Baxter International Inc (NYSE:BAX) Q4 2019 Earnings Conference Call - Final Transcript

Mar 17, 2020 • 08:30 am ET

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Baxter International Inc (NYSE:BAX) Q4 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] I would like to remind participants that the call is being recorded and a digital replay will be available on Baxter International's website for 60 days at www.baxter.com. And our first question comes from Pito Chickering from Deutsche Bank. Your line is open.

Analyst
Philip Chickering

Good morning guys. Thank you for taking my questions. First one is on your manufacturing side. You talked about in the script that you guys don't believe in issues with the supplies. Can you sort of go into more detail around where the majority of your raw materials are coming from? Sort of what percent of those are sourced through the guys like China? And sort of why is that sort of not a risk in terms of to be able to offset from, like, other supplier, [Indecipherable]? And I have a follow-up after that.

Executive
Clare Trachtman

Yes. So just to refresh the question because it's a little hard for you -- to hear you, Pito. So I think what you were talking about is just our overall manufacturing, where we're at, where our raw materials are coming from, how confident are we in the supply chain? Is that kind of summarize what you were asking?

Analyst
Philip Chickering

Yes. Yes, and I apologize, on a cellphone obviously.

Executive
Jose E. Almeida

Okay. Pito, good morning. And our raw materials come from a variety of places around the globe. Let me -- because your question has a specificity for COVID-19, I'm sure, and our supply chain. So our electronics come primarily from parts of Europe and China. We're working very diligently and we're getting -- starting to get components out of China. We have good safety stocks. We feel comfortable that towards late spring, we will have enough. For most of our products would have guaranteed ability of having products sold across the globe. So I'm not that concerned. If things become really difficult in China back to what it was in January and February, then the conversation is different. But today, the way we're seeing the shipping lines are clearing up, we're getting products into our factories, not -- don't feel they were under tremendous amount of pressure.

Now, when it comes to IV bags. IV bags, the products are made -- for the US, are exclusively made in the US. Meaning the raw materials are made in our plant in Arkansas, the bags are made in the Carolinas. And we can also make bags down in Mexico in Cuernavaca. So that is a backup plant that we have set up since Hurricane Maria, and we can get -- we are getting products from there now. We can get products -- more products in the future. So our supply chain is, we have about probably 20, 25 components in raw materials that we're watching very closely. But we have 24 hours coverage around the globe. Our procurement departments are set in many parts of the world. So at this moment, we feel that between APIs,