Becton Dickinson & Company (BDX) — Q4 2018 Earnings Call Transcript

Thank you, Crystal. Good morning, everyone, and thank you for joining us to review our fourth fiscal quarter results. As we referenced in our press release, we are presenting a set of slides to accompany our remarks on this call. The presentation is posted on the Investor Relations page of our website at bd.com. During today's call, we will make forward-looking statements, and it is possible that actual results could differ from our expectations. Factors that could cause such differences appear in our fourth fiscal quarter press release and in the MD&A sections of our recent SEC filings. We will also discuss some non-GAAP financial measures with respect to our performance. Reconciliations to GAAP measures can be found in our press release and its related financial schedules and in the slides. A copy of the release, including the financial schedules, is posted on the bd.com website. In the fourth quarter, the company recorded $58 million in non-cash charges to write down the carrying value of assets primarily within our Diabetes Care business...

Thank you, Monique, and good morning, everyone. Before we discuss the company's performance, I would like to comment briefly on the organizational change Monique just mentioned. Tom's promotion to COO reflects the leadership role he has played developing and implementing BD's strategy and vision over the past 18 months. Since Tom was named President in April 2017, BD has made great progress on the Bard integration, named three strong leaders to the segment President roles, and appointed a dedicated Chief Technology Officer. These key leadership appointments position the company well and increase Tom's capacity to focus on driving our strategy, advancing our culture, and accelerating BD's growth and impact. I look forward to continuing to partner closely with Tom, as we take BD to the next level and fulfill our potential as the partner of choice for the global healthcare industry...

Thanks, Vince, and good morning, everyone. I'm also extremely proud of what our organization achieved in 2018 and the strong momentum we carry into 2019. On slide 8, I will review our fourth quarter revenue and EPS results, as well as the key financial highlights for the quarter and the total year. Fourth quarter revenues grew 8.4% on a comparable currency-neutral basis, driven by broad-based strength across all three segments. As we communicated to you last quarter, our confidence in achieving our increased full year fiscal 2018 revenue outlook was based on continued momentum in the fourth quarter with particular strength in our MMS and Pharmaceutical Systems units, and some re-acceleration in Surgery, all of which we achieved. I'll provide more color on revenue growth in the quarter in a moment when I take you through the results by segment and geography...

The only thing I would add, David, is, from a geographic perspective, we had strong performance across all regions. And as you know, looking back a couple of years, that wasn't always the case. But this year, we've seen it across all geographies and all businesses. So we feel really good about it.

Just two quick ones for me. I'll start with Chris or Vince. So, guys, the headwinds are consistent with our model, but clearly the magnitude of each is a little greater. So I think from our emails this morning, the questions that I think investors want to get answered is does fiscal 2019 earnings reflect any change in the underlying fundamentals of the business with a rate of progression of the Bard deal model? Or is this just a perfect storm of macro headwinds? And then I have a quick follow-up.

I think you look at the momentum that we had in fiscal year 2018, we were driving 6.5% revenue growth and 16% earnings per share growth, and that momentum actually accelerated in the fourth quarter with 8.4% revenue growth, 25% increase in EPS, and 350 basis points of gross margin improvement. So clearly the fundamentals of the business are very strong, and we carry that forward into 2019...

Yeah, I'm feeling very good about the 5% to 6% number. And yes, we had a very strong fourth quarter. You saw real strong performance out of Pharm Systems.

Hey, guys. Thanks for taking the question. Just a follow-up on David's question there, obviously, a very strong year-end with the 8.4% growth, but maybe, Tom, can you talk about the sustainability of the trends that you're seeing, and specifically the drivers...

As you heard from Vince, what we were most pleased about is, is that there was strong growth across all three segments, and it was both in the core across all three segments as well as what you saw where new products starting to fire in each of the three segments. And so as we think about Medical, again, we've got core strong underlying businesses...

Good morning, guys. Thank you. Hey, guys. So, just a question on a couple of key pipeline items, maybe on the Medical side. Vince, you mentioned a little bit about status on the T2 Patch Pump. Can you give us a little bit more detail as to the initial strategy for rollout at the end of 2019...

Yeah. Well, on the Type 2 Patch Pump, we are – continue to be very excited about the potential of the product. We are making good progress on the program. We are learning through our clinical trials and the interactions with our customers. And we expect to be preparing for a submission in the next few months both in U.S. and Europe...

Yes. Hi, Isaac. This is Patrick. Well, let me first report a little bit on BD MAX, and as you've heard, we've really had very strong growth in the year, we grew about 35% worldwide with BD MAX, and a lot of that is driven, of course, by the new panels we rolled out...

So, thank you very much for your participation and your questions. Let me just finish with some final thoughts. We had a very strong finish to the year, and I feel incredibly proud of our performance and what this team has done. The combination of BD and Bard continues to deliver exceptional value to our customers and our shareholders.