ABBOTT-LABORATORIES Earningcall Transcript Of Q2 of 2024

Key Points

• Sales increased 7.4% on an organic basis and 9.3% when excluding COVID testing sales.
• Foreign exchange had an unfavorable year-over-year impact of 3.5% on second-quarter sales.
• Second-quarter adjusted gross margin was 56% of sales, with adjusted R&D at 6.3% and adjusted SG&A at 27.7%.
• The second-quarter adjusted tax rate was 15%.
• Full-year adjusted earnings per share forecasted at $4.61 to $4.71, an increase from previous guidance.
• Organic sales growth for the full year, excluding COVID testing sales, is now expected to be 9.5% to 10%.

Key Risks

• The strengthening of the U.S. dollar could continue to have a negative impact on sales.
• Expected unfavorable exchange impacts of more than 2.5% on full-year reported sales and around 3% on third-quarter reported sales.
• Reliance on organic growth excluding COVID testing sales could present challenges if market conditions change.

Detail Transcript

Philip Boudreau -- Senior Vice President, Finance, and Chief Financial Officer

Thanks, Robert. As Mike mentioned earlier, please note that all references to sales growth
rates, unless otherwise noted, are on an organic basis. Turning to our second-quarter results.
Sales increased 7.4% on an organic basis and increased 9.3% when excluding COVID testing
sales.

Foreign exchange had an unfavorable year-over-year impact of 3.5% on second-quarter sales.
During the quarter, we saw the U.S. dollar strengthen versus several currencies, which resulted
in more unfavorable impact on sales compared to exchange rates at the time of our earnings
call in April. Regarding other aspects of the P&L.

The adjusted gross margin ratio was 56% of sales. Adjusted R&D was 6.3% of sales, and
adjusted SG&A was 27.7% of sales in the second quarter. Lastly, our second-quarter adjusted
tax rate was 15%. Turning to our outlook for the full year.

We now forecast full-year adjusted earnings per share of $4.61 to $4.71, which represents an
increase compared to the guidance range we provided in April. We also raised the midpoint of
our guidance for organic sales growth. We now forecast organic sales growth, excluding COVID
testing sales, to be in the range of 9.5% to 10%. Based on current rates, we expect exchange to
have an unfavorable impact of more than 2.5% on full-year reported sales, which includes an
expected unfavorable impact of approximately 3% on third-quarter reported sales.

Lastly, for the third quarter, we forecast adjusted earnings per share of $1.18 to $1.22. With that,
we'll now open the call for questions.

Questions & Answers: