Becton, Dickinson(US:BDX)2021-08-05 17:10Financial Data and Key Metrics Changes - Revenues totaled $4.9 billion, up 26.9% on a reported basis and 22% on a currency-neutral basis, exceeding expectations [14][61] - Adjusted EPS was $2.74, reflecting a 24.5% increase over the prior year [78] - Year-to-date cash flows from operations totaled $3.7 billion, an increase of 80% from the prior-year period [21] Business Line Data and Key Metrics Changes - BD Medical segment revenues totaled $2.4 billion, up 7.7% year-over-year [63] - Pharmaceutical Systems revenues increased by 12%, driven by demand for prefilled devices [65] - BD Life Sciences revenues reached $1.4 billion, up 43%, including $300 million from COVID diagnostic testing [65][66] - BD Interventional sales totaled nearly $1.1 billion, up nearly 35%, with surgery revenues increasing by 68% [69] Market Data and Key Metrics Changes - Base business revenues increased 17.6% excluding COVID diagnostic revenues [15][62] - Revenues from the Pharmaceutical Systems and Urology/Critical Care franchises were up 17% and 11% respectively compared to 2019 levels [18] - MDS revenues were up about 2% versus 2019 levels, reflecting ongoing impacts from COVID and China volume-based purchasing [19] Company Strategy and Development Direction - The company is focused on its BD 2025 strategy, emphasizing growth, simplification, and empowerment [29] - Investments are being made in new innovations to strengthen market leadership and drive growth in high-potential areas [30][31] - The company plans to spin off its Diabetes Care business into an independently traded company, expected in the first half of 2022 [50][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of the base business and expects strong mid-single-digit revenue growth for fiscal 2022 [57][86] - The company anticipates continued positive momentum in its base business, with a revised revenue growth expectation of approximately 14% [80] - Management acknowledged challenges from inflation and COVID-related impacts but remains optimistic about margin recovery [108][130] Other Important Information - The company repurchased $1 billion in stock, marking the first repurchase since 2017 [21] - The gross margin was reported at 51.5%, impacted by COVID-related expenses and manufacturing variances [71][72] - The company is actively working on the remediation of the BD Alaris pump, which remains a top priority [25][26] Q&A Session Summary Question: Can you explain the difference between 2019 margins and the new guidance for 2022? - Management indicated that the primary differences are due to the Alaris ship hold, China price cuts, and inflationary pressures [99][100] Question: When do inflationary costs abate? - Management expects inflationary pressures to ease, but it will take time to fully pass on cost increases to customers [108][109] Question: What is the timeline for getting back to pre-pandemic margins? - Management believes that margins could return to 2019 levels within the next couple of years as Alaris comes back and continuous improvements are realized [104][100] Question: What are the expectations for Q4 revenue guidance? - Management noted that Q4 comparisons are challenging due to a strong prior year and investments made this year will impact margins [119][120] Question: What is the outlook for the tax rate next year? - The tax rate is expected to be at the low end of the traditional guidance range of 14% to 16% [132]