Solventum Reports Third Quarter 2024 Financial Results and Raises Full-Year Guidance
- Reported sales increased 0.4% to
$2.082 billion ; organic sales increased 0.3% - GAAP Earnings Per Share (EPS) of
$0.70 ; adjusted EPS1 of$1.64 - Generated
$169 million in cash from operations; free cash flow1 of$76 million - Raises full-year 2024 organic sales growth, adjusted EPS and free cash flow guidance
"We have now delivered consecutive quarters of outperformance against our expectations, and based on these results, we are again raising our full-year guidance," said Bryan Hanson, chief executive officer, Solventum. "It has been an exciting start, and we are confident that our three-phased approach will drive long-term growth and significant value creation."
Third Quarter 2024 Financial Results
3 months ended (Millions of dollars, except per share amounts) |
GAAP |
non-GAAP1 |
Sales |
|
|
Operating income |
|
|
Operating income margin |
13.2 % |
22.8 % |
Earnings per share (EPS) |
|
|
Cash from operations/free cash flow1 |
|
|
Reported and organic sales growth reflect the expected normalization of pricing. By segment, organic sales growth was primarily driven by the MedSurg and Health Information Systems segments, partially offset by the Dental Solutions and Purification and Filtration segments.
GAAP and adjusted operating income margin declined due to lower gross margins, including the impact from the 3M supply agreement mark-up, and an increase in operating expenses related to public company stand-up costs and growth investments.
1 Represents non-GAAP financial measure; see the "Non-GAAP Financial Measures" section for applicable information. |
Segment and Total Company |
||||||||||||
|
|
Three months ended |
|
Increase/(Decrease) |
||||||||
(Dollars in millions) |
|
2024 |
|
2023 |
|
Total |
|
Currency |
|
Other2 |
|
Organic |
MedSurg |
|
$ 1,182 |
|
$ 1,180 |
|
0.1 % |
|
(0.1) % |
|
(0.7) % |
|
1.0 % |
Dental Solutions |
|
313 |
|
331 |
|
(5.2) |
|
— |
|
(1.2) |
|
(3.9) |
Health Information Systems |
|
326 |
|
321 |
|
1.5 |
|
0.1 |
|
— |
|
1.5 |
Purification and Filtration |
|
238 |
|
242 |
|
(1.5) |
|
— |
|
(1.1) |
|
(0.3) |
Corporate and Unallocated3 |
|
23 |
|
— |
|
NM |
|
NM |
|
NM |
|
NM |
|
|
$ 2,082 |
|
$ 2,074 |
|
0.4 % |
|
(0.1) % |
|
0.2 % |
|
0.3 % |
*Data in the schedule above is intentionally rounded to the nearest million and, therefore, may not sum. |
|
2
Other represents sales impact from acquisitions and divestitures measured separately for the first 12 months post-transaction. Divestiture impacts include lost sales from the company's dental anesthetics business that was sold in |
|
3 Corporate and unallocated includes sales related to product supplied to 3M and other supply agreements related to legacy 3M business and assumed by the company at spin-off. |
Full-Year 2024 Guidance
Solventum is raising its full-year 2024 guidance
- Organic sales growth to the upper half of 0% to +1.0% (previously 0% to +1.0%)
- Adjusted EPS of
$6.50 to$6.65 (previously$6.30 to$6.50 ) - Free cash flow of
$750M to$850M (previously$700M to$800M )
Organic sales, adjusted EPS and free cash flow amounts included in Solventum's full-year guidance and additional considerations below are non-GAAP financial measures. Solventum does not provide reconciliations of the forward-looking non-GAAP financial measures to the respective GAAP metrics as it is unable to predict with reasonable certainty and without unreasonable effort certain items, such as the impact of changes in currency exchange rates, impacts associated with business acquisitions or divestitures, and the timing and magnitude of restructuring activities, among other items.
Solventum's full-year 2024 guidance is based on Q1 2024 as a carve-out plus the remainder of the year as a stand-alone company starting
See the "Non-GAAP Financial Measures" section for explanations of our non-GAAP financial measures.
Earnings Conference Call
Solventum will host a conference call today,
A replay of the webcast, along with the earnings press release, slides highlighting the results, and supplemental financial disclosures, will also be available at the same link on the Investor Relations section of the company's website.
Forward-Looking Statement
This news release contains forward-looking information about Solventum's financial results and estimates and business prospects that involve substantial risks and uncertainties. In particular, statements regarding the future performance of Solventum, including guidance for 2024, are forward-looking statements. You can identify these statements by the use of words such as "anticipates," "believes," "could," "estimates," "expects," "forecasts," "goal," "guidance," "intends," "may," "outlook," "plans," "projects," "seeks," "sees," "should," "targets," "will," "would," and other words and terms of similar meaning in connection with any discussion of future operating or financial performance or business plans or prospects. Among the factors that could cause actual results to differ materially are the following: (1) worldwide economic, political, regulatory, international, trade and geopolitical conditions, natural disasters, war, public health crises, and other events beyond Solventum's control; (2) operational execution risks; (3) damage to Solventum's reputation or its brands; (4) risks from acquisitions, strategic alliances, divestitures and other strategic events; (5) Solventum's business dealings involving third-party partners in various markets; (6) Solventum's ability to access the capital and credit markets and changes in Solventum's credit ratings; (7) exposure to interest rate and currency risks; (8) the highly competitive environment in which Solventum operates and consolidation in the healthcare industry; (9) reduction in customers' research budgets or government funding; (10) the timing and market acceptance of Solventum's new product and service offerings; (11) ongoing working relationships with certain key healthcare professionals; (12) changes in reimbursement practices of governments or private payers or other cost containment measures; (13) Solventum's ability to obtain components or raw materials supplied by third parties and other manufacturing and related supply chain difficulties, interruptions, and disruptive factors; (14) legal and regulatory proceedings and legal compliance risks (including third-party risks) with regards to antitrust, FCPA and other anti-bribery laws, environmental laws, anti-kickback and false claims laws, privacy laws, product liability claims, tax laws, and other laws and regulations in
Changes in such assumptions or factors could produce significantly different results. A further description of these factors is located under "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" in Solventum's Quarterly Report on Form 10-Q for the quarter ended
Non-GAAP Financial Measures
In addition to reporting financial results in accordance with
Solventum calculates forward-looking non-GAAP financial measures, including organic sales growth, adjusted operating income, adjusted operating income margin, adjusted effective tax rate, adjusted earnings per share, and free cash flow based on internal forecasts that omit certain amounts that would be included in GAAP financial measures. Solventum does not provide reconciliations of these forward-looking non-GAAP financial measures to the respective GAAP metrics as it is unable to predict with reasonable certainty and without unreasonable effort certain items such as the impact of changes in currency exchange rates, impacts associated with business acquisitions or divestitures, and the timing and magnitude of restructuring activities, among other items. The timing and amounts of these items are uncertain and could have a material impact on Solventum's results in accordance with GAAP.
The Q3 2024 financial statements and financial information, including reconciliations of non-GAAP financial measures, are available on Solventum's website: investors.solventum.com.
About Solventum
At Solventum, we enable better, smarter, safer healthcare to improve lives. As a new company with a long legacy of creating breakthrough solutions for our customers' toughest challenges, we pioneer game-changing innovations at the intersection of health, material and data science that change patients' lives for the better — while empowering healthcare professionals to perform at their best. See how at Solventum.com.
|
||||||||
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF INCOME |
||||||||
(Dollars in millions, except per-share amounts) |
||||||||
(Unaudited) |
||||||||
|
||||||||
|
|
Three months ended |
|
Nine months ended |
||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Net sales of product |
|
$ 1,608 |
|
$ 1,593 |
|
$ 4,766 |
|
$ 4,750 |
Net sales of software and rentals |
|
474 |
|
481 |
|
1,413 |
|
1,411 |
Total net sales |
|
2,082 |
|
2,074 |
|
6,179 |
|
6,161 |
Cost of product |
|
793 |
|
748 |
|
2,341 |
|
2,262 |
Cost of software and rentals |
|
124 |
|
117 |
|
364 |
|
364 |
Gross profit |
|
1,165 |
|
1,209 |
|
3,474 |
|
3,535 |
Selling, general and administrative expenses |
|
701 |
|
525 |
|
1,998 |
|
1,681 |
Research and development expenses |
|
189 |
|
180 |
|
576 |
|
568 |
Total operating expenses |
|
1,807 |
|
1,570 |
|
5,279 |
|
4,875 |
Operating income |
|
275 |
|
504 |
|
900 |
|
1,286 |
Interest expense, net |
|
107 |
|
— |
|
260 |
|
— |
Other expense (income), net |
|
1 |
|
4 |
|
48 |
|
10 |
Income before income taxes |
|
167 |
|
500 |
|
592 |
|
1,276 |
Provision for income taxes |
|
45 |
|
40 |
|
144 |
|
202 |
Net Income |
|
$ 122 |
|
$ 460 |
|
$ 448 |
|
$ 1,074 |
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ 0.70 |
|
$ 2.66 |
|
$ 2.59 |
|
$ 6.22 |
Diluted earnings per share |
|
0.70 |
|
2.66 |
|
2.58 |
|
6.22 |
Weighted-average number of share outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
173.4 |
|
172.7 |
|
173.1 |
|
172.7 |
Diluted |
|
173.9 |
|
172.7 |
|
173.4 |
|
172.7 |
|
||||
CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS |
||||
(Dollars in millions) |
||||
(Unaudited) |
||||
|
||||
|
|
|
|
|
(Millions) |
|
2024 |
|
2023 |
Assets |
|
|
|
|
Current assets |
|
|
|
|
Cash and cash equivalents |
|
$ 772 |
|
$ 194 |
Accounts receivable — net of allowances of |
|
1,105 |
|
1,313 |
Due from related parties |
|
222 |
|
— |
Inventories |
|
|
|
|
Finished goods |
|
529 |
|
453 |
Work in process |
|
181 |
|
171 |
Raw materials and supplies |
|
243 |
|
233 |
Total inventories |
|
953 |
|
857 |
Other current assets |
|
302 |
|
155 |
Total current assets |
|
3,354 |
|
2,519 |
Property, plant and equipment — net |
|
1,599 |
|
1,457 |
|
|
6,592 |
|
6,535 |
Intangible assets — net |
|
2,651 |
|
2,902 |
Other assets |
|
549 |
|
530 |
Total assets |
|
$ 14,745 |
|
$ 13,943 |
Liabilities |
|
|
|
|
Current liabilities |
|
|
|
|
Short-term borrowings and current portion of long-term debt |
|
$ 300 |
|
$ — |
Accounts payable |
|
560 |
|
477 |
Due to related parties |
|
450 |
|
— |
Unearned revenue |
|
563 |
|
574 |
Other current liabilities |
|
1,031 |
|
677 |
Total current liabilities |
|
2,904 |
|
1,728 |
Long-term debt |
|
7,809 |
|
— |
Pension and postretirement benefits |
|
321 |
|
166 |
Deferred income taxes |
|
214 |
|
231 |
Other liabilities |
|
305 |
|
152 |
Total liabilities |
|
$ 11,553 |
|
$ 2,277 |
|
|
|
|
|
Equity |
|
|
|
|
Common stock par value, |
|
$ 2 |
|
$ — |
Shares issued and outstanding - |
|
|
|
|
Shares issued and outstanding - |
|
|
|
|
Additional paid-in capital |
|
3,744 |
|
— |
Retained earnings |
|
211 |
|
— |
Net parent investment |
|
— |
|
12,003 |
Accumulated other comprehensive income (loss) |
|
(765) |
|
(337) |
Total equity |
|
3,192 |
|
11,666 |
Total liabilities and equity |
|
$ 14,745 |
|
$ 13,943 |
|
||||
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS |
||||
(Dollars in millions) |
||||
(Unaudited) |
||||
|
||||
|
|
Nine months ended |
||
(Millions) |
|
2024 |
|
2023 |
Cash Flows from Operating Activities |
|
|
|
|
Net income |
|
$ 448 |
|
$ 1,074 |
Adjustments to reconcile net income to net cash provided by operating activities |
|
|
|
|
Depreciation and amortization |
|
405 |
|
422 |
Postretirement benefit plan expense |
|
30 |
|
31 |
Stock-based compensation expense |
|
87 |
|
32 |
Gain on business divestitures |
|
— |
|
(56) |
Deferred income taxes |
|
(93) |
|
(99) |
Changes in assets and liabilities |
|
|
|
|
Accounts receivable |
|
14 |
|
(24) |
Due from related parties |
|
200 |
|
— |
Inventories |
|
(99) |
|
(7) |
Accounts payable |
|
200 |
|
48 |
Due to related parties |
|
(393) |
|
— |
All other operating activities |
|
167 |
|
(53) |
Net cash provided by operating activities |
|
966 |
|
1,368 |
|
|
|
|
|
Cash Flows from Investing Activities |
|
|
|
|
Purchases of property, plant and equipment |
|
(253) |
|
(202) |
Proceeds from sale of business |
|
— |
|
60 |
Net cash used in investing activities |
|
(253) |
|
(142) |
|
|
|
|
|
Cash Flows from Financing Activities |
|
|
|
|
Repayment of debt |
|
(200) |
|
— |
Net transfers to 3M |
|
(8,247) |
|
(1,248) |
Proceeds from long-term debt, net of issuance costs |
|
8,303 |
|
— |
Other — net |
|
8 |
|
2 |
Net cash used in financing activities |
|
(136) |
|
(1,246) |
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
1 |
|
1 |
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
578 |
|
(19) |
Cash and cash equivalents at beginning of year |
|
194 |
|
61 |
Cash and cash equivalents at end of period |
|
$ 772 |
|
$ 42 |
|
|||||||||||||
SALES CHANGE ANALYSIS4 |
|||||||||||||
(Dollars in millions) |
|||||||||||||
(Unaudited) |
|||||||||||||
|
|||||||||||||
Segment and Total Company |
|||||||||||||
|
|
Nine months ended |
|
Increase/(Decrease) |
|||||||||
(Dollars in millions) |
|
2024 |
|
2023 |
|
Total |
|
Currency |
|
Other |
|
Organic |
|
MedSurg |
|
$ 3,463 |
|
$ 3,464 |
|
— % |
|
(0.6) % |
|
(0.5) % |
|
1.1 % |
|
Dental Solutions |
|
979 |
|
1,023 |
|
(4.3) |
|
(0.6) |
|
(1.9) |
|
(1.8) |
|
Health Information Systems |
|
971 |
|
953 |
|
1.8 |
|
— |
|
— |
|
1.8 |
|
Purification and Filtration |
|
721 |
|
721 |
|
0.1 |
|
(0.7) |
|
(0.9) |
|
1.7 |
|
Corporate and Unallocated5 |
|
45 |
|
— |
|
NM |
|
NM |
|
NM |
|
NM |
|
|
|
$ 6,179 |
|
$ 6,161 |
|
0.3 % |
|
(0.5) % |
|
— % |
|
0.8 % |
*Data in the schedule above is intentionally rounded to the nearest million and, therefore, may not sum. |
|
4Total sales change is calculated based on reported sales results. The components of sales change include organic local-currency sales, translation, and other. Organic local-currency sales include both organic volume impacts (which excludes acquisition and divestiture impacts, in addition to supply agreement and impacts) and selling price changes. Other represents sales impact from acquisitions and divestitures measured separately for the first 12 months post-transaction. Divestiture impacts include lost sales from the company's dental anesthetics business that was sold in |
|
5Corporate and Unallocated also includes sales and cost of sales related to products supplied to 3M and other supply agreements related to legacy 3M business and assumed by the company at spin-off. |
BUSINESS SEGMENTS
(Unaudited)
Operating segments include components of an enterprise where separate financial information is available that is evaluated regularly by the company's Chief Operating Decision Maker ("CODM") for the purpose of assessing performance and allocating resources. The company's CODM is its Chief Executive Officer. The company's operating activities are managed through four operating segments: MedSurg, Dental Solutions, Health Information Systems, and Purification and Filtration. There have been no changes to the composition of the segments or to financial information reported within each of the business segments. These segments have been identified based on the nature of the products sold and how the company manages its operations. Transactions among reportable segments are recorded at cost. No operating segments have been aggregated to form reportable segments.
Corporate and Unallocated includes amortization of acquired intangible assets, restructuring and related charges, benefits or costs related to capitalized manufacturing variances, spin-off and separation-related costs and other net costs that the company chose not to allocate directly to its business segments. Spin-off and separation-related costs include any costs incurred as part of our separation from 3M and costs to setup operations as a standalone company, including system implementations, manufacturing relocation, legal entity separation, certain equity awards granted as part of the spin-off, profit mark-ups on transition service arrangements with 3M and other one-time costs.
Corporate and Unallocated also includes sales and cost of sales related to products supplied to 3M and other supply agreements related to legacy 3M business and assumed by the company at spin-off. Because Corporate and Unallocated includes a variety of miscellaneous items, it is subject to fluctuation on a quarterly and annual basis. Business segment operating income is reconciled to total operating income below:
BUSINESS SEGMENT INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Three months ended |
||||||||
|
|
|
||||||||||
(Dollars in millions) |
|
|
|
Operating |
|
Operating |
|
|
|
Operating |
|
Operating |
MedSurg |
|
$ 1,182 |
|
$ 243 |
|
20.6 % |
|
$ 1,180 |
|
$ 307 |
|
26.0 % |
Dental Solutions |
|
313 |
|
72 |
|
23.0 |
|
331 |
|
114 |
|
34.4 |
Health Information Systems |
|
326 |
|
105 |
|
32.2 |
|
321 |
|
114 |
|
35.5 |
Purification and Filtration |
|
238 |
|
20 |
|
8.4 |
|
242 |
|
48 |
|
19.8 |
Total business segment operating income |
|
|
|
$ 440 |
|
|
|
|
|
$ 583 |
|
|
Corporate and Unallocated: |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense |
|
|
|
$ (88) |
|
|
|
|
|
$ (92) |
|
|
Other Corporate and Unallocated |
|
|
|
(77) |
|
|
|
|
|
13 |
|
|
Total Corporate and Unallocated |
|
23 |
|
(165) |
|
NM |
|
— |
|
(79) |
|
NM |
|
|
$ 2,082 |
|
$ 275 |
|
13.2 % |
|
$ 2,074 |
|
$ 504 |
|
24.3 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
BUSINESS SEGMENT INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended |
|
Nine months ended |
||||||||
|
|
|
||||||||||
(Dollars in millions) |
|
|
|
Operating |
|
Operating |
|
|
|
Operating |
|
Operating |
MedSurg |
|
$ 3,463 |
|
$ 678 |
|
19.6 % |
|
$ 3,464 |
|
$ 829 |
|
23.9 % |
Dental Solutions |
|
979 |
|
272 |
|
27.8 |
|
1,023 |
|
349 |
|
34.1 |
Health Information Systems |
|
971 |
|
317 |
|
32.6 |
|
953 |
|
304 |
|
31.9 |
Purification and Filtration |
|
721 |
|
78 |
|
10.8 |
|
721 |
|
134 |
|
18.6 |
Total business segment operating income |
|
|
|
$ 1,345 |
|
|
|
|
|
$ 1,616 |
|
|
Corporate and Unallocated: |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense |
|
|
|
$ (261) |
|
|
|
|
|
$ (276) |
|
|
Other Corporate and Unallocated |
|
|
|
(184) |
|
|
|
|
|
(54) |
|
|
Total Corporate and Unallocated |
|
45 |
|
(445) |
|
NM |
|
— |
|
(330) |
|
NM |
|
|
$ 6,179 |
|
$ 900 |
|
14.6 % |
|
$ 6,161 |
|
$ 1,286 |
|
20.9 % |
SUPPLEMENTAL FINANCIAL INFORMATION
NON-GAAP MEASURES
(Unaudited)
In addition to reporting financial results in accordance with
There are limitations to the use of the non-GAAP financial measures presented in this information statement. These non-GAAP financial measures are not prepared in accordance with
The tables below reconcile our non-GAAP financial measures to the nearest financial measure that is in accordance with
Adjusted Operating Income, Adjusted Operating Income Margin and Adjusted Earnings Per Share (Non-GAAP measures)
Adjusted operating income and adjusted operating income margin are not defined under
Adjusted earnings per share is not defined under
|
||||||||||||||||||||||
SUPPLEMENTAL FINANCIAL INFORMATION |
||||||||||||||||||||||
NON-GAAP MEASURES – (CONTINUED)* |
||||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||||
|
||||||||||||||||||||||
|
|
Three months ended |
||||||||||||||||||||
(Dollars in millions, except per share amounts) |
|
Net sales |
|
Cost of |
|
Gross |
|
Other |
|
Operating |
|
Operating |
|
Non- |
|
Income |
|
Net Income |
|
Diluted |
|
Effective |
GAAP |
|
|
|
$ 917 |
|
56.0 % |
|
$ 1,807 |
|
$ 275 |
|
13.2 % |
|
$ 108 |
|
$ 167 |
|
$ 122 |
|
$ 0.70 |
|
26.9 % |
Non-GAAP Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Amortization of acquisition-related intangible assets |
|
— |
|
— |
|
— |
|
(88) |
|
88 |
|
4.2 |
|
— |
|
88 |
|
73 |
|
0.42 |
|
|
Restructuring costs (a) |
|
— |
|
(1) |
|
— |
|
(1) |
|
1 |
|
0.1 |
|
— |
|
1 |
|
1 |
|
0.01 |
|
|
Spin-off and separation-related costs (b) |
|
— |
|
(27) |
|
1.3 |
|
(111) |
|
111 |
|
5.3 |
|
— |
|
111 |
|
85 |
|
0.49 |
|
|
Legal entity restructuring (c) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
4 |
|
0.02 |
|
|
Non-GAAP |
|
|
|
$ 889 |
|
57.3 % |
|
$ 1,607 |
|
$ 475 |
|
22.8 % |
|
$ 108 |
|
$ 367 |
|
$ 285 |
|
$ 1.64 |
|
22.3 % |
|
|
|
||||||||||||||||||||
|
|
Three months ended |
||||||||||||||||||||
(Dollars in millions, except per share amounts) |
|
Net sales |
|
Cost of |
|
Gross |
|
Other |
|
Operating |
|
Operating |
|
Non- |
|
Income |
|
Net Income |
|
Diluted |
|
Effective |
GAAP |
|
|
|
$ 865 |
|
58.3 % |
|
$ 1,570 |
|
$ 504 |
|
24.3 % |
|
$ 4 |
|
$ 500 |
|
$ 460 |
|
$ 2.66 |
|
8.0 % |
Non-GAAP Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Amortization of acquisition-related intangible assets |
|
— |
|
— |
|
— |
|
(92) |
|
92 |
|
4.4 |
|
— |
|
92 |
|
77 |
|
0.45 |
|
|
Restructuring costs (a) |
|
— |
|
(1) |
|
— |
|
1 |
|
(1) |
|
— |
|
— |
|
(1) |
|
(1) |
|
(0.01) |
|
|
Spin-off and separation-related costs (b) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Gain on business divestitures |
|
— |
|
— |
|
— |
|
56 |
|
(56) |
|
(2.7) |
|
— |
|
(56) |
|
(40) |
|
(0.23) |
|
|
Non-GAAP |
|
|
|
$ 864 |
|
58.3 % |
|
$ 1,535 |
|
$ 539 |
|
26.0 % |
|
$ 4 |
|
$ 535 |
|
$ 496 |
|
$ 2.87 |
|
7.3 % |
_________
*Data in the schedule above is intentionally rounded to the nearest million and, therefore, may not sum. |
|
(a) Consists of severance associated with restructuring programs. |
(b) Consists of costs specifically incurred in connection with the separation from 3M. |
(c) Consists of tax impacts for legal entity restructuring in connection with the separation from 3M. |
|
6Cost of sales is the combination of cost of product and cost of software and rental line items from the Condensed Consolidated and Combined Statements of Income and represents the total company cost of sales. |
|
7Other operating expenses is a combination of selling, general and administrative expenses and research and development expenses from the Condensed Consolidated and Combined Statements of Income and represents the total company other operating expenses. |
|
8 Non-operating expense (income), net is the combination of interest expense, net and other expense (income), net line items from the Condensed Consolidated and Combined Statements of Income and represents the total company non-operating expense. |
|
||||||||||||||||||||||
SUPPLEMENTAL FINANCIAL INFORMATION |
||||||||||||||||||||||
NON-GAAP MEASURES – (CONTINUED)* |
||||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||||
|
||||||||||||||||||||||
|
|
Nine months ended |
||||||||||||||||||||
(Dollars in millions, except per share amounts) |
|
Net sales |
|
Cost of |
|
Gross |
|
Other |
|
Operating |
|
Operating |
|
Non- |
|
Income |
|
Net Income |
|
Diluted |
|
Effective |
GAAP |
|
|
|
|
|
56.2 % |
|
$ 5,279 |
|
$ 900 |
|
14.6 % |
|
$ 308 |
|
$ 592 |
|
$ 448 |
|
$ 2.58 |
|
24.3 % |
Non-GAAP Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Amortization of acquisition-related intangible assets |
|
— |
|
— |
|
— |
|
(261) |
|
261 |
|
4.2 |
|
— |
|
261 |
|
218 |
|
1.26 |
|
|
Restructuring costs (a) |
|
— |
|
(5) |
|
0.1 |
|
(13) |
|
13 |
|
0.2 |
|
— |
|
13 |
|
9 |
|
0.06 |
|
|
Spin-off and separation-related costs (b) |
|
— |
|
(48) |
|
0.8 |
|
(215) |
|
215 |
|
3.5 |
|
(38) |
|
253 |
|
205 |
|
1.18 |
|
|
Legal entity restructuring (c) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
35 |
|
0.20 |
|
|
Non-GAAP |
|
|
|
|
|
57.1 % |
|
$ 4,790 |
|
|
|
22.5 % |
|
$ 270 |
|
|
|
$ 915 |
|
$ 5.28 |
|
18.2 % |
|
|
|
||||||||||||||||||||
|
|
Nine months ended |
||||||||||||||||||||
(Dollars in millions, except per share amounts) |
|
Net sales |
|
Cost of |
|
Gross |
|
Other |
|
Operating |
|
Operating |
|
Non- |
|
Income |
|
Net Income |
|
Diluted |
|
Effective |
GAAP |
|
|
|
|
|
57.4 % |
|
$ 4,875 |
|
|
|
20.9 % |
|
$ 10 |
|
|
|
$ 1,074 |
|
$ 6.22 |
|
15.8 % |
Non-GAAP Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Amortization of acquisition-related intangible assets |
|
— |
|
— |
|
— |
|
(276) |
|
276 |
|
4.5 |
|
— |
|
276 |
|
231 |
|
1.33 |
|
|
Restructuring costs (a) |
|
— |
|
(12) |
|
0.2 |
|
(38) |
|
38 |
|
0.6 |
|
— |
|
38 |
|
31 |
|
0.18 |
|
|
Spin-off and separation-related costs (b) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Gain on business divestitures |
|
— |
|
— |
|
— |
|
56 |
|
(56) |
|
(0.9) |
|
— |
|
(56) |
|
(40) |
|
(0.23) |
|
|
Non-GAAP |
|
|
|
|
|
57.6 % |
|
$ 4,617 |
|
|
|
25.1 % |
|
$ 10 |
|
|
|
$ 1,296 |
|
$ 7.50 |
|
15.5 % |
__________
*Data in the schedule above is intentionally rounded to the nearest million and, therefore, may not sum. |
(a) Consists of severance associated with restructuring programs. |
(b) Consists of costs specifically incurred in connection with the separation from 3M. |
(c) Consists of tax impacts for legal entity restructuring in connection with the separation from 3M. |
|
6Cost of sales is the combination of cost of product and cost of software and rental line items from the Condensed Consolidated and Combined Statements of Income and represents the total company cost of sales. |
|
7Other operating expenses is a combination of selling, general and administrative expenses and research and development expenses from the Condensed Consolidated and Combined Statements of Income and represents the total company other operating expenses. |
|
8 Non-operating expense (income), net is the combination of interest expense, net and other expense (income), net line items from the Condensed Consolidated and Combined Statements of Income and represents the total company non-operating expense. |
Free Cash Flow (non-GAAP measure):
Free cash flow is not defined under
(Dollars in millions) |
|
Three months ended |
|
Nine months ended |
||||
Major GAAP Cash Flow Categories |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Net cash provided by operating activities |
|
$ 169 |
|
$ 493 |
|
$ 966 |
|
$ 1,368 |
Net cash used in investing activities |
|
(93) |
|
(6) |
|
(253) |
|
(142) |
Net cash used in financing activities |
|
(202) |
|
(485) |
|
(136) |
|
(1,246) |
|
|
|
|
|
|
|
|
|
Free Cash Flow (non-GAAP measure) |
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
$ 169 |
|
$ 493 |
|
$ 966 |
|
$ 1,368 |
Purchases of property, plant and equipment |
|
(93) |
|
(66) |
|
(253) |
|
(202) |
Free cash flow* |
|
76 |
|
427 |
|
713 |
|
1,166 |
__________________
* Non-GAAP financial measure. |
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SOURCE Solventum