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Exploring AbbVie’s Cash Flows

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Cash flows

AbbVie (ABBV) generated operating cash flow of $2.6 billion in 1Q18 compared to $2.1 billion in 1Q17. This increase in operating cash flow was due to the company’s improved operating performance as a result of growth in its revenue and operating earnings. AbbVie’s operating cash flow for 1Q18 reflected its voluntary contribution of $150 million to its principal domestic defined benefit plan.

AbbVie plans to make an additional voluntary contribution of $600 million to its various defined benefit plans in 2018.

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The company spent $447 million in investing activities in 1Q18 compared to $684 million in 1Q17. Its investing cash flow in 1Q18 included $372 million in investments and payments made for acquisitions, capital expenditure of $119 million, and $44 million in net sales and the maturities of investment securities. In comparison, its investing cash flows in 1Q17 included capital expenditure of $95 million, payments made for acquisitions and investments of $63 million, and net purchases of investment securities of $526 million.

In 1Q18, AbbVie used $2.5 billion in financing activities compared to $1.8 billion in 1Q17. This expenditure included dividend payments of $1.1 billion in 1Q18 compared to $1 billion in 1Q17. In 1Q17, AbbVie spent $895 million on the purchase of Treasury stock. In comparison, the company spent $1.4 billion on Treasury stock purchases in 1Q18.

Share repurchase program

AbbVie adopted a new $10 billion stock repurchase program in February. Prior to this new program, the company purchased 10.9 million shares in 1Q18. As part of the new program, AbbVie announced a modified Dutch auction tender offer for the purchase of up to $7.5 billion worth of its common stock on May 1. These shares are to be purchased for between $99 and $114 per share. The tender offer expires at the end of May 29 unless it’s extended or terminated by the company.

In the next part of the series, we’ll take a look at AbbVie’s price performance and valuation metrics.

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