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Solventum Reports Second Quarter 2024 Financial Results and Raises Full-Year Guidance

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Solventum (NYSE: SOLV) posted its Q2 2024 financial results. Reported sales increased by 0.2% to $2.081 billion, and organic sales grew by 1.3%. GAAP EPS was $0.51, while adjusted EPS was $1.56. The company generated $355 million in cash from operations and had a free cash flow of $297 million.

Segment-wise, MedSurg and Health Information Systems saw organic sales growth, while Dental Solutions and Purification and Filtration declined.

Solventum raised its full-year 2024 guidance, expecting organic sales growth between 0% to 1.0% and adjusted EPS between $6.30 to $6.50. Free cash flow guidance remains at $700M to $800M. CEO Bryan Hanson highlighted ongoing business continuity amid the company's transformation.

Solventum (NYSE: SOLV) ha pubblicato i risultati finanziari per il secondo trimestre del 2024. Le vendite riportate sono aumentate dello 0,2% a 2,081 miliardi di dollari, mentre le vendite organiche sono cresciute dell'1,3%. L'utile per azione secondo i principi contabili GAAP è stato di 0,51 dollari, mentre l'utile per azione rettificato è stato di 1,56 dollari. L'azienda ha generato 355 milioni di dollari in contante dalle operazioni e ha registrato un flusso di cassa libero di 297 milioni di dollari.

Suddividendo per segmento, MedSurg e Health Information Systems hanno visto una crescita delle vendite organiche, mentre Dental Solutions e Purification and Filtration hanno registrato un calo.

Solventum ha alzato le previsioni per l'intero anno 2024, prevedendo una crescita delle vendite organiche tra lo 0% e l'1,0% e un utile per azione rettificato tra 6,30 e 6,50 dollari. Le previsioni del flusso di cassa libero rimangono tra 700 milioni e 800 milioni di dollari. Il CEO Bryan Hanson ha sottolineato la continuità aziendale durante la trasformazione dell'azienda.

Solventum (NYSE: SOLV) publicó sus resultados financieros del segundo trimestre de 2024. Las ventas reportadas aumentaron un 0,2% a 2.081 millones de dólares, y las ventas orgánicas crecieron un 1,3%. El beneficio por acción GAAP fue de 0,51 dólares, mientras que el beneficio por acción ajustado fue de 1,56 dólares. La empresa generó 355 millones de dólares en efectivo de las operaciones y tuvo un flujo de caja libre de 297 millones de dólares.

Por segmento, MedSurg y Health Information Systems vieron crecimiento en las ventas orgánicas, mientras que Dental Solutions y Purification and Filtration experimentaron una disminución.

Solventum elevó su guía para el año completo 2024, esperando un crecimiento de ventas orgánicas entre el 0% y el 1,0% y un beneficio por acción ajustado entre 6,30 y 6,50 dólares. La guía de flujo de caja libre se mantiene entre 700 millones y 800 millones de dólares. El CEO Bryan Hanson destacó la continuidad del negocio en medio de la transformación de la compañía.

솔벤트럼(Solventum, NYSE: SOLV)는 2024년 2분기 재무 결과를 발표했습니다. 보고된 판매는 20억 8100만 달러로 0.2% 증가했으며, 유기적 판매는 1.3% 증가했습니다. GAAP 기준 주당 순이익(EPS)은 0.51달러였고 조정 주당 순이익은 1.56달러였습니다. 회사는 운영에서 3억 5500만 달러의 현금을 창출했으며, 자유 현금 흐름은 2억 9700만 달러로 나타났습니다.

세그먼트별로는 MedSurg와 Health Information Systems가 유기적 판매 성장을 보인 반면, Dental Solutions와 Purification and Filtration은 감소했습니다.

솔벤트럼은 2024년 전체 연도 가이드를 상향 조정하여 유기적 판매 성장이 0%에서 1.0% 사이, 조정 주당 순이익이 6.30달러에서 6.50달러 사이일 것으로 예상하고 있습니다. 자유 현금 흐름 가이드는 7억 달러에서 8억 달러로 유지됩니다. CEO 브라이언 핸슨은 회사의 변혁 중에도 지속적인 비즈니스 연속성을 강조했습니다.

Solventum (NYSE: SOLV) a publié ses résultats financiers pour le deuxième trimestre 2024. Les ventes déclarées ont augmenté de 0,2 % pour atteindre 2,081 milliards de dollars, et les ventes organiques ont crû de 1,3 %. Le bénéfice par action selon les principes comptables GAAP était de 0,51 dollar, tandis que le bénéfice par action ajusté était de 1,56 dollar. L'entreprise a généré 355 millions de dollars de flux de trésorerie provenant des opérations et a enregistré un flux de trésorerie libre de 297 millions de dollars.

Par segment, MedSurg et Health Information Systems ont connu une croissance des ventes organiques, tandis que Dental Solutions et Purification et Filtration ont diminué.

Solventum a relevé ses prévisions pour l'année 2024, s'attendant à une croissance des ventes organiques comprise entre 0 % et 1,0 % et à un bénéfice par action ajusté situé entre 6,30 et 6,50 dollars. Les prévisions de flux de trésorerie libre demeurent entre 700 millions et 800 millions de dollars. Le PDG Bryan Hanson a souligné la continuité des activités pendant la transformation de l'entreprise.

Solventum (NYSE: SOLV) hat seine Finanzzahlen für das zweite Quartal 2024 veröffentlicht. Die berichteten Verkaufszahlen stiegen um 0,2% auf 2,081 Milliarden Dollar, und die organischen Verkäufe wuchsen um 1,3%. Der GAAP Gewinn pro Aktie betrug 0,51 Dollar, während der bereinigte Gewinn pro Aktie bei 1,56 Dollar lag. Das Unternehmen generierte 355 Millionen Dollar Cashflow aus dem operativen Geschäft und hatte einen Free Cashflow von 297 Millionen Dollar.

Segmentweise verzeichneten MedSurg und Health Information Systems ein organisches Verkaufswachstum, während Dental Solutions und Purification and Filtration rückläufig waren.

Solventum hob die Prognose für das Gesamtjahr 2024 an und erwartet ein organisches Verkaufswachstum zwischen 0% und 1,0% sowie einen bereinigten Gewinn pro Aktie zwischen 6,30 und 6,50 Dollar. Die Prognose für den freien Cashflow bleibt bei 700 Millionen bis 800 Millionen Dollar. CEO Bryan Hanson betonte die kontinuierliche Geschäftstätigkeit trotz der Transformation des Unternehmens.

Positive
  • Reported sales increased by 0.2% to $2.081 billion.
  • Organic sales increased by 1.3%.
  • Adjusted EPS of $1.56.
  • Generated $355 million in cash from operations.
  • Free cash flow of $297 million.
  • Raised full-year 2024 guidance: organic sales growth of 0% to 1.0%, adjusted EPS of $6.30 to $6.50.
Negative
  • GAAP operating income margin declined due to lower gross margins and increased operating expenses.
  • Dental Solutions segment saw a 5.8% decline in sales.
  • Purification and Filtration segment sales dropped by 3.6%.
  • Separation activities and business continuity on track
  • Reported sales increased 0.2% to $2.081 billion; organic sales increased 1.3%
  • GAAP Earnings Per Share (EPS) of $0.51; adjusted EPS1 of $1.56
  • Generated $355 million in cash from operations; free cash flow1 of $297 million
  • Raises full-year 2024 organic sales growth and adjusted EPS guidance

ST. PAUL, Minn., Aug. 8, 2024 /PRNewswire/ -- Solventum (NYSE: SOLV) today reported financial results as a stand-alone company for the second quarter ended June 30, 2024.

"As we continue to execute a complex transformation, we're encouraged by our first financial results as an independent company and early ability to maintain business continuity," said Bryan Hanson, chief executive officer, Solventum. "We are starting from a solid foundation and remain focused on addressing historical underperformance and spin-related topics to unlock significant value creation over time."

Second Quarter 2024 Financial Results

3 months ended June 30, 2024

(Millions of dollars, except per share amounts)

GAAP 

non-GAAP1

 Sales

$2,081

$2,081

Operating income

$244

$430

Operating income margin

11.7 %

20.7 %

Earnings per share (EPS)

$0.51

$1.56

Cash from operations/free cash flow1

$355

$297

Reported and organic sales growth reflect the expected normalizing of pricing. While volumes grew slightly, this included a benefit from a backorder improvement. By segment, organic sales growth was primarily driven by performance in our MedSurg and Health Information Systems segments, partially offset by results in our Dental Solutions and Purification and Filtration segments.

GAAP and adjusted operating income margin declined due to lower gross margins and an increase in operating expenses related to public company and functional stand-up costs. Both GAAP and adjusted EPS reflect a full quarter of interest expense.

1 Represents non-GAAP financial measure; see the "Non-GAAP Financial Measures" section for applicable information.

 

Segment Sales*



Three months ended June 30,



2024


2023


Sales change 2024 vs 2023

(Dollars in millions)


Net Sales


Net Sales


Total Sales
 Change


Translation


Other2


Organic Sales

MedSurg


$         1,162


$        1,161


0.1 %


(1.1) %


(0.5) %


1.8 %

Dental Solutions


331


351


(5.8)


(1.5)


(2.4)


(2.0)

Health Information Systems


328


316


3.5


(0.1)



3.6

Purification and Filtration


238


248


(3.6)


(1.6)


(1.2)


(0.9)

Corporate and Unallocated3


22



NM


NM


NM


NM

Total Company


$         2,081


$        2,076


0.2 %


(1.1) %


— %


1.3 %


*Data in the schedule above is intentionally rounded to the nearest million and, therefore, may not sum.

2Other 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 August 2023 and certain health care businesses retained by 3M India in connection with the spin-off.

3Corporate 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 of 0% to +1.0% (previously -2% to 0%)
  • Adjusted EPS of $6.30 to $6.50 (previously $6.10 to $6.40)
  • Free cash flow of $700M to $800M (no change to prior guidance)

Organic revenue, adjusted EPS, free cash flow amounts and adjusted effective tax rate 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, timing and magnitude of restructuring activities, among other items. 

Additional considerations:

  • Wave 1 of the SKU rationalization project represents approximately 5% of total SKUs and is not expected to have a material impact on 2024 revenue or margin performance
  • 3M supply agreement mark-up started on April 1, 2024, and Solventum anticipates impact to the income statement to begin in Q3 2024
  • Solventum now expects a full-year adjusted effective tax rate range of 18% to 19% (previously 20% to 21%)

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 April 1, 2024.

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, August 8, at 4:30 p.m. Eastern Time to discuss its second quarter financial results and provide an update on its business. The conference call can be accessed via audio webcast at investors.solventum.com or by dialing (800) 715-9871 within the U.S. or +1 (646) 307-1963 for international callers, using the conference ID 6342275.

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 the United States and other countries in which Solventum operates; (15) potential liabilities related to per-and polyfluoroalkyl substances; (16) risks related to the highly regulated environment in which Solventum operates; (17) climate change and measures to address climate change; (18) security breaches and other disruptions to information technology infrastructure; (19) Solventum's failure to obtain, maintain, protect, or effectively enforce its intellectual property rights; (20) pension and postretirement obligation liabilities; (21) any events that adversely affect the sale or profitability of one of Solventum's key products or the revenue delivered from sales to its key customers; (22) any failure by 3M Company ("3M") to perform any of its obligations under the various separation agreements entered into in connection with the separation of Solventum from 3M and distribution (the "Separation"); (23) any failure to realize the expected benefits of the Separation; (24) Solventum's ability to execute its turnaround strategy; (25) a determination by the IRS or other tax authorities that the Separation or certain related transactions should be treated as taxable transactions; (26) indebtedness incurred in the financing transactions undertaken in connection with the Separation and risks associated with additional indebtedness; (27) the risk that incremental costs of operating on a standalone basis (including the loss of synergies), costs of restructuring transactions and other costs incurred in connection with the Separation will exceed Solventum's estimates; and (28) the impact of the Separation on Solventum's businesses and the risk that the Separation may be more difficult, time-consuming or costly than expected, including the impact on Solventum's resources, systems, procedures and controls, diversion of management's attention and the impact on relationships with customers, suppliers, employees and other business counterparties.

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 the Information Statement included in Solventum's Quarterly Report on Form 10-Q for the quarter ended March 31, 2024. Solventum assumes no obligation to update any forward-looking statements discussed herein as a result of new information or future events or developments.

Non-GAAP Financial Measures
In addition to reporting financial results in accordance with U.S. GAAP, Solventum also provides non-GAAP measures that we use, and plan to continue using, when monitoring and evaluating operating performance and measuring cash available to invest in our business. The adjusted measures are not in accordance with, nor are they a substitute for, GAAP measures. These non-GAAP financial measures are supplemental measures of our performance and our liquidity that we believe help investors understand our underlying business performance and Solventum  uses these measures as an indication of the strength of Solventum and its ability to generate cash.

Solventum calculates forward-looking non-GAAP financial measures, including organic revenue 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, 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 Q2 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

 

Solventum Corporation

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF INCOME

(Dollars in millions, except per-share amounts)

(Unaudited)




Three months ended June 30,


Six months ended June 30,



2024


2023


2024


2023

Net sales of product


$       1,605


$       1,607


$       3,158


$       3,157

Net sales of software and rentals


476


469


939


930

Total net sales


2,081


2,076


4,097


4,087

Cost of product


823


762


1,548


1,514

Cost of software and rentals


121


125


240


247

Gross profit


1,137


1,189


2,309


2,326

Selling, general and administrative expenses


701


579


1,297


1,156

Research and development expenses


192


193


387


388

Total operating expenses


1,837


1,659


3,472


3,305

Operating income


244


417


625


782

Interest expense, net


114



153


Other expense (income), net


34


4


47


6

Income before income taxes


96


413


425


776

Provision for income taxes


7


92


99


162

Net Income


$            89


$          321


$          326


$          614










Earnings per share:









Basic earnings per share


$         0.51


$         1.86


$         1.89


$         3.56

Diluted earnings per share


0.51


1.86


1.88


3.56

Weighted-average number of share outstanding:









Basic


173.2


172.7


172.9


172.7

Diluted


173.5


172.7


173.1


172.7

 

Solventum Corporation

CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS

(Dollars in millions)

(Unaudited)




June 30,


December 31,

(Millions)


2024


2023

Assets





Current assets





Cash and cash equivalents


$            897


$            194

Accounts receivable — net of allowances of $83 and $82


1,028


1,313

Due from related parties


289


Inventories





Finished goods


500


453

Work in process


171


171

Raw materials and supplies


228


233

Total inventories


899


857

Other current assets


250


155

Total current assets


3,363


2,519

Property, plant and equipment — net


1,537


1,457

Goodwill


6,447


6,535

Intangible assets — net


2,724


2,902

Other assets


507


530

Total assets


$       14,578


$       13,943

Liabilities





Current liabilities





Accounts payable


$            495


$            477

Due to related parties


611


Unearned revenue


505


574

Other current liabilities


960


677

Total current liabilities


2,571


1,728

Long-term debt


8,306


Pension and postretirement benefits


315


166

Deferred income taxes


214


231

Other liabilities


305


152

Total liabilities


$        11,711


$          2,277






Equity





Common stock par value, $0.01 par value, 750,000,000 shares authorized


$                2


$               —

Shares issued and outstanding - June 30, 2024: 172,710,593





Shares issued and outstanding - December 31, 2023: 0





Additional paid-in capital


3,719


Retained earnings


89


Net parent investment



12,003

Accumulated other comprehensive income (loss)  — net


(943)


(337)

Total equity


2,867


11,666

Total liabilities and equity


$        14,578


$        13,943

 

Solventum Corporation

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

(Dollars in millions)

(Unaudited)




Six months ended June 30,

(Millions)


2024


2023

Cash Flows from Operating Activities





Net income


$            326


$            614

Adjustments to reconcile net income to net cash provided by operating activities





Depreciation and amortization


272


278

Postretirement benefit plan expense


19


21

Stock-based compensation expense


60


26

Deferred income taxes


(56)


(69)

Changes in assets and liabilities





Accounts receivable


70


(30)

Due from related parties


131


Inventories


(57)


(5)

Accounts payable


132


30

Due to related parties


(229)


All other operating activities


129


10

Net cash provided by operating activities


797


875






Cash Flows from Investing Activities





Purchases of property, plant and equipment


(160)


(136)

Net cash used in investing activities


(160)


(136)






Cash Flows from Financing Activities





Net transfers to 3M


(8,247)


(761)

Proceeds from long-term debt, net of issuance costs


8,303


Other — net


10


Net cash provided by (used in) financing activities


66


(761)






Effect of exchange rate changes on cash and cash equivalents








Net increase (decrease) in cash and cash equivalents


703


(22)

Cash and cash equivalents at beginning of year


194


61

Cash and cash equivalents at end of period


$            897


$              39

 

Solventum Corporation

SALES CHANGE ANALYSIS4

(Dollars in millions)

(Unaudited)


Business Segment Information*



Six months ended June 30,



2024


2023


Sales Change 2024 vs 2023

(Dollars in millions)


Net Sales


Net Sales


Total Sales
Change


Translation


Other


Organic Sales

MedSurg


$         2,281


$        2,284


(0.1) %


(0.8) %


(0.3) %


1.0 %

Dental Solutions


666


692


(3.8)


(0.9)


(2.1)


(0.8)

Health Information Systems


645


632


2.0




2.0

Purification and Filtration


483


479


0.9


(1.1)


(0.6)


2.6

Corporate and Unallocated5


22



NM


NM


NM


NM

Total Company


$         4,097


$        4,087


0.2 %


(0.7) %


(0.1) %


1.1 %


*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 August 2023 and certain health care businesses retained by 3M India in connection with the spin-off.

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.

       

 

Solventum Corporation and Subsidiaries
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 June 30, 2024


Three months ended June 30, 2023




(Dollars in millions)


Net Sales


Operating
Income


Operating
Margin %


Net Sales


Operating
Income


Operating
Margin %

MedSurg


$      1,162


$         214


18.4 %


$      1,161


$         269


23.2 %

Dental Solutions


331


90


27.2


351


124


35.3

Health Information Systems


328


111


33.8


316


96


30.4

Purification and Filtration


238


19


8.0


248


50


20.2

Total business segment operating income




$         434






$         539



Corporate and Unallocated:













Amortization expense




$          (86)






$          (92)



Other Corporate and Unallocated




(104)






(30)



Total Corporate and Unallocated


22


(190)


NM



(122)


NM

Total Company


$      2,081


$         244


11.7 %


$      2,076


$         417


20.1 %

 

BUSINESS SEGMENT INFORMATION















Six months ended June 30, 2024


Six months ended June 30, 2023




(Dollars in millions)


Net Sales


Operating
Income


Operating
Margin %


Net Sales


Operating
Income


Operating
Margin %

MedSurg


$      2,281


$         435


19.1 %


$      2,284


$         522


22.8 %

Dental Solutions


666


200


30.0


692


235


34.0

Health Information Systems


645


212


32.9


632


190


30.1

Purification and Filtration


483


58


12.0


479


86


17.9

Total business segment operating income




$         905






$      1,033



Corporate and Unallocated:













Amortization expense




$        (173)






$        (184)



Other Corporate and Unallocated




(107)






(67)



Total Corporate and Unallocated


22


(280)


NM



(251)


NM

Total Company


$      4,097


$         625


15.3 %


$      4,087


$         782


19.1 %

 

Solventum Corporation
SUPPLEMENTAL FINANCIAL INFORMATION
NON-GAAP MEASURES
(Unaudited)

In addition to reporting financial results in accordance with U.S. GAAP, the company use non-GAAP financial measures to supplement the financial measures prepared in accordance with U.S. GAAP. These include (1) Adjusted operating income, and adjusted operating income margin, (2) Adjusted earnings per share, and (3) Free cash flow. Managements believe that these non-GAAP financial measures are useful in evaluating current performance and focusing management on our underlying operational results.

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 U.S. GAAP nor do they have any standardized meaning under U.S. GAAP. In addition, other companies may use similarly titled non-GAAP financial measures that are calculated differently from the way we calculate such measures. Accordingly, our non-GAAP financial measures may not be comparable to such similarly titled non-GAAP financial measures used by other companies. Management cautions you not to place undue reliance on these non-GAAP financial measures, but instead to consider them with the most directly comparable U.S. GAAP measure. These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation. These non-GAAP financial measures should be considered supplements to, not substitutes for, or superior to, the corresponding financial measures calculated in accordance with U.S. GAAP.

The tables below reconcile our non-GAAP financial measures to the nearest financial measure that is in accordance with U.S. GAAP for the periods presented.

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 U.S. GAAP. Therefore, they should not be considered a substitute for earnings data prepared in accordance with U.S. GAAP and may not be comparable to similarly titled measures used by other companies. Solventum defines adjusted operating income as operating income excluding the effects of amortization, restructuring costs, and spin-off and separation-related costs. Adjusted operating income margin is adjusted operating income divided by the U.S GAAP measure total net sales for the same period. The company believes adjusted operating income and adjusted operating income margin provide investors with visibility into the company's unleveraged, pre-tax operating results and reflects underlying financial performance. However, adjusted operating income should not be construed as inferring that the company's future results will be unaffected by the items for which the measure adjusts.

Adjusted earnings per share is not defined under U.S. GAAP. Therefore, it should not be considered a substitute for earnings data prepared in accordance with U.S. GAAP and may not be comparable to similarly titled measures used by other companies. Solventum defines adjusted earnings per share as net income excluding the after-tax effects of amortization, restructuring costs, spin-off and separation-related costs, and legal entity restructuring costs. The company believes adjusted earnings per share provides investors with improved comparability of underlying operating results and a further understanding and additional transparency regarding how the company evaluate the business. However, adjusted earnings per share should not be construed as inferring that the company's future results will be unaffected by the items for which the measure adjusts.

Solventum Corporation

SUPPLEMENTAL FINANCIAL INFORMATION

NON-GAAP MEASURES – (CONTINUED)*

(Unaudited)




Three months ended June 30, 2024

(Dollars in millions,
except per share
amounts)


Net sales


Cost of
Sales6


Gross
Margin %


Operating
Expenses


Operating
Income


Operating
Income
Margin %


Non-
Operating
Expense
(Income),
net7


Income
Before
Income
Taxes


Net Income
Attributable
to
Solventum


Diluted
EPS


Effective
Tax Rate

GAAP


$ 2,081


$    944


54.6 %


$ 1,837


$    244


11.7 %


$    148


$      96


$        89


$   0.51


7.3 %

Non-GAAP Adjustments:





















Amortization of
acquisition-related
intangible assets





(86)


86


4.1



86


72


0.41



Restructuring costs (a)



(3)


0.2


(3)


3


0.2



3


2


0.01



Spin-off and
separation-related
costs (b)



(21)


1.0


(97)


97


4.7


(26)


123


104


0.61



Legal entity
restructuring (c)










4


0.02



Non-GAAP


$ 2,081


$    920


55.8 %


$ 1,651


$    430


20.7 %


$    122


$    308


$      271


$   1.56


12.2 %

 



Three months ended June 30, 2023

(Dollars in millions,
except per share
amounts)


Net sales


Cost of
Sales6


Gross
Margin %


Operating
Expenses


Operating
Income


Operating
Income
Margin %


Non-
Operating
Expense
(Income),
net7


Income
Before
Income
Taxes


Net Income
Attributable
to
Solventum


Diluted
EPS


Effective
Tax Rate

GAAP


$ 2,076


$    887


57.3 %


$ 1,659


$    417


20.1 %


$        4


$    413


$      321


$  1.86


22.3 %

Non-GAAP Adjustments:





















Amortization of
acquisition-related
intangible assets






(92)


92


4.4



92


77


0.45



Restructuring costs (a)



(10)


0.5


(30)


30


1.5



30


24


0.13



Non-GAAP


$ 2,076


$    877


57.8 %


$ 1,537


$    539


26.0 %


$        4


$    535


$      422


$  2.44


21.1 %

__________________

*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.

7 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.

 

Solventum Corporation

SUPPLEMENTAL FINANCIAL INFORMATION

NON-GAAP MEASURES – (CONTINUED)*

(Unaudited)




Six months ended June 30, 2024

(Dollars in millions,
except per share
amounts)


Net sales


Cost of
Sales6


Gross
Margin %


Operating
Expenses


Operating
Income


Operating
Income
Margin %


Non-
Operating
Expense
(Income),
net7


Income
Before
Income
Taxes


Net Income
Attributable
to
Solventum


Diluted
EPS


Effective
Tax Rate

GAAP


$ 4,097


$ 1,788


56.4 %


$ 3,472


$    625


15.3 %


$    200


$    425


$      326


$   1.88


23.3 %

Non-GAAP Adjustments:





















Amortization of
acquisition-related
intangible assets





(173)


173


4.2



173


145


0.84



Restructuring costs (a)



(4)


0.1


(12)


12


0.3



12


8


0.05



Spin-off and
separation-related
costs (b)



(21)


0.5


(104)


104


2.5


(38)


142


120


0.69



Legal entity
restructuring (c)










31


0.18



Non-GAAP


$ 4,097


$ 1,763


57.0 %


$ 3,183


$    914


22.3 %


$    162


$    752


$      630


$   3.64


16.2 %

 



Six months ended June 30, 2023

(Dollars in millions,
except per share
amounts)


Net sales


Cost of
Sales6


Gross
Margin %


Operating
Expenses


Operating
Income


Operating
Income
Margin %


Non-
Operating
Expense
(Income),
net7


Income
Before
Income
Taxes


Net Income
Attributable
to
Solventum


Diluted
EPS


Effective
Tax Rate

GAAP


$ 4,087


$ 1,761


56.9 %


$ 3,305


$    782


19.1 %


$        6


$    776


$      614


$   3.56


20.9 %

Non-GAAP Adjustments:





















Amortization of
acquisition-related
intangible assets






(184)


184


4.5



184


154


0.89



Restructuring costs (a)



(11)


0.3


(39)


39


1.0



39


32


0.18



Non-GAAP


$ 4,087


$ 1,750


57.2 %


$ 3,082


$ 1,005


24.6 %


$        6


$    999


$      800


$   4.63


19.9 %

__________________

*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.

7 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.

 

Solventum Corporation
SUPPLEMENTAL FINANCIAL INFORMATION
NON-GAAP MEASURES – (CONTINUED)*
(Unaudited)

Free Cash Flow (non-GAAP measure):

Free cash flow is not defined under U.S. GAAP. Therefore, it should not be considered a substitute for income or cash flow data prepared in accordance with U.S. GAAP and may not be comparable to similarly titled measures used by other companies. The company defines free cash flow as net cash provided by operating activities less purchases of property, plant and equipment. It should not be inferred that the entire free cash flow amount is available for discretionary expenditures. The company believes free cash flow is meaningful to investors as it is a useful measure of liquidity and the company uses these measures as an indication of the strength of the company and its ability to generate cash. Free cash flow varies across quarters throughout the year. Below find a recap of free cash flow.

(Dollars in millions)


Three months ended June 30,


Six months ended June 30,

Major GAAP Cash Flow Categories


2024


2023


2024


2023

Net cash provided by operating activities


$           355


$           366


$           797


$           875

Net cash used in investing activities


(58)


(71)


(160)


(136)

Net cash provided by (used in) financing activities


(396)


(299)


66


(761)










Free Cash Flow (non-GAAP measure)









Net cash provided by operating activities


$           355


$           366


797


875

Purchases of property, plant and equipment


(58)


(71)


(160)


(136)

Free cash flow*


$           297


$           295


637


739

__________________

*  Non-GAAP financial measure.

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/solventum-reports-second-quarter-2024-financial-results-and-raises-full-year-guidance-302218373.html

SOURCE Solventum

FAQ

What was Solventum's reported sales for Q2 2024?

Solventum reported sales of $2.081 billion for Q2 2024.

What was Solventum's GAAP EPS for Q2 2024?

The GAAP EPS for Solventum in Q2 2024 was $0.51.

How much cash did Solventum generate from operations in Q2 2024?

Solventum generated $355 million in cash from operations in Q2 2024.

What is Solventum's updated full-year 2024 adjusted EPS guidance?

Solventum's updated full-year 2024 adjusted EPS guidance is between $6.30 to $6.50.

Which segments had declining sales in Q2 2024 for Solventum?

The Dental Solutions and Purification and Filtration segments had declining sales in Q2 2024 for Solventum.

What was the free cash flow for Solventum in Q2 2024?

The free cash flow for Solventum in Q2 2024 was $297 million.

Solventum Corporation

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Health Information Services
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