Baxter International Inc. (NYSE:BAX) Q4 2014 Earnings Conference Call - Final Transcript

Jan 29, 2015 • 08:30 am ET


Baxter International Inc. (NYSE:BAX) Q4 2014 Earnings Conference Call - Final Transcript


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Good morning, ladies and gentlemen, and welcome to Baxter International's Fourth Quarter Earnings Conference Call. (Operator Instructions) As a reminder, this call is being recorded by Baxter and is copyrighted material. It cannot be recorded or rebroadcast without Baxter's permission. If you have any objections, please disconnect at this time.

I would now like to turn the call over to Ms. Mary Kay Ladone, Corporate Vice President, Investor Relations at Baxter International. Ms. Ladone, you may begin.

Mary Kay Ladone

Thanks, Sam. Good morning, everyone, and welcome to our Q4 2014 earnings conference call. Joining me today are Bob Parkinson, CEO and Chairman of Baxter International; Ludwig Hantson, President, BioScience; and Bob Hombach, Chief Financial Officer.

(Forward-looking Cautionary Statements)

Now I'd like to turn the call over to Bob Parkinson.

Robert L. Parkinson

Thanks, Mary Kay. Good morning, and thank you all for calling in.2014 was a great year for our company and I'm very pleased with our achievements and progress we've made from a financial, operational, scientific and strategic perspective. First, we were successful in meeting or exceeding our financial objectives with accelerated growth in sales, solid earnings and significant cash flow.

And we've consistently executed a disciplined capital allocation strategy that balances reinvestment in the business with returning value to shareholders in the form of increased dividends and share repurchases. Positive momentum continues to build across the commercial franchises as we extend our global reach with the core portfolio, enhanced care with the introduction of several new products and position both businesses for sustained success.

We're balancing this with investments in commercial and operational excellence as well as manufacturing capacity to improve our competitive position and support the solid underlying fundamentals in future demand that we foresee for Baxter's products and therapies across the globe. We're also transforming innovation and advancing the pipeline with the achievement of significant clinical and regulatory milestones, while expanding the portfolio through acquisitions and collaborations.

And most notably, in 2014, we reached a significant milestone in Baxter's history as we remain committed to driving long-term value for shareholders with the creation of two independent publicly traded companies in mid-2015, providing investors with two unique and compelling investment opportunities. Before turning the call over to Bob Hombach for a discussion of the financial results and future outlook, let me take just a few minutes to reflect on a number of the achievements from the past year.

First, strong sales performance reflects our strategic focus on improving access and treatment standards, broadening our global presence while investing to support future growth. Baxter's worldwide revenues totaled $16.7 billion in 2014, advancing 11% or 5%, excluding Gambro and foreign exchange. International sales, representing nearly 60% of Baxter's total revenues, were augmented by significant growth in emerging markets with sales in the BRIC countries advancing by more than 15%.

Continued emerging market penetration represents a significant opportunity for both businesses going forward as many products and therapies remain underpenetrated, diagnosed or treated. For example, in Medical Products, we continue to drive global penetration for higher-margin