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    Becton Dickinson and Co (BDX)

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    Business Description

    Becton, Dickinson and Company (BD) is a global medical technology company that develops, manufactures, and sells a wide range of medical supplies, devices, laboratory equipment, and diagnostic products . The company operates through three principal business segments: BD Medical, BD Life Sciences, and BD Interventional . BD's products are marketed and sold worldwide, with operations organized into regions such as EMEA, Greater Asia, Latin America, and Canada .

    1. BD Medical - Provides medication delivery solutions, medication management systems, pharmaceutical systems, and advanced patient monitoring products, serving hospitals, clinics, and other healthcare providers.

      • Medication Delivery Solutions - Offers products like infusion pumps and syringes.
      • Medication Management Solutions - Focuses on systems for managing medication.
      • Pharmaceutical Systems - Develops systems for pharmaceutical applications.
      • Advanced Patient Monitoring - Supplies monitoring solutions for patient care.

    2. BD Life Sciences - Supplies products for specimen collection, diagnostic systems, and research tools, catering to hospitals, laboratories, and research institutions.

      • Integrated Diagnostic Solutions - Provides comprehensive diagnostic solutions.
      • Biosciences - Offers tools and systems for biological research.

    3. BD Interventional - Delivers vascular, urology, oncology, and surgical specialty products, including surgery, peripheral intervention, and urology and critical care units.

      • Surgery - Offers surgical specialty products.
      • Peripheral Intervention - Provides solutions for vascular interventions.
      • Urology and Critical Care - Supplies products for urology and critical care needs.

    Q4 2024 Summary

    Initial Price$233.76June 30, 2024
    Final Price$241.10September 30, 2024
    Price Change$7.34
    % Change+3.14%

    What went well

    • BD announced a $1 billion share repurchase program over the next 12-18 months and increased its dividend by 9.5%, reflecting strong free cash flow growth and a commitment to returning capital to shareholders.
    • BD crossed $1 billion in biologic drug delivery sales, driven by increased manufacturing capacity to serve growing GLP-1 demand, positioning the company well in high-growth markets.
    • BD is investing in innovative technologies, including AI-enabled devices and advanced patient monitoring, expecting 100 basis points of operating margin improvement primarily from gross margin enhancements, indicating strong operational performance and future growth potential.

    What went wrong

    • The integration of the recent $4 billion acquisition of Advanced Patient Monitoring (APM) may divert resources, possibly affecting the company's capacity for additional tuck-in acquisitions in the near term.
    • BDX is prioritizing deleveraging, aiming to reduce net leverage to 2.5x over the next 12 to 18 months. This focus on debt reduction might limit financial flexibility for future investments.
    • Increased R&D investments, particularly in AI initiatives, may elevate expenses without immediate guaranteed returns. The company has yet to provide concrete timelines or financial impacts from these AI projects.

    Q&A Summary

    1. Alaris Sales Performance and Outlook
      Q: Did Alaris meet FY24 goals, and what's the FY25 outlook?
      A: Alaris exceeded the $350 million target for fiscal '24. Integration is progressing well, and we expect continued strong growth in Alaris for FY25, returning to normal operations and effectively serving customers.

    2. Confidence in Revenue Growth Acceleration
      Q: Can you still accelerate revenue growth despite tough comps?
      A: We are confident in our growth trajectory. While Q1 growth rates will be lower due to market dynamics and tough comparisons, we anticipate revenue acceleration over the year, with balanced earnings growth and strong margins starting in Q1.

    3. Pharma Biosciences in China and Q1 Phasing
      Q: Are pharma biosciences trends flat, and what's the Q1 impact?
      A: Our pharma biosciences performed competitively. In China, we've built in a mid-single-digit decline into our FY25 guidance, assuming strong volume growth but offset by pricing impacts from value-based procurement. Revenue growth in the first half will be below the full-year guidance range, with Q1 growth lower due to market dynamics and prior-year comparisons.

    Guidance Changes

    Annual guidance for FY 2025:

    • Revenue Growth: $21.9B to $22.1B (currency-neutral adjusted 8.8% to 9.3%, organic 4% to 4.5%) (no prior guidance)
    • Adjusted Operating Margin: Expected to expand by about 100 basis points (no change from “exceeding 25%” )
    • Adjusted Diluted EPS: $14.25 to $14.60 (no change from implied ~10% growth )
    • Tax Rate: 14% to 15.5% (no prior guidance)
    • Interest Expense: Expected to increase year-over-year (no prior guidance)
    • Free Cash Flow Conversion: Expected to be around 75% (no prior guidance)
    • Phasing: First half revenue growth below low end, second half above high end (no prior guidance)

    Key Metrics

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    Executive Team

    NamePositionStart DateShort Bio
    Thomas E. PolenChairman, Chief Executive Officer, and PresidentCEO: Jan 2020Thomas E. Polen has been with BD for over 20 years. He became CEO in January 2020 and Chairman in April 2021. He has served as BD's President since April 2017 and was the COO from October 2018 to January 2020 .
    Richard ByrdExecutive Vice President and President, Interventional SegmentSep 2022Richard Byrd has been the Executive Vice President and President of the Interventional Segment since September 2022. He was previously the Worldwide President of BD Medication Delivery Solutions from March 2019 to September 2022 .
    Christopher J. DelOreficeExecutive Vice President and Chief Financial OfficerSep 2021Christopher J. DelOrefice has been serving as the Executive Vice President and Chief Financial Officer since September 2021. He was previously Vice President of Investor Relations at Johnson & Johnson .
    Antoine C. EzellExecutive Vice President, President of the Americas, and Chief Marketing OfficerOct 2020Antoine C. Ezell has held his current position since October 2020. He was previously the Executive Vice President and Chief Marketing Officer from January 2020 to October 2020 .
    Michael FeldExecutive Vice President and President, Life SciencesAug 2024Michael Feld began his role in August 2024. He was previously President of Hach (Veralto Corporation) from September 2023 to August 2024 .
    Michael GarrisonExecutive Vice President and President, Medical SegmentSep 2022Michael Garrison has been in this role since September 2022. He was previously the Worldwide President of BD Medication Management Solutions from March 2020 to September 2022 .
    Roland GoetteExecutive Vice President and President, EMEAMay 2017Roland Goette has held this position since May 2017 .
    Pavan MocherlaExecutive Vice President and President, Greater AsiaJuly 2022Pavan Mocherla has held this position since July 2022. He was previously the Country General Manager, South Asia/Managing Director from December 2017 to June 2022 .
    Shana NealExecutive Vice President and Chief People OfficerApr 2022Shana Neal joined BD as the Executive Vice President and Chief People Officer on April 4, 2022. She was previously the Chief Human Resources Officer at Owens & Minor .
    Michelle QuinnExecutive Vice President and General CounselApr 2023Michelle Quinn has been serving as the Executive Vice President and General Counsel since April 2023. She was previously the Senior Vice President, Deputy General Counsel, and Chief Ethics and Compliance Officer .
    David ShanExecutive Vice President and Chief Integrated Supply Chain OfficerJan 2023David Shan has held this position since January 2023. He was previously the Executive Vice President and Chief Quality Officer from March 2020 to August 2023 .
    Dave HickeyExecutive Vice President and President, Life Sciences (retiring)Jan 2021Dave Hickey has been in this role since January 2021 and announced his retirement effective July 1, 2024. He joined BD in 2014 after various leadership roles at Siemens Healthcare .
    Thomas SpoerelSenior Vice President, CFO RegionsAug 30, 2024Thomas Spoerel was appointed to this position effective August 30, 2024. He was previously the Senior Vice President and Controller, Chief Accounting Officer, and International Chief Financial Officer at BD .
    Katie SzymanLeader of the Critical Care business unit within BD's Medical segment2015Katie Szyman has been serving as the leader of the Critical Care business unit since the acquisition of Edwards Lifesciences' Critical Care product group by BD. She has been with the unit since 2015 .

    Questions to Ask Management

    1. You expect a mid-single-digit decrease in China revenues for fiscal year 2025 due to market dynamics ; can you elaborate on the specific challenges in China and the strategies you have in place to mitigate these headwinds?

    2. Given the transitory dynamics affecting your bioscience pharma businesses, resulting in lower market demand for research instruments and reagents ; how do you plan to drive growth in this segment amid these challenges?

    3. With strong growth in biologic drug delivery sales driven by GLP-1 demand, but noting expected customer inventory destocking impacting Pharma Systems ; what measures are you taking to address potential overreliance on specific therapies and ensure sustainable growth in the Pharma Systems segment?

    4. You are increasing investments in AI and plan to launch AI-enabled devices across your platforms ; can you discuss how these investments will impact your top-line growth and operational efficiency, and what is the expected return on investment in the near term?

    5. You announced a $1 billion share repurchase program while also focusing on capitalizing the value from the Advanced Patient Monitoring acquisition and managing net leverage ; how do you balance these capital allocation priorities, and does this indicate a temporary shift away from tuck-in acquisitions due to valuation concerns or integration capacity?

    Share Repurchase Program

    Program DetailsProgram 1Program 2
    Approval DateSeptember 24, 2013 November 3, 2021
    End Date/DurationFully utilized as of September 30, 2022 No expiration date
    Total additional amount10 million shares 10 million shares
    Remaining authorization amountNone 6,681,777 shares as of September 30, 2024
    DetailsN/APart of capital allocation strategy, supported by strong margins and healthy cash flow

    Past Guidance

    Q4 2024 Earnings Call

    • Issued Period: Q4 2024
    • Guided Period: FY 2025
    • Guidance:
      1. Revenue Growth: Total revenues expected to be $21.9 billion to $22.1 billion; currency-neutral adjusted revenue growth of 8.8% to 9.3%; organic revenue growth of 4% to 4.5% .
      2. Adjusted Operating Margin: Expected to expand by about 100 basis points .
      3. Adjusted Diluted EPS: Expected to be $14.25 to $14.60 .
      4. Tax Rate: Adjusted effective tax rate expected to be 14% to 15.5% .
      5. Interest Expense: Expected to increase year-over-year .
      6. Free Cash Flow Conversion: Expected to be around 75% .
      7. Phasing: First half revenue growth below low end, second half above high end .

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: FY 2024 and FY 2025
    • Guidance:
      1. Organic Revenue Growth: Expected to be 5% to 5.25% for FY 2024 .
      2. Adjusted Diluted EPS: Raised to $13.05 to $13.15 .
      3. Adjusted Operating Margin: Improvement of over 50 basis points, implying margins over 24% .
      4. Free Cash Flow Conversion: Above 80% .
      5. Net Leverage: Improved to 2.4x .
      6. Cash and Short-term Investments: Totaled $5.3 billion .
      7. Fiscal Year 2025 Outlook: Exceeding 25% adjusted operating margin goal and 10% EPS growth .

    Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Organic Revenue Growth: Maintained at 5.5% to 6.25% .
      2. Adjusted Diluted EPS: Raised to $12.95 to $13.15 .
      3. Foreign Currency Impact: Headwind of 40 basis points .
      4. Second Half Organic Sales Growth: About 7.5% .
      5. Alaris Revenue Contribution: Over 100 basis points or at least $300 million .
      6. Adjusted Operating Margin: Improvement of at least 50 basis points .
      7. Tax Rate: Expected to be about 15% .

    Q1 2024 Earnings Call

    • Issued Period: Q1 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Organic Revenue Growth: Expected to be 5.5% to 6.25% .
      2. Adjusted Diluted EPS: Expected to be $12.82 to $13.06 .
      3. Foreign Currency Impact: Headwind of 25 basis points to revenues and 360 basis points to EPS growth .
      4. Q2 Adjusted Operating Margin: Expected to expand by 25 to 50 basis points .
      5. Q2 Tax Rate: Expected to be nearly 17% .
      6. Adjusted Operating Margin Improvement: About 50 basis points for the year .
      7. Free Cash Flow Growth: Expected to be double-digit .

    Latest news

    Recent developments and announcements about BDX.

    Corporate Leadership

      Leadership Change

      ·
      Jan 10, 2025, 12:38 PM

      Who is leaving? No one is leaving at this time.

      Who is stepping up? Pamela L. Spikner has been appointed as Senior Vice President, Chief Accounting Officer, and Controller of BD, effective January 20, 2025. She will take over as the company's principal accounting officer after the filing of the Form 10-Q for the quarter ending December 31, 2024.

      Why? Pamela Spikner's appointment is based on her 25+ years of expertise in corporate finance and accounting, including leadership roles at R1 RCM, Exelon Corporation, and Hill-Rom Holdings. She is recognized for her ability to lead high-performing teams and her deep knowledge of financial reporting and compliance.