while adjusted EPS reached $1.64[2] - Generated $169 million in cash from operations, with free cash flow amounting to $76 million[2] - Operating income was reported at $275 million, with an operating income margin of 13.2%[2] - Total net sales for Q3 2024 reached $2,082 million, a slight increase of 0.4% compared to $2,074 million in Q3 2023[19] - Net income for Q3 2024 was $122 million, significantly lower than $460 million in Q3 2023, representing a decrease of 73.5%[19] - Operating income for Q3 2024 decreased to $275 million, a decline of 45.5% from $504 million in Q3 2023[19] - For the nine months ended September 30, 2024, total net sales were $6,179 million, a marginal increase of 0.3% compared to $6,161 million in the same period of 2023[23] - The company reported a diluted EPS of $5.28 for the nine months ended September 30, 2024, down from $7.50 in the same period of 2023, a decrease of 29.3%[40][41] Segment Performance - Organic sales growth was primarily driven by the MedSurg and Health Information Systems segments, with MedSurg segment sales at $1.182 billion, reflecting a 1.0% increase[4] - MedSurg segment reported net sales of $1,182 million with an operating income of $243 million, resulting in an operating margin of 20.6%, compared to $1,180 million and $307 million (26.0% margin) in the prior year[27] - Dental Solutions segment generated net sales of $313 million and an operating income of $72 million, with a margin of 23.0%, down from $331 million and $114 million (34.4% margin) year-over-year[27] - Health Information Systems achieved net sales of $326 million and an operating income of $105 million, with a margin of 32.2%, compared to $321 million and $114 million (35.5% margin) in the previous year[27] - Purification and Filtration segment reported net sales of $238 million and an operating income of $20 million, with an operating margin of 8.4%, down from $242 million and $48 million (19.8% margin) in the same quarter last year[27] - Total business segment operating income for the three months ended September 30, 2024, was $440 million, a decrease from $583 million in the same period of 2023[27] Cash Flow and Guidance - The company raised its full-year 2024 guidance for organic sales growth to the upper half of 0% to +1.0%[6] - Adjusted EPS guidance for 2024 is now set at $6.50 to $6.65, an increase from the previous range of $6.30 to $6.50[6] - Free cash flow guidance for 2024 has been raised to a range of $750 million to $850 million, up from $700 million to $800 million[6] - The company reported a net cash provided by operating activities of $966 million for the nine months ended September 30, 2024, down from $1,368 million for the same period in 2023[22] - Free cash flow for the nine months ended September 30, 2024, was $76 million, down from $427 million in the same period of 2023, a decline of 82.2%[46] Expenses and Margins - The decline in GAAP and adjusted operating income margin was attributed to lower gross margins and increased operating expenses[3] - Gross profit for Q3 2024 was $1,165 million, down from $1,209 million in Q3 2023, reflecting a decrease of 3.6%[19] - Gross margin for the nine months ended September 30, 2024, improved to 56.2%, compared to 57.4% in the prior year, indicating a decrease of 1.2 percentage points[40][41] - Operating income for the nine months ended September 30, 2024, was $900 million, up from $1,286 million in the same period of 2023, reflecting a decline of 30%[40][41] - Operating margin for the nine months ended September 30, 2024, was 14.6%, down from 20.9% in the same period of 2023, a decrease of 6.3 percentage points[40][41] - Corporate and Unallocated expenses totaled $(165) million for the three months ended September 30, 2024, compared to $(79) million in the same period of 2023[27] Assets and Liabilities - Cash and cash equivalents increased to $772 million in Q3 2024, up from $194 million in Q3 2023[21] - Total assets rose to $14,745 million in Q3 2024, compared to $13,943 million in Q3 2023, marking an increase of 5.8%[21] - Total liabilities increased to $11,553 million in Q3 2024, a substantial rise from $2,277 million in Q3 2023[21] Research and Development - Research and development expenses for Q3 2024 were $189 million, slightly up from $180 million in Q3 2023[19] Restructuring and Amortization - The company incurred $261 million in amortization of acquisition-related intangible assets for the nine months ended September 30, 2024[40] - Restructuring costs for the nine months ended September 30, 2024, amounted to $13 million, compared to $38 million in the same period of 2023[40][41]