10-QPeriod: Q1 FY2012

BECTON DICKINSON & CO Quarterly Report for Q1 Ended Dec 31, 2011

Filed February 7, 2012For Securities:BDX

Summary

Becton, Dickinson and Company (BDX) reported its financial results for the fiscal quarter ended December 31, 2011. The company experienced a modest 2.5% increase in revenue to $1.89 billion, driven by volume growth partially offset by price decreases. While overall revenue grew, operating income saw a decline compared to the prior year, primarily due to increased costs in cost of products sold and selling and administrative expenses, as well as a decrease in operating income from the Medical segment. The company's liquidity remains strong, with significant cash flows from operations and substantial debt issuance to fund corporate purposes. Investors should note the ongoing legal proceedings, particularly the antitrust litigation and patent disputes, which carry potential material adverse effects.

Financial Highlights

49 data points
Beta

Revenue

$1.83B

50.8% Gross Margin

Net Income

$262.99M

14.4% Net Margin

EPS (Diluted)

$1.21

Total Assets

$11.41B

Cash & Equivalents

$2.20B

Free Cash Flow

$195.15M

Financial Statements
Beta
Revenue$1.83B
Cost of Revenue$900.47M
Gross Profit$931.25M
R&D Expenses$112.23M
SG&A Expenses$482.27M
Operating Expenses$1.49B
Operating Income$336.76M
Interest Expense$29.38M
Net Income$262.99M
EPS (Basic)$1.23
EPS (Diluted)$1.21
Shares Outstanding (Basic)214.30M
Shares Outstanding (Diluted)217.63M

Key Highlights

  • 1Total revenues increased by 2.5% year-over-year to $1.89 billion, primarily due to volume increases of 3.7%, though tempered by price decreases of 1.3%.
  • 2Operating income decreased by 13.2% to $358.6 million, impacted by higher cost of products sold and selling and administrative expenses.
  • 3Net income for the quarter was $263.0 million, a decrease from $315.9 million in the same period last year, leading to a diluted EPS of $1.21, down from $1.36.
  • 4The company strengthened its liquidity by issuing $1.5 billion in new long-term debt, while also returning capital to shareholders through $400 million in stock repurchases and $96 million in dividends.
  • 5The Medical segment saw a revenue increase of 2.6% to $950.4 million, but operating income declined by 7.9%, partly due to amortization of intangibles from acquisitions and increased raw material costs.
  • 6The Diagnostics and Biosciences segments also reported revenue increases of 3.2% and 0.9% respectively, though Biosciences experienced a notable decline in operating income (8.1%) due to acquisition-related amortization.
  • 7BD continues to face pricing pressures and expects them to persist through fiscal year 2012, alongside increased raw material costs and constrained healthcare spending in key markets.

Frequently Asked Questions

Revenue growth was primarily driven by volume increases across most segments, particularly in the Medical and Diagnostics segments. International sales, especially in emerging markets and for safety-engineered products, also contributed positively, while U.S. sales faced some headwinds from uncertain research spending and pricing pressures.

The decline in operating income was mainly due to an increase in the cost of products sold and higher selling and administrative expenses. Specifically, the Medical segment's operating income decreased due to amortization of intangibles from recent acquisitions (Carmel Pharma), unfavorable pricing, and rising raw material costs. The Biosciences segment also saw a drop in operating income due to amortization related to the Accuri acquisition.

BD's financial condition remains strong. In November 2011, the company issued $1.5 billion in new long-term debt to fund general corporate purposes. They also continued to return value to shareholders through significant stock repurchases ($400 million) and dividend payments ($96 million). Cash flow from operations remained robust, supporting the company's liquidity needs.

BD faces several risks, including ongoing pricing pressures in the healthcare industry, constrained healthcare spending in the U.S. and Western Europe, increasing raw material costs, and significant legal proceedings such as antitrust litigation and patent disputes. The company also notes the potential impact of the U.S. healthcare reform, specifically the medical device excise tax starting in 2013.