10-QPeriod: Q2 FY2019

BECTON DICKINSON & CO Quarterly Report for Q2 Ended Mar 31, 2019

Filed May 9, 2019For Securities:BDX

Summary

Becton Dickinson & Co. (BDX) reported its first quarter results for fiscal year 2019, showing a slight year-over-year decrease in total revenues to $4.195 billion from $4.222 billion. This revenue decline was primarily attributed to an unfavorable foreign currency translation impact of approximately 2.7% and a 1% impact from the divestiture of the Advanced Bioprocessing business. Despite the revenue dip, the company demonstrated resilience with positive volume growth across all three segments: Medical, Life Sciences, and Interventional. The Medical segment saw notable growth in Medication Management Solutions, while Life Sciences benefited from Preanalytical Systems and Biosciences, and Interventional saw strength in Peripheral Intervention and Urology and Critical Care. The company incurred a significant pre-tax charge of $331 million related to certain product liability matters, impacting the "Other operating expense, net" line item. This charge, combined with other factors, led to a net income of $20 million for the quarter, a substantial improvement from the net loss of $12 million in the prior-year period. Diluted earnings per share were $(0.07), compared to $(0.19) in the prior year. The company continued to generate strong operating cash flow, amounting to $1.027 billion for the six months ended March 31, 2019, supporting its ongoing commitment to returning value to shareholders through dividends.

Financial Statements
Beta
Revenue$4.20B
Cost of Revenue$2.22B
Gross Profit$1.97B
R&D Expenses$252.00M
SG&A Expenses$1.09B
Operating Expenses$4.06B
Operating Income$136.00M
Interest Expense$171.00M
Net Income$20.00M
EPS (Basic)$-0.07
EPS (Diluted)$-0.07
Shares Outstanding (Basic)269.88M
Shares Outstanding (Diluted)269.88M

Key Highlights

  • 1Total revenues for the quarter decreased slightly by 0.6% to $4.195 billion, mainly due to foreign currency headwinds and the divestiture of the Advanced Bioprocessing business.
  • 2Despite the revenue decrease, underlying volume growth was positive across all three business segments (Medical, Life Sciences, and Interventional).
  • 3A significant pre-tax charge of $331 million was recorded for product liability matters, impacting operating expenses.
  • 4Net income improved substantially to $20 million from a net loss of $12 million in the prior year's quarter.
  • 5Operating cash flow remained robust, totaling $1.027 billion for the first six months of the fiscal year.
  • 6The company continued to return capital to shareholders through dividends, with $491 million paid in the first six months.

Frequently Asked Questions

The decrease in revenue was primarily due to an unfavorable foreign currency translation impact of approximately 2.7% and a 1% reduction from the divestiture of the Advanced Bioprocessing business in October 2018. Underlying volume growth was positive across all segments, indicating underlying business strength despite these headwinds.

The company recorded a pre-tax charge of $331 million related to certain product liability matters. This charge significantly impacted the quarter's operating income but was partially offset by a gain from the sale of the Advanced Bioprocessing business, resulting in a net income improvement compared to the prior year's loss.

BD maintained strong operating cash flow and is managing its debt effectively. Total debt was $20.6 billion at March 31, 2019, with a debt-to-capital ratio of 46.5%. The company has access to credit facilities and remains in compliance with its financial covenants, indicating a stable liquidity position.

The Medical segment saw growth in Medication Management Solutions and Diabetes Care. Life Sciences benefited from Preanalytical Systems and Biosciences, while the Interventional segment showed strength in Peripheral Intervention and Urology and Critical Care. Overall, positive volume growth across these units signals healthy demand for BD's products.