BECTON DICKINSON & CO Q4 FY2024 earnings call

• Welcomed Mike Feld, President of the Life Science segment, who joined from Veralto in August. - Strong Q4 and full-year results: 7.4% revenue growth (6.2% organic), 120bps margin expansion, adjusted diluted EPS up 11.4%; full-year organic revenue growth 5%. - Navigated complex market dynamics in China and Bioscience-Pharma. - Consistently executed on margin expansion in FY '24, increasing adjusted EPS guidance each quarter. - Launched BD Excellence 18 months ago, making progress on network optimization, plant productivity, and margin progression. - Focused on cash generation, returning capital to shareholders through dividends and share buybacks. - Announced over 25 planned new product launches in FY '25 across segments, including next-generation Pyxis platform, advanced patient monitoring products, BD FACSDiscover Analyzer A8, and PureWick Portable.

BD reported strong Q4 results with 7.4% revenue growth or 6.2% organic, 120 basis points of margin expansion and adjusted diluted EPS up 11.4%. For the full year, solid organic revenue growth of 5% was achieved. MedTech and Diagnostics businesses grew 5.9% in FY '24, inclusive of absorbing a decrease in China. Bioscience-Pharma businesses grew about 1%. BD Medical: organic growth led by MMS with infusion systems performance, MDS consumable portfolio contributed to Q4 growth. BD Life Sciences: IDS had strong mid-single-digit growth in specimen management, Diagnostics saw double-digit growth in BD MAX and BD COR. BD Interventional: PureWick franchise had double-digit growth, Surgery had above-market growth, advanced repair and reconstruction also performed well.

• FY '25 initial guidance: high single-digit revenue growth driven by APM contribution and broad-based organic growth, capturing market dynamics in China and Bioscience-Pharma. - Expected significant margin expansion from BD Excellence, aiming for adjusted EPS growth of about 10% at midpoint. - Total revenues expected in range of $21.9B to $22.1B, currency-neutral adjusted revenue growth 8.8% to 9.3%, including 4% to 4.5% organic growth. - Adjusted diluted EPS expected to be $14.25 to $14.60. - Phasing: first half revenue growth modestly below low end of total guidance, second half modestly above high end.

• Market dynamics in China and Bioscience-Pharma, including value-based procurement in China and transitory market dynamics in bioscience-pharma. - Integration challenges related to the acquisition of Advanced Patient Monitoring. - Potential tariff and supply chain impacts, though BD has strong local manufacturing strategies in place.

Q: Maybe on this guidance question here. The 125 basis points of headwinds on pharma, biosciences in China, it looks like assuming those 3 segments are flattish for the year. And related to that on phasing here, is Q1 going to be still in that 4% to 4.5% -- any impact on hurricane, IV fluids?

A: Tom Polen and Chris DelOrefice responded, discussing assumptions on market dynamics, phasing, and monitoring of hurricane impacts.

Q: Congrats on a nice quarter here. I wanted to just ask one question on Alaris, Tom. Did Alaris meet your goal of $350 million for fiscal '24? And how are you thinking about Alaris sales in fiscal '25 relative to fiscal '24?

A: Tom Polen and Mike Garrison responded, stating Alaris met goals and expectations for FY '25.

Q: I wanted to just to dig in a little bit more here on the P&L. And as we look at FY '25, there are some sort of discrete items here. You have a year-over-year kind of gross margin normalization as well as accretion from M&A, offset by tax headwinds and higher interest expense. So can you maybe just help us think about the construct of the P&L here both in FY '25 and how we should think about it beyond that point in terms of normalized growth drivers across the various line items?

A: Chris DelOrefice responded, discussing the P&L construct, focus on BD excellence, and growth drivers.

Q: Just given it's kind of topical at the moment, question around potential tariffs, supply chain impacts. Do you benefit from onshoring relative to any potential paths to go in? And how are you thinking about pricing as it interrelates within all of that?

A: Tom Polen responded, discussing tariff monitoring, local manufacturing strategies, and pricing considerations.

Q: I was wondering now that you've closed APM, if you could give us some additional thoughts on how you think that segment could grow over time and just how it's going to contribute to the margins going forward? And you were just talking about your connected strategy. So I was wondering if you had additional thoughts on how you could develop that and perhaps integrate it with some of the other segments there that are smart and connected and generating the data?

A: Tom Polen responded, discussing APM integration, growth expectations, and integration with connected strategies.

Q: Maybe we can turn to capital allocation. Your $1 billion share repurchase announcement over the next 12 to 18 months certainly seems like a positive to me and highlights your views about the value inherent in the stock. A couple of things. Should we be interpreting this as Becton taking maybe a momentary step back from your tuck-in acquisition strategy near term as you integrate APM? Is it their value -- lack of value, lack of compelling candidates and again, more broadly on capital allocation related to dividends or -- and anything else that you want to talk about?

A: Chris DelOrefice responded, discussing capital allocation priorities, cash flow, and share repurchase plans.