Becton, Dickinson and Company

Please stand by, your program is about to begin. If you should need any audio assistance during your call today, please press star zero. Hello and welcome to BD's earnings call for the fourth quarter and full year fiscal 2022. At the request of BD, today's call is being recorded and will be available for replay through November 17, 2022 on BD's investor relations website on BD.com or by the phone at 866-342-8591 for domestic calls and area code plus one. 203-518-9713 for international calls. The replay bridges are now dedicated, so you no longer need a conference ID to hear the replay. For today's call, all parties have been placed in a listen-only mode until the question and answer session. I will now turn the call over to BD.

Good morning, and welcome to BD's earnings call. I'm Francesca DiMartino, Senior Vice President and Head of Investor Relations. On behalf of the BD team, thank you for joining us. This call is being made available via audio webcast at BD.com. Earlier this morning, BD released its results for the fourth quarter and full year of fiscal 2022. We also posted an earnings presentation that provides additional details on our performance. The press release and presentation can be accessed on the IR website at investors.bd.com. Leading today's call are Tom Poland, BD's Chairman, Chief Executive Officer and President, and Chris Del Orifice, Executive Vice President and Chief Financial Officer. Tom will provide highlights of our performance and the continued execution of our BD 2025 strategy. Chris will then provide additional details on our FY22 financial performance and our guidance for fiscal 2023. Following the prepared remarks, Tom and Chris will be joined for Q&A by our segment presidents, Mike Garrison, president of the medical segment, Dave Hickey, president of the life sciences segment, and Rick Bird, president of the interventional segment. Before we get started, I want to remind you that we will be making forward-looking statements. I encourage you to read the disclaimer in our earnings release and the disclosures in our SEC filings, which are both available on the IR website. Unless otherwise specified, all comparisons will be on a year-over-year basis versus the relevant period. revenue percentage changes are on an FX-neutral basis unless otherwise noted. In addition, the results and guidance we are presenting today are on a continuing operations basis, which exclude the historical results of INBECTA, which are accounted for as discontinued operations. When we refer to any given period, we are referring to the fiscal period unless we specifically note it as a calendar period. I would also call your attention to the basis of presentation slide which defines terms you will hear today such as base revenues and base margins, which refer to our results excluding estimated COVID-only testing. With that, I am very pleased to turn it over to Tom.

Thanks, Francesca, and good morning, everyone, and thank you for joining us. I am extremely proud of our organization and our performance this year. We closed the year with excellent momentum, having delivered strong and consistent growth in our base business. For the full fiscal year, we exceeded our revenue and earnings guidance and achieved our margin expansion goal. Our performance this year confirms BD 2025 is the right strategy and it's working. Our results reflect our strategy in action and the focused execution and dedication of our global teams who reliably served our customers, controlled costs, and increased productivity during a challenging environment. At Investor Day in November 2021, We outlined our plan to build sustained shareholder value creation in five key focus areas. Today, I'm pleased to review the progress we've made to achieve this plan. First, we delivered consistent performance and durably strengthened our growth profile. Our FY22 results are on track with our long range targets to deliver 5.5 plus top line and double digit EPS growth with operating margin improvement back toward our pre-pandemic level. In FY22, we drove 9.4% revenue growth in our base business. Additionally, we achieved our margin expansion goals in an increasing inflationary environment by both leveraging our revenue performance and realizing savings and efficiencies from several of our multi-year simplification and cost improvement initiatives. As a result, we delivered $11.35 in adjusted diluted EPS. Second, we continued to reshape our portfolio, by advancing our innovation pipeline and M&A strategy towards higher growth markets. In FY22, we continued to transform our innovation pipeline with about 60% of our new product development invested in three market spaces that are reshaping healthcare and helping to fuel our growth. Smart connected care, enabling new care settings, and improving chronic disease outcomes. We believe our current pipeline is the most exciting in the history of the company. In addition, we deployed over $2 billion this year towards six tuck-in acquisitions, all of which were allocated towards higher growth markets. This includes Prada Systems, our largest acquisition since Bard, which is aligned to our focus on smart, connected care and enabling new care settings. Prada makes BD the global leader in the fast-growing pharmacy automation market and enables us to provide solutions to help pharmacies address rising costs and labor shortages. With today's transformative solutions, from pharmacy automation to biotech drug delivery devices to high throughput molecular diagnostic systems and new dyes and instruments for immuno-oncology and multi-omics research to at-home solutions for urinary incontinence, we are systematically creating a new wave of future growth for BD. Third, we executed our simplification programs and managed our cost structure. Like every other company, we faced tremendous inflationary pressure. We saw the pressure coming early on and we took action immediately, putting in place an inflation task force to attack it from every side. We also prioritized our internal cost reduction programs and significantly leveraged our selling and G&A expense, driving strong operating leverage. In addition, we actively managed our portfolio, including Spinning and Becta, as well as exiting more than 2,500 SKUs as we accelerated our project recode initiative to simplify our portfolio and exit products that add complexity in our plants. A leaner portfolio and less complex manufacturing processes allowed us to improve output with the same fixed cost base and optimize our mix to produce more of the products most critical to our customers. we furthered our investments in what matters to our customers, strengthening our supply chain, validating secondary suppliers, and building key component inventory, all factors that have been even more important in a supply-constrained environment. And finally, as we drove strong revenue growth beyond our original expectations, we leveraged our scale and excellence in manufacturing as volumes in our plants recovered from FY20 and 21 lows due to COVID disruptions in procedures. As a result, in FY22, we were able to absorb significant increases in inflation during the year and improve our margin profile back towards BD's pre-pandemic levels of 25% in FY25. Fourth, we maintained a disciplined and balanced capital deployment strategy. Over the last few years, we significantly strengthened our balance sheet and improved flexibility. This has allowed us to advance our balanced capital allocation framework and support growth-enhancing investments in capital, R&D, and tuck-in M&A. We're now at 2.8 times net leverage, and both Moody's and Fitch upgraded our debt this year, reflecting the strength of our business and disciplined approach on balance sheet management and capital deployment. Also, this framework gave us the flexibility to return capital to shareholders. We just announced our 51st consecutive year of dividend increases, continuing our longstanding recognition as a member of the S&P 500 Dividend Aristocrats Index, a distinction that reflects the consistency and reliability of our dividend policy. And finally, our strong teams continue to execute and create value even during uncertain times. Our execution in FY22 is a testament to our growth mindset at BD, where we firmly believe there's nothing we can't do, only things we haven't done yet. And by navigating successfully the challenging macro environment, we're distinguishing BD and supporting our ability to consistently deliver strong performance. These capabilities are now all embedded in our operating principles, and with the strong execution abilities across our network, they're having a positive impact on our overall cost effectiveness, responsiveness, and sustainability. In summary, these proof points reflect how BD 2025 and the actions we've taken in FY22 and over the past several years uniquely position us to lead and deliver strong and consistent results. I'll now provide more detail on the progress we made this year on organic innovation, which is a key enabler to our growth strategy. In FY22, we significantly advanced our innovation pipeline, launching 25 key new products. We are on track to achieve our new product revenue contribution, as outlined at Investor Day, and are increasing our portfolio weighting in attractive, faster-growing markets. Our product launches reinforce our leadership position in our durable core and expand our offering in higher growth spaces across smart, connected care, enabling new care settings, and improving outcomes for chronic disease. These launches strengthened our position in strategic areas such as medication safety, immunology research reagents, molecular and point-of-care diagnostics, peripheral vascular disease and incontinence. Examples include Posi-Flush Safe Scrub, our next-generation flush product, Preview, our peripheral vascular access system, BD-Core, our fully automated high-throughput molecular system and related women's health and STI assays, and the Purewick Male External Catheter. I'm excited by the progress we've made advancing our innovation-driven growth strategy and the strides we've made to improve outcomes for patients and providers and create value for our stakeholders. I'll now share a few updates on the progress our team made this year to advance our ESG strategy and goals. Together We Advance serves as a framework for our ESG strategy. In July, we published our 2021 ESG report, which provides details about our ESG strategy and progress against our 2030 commitments. Highlights include the launch of the BD Sustainable Medical Technology Institute, efforts to reduce our greenhouse gas emissions, including joining the UN Race to Zero, and increasing our investments in on-site renewable energy. Just last month, BD in Sandy, Utah, was awarded the Blue Sky Legacy Award for making significant strides towards Utah's environmental sustainability. We believe that the work we're doing today can make a lasting, positive impact on our communities. We also made progress on our workforce ID&E goals, ending FY22 with increased diversity at the executive and management levels, and we remain committed to having an inclusive workplace. We're proud to receive continued recognition for our ESG efforts, Most recently, we were named to Forbes 2022 list of the world's best employers, a recognition of BD as a great place for the world's best talent to work as part of a healthy and inclusive community. Before I turn it over to Chris, as we look forward to FY23, I'd like to provide some perspective on the macro environment and BD 2025 as we move toward the second half of our strategic plan period. Starting with the macro environment, our BD 2025 strategy and the capabilities we've built over the past two years position us well to navigate what we expect to be some persistent macro challenges and uncertainty facing all companies. We reiterate our conviction in the three irreversible forces shaping healthcare and our strategy to address them. For example, as it relates to smart connected care, there's an increasing need for digitalization and automation of healthcare processes as providers look for ways to increase efficiency and address labor and inflationary challenges. Regarding inflation and supply chain, our perspective continues to be the challenges are going to persist, not escalate, at least through 2023. And although inflation could potentially start easing somewhat, we do expect that we'll remain well above what we have seen historically. Companies that have processes, systems, and capabilities to navigate this environment will continue to thrive over the next couple of years. As we move forward, you can expect to see continued relentless focus on execution of BD 2025, which will continue to serve as our true north. This includes delivering impactful innovations for our customers by expanding our leadership positions in our durable core and continuing to invest to expand our portfolio in the higher growth areas that are transforming healthcare. In addition, Alaris remains our number one priority, and we're making good progress. While we don't comment on the status of the review or approval timing, we are taking all the steps necessary to provide the required regulatory information and support our customers upon clearance. We will also continue our investments to increase manufacturing capacities, strengthen our supply chain, and increase supplier redundancy to help ensure we continue to reliably supply our products for our customers. We will continue to focus on initiatives to return our margin profile to FY19 pre-pandemic levels in FY25. This includes accelerating initiatives like Project Recode, including our efforts around operating model simplification, resulting in BD becoming a more agile and less complex organization. We expect to continue our balanced approach to capital deployment. Our priorities include investing in our business through R&D and CapEx. After investing organically and returning value through dividends, we will continue to execute our tuck-in M&A strategy and return value to shareholders through share repurchases. We expect to continue to stay ahead of the curve as we navigate the macro environment, leveraging the capabilities we have built that are now embedded in our operating principles. We recently celebrated BD's 125th year anniversary as a company, demonstrating our durable model underpinned by our tradition of relentless focus on innovation and operational excellence. We're really excited about what the future holds, and with the performance of our global teams, we'll continue to grow our impact on customers and patients and advance the world of health. With that, let me turn it over to Chris to review our financials, guidance, and outlook.