Abbott(ABT)2023-01-25 18:00Financial Data and Key Metrics Changes - For the full year 2022, the company achieved ongoing earnings per share of $5.34, exceeding the original EPS guidance set at the beginning of the year [5] - The company forecasts ongoing earnings per share for 2023 to be between $4.30 and $4.50, with organic sales growth, excluding COVID testing sales, expected in the high single-digits [10][20] - Total sales decreased 6.1% on an organic basis in the fourth quarter, but excluding COVID testing and U.S. infant formula sales, total sales increased 7.1% in the fourth quarter and 7.4% for the full year 2022 [18] Business Line Data and Key Metrics Changes - Nutrition sales declined around 6% in both the fourth quarter and full year due to manufacturing disruptions at a U.S. infant formula facility, but production is recovering [11] - Diagnostics sales growth in the fourth quarter was negatively impacted by a decline in COVID-19 test sales, which were $1.1 billion, while excluding COVID testing, worldwide diagnostics grew over 11% [12][13] - Established Pharmaceuticals (EPD) sales increased 8% in the fourth quarter and over 10% for the full year, driven by strong performance in emerging markets [14] - Medical devices sales grew 7.5% in the fourth quarter and 8% for the full year, with significant growth in electrophysiology and diabetes care [15] Market Data and Key Metrics Changes - The company noted that the U.S. dollar weakened somewhat and inflation eased, contributing to a more favorable operating environment [6][7] - The company expects COVID-19 testing sales to decline significantly as the virus transitions to a more endemic seasonal type [10] Company Strategy and Development Direction - The company aims to strengthen its strategic position in diagnostics and expand investments in priority growth areas, including R&D and new product launches [9][10] - The company is optimistic about growth opportunities across all business lines and plans to leverage its strong balance sheet for future growth [16][20] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the easing of macroeconomic challenges, including inflation and supply chain issues, while acknowledging that these factors remain headwinds [6][10] - The company anticipates a steady improvement in procedure trends and expects to recover market share in the Nutrition segment [30][52] Other Important Information - The adjusted gross margin ratio was 55.6% of sales in the fourth quarter, reflecting the impact of manufacturing disruptions and inflation [19] - The company plans to invest approximately $2.5 billion in R&D and around $11 billion in SG&A for the year [20] Q&A Session Summary Question: How should the guidance range be interpreted given the various business lines and macro factors? - Management indicated that the guidance reflects improvements in the macro environment and stabilization in business segments, excluding COVID testing and recall impacts [24][26] Question: What is the expected quarterly cadence for 2023? - Management expects earnings to build throughout the year, with a forecast of approximately $1 in earnings for the first quarter, improving as new product launches and recovery in procedures take effect [30] Question: What is the outlook for the FreeStyle Libre product? - Management expects continued growth in the U.S. and internationally, with potential for over 20% growth in 2023, driven by market expansion and resolution of supply chain issues [35][36] Question: What are the company's plans for share repurchases and cash use? - The company prioritizes a strong and growing dividend, with plans for share repurchases focused on offsetting dilution and ensuring resources for new product launches [54] Question: What are the assumptions for organic growth in 2023? - Management noted that while there are macro headwinds, the reopening of China and improvements in procedure trends are expected to positively impact growth [57]