Baxter International Inc. (BAX) reported financial results for the fourth quarter and full fiscal 2009. For the fourth quarter, earnings per share were $1.03, in line with the Zacks Consensus Estimate and higher than the year-ago earnings of 91 cents. For full fiscal 2009, earnings per share were $3.80, again in line with the Zacks Consensus Estimate and greater than the year-ago earnings of $3.38.
Quarterly results
Net sales in the reported quarter increased 11% year over year to roughly $3.5 billion. Excluding the foreign currency translation (FX), net sales increased 6% year over year. Baxter reported sales growth across all its business segments.
BioScience revenues increased 12% year over year to $1.5 billion. Growth was due to higher sales of recombinant products (including ADVATE), antibody therapies, biosurgery products and specialty plasma therapeutics.
Medication Delivery sales increased 12% year over year to $1.3 billion. Growth can be attributed to strong sales of intravenous and nutritional therapies, infusion systems, injectable drugs and anesthesia products.
Renal sales increased 12% year over year to $625 million due to higher sales of peritoneal dialysis and the acquisition of hemofiltration business from Edwards Lifesciences Corporation (EW).
Gross margin declined 30 basis points (bps) year over year to 50.9%. Marketing and administrative expenses as a percentage of sales increased 120 bps year over year to 22.7%. Research and development (R&D) expenses as a percentage of sales declined 10 bps year over year to 7.1%.
Fiscal year results
Net sales in fiscal 2009 increased 2% year over year to approximately $12.6 billion. Excluding the foreign currency translation (FX), net sales increased 7% year over year. Growth was registered across all major business segments.
BioScience revenues increased 5% year over year to $5.6 billion. Medication Delivery sales increased 2% year over year to $4.6 billion. Renal sales declined 2% year over year to $2.3 billion.
On a geographic basis, domestic sales accounted for 42% of total sales and increased 5% year over year. International sales declined 1% year over year.
Balance Sheet and Cash Flow
Baxter had cash and cash equivalents of $2,786 million at the end of fiscal 2009. The company had a net debt of $1,365 million at the end of the year. Baxter generated a record cash flow from operations of $2.9 billion in fiscal 2009, compared to $2.5 billion at the end of the previous year. Cash flow from operations was also ahead of the company’s expectations of $2.6 billion.
Outlook
Baxter has provided guidance for the first quarter and full fiscal 2010. For the first quarter, net sales are expected to grow roughly between 10% and 12% year over year. Foreign currency translation (FX) is expected to have a positive impact on net sales. Excluding FX, net sales growth should range approximately between 5% and 7% year over year. Earnings per share should be in the range of 92 cents to 94 cents.
For fiscal 2010, Baxter expects net sales to grow between 7% and 9% year over year. Excluding FX, net sales growth is expected between 5% and 7%. Earnings per share should be in the range of $4.20 to $4.28. Cash flow from operations should be approximately $2.9 billion.
Baxter is a leading global medical products and services company that develops, manufactures and markets products to treat hemophilia, kidney disease, infectious diseases, etc.
Baxter’s main competitors include Becton, Dickinson and Company (BDX) and Johnson & Johnson (JNJ).
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