Becton, Dickinson(US:BDX)2024-05-02 20:16Part I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) BD's unaudited Q2 FY2024 financials show revenue growth, mixed net income, increased assets/liabilities, and improved operating cash flow Condensed Consolidated Statements of Income Q2 & Six Months FY2024 vs FY2023 Income Statement Highlights (in millions, except per share data) | Metric | Three Months Ended Mar 31, 2024 | Three Months Ended Mar 31, 2023 | Six Months Ended Mar 31, 2024 | Six Months Ended Mar 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $5,045 | $4,821 | $9,751 | $9,407 | | Operating Income | $734 | $628 | $1,173 | $1,213 | | Net Income | $537 | $460 | $818 | $969 | | Diluted EPS | $1.85 | $1.53 | $2.81 | $3.24 | Condensed Consolidated Statements of Comprehensive Income - Comprehensive income for Q2 FY2024 was $516 million, up from $445 million in Q2 FY2023; six-month comprehensive income decreased to $831 million from $882 million due to higher net foreign currency translation losses4 Condensed Consolidated Balance Sheets Balance Sheet Summary (in millions) | Account | March 31, 2024 | September 30, 2023 | | :--- | :--- | :--- | | Total Current Assets | $10,340 | $8,676 | | Total Assets | $54,157 | $52,780 | | Total Current Liabilities | $7,327 | $6,641 | | Long-Term Debt | $15,995 | $14,738 | | Total Liabilities | $28,510 | $26,984 | | Total Shareholders' Equity | $25,647 | $25,796 | Condensed Consolidated Statements of Cash Flows Six Months Ended March 31 Cash Flow Summary (in millions) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $1,369 | $584 | | Net Cash Used for Investing Activities | $(1,289) | $(524) | | Net Cash Provided by Financing Activities | $843 | $835 | | Net increase in cash | $913 | $909 | Notes to Condensed Consolidated Financial Statements The notes detail accounting changes, shareholder equity, legal contingencies, revenue disaggregation, segment performance, and debt and derivative instruments - The company adopted a new accounting standard on October 1, 2023, requiring additional disclosures regarding supplier finance programs7 - In Q1 FY2024, the company repurchased 2.118 million shares of common stock for $500 million under an accelerated share repurchase agreement83 - Product liability and legal defense cost accruals amounted to approximately $1.7 billion as of March 31, 2024, a decrease from $1.9 billion at September 30, 2023, mainly due to settlement payments41 - The company has unsatisfied performance obligations of approximately $2.3 billion for service contracts and pending installations, and an additional $2.1 billion for minimum purchase commitments, expected to be recognized over the next three years and customer relationship periods, respectively4595 - In February 2024, the company issued $625 million of 4.874% notes, $550 million of 5.110% notes, and €750 million of 3.519% notes110 Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes Q2 FY2024 revenue growth to strong segment performance, improved operating cash flow, and ongoing strategic execution amidst regulatory and macroeconomic challenges Results of Operations Q2 FY2024 worldwide revenues increased 4.6% to $5.045 billion, driven by volume growth across all segments, while gross profit margin slightly decreased Q2 FY2024 Revenue Growth Drivers | Driver | % Contribution to Revenue Growth | | :--- | :--- | | Volume/other | 5.0% | | Impact due to sale of Surgical Instrumentation platform | (0.9)% | | Pricing | 0.6% | | Foreign currency translation | (0.1)% | | Total Increase in Revenues | 4.6% | Q2 FY2024 Revenue by Segment (in millions) | Segment | Q2 2024 Revenue | Q2 2023 Revenue | Total Change | FXN Change | | :--- | :--- | :--- | :--- | :--- | | BD Medical | $2,449 | $2,360 | 3.8% | 3.7% | | BD Life Sciences | $1,304 | $1,275 | 2.2% | 2.3% | | BD Interventional | $1,292 | $1,186 | 9.0% | 9.5% | | Total Revenues | $5,045 | $4,821 | 4.6% | 4.7% | - U.S. revenue grew 6.3% in Q2, while International revenue grew 2.4% (2.6% FXN); emerging markets revenue grew 2.6% (3.2% FXN), driven by South Asia, EMA, and Latin America, partially offset by unfavorable market dynamics in China151231262 Liquidity and Capital Resources The company's liquidity strengthened with increased cash from operations, a $2.75 billion undrawn credit facility, and total debt of $18.0 billion - Net cash provided by operating activities for the six months ended March 31, 2024, was $1.369 billion, compared to $584 million for the same period in 2023126270 - During the first six months of FY2024, the company paid $550 million in dividends and repurchased $500 million of common stock127255 - The company has a $2.75 billion senior unsecured revolving credit facility expiring in September 2026, with no borrowings outstanding as of March 31, 2024129 Regulatory Matters The company is addressing new EPA regulations for ethylene oxide emissions and operating its Alaris infusion pump business under an FDA Consent Decree - The EPA's final NESHAP regulation for Ethylene Oxide Emissions became effective on April 5, 2024, with a two-year compliance deadline, and the company is reviewing its operational impact275 - The BD Alaris infusion pump unit is operating under an FDA Consent Decree, with the company having received 510(k) clearance for its updated system in July 2023 and actively remediating or replacing devices in the U.S. market276 Quantitative and Qualitative Disclosures About Market Risk No material changes in market risk disclosures have occurred since the fiscal year ended September 30, 2023 - There have been no material changes in market risk disclosures since the fiscal year ended September 30, 2023247 Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting - Based on an evaluation as of March 31, 2024, the CEO and CFO concluded that the company's disclosure controls and procedures were effective279 Part II. OTHER INFORMATION Legal Proceedings The company is involved in various legal proceedings, with detailed information incorporated by reference from Note 5 of the financial statements - Information regarding legal proceedings is incorporated by reference from Note 5 of the Notes to Condensed Consolidated Financial Statements166 Risk Factors No material changes to the risk factors previously disclosed in the company's 2023 Annual Report on Form 10-K were reported - No material changes to risk factors were reported compared to the 2023 Annual Report136 Unregistered Sales of Equity Securities and Use of Proceeds During Q1 FY2024, the company purchased 1,532 shares of common stock, with 6,681,777 shares remaining available for repurchase Issuer Purchases of Equity Securities (For the three months ended March 31, 2024) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 1 - 31, 2024 | 1,280 | $238.11 | | February 1 – 29, 2024 | 252 | $239.08 | | March 1 – 31, 2024 | 0 | N/A | | Total | 1,532 | $238.27 | - As of March 31, 2024, 6,681,777 shares may yet be purchased under the existing repurchase program167281 Other Information An executive vice president adopted a Rule 10b5-1 trading plan for the potential sale of up to 6,600 shares of common stock, terminating by June 1, 2025 - On February 12, 2024, Roland Goette, EVP and President EMEA, adopted a Rule 10b5-1 trading plan for the sale of up to 6,600 shares of BD common stock283