Zimmer Biomet (ZBH) 8 Feb 242023 Q4 Earnings call transcript

Good morning, ladies and gentleman, and welcome to the Zimmer Biomet Fourth Quarter 2023 Earning's Conference Call. [Operator Instructions]

As a reminder, this conference is being recorded today, February 8, 2024.

Following today's presentation, there will be a question-and-answer session. [Operator Instructions]

I would now like to turn the conference over to Keri Mattox, Chief communications and Administration officer, please go ahead.

good and operator you morning everyone. Thank Zimmer to Biomet Fourth Call. Conference Earning's XXXX Quarter Welcome

are our chain, Ivan and today me Joining Tornos, EVP Operations CFO president Finance, and Upadhyay. supply Suky and CEO and

comments differ started get forward-looking to that will would Before during results we call may I this Acutal remind like you our statements. include

actual obligation of uncertainties. in Please the note, materially from forward-looking or inherent the even and by results these limitations statements due statements assume of detailed the and change risks refer no to of expectations those indicated to update looking uncertainties a filings these risks to materially. variety our to future we discussion for if forward-looking such addition Please a SEC statements.

will basis release, of turn within over these measures, non-GAAP measures. our and call that, include most non-GAAP to I'll Ivan. financial measures measures the Additionally, certain which of be of forward-looking calculating comparable website, the some With these measures directly an included Reconciliation our Ivan? can the on on financial which to is are for zimmerbiomet.com. financial distances GAAP explanation earnings call QX our found this

Biomet and to do, to here their super the for year XXXX. And dedication, for great their say want everyone, morning. I'd show company. my thank I in for their and this to commitment, performance members I you. for strong recognize put, almost like team Kerri, joining Zimmer just taking the you, our start their XXXX for Simply for a Thank XX,XXX was that thanks, to way moment the resilience call typically a to gratitude

billion earnings deliver between the constant almost the flow. in growth lives the we X while generated of in way, points along and patients. turbulence adjusted with $X In per by X.X%, growing currency our some inventory EPS. share X.X% whatnot. impacted almost year, X.X% grew EPS X.X% performance, And the the financial around almost million we growth that's and year. XXXX, as best-in-class And in XXX revenue of In revenue free basis leverage management the cash we

of top that It's to of very execution happy whether challenges. level in struggle We macro very, I some geopolitical year. just a to performance that's execution much the noting year complex think year. worth have in the challenges supply that many fairly FX, don't in with and but need performance, and bottom, did issues, we and I behind, it strong in I'm talk the inflation, this in macro the proud periods. in which deal a to throughout some again, was some So I'm about challenges still also it's XXXX. with of periods came headwind

currency year But having constant again, XXXX comparables, revenue in before, grown tough some in X.X%. X.X% XXXX, the by against delivering

level So grateful excited team. performance, all so I'm time, a as same grateful the beyond trend Biomet of the and beginning. very the that here and just Biomet. be is beginning performance at that to why confident of Zimmer when of At Zimmer just clearly, great and just is drivers it proud you, the can very I'm in this we making, that of note clearly the I'm comes this I truly the so realize multiple strong

in new great twice place. to bold size be The XXXX. But in got We product what I'll launches are that here early that have used the our start with it highlighting we in is of happening pipeline XXXX. pipeline

the not To level a that is I stable in Procedure behind just we've a growth environment. supply the stable ahead improvement we or supply. strong And of developing these have is evidenced great to seen given believe by execution. This We've created commercial we profile is demand compound got same of volume we market commercial that continue our this strong. execution growth a to see We're substantial highlighted. that flawless have a variety We as end reasons. excitement very and have. is fact used markets. Patient rates

in market in very better being for in the a the we leader X near is we think knees both market to and as is XXXX. growth average ago, And if as sustainable. as believe, been And WAMGR very not rates when today, exciting that's we range. at years And wish weighted hips, somewhere just company, has I enter meaningful being joined Back WAMGR increase markets the our pick go X%. X% again,

X% the back market to to growth comes So rates. not we're days when it going

and confidence us So is external best the ahead. gives again, internal that dynamics truly gives me

we When nothing short of these truly that have the strongest variables, future is of the no of then you can our all that the in sheet add claim we is company, fact balance doubt that that the history to right.

as So pleased, support well for XXXX confidence again, the thank beyond. investors proud their I'd for and in very and very to very XXXX our in like and confident.

We take continue biggest forward. to strides

than a basis So grow market we're financial an a to revenue EPS. share with of revenue that already this our guidance with in at XXXX commitment points committing to with are for our providing discipline. such company to growing being reflect type above per earnings faster a free to XXX growing cash bottom, our different least EPS, The top from flow today growth profile than expectation very and to dollars we XXX faster

innovation commitment. multiyear and X-year looking then not additional laser mode. deliver being XX forward here, longer provide no This And in at my We're every meeting. illustrate earnings over call strategic know I Day the ready performance. and we our Zimmer that X that this And we number excellence; of highlighted Analyst and wonder. to diversification. as to are has plan, stage when and because during on are you our by drivers we're I growth Biomet much culture; our repeat strategic our on will X that to [indiscernible] will in imperatives operational May drive to first two, terms being: long-range Biomet going frankly, which repeat in three, is truly number Those Zimmer the entered turnaround one, over that details imperatives is very very a will focus I'm will continue people that see number continue and to a I those the And

talk commitments. across -- how So our imperatives let's forward. strategic about X XXXX different will our these growth drive initiatives

the team culture, of in We that we sure it right business. people must the in right This -- what culture. the I've this and within past, decision-making, and it's First, decentralizing explained operators every customer. about the function members means, members means must level in at having to world. of make be people the and every empowering driving again, the agility roles and to right become closer we to owners support the got and the around act leaner, We team as across area

are at disciplined to level. every must set the in we driver in flow that cash or the of is revenue something in incentives an drive also growth most a pay truly free growth compensation of way incentivizing year fiscal this enterprise for important, very this And meaningful flow the durable Equally live we're performance. knowing fiscal generation a the for way much is revenue already kicked in our is fact performance. that XXXX. of example more across environment firm that -- meaningfully off that has An cash also free dollar across

in double-digit So in compensation to pay we, we think as people, again, of terms to need cash market. operational the adherence larger about growing this rates above top of flow we in a percentage to business second way about the is again, area at that of way company, bottom. pay a changed fact grow the changed we excellence. we dollars growing giving revenue And the that people, the free how And we

It press can You today's something do lightly, company. in is had certainly the update we already that once to choice it. press we're ensure tough right in the structure we restructure It's that the in greater the tough that again investments to that take release a our to and deliver you changes release, we enhancing operational areas it. we to efficiency to a closer see again, needed read to don't customer. and to It's business, simplify of mean make the

an do, something have not had that to we do something thing again, that and we but So easy to done.

is while not our in and more or reduce DOH exposure, free done growth the in days at our and obsolescence previous improvement how frankly, out by well already Beyond XX cash something hand are we years. excess on that restructuring, motion, full that This other drive excellence kicking levels initiatives substantial area the will the of operational reduce are programs in flow that, inventory also reducing Zimmer Biomet. place dollar in new days in will we've to that got which drastically our

the initiative rollout launch in product that across mechanisms to a X of operating thing cadence new we drive proper introductions In is meaningful launches, these doing launches is beyond product we're ensure global XXXX. of reporting integration each most we doing Second key or the make the product to let's the governance the simple year have terms, our the pricing excellence in to across And maximum financial governance to the restructuring operational product accountability of ensure that and structure, under directly we're geography. then enterprise. the first across Suketu, maximizing we're key organization the excellence sure X new a have the CFO, with thing

in reduction erosion over and we the last drive a While opportunity believe better dynamics. pricing even we pleased the to to years, price is X durable greater are much with X there more

the in generate is cash, of product growth. free beyond beyond or better to So area inventory flow thirdly, the around It's is then in improved drastically doing And of new restructuring the the behind area excellence dynamics. governance reducing pricing about launches. again, levels operational about dollar

continue In to in to the our going continue pipeline customer-centric expanded already to we're expansion very about We're new going as our drive R&D products. meaningfully to also are excited we these to continue where third vitality invest which in launch innovative margin diversification, years. product launches. of the that innovation sure continue We're to R&D. see last to to today. products, new with We're I'm from we and we index, has over fuel going make coming meaningful going X strategic imperative

our it at was the the Our twice with value what is of end associated pipeline pipeline dollar XXXX. --

where last we impactors, we hip in taper key enter navigation. market in the launches, lost categories or years, share in as XXXX, lack of triple the products hip And in product given like X area have stems the meaningful very particularly surgical we

the launches, regain lost. XXXX we product year where again, meaningful that is through the So momentum very in we will

excited about are in generate we continues where Beyond shoulder, excitement. Hips, to I'm great Identity

a identity. yes, very and it surgeries. market, being very entering in XXXX highly will We're in will for to the reverse shoulders excited about apply full in mode with the offering excited for We shoulder enter market that when and robotics differentiated both comes launch category stemless of about robotics shoulders to first anatomic

area the days of cementless launch, seek penetration knees our In our increase early within In to we XXXX, rates of drastically. the knee

more is Here details category XX% cementless assured knee to rate into even penetration and to committing that at in rate but in is the very our in the cementless the in those plans penetration not our U.S., XX% long. pace. our to we Again, Analyst the or are low Day, rapid range the XXs stay rest not XX% drive even a penetration the the for going at teens to rate in range

we're next-generation in robotics knee. Beyond about cementless, excited

way a launch to knees. great and smart are CMFT, therapies, in be integrates already fact different cranio-maxillofacial technology going cementless in that is restorative partial X fully which sports, world Persona exited We're implants the iQ, In XXXX. for about We is excited trauma the in of are thoracic, category we full only the knee we're that doing. the seeing data businesses, nobody foot extremities else about and best-in-class ankle, in [indiscernible], and growth that entering the excited XXXX,

ever And grow The POSCO of the above grew digit beyond, of will as expectation we year above. set in something the is digit XXXX, since continue and by entered or and a is this company, with comps. exclusion or realized second mid-single that not [indiscernible] merger mid-single to the we we've that, XXXX we as given semester said,

the really and some already about cadence come investments those multiple Analyst return in So -- in excited in a execution. mentioned in [indiscernible], to we great when innovation SEP. made There product our particularly the is launches in Day areas of of and of do the commercial I more we on later the spring.

So whole. excited as a [indiscernible], innovation about

as enable Our strong. the the Zimmer going leader over XX category new them to launching be products in establishing position Biomet or leadership, product so. going second different to We're XX development pipeline are in the new or Most is of months category. next the

going are spaces be in virtually X% market are that or And to above. growing plus them virtually, all of

here the in going. like surgery investments of particularly of stages we the meaningful what U.S., like quantity, a profile made happens for the the like care. in terms surgery. We've during I during happens market So in I'm and plans is whether that before and ASC also of the about here quality, what innovation care. innovation have the of all growth the ASC in side surgery, after What the happens innovation episode excited

And we comes and outcomes to the are stage efficiency, ASC solving intra-op relative of to delivering ASC, in problems the it best-in-class and when best-in-class the safety.

which internally, when will M&A, of remain going this Zimmer category excited strategy end comes where So relative capital will not care. by but Diversification happen innovation about Biomet's to our ASC it will through #X we're happen of really again, smart markets to the side just allocation.

level confidence is years, the cash generating in M&A, the a deep next flow make of free strategy best-in-class our our plans the with and capital. smart over our ratio, top to With recipient few

love do more buybacks share meaningful But we morning as at level. this we the have just and the time, at same that continue perhaps the to fact a optionality to announced I

given So this seeing I'm are by the M&A that the of in that coexist, the grow we team keep place, is know and come Zimmer combination deliver very their smart the plans [indiscernible] that above generation dollar free flow and XXX which regard. that Biomet can growth detailed to position to points. cash buybacks that focused and the strong profile XXX we execution has put I recommitting basis to in on upon energized will

a we faster In a will closing, we where X-year as is go This terms per I a again, of not And know beyond. revenue, to in the of with the point XXXX our where excited most last the multiyear are X% The flawless very establishing This at year ready, EPS. on share growing are team we're very commitments. and the earnings faster get growing importantly, is over minimum record than we're right free always So excited continue deeply in there. commitment entry plans in than to drive And track X the years. about execution, going cash always and based XXXX, commitment. is commitment. flow going we delivering trend, we're and of we're detailed to

and to going going that, mission With we're for to Suketu. world. create will of way, patients, the we and to the value, leave the [indiscernible] people our Along I'll around we're life call shareholder improving help over pain the turn quality of

Thanks, and good morning, everyone.

of mentioned, our and billion X.X% than Biomet earnings consecutive for year. margin basis the currency just XX%, cash for SET a year generating Zimmer segments well environment. Global X% year expanding $X constant the X.X% on adjusted over under XXX quarter Ivan of and performed year results a growth basis, growing all of while revenue full by fourth also flow. in while successful ended a growth in points, adjusted our currency more margin business As free constant growing operating reported X% Inside With with almost almost challenging second of operating growth Hips knees expansion of and that,

Also, revenue as a continue moving growth with we the and we previously growth, profile mid-single-digit earnings forward. half levered guided, of second to expect closed XXXX

fourth quarter a currency sales of on an otherwise an basis on XXXX about will currency billion, basis. Unless basis. period results. to and a and my the increase be on quarter Net be into noted, operating of and were same dive and a compares fourth reported increase in in constant the the will quarter Let's X.X% commentary XXXX, constant of fourth my it statements how adjusted $X.XX the X.X%

selling of We international X.X% was day about in had was points quarter. a XXX tailwind growth basis the and growth U.S. X.X%.

factor international robust a quarter As be business X.X% the recently by saw excited X.X% with regions. expected, with OsseoTi. Knees the growing the ROSA Persona, combined we growing versus platform, robotics third for our Global and and positive grew driven remain cementless across product U.S. our Persona X.X%. feedback form step-up the continues portfolio, to launched in sequential knee quarter we around our The all about

grew X.X% in international year, U.S. Knees full with the the XX.X%. quarter, growing X.X%. growing For Global and hips the grew X% Global

to segment XXXX. eager new in are offerings product of the with addition performance accelerate We multiple this of

For full the year, hips X.X%. Global grew

strong mid-single subsegments Next, the upper grew our The category digit double-digit the sports, range. quarter, areas these growth SET X.X% partially key with category. in offset growing by in in low other the the of focus and focus areas within was all extremities, CMFT to

the year. to For second step-up the the half mid-single-digit in year, a X.X%, grew growth including full SCT of

Finally, the ROSA another by driven sales. strong quarter, XX.X% our in quarter Global other of category grew

moving in share driven Now repeat onetime earnings we QX, did reported charge and by benefits loss year. revenue, per in was the GAAP goodwill in compared GAAP higher to GAAP lower In share per not the tax $X.XX, diluted $X.XX share XXXX XXXX favorable in that impairment a of to diluted P&L. prior a of count. increase results The

details with can driven margins, release. growth, prior in press better an by lower share of $X.XX is representing adjusted a basis, today's to step-up The rate. XX%. year-over-year diluted OpEx reported revenue performance our lower earnings The gross year, $X.XX we reported of be growth financial in margin tax the compared found in around tandem On per

better leverage, gross realized expansion. basis was across operating up prior XX the by basis in the Our primarily XXX year-over-year The And year. XX.X%, expectations, margin came up gross points points margin year, step-up mix year, from Adjusted by adjusted SG&A. driven we royalties. margin volumes lower XX.X%, higher XX operating for points revenue the efficiencies prior of above favorable from slightly basis margin was driven and year-over-year full representing was and

XX.X%, basis quarter at XX margin slightly year-over-year. up discrete line $XX the ahead our of was operating in quarter, driven more Net slightly interest with onetime the bringing $XXX expectations adjusted year, nonoperating our rate full adjusted was and favorable full and the XX.X% year. million expenses the full were tax for XX.X%, and rate overall other And in by tax to year points was items million in tax rate the For expectations.

operating cash and ended cash and with $XXX of totaled We million, we and flow $XXX liquidity. million. the totaling year million generated $XXX cash to free and equivalents cash Turning flows cash

completed we offset program than As a is Ivan dilution. annual required share which buyback $XXX million early more earlier, mentioned XXXX, to in

operating and year, million. the flow under generated cash just cash flow we For full of of $X.X $XXX billion free

balance Our leaving sheet strategic we as move remains strong, flexibility and continued financial us forward. optionality

Now moving assumptions, key erosion, on to XXX improvement from trends. to change historical XXX outlook our expected of into is XXXX, our basis including it's takes certain continued outlook points a pricing, financial account about be step which for to but

to a X.X% range in backdrop, of in Adjusted expect new diluted exchange end strength XX X%. markets see constant to foreign representing product growth supply. We introductions expect share per translating improvement to currency the growth headwind revenue X%, and earnings points, product continued $X.XX, of to $X to tandem in X% including XXXX in currency Against X% reported of continued of with basis growth our that we approximately to X.X%. of reported

recent point and than of per headwind an XXX basis EPS greater This on when the the expected is midpoint XX to points compared operating margin at implementation currency headwind an And share expansion have X basis on XXXX. $X.XX growth to for $X.XX earnings rates about has guidance a based or year. of Pillar the EPS about implies on

by to effective are and million. expected expenses in more were year-over-year and previously tax $XXX our with to in to We gross the that nonoperating about of efficiency to X. interest slightly be lower up expected programs initiated be is step conjunction restructuring XX% XXXX. Net And rate implementation expect Pillar as discussed, offset than margins other

XXXX referenced expect the year XXX that earlier. share $XXX about outstanding, with We buyback to end the I lower than to million shares million plan due

flow the growth in or $X.X Finally, at midpoint. be billion our about $X.XX billion free the cash to XX% we range expect of to of

streamline cost select initiatives reporting As maximize program footprint restructuring XXXX. to further simplify our along a we savings Ivan shift organization operational other the in spend and mentioned, late how organizational These in structure, lines, efficiency. order we with programs initiated above and across further global our prioritize

to total to This expected exit result deliver run leverage about to $XXX rate charges of areas a the million in rate. $XXX in as cash expansion million earnings X in margin program is million meaningful enabling next invest while savings to XXXX, years step-up $XXX in over driving tax and us we despite up and priority

In of of the be second currency lower for the cadence expect of to higher growth end be the digits at through the mid-single digits. the first will year the end revenue the year, terms half half at while constant we of mid-single

impacts. less in impact slightly increases gross and step quarter, choppy year XXX QX third-party about Also, lower a be are gains of XXXX quarterly be will and realization will and and capitalized basis second the FX headwind be XX point expected XXXX. billing than of immaterial be point XXX down half tailwind. will results manufacturing point XX hedge due each expected to the cost to to margin QX point XXXX to observed Full due is XXX or versus in basis tailwind. QX basis day tailwind a be basis to will QX

first standpoint, in the cadence gross of higher a margin be will year. half From the

summary, operating followed was restructuring Additionally, with maintain in the being into another be first expect the of that XXXX and the QX second for in because of will strong half by momentum we program, margin beyond. higher QX. timing half than we In high XXXX year the the expect watermark, company, and our to

to turn I'll back for Karrie over With the call the Q&A. that,

brief session, follow-up get many please to single question that during possible the through A quick [indiscernible] a so as questions call. X as to just can limit we yourself a reminder and

[indiscernible]

Biegelsen to We'll Wells go Fargo. with Larry first

CEO, first a on the guidance. love XXXX nice congratulations ask I'd to about year -- I as here Yvon,

market. just in Suky, the find guidance does incorporated would conservatism it's growth you guidance? the about should end for that And you And about the talk in of philosophy the Just assumptions How that? -- buyback, -- the Yvon the $XXX targets? you're your imply to get have constant . key What M&A 'XX. the range? for any assuming X% recon interpret on that good talked million high What the we to currency quickly, hard X% to

Thank Larry. to great you. you, Always hear from

the then parts talk rest. and about the X Suky first take can I'll So

embedded the So guidance micro for X% in the we're confident which XXXX, on and reasons. macro is very to X%

So macro believe most by to very markets heard our the healthy. peers, backlog, now from be a perspective, from you beyond of the are -- We continue going the to the healthy. markets are

patient You got the patients, dynamic you younger ASC. an of into cases got better demographics, moving

more the in on, it's go You where I X are healthy. shorter, rehabilitation surgery U.S. got just days seen of days. processes. markets can but X better, you've very not in the days,

And launches. of a are hips Most hit got cadence the product in then X a of the will to product micro penetration second in We again material be new very more them product ROSA. got meaningful launching perspective, [indiscernible] to new from We as and of a set, you of our we're introductions launches cadence year. the and in going cementless later we which year. continue going to increase got We're XXXX, in new shoulder. be early semester in

basic. We make of product and we minimum healthier of Relative confidence amplified So dynamics miss new commitments X% a it's and very them. to to it launches, to guidance, again, range the market when philosophy great by don't the X%. gives my execution commercial combination us the X% comes on

operationally, we have what in We headwinds We that we that had. whatnot. the the study know in and we're study a dynamics, better around had don't we we supply XXXX different So place.

driven comment on to through and represents my and to my commitments. make the opportunities well-stated philosophies deliver very So just going commitments. year. at raise guidance those these not there are nor and to whether is I'm philosophy exemplifies and today making live bid on of commitments commitments, commitments

that, I'll it to So question. second Suky your on pass with

for say to question. I imply all, million outlook question, in M&A the short your deterioration And first our Larry, answer does buyback, share not. Yes. of targets. the the business. I in demonstrates thanks And confidence $XXX in the this would think, our some say, absolutely I'd

We I power the smart perspective, that company as still We really and do based still to will a well as think has firepower share got see Ivan the where talked is about. in the very from we've significant execute to as even sheet heightened we still of tuck-in acquisitions. firepower prioritize favor the that . But to strategy a backdrop feel as results doing well. M&A acquisitions we both. level forward-looking buyback, strength on M&A, midsized balance of

any So is again, answer, the short deterioration of see don't no, target. this we as in type

Yes. We'll Matthew go Sandler. O'Brien with Piper to next

sales, the one. Evan little of stack start still a bit, expecting, a in competitors, it. another or of but were It what performance maybe quarter. Just on but to below better X below Suky, knee we on bit a close the your was it's XX% little than X-year basis, not quite

going here range, order to this performance a see hit very in being that's 'XX maybe need So I which in think morning. guidance anticipate questioned I to good that to the little bit would is

Persona have specifically macro quick is environment you of between what there then in it And between outside So the the 'XX? I a do the in confidence IQ robotic cementless, franchise that gives knee here follow-up. between

Thanks, Matt.

we're pleased with digit, entire kinds do but And is know you we the expansion. just relative to I very all your of then no that got quarter. for it [indiscernible] performance growing We happens with double was business knees to days XX to don't growing entire volatility, that, our business. don't the with the line attention to the comps. So job working X is expectations quarter, to quarter. really pay X.X% EPS XX year performed a what solid acute for there quarter, and with in the We year, for frankly, and in a

when X comes to analysis, XX it about knees, we look whatnot, look quarters. if a to take X talking the to but is you performance, there. XX hips at do to you're run quarters, performance So and And the

IBMs here. Speaking timing did we in orders. see of the that largest some knees, of see did our for U.S., in impacted QX volatility some we of

the knees. had, also of versus our competitors ahead XXX let's XXXX, in points basis strongest were tougher We at of in comps where particularly QX remember, we U.S. some

And then the where U.S. again, hips, when both that's in you competitors look outperform the our we in its and QX, quarter at

So again, market given in share. any all And the do trends continue the look X X just show X, at #X be this trends. volatility, attention to and that quarter. all we to gain pay these we the continue acutely we downs, to years player ups don't and We news, particular later,

guidance fact question the your Relative around to of in see increases second the that around part what we confidence cementless continue is XXXX, the penetration. to gives us

we to penetration, in solved continue for in commercial execution this in ROSA the XXXX. periods great And we We backorder that have seen a many ASC. in headwind knees, which was had challenge the see we'veee increases

So going are very in acceleration very about around where in are is, knees we we're the into confident and confident we XXXX.

Appreciate or lot a there's cetera. XX -- to things this But year as et of coming result. of significantly suffer well, that. products, headwinds are ton have of restructuring far inventory how in and days in space. 'XX Follow-up is dislocation those levels even potential just this 'XX good trying new as in in on you're lower -- some you as lost a And factored potentially may revenues the then you terms as those into

the restructuring we've with in just is management let in embedded and and do everything me begin wise given. Well, the Anything guidance answer. simple inventory we wise

of part that's that. So

but inventory going In not reckless. or terms inventory to bold, we're be management of reductions,

leftover we're not key is be whether key We key it's inventory sure it's whether components we are for inventories lot SET. components the needs did those to This of hips, brands. reducing from making it where the integration a is key it's the that do. Persona, the that whether the in is So categories. actually is in

-- frankly, reduction to doing areas, the So in in going noncritical again, this be is we're inventory noncritical countries, thoughtfully. so

the in and terms restructuring, virtually in office. In we again, changes we will of I people happening the given. the noncustomer-facing that inventory guidance reductions this these morning, announced we've reductions embedded in and the tell you, are are make back that all are

Matt. Thanks,

We'll go Marcus . Robbie JPMorgan. with next to

just line how how might was knees? guide those much beat trends SET hips hoping in of coming ask strong well, we the versus that to And underperformed, as is the you growth wanted could items the and from And line the items of Street. and anything? out have think What the about break part did what -- I of if some versus Those XXXX? Great. I different on were there. X that other.

Thank you, Robbie.

set, So suspects. solid grow XXXX for quarter digits, The semester use are frankly, of the key committing solid last to digit X% around in in XXXX. growing and above of mid-single around for drivers mid-single

product execution. in focusing with extremities, geographies single digit, We growing supply, continue do new to that's really the well that's double great just upper upper that's launches digit ASC, commercial stable most

upper CMFT Craniomaxillofacial We years single well. we is continues X, Restorative some where digit. we challenges finally are Our digit, in business there. X had did see those thoracic a here Recall reimbursement that double Therapies business And the stabilized behind. business, our to do and U.S. recall continue those over CMFT again, the last really we And to I X acquisitions really do that well.

now. business then So you've acquisitions. clip med, growing at a therapy restorative nice we've seen the biologics done some sports And

line expectations. some to have but with in challenges, perform that We had continues

you, out work So we tell decisions, foot We ankle, X going to got considerations of some some got Robbie, really do. to category, the X I some make. businesses strategic will and the Trauma, well. are within

be digit be here growing sales investments in think environment. U.S. got enter Frankly, we point As has the of terms than where in is it's higher This the I see we that. we in Heavy the and We the to dedicated infrastructure the mid-single geographies, some year innovation, ASC got emphasis XXXX, in digit. going mid-single to the of specialization. entry.

forward. So moving confidence see to again, in going growth that profile the full we're

the lower a exclusive digit quick mid-single of and half of on end . Suky first the inclusive benefit The clarification. for Great. a Maybe second guidance just that higher day half. in selling then or Is the follow-up and in

day benefit, is of inclusive That Robbie. the selling

. Yes.

Can we the next go question.

next to We'll with Citi. go Joanne Wuensch

And cementless, second why you benefit is then to the are can of to the through down do us -- to think my question has dynamics what for what math walk that? year-over-year, XX% that? curious margins needs excuse you cemented be XX%, or but our of I'm me, gross XX% moving being expected somewhat smiles of with are to the

expected. cementless. with we won't by as which basis the we improved up really that previously gross still well those on margin in as did margin a I'll FX profile thought gross nice 'XX XX around, they in loss generated margins FX it gains, year-over-year, pretty about at really over into driven same Overall, for some better we hedge of we that Suky. it's level, Ivan might Joanne, of a to down gains. Yes. in the -- They on the better points then pricing, pricing X and XXXX, year-over-year. communicated at gross slightly that and had we mix hedge 'XX, year got erosive Overall, start but drivers talked pass are had primarily good throughout had repeat had get 'XX. we XXXX as length than

of able we're of slightly large capitalization XXXX. we in gross seeing manufacturing, the of those into costs end overall, third-party in just see feather also, of offset we're But do some will headwinds, But towards X end of a to back headwinds. the versus expect to component the Despite in 'XX those 'XX the down increased back margins P&L which backdrop around the that.

would XX you operating if that, take which an midpoint the you our into think basis said about implied of increase point guidance, an about that of having EPS margin I XX%, back year-over-year. Now represents

operating the as margins through step efficiency may increase revenue seeing and are growth margin better you gross slightly, company. while down drive so we And

see with and area. in of up again, make great the calls P&L. thing we've can We puts are there that other X headwinds got efficiency in where optionality So throughout a areas. is and we tailwinds lot The

we now row, deliver able in years I we're environment X think you've all challenging 'XX and in years, once earnings. margin or levered to a X in a operating that which, seen to grow continue

the for question. thanks So

to cementless, relative you as give again. on much I'll Joanne, your And as question

an the combo pricing to we dynamics, of So and with time frankly, XX%, closer around in we starting cementless additional XX% disposals form in of Persona to the to revenue around cementless uplift XX% not. we with ASP with see [indiscernible], see or uplift basic with that of the robotics XX% the ROSA, XX% drives knee than the XX%, the

see dynamic that's we in ASC. the particular in great a So

both exit to expectations Our get near penetration range. into somewhat we'll to XX% with today XXXX, the in on XX% cementless XX% XX%,

not fairly it some some the XX%. But plans I'm you market when our going given at developed the And a that have to to commitment today. to and see is comes uplift, work the the We Analyst of be there's getting the give already Day, long-range a peers you going will by being fact believe our of to that that quick done. trending

going So XX% long is again, you be should XX% a not expect that to to to getting journey.

of but XXXX of launch these dynamics disclose dynamics the U.S., outside the in the excited pricing other Japan time I and launching are when U.S., in in we're in XXXX in market. All will about is the the key markets another right,

the to So here cementless. those dynamics when it are comes

Katie, can the question next we in go the queue?

Ryan with We'll go next to Zimmerman BTIG.

on Following guidance. up Larry's maybe question about

environment. You at market the clearly, we're And being WAMGR X%. talked stronger about a in

guidance basis Maybe the one, is . basis potentially rate thinking a mix as lower. if I about contribute of help as that's at how just the that product to the thinking contribution guidance, want just XXX, about so pricing it with XXXX, product out. flesh maybe a points. you're to about contribution higher to components little points us Or XXX you're think it? and market if see, in a mix going to suggests XXX I of And XXX headwind

years, are early we got elaborate, significant. in hip Yes. products. that in launched the new to XXXX. products I and call product -- in I'll going again, mentioned XXXX, giving be around meaningful which I'm X We the in not products not lot the it's we to products all Suky, the the believe And quantify We a don't is got I to mean launch. we meaningful different year be are Shoulder, and of this large a to category. believe Rosa got X market X%. it's going it fact to getting launched try We that the these in going we is simplify XX same next year let's but in. late X%. model but contribution, but ways, new it got

has So new contributor a very again, you should the guidance. product meaningful think of to introductions

to we headwinds Add comes say between #X, the got fact in supply, on confidence when had we going. have that XXXX that it would #X, we're I to we the don't that where

And the actually holders we're see to of don't ASC. are we of see headwind a to ago we I the Joanne, which Beyond X about launched comes contributors cementless and dynamics it that to confidence as hear a tailwind, That's that years the products We but when in the to the be uplift to the a it the as when to Rosa on movement contributor. about that, we comes going to main shift mentioned guidance. some get accelerator that excited into see not are we going the ASC.

else Suky here. have know, don't I you anything

that's said. think well I

One Iron is pricing land. that in in set of that points a key is the erosion assumed

Right.

then And from helpful of kind around both question just margins. you. That's Okay. to on of dovetail Joanne's

margin, about year. heavy doing lifting are operating Suky, this clearly, margins gross You talked more

of are XX margin assuming that from some line points leverage much program expansion in that's restructuring yes, driving so or of And so is you how the benefit, operating about much for it. that top is And how expansion? basis

Yes.

the really of being to with overall with gross about it a year-over-year. of flat take. basis revenue So coming by key expect leverage or is as operating increasing margin points, could R&D percentage margin give driver And from to OpEx sort and drop down even that's slightly, sales XXX you

in are So programs SG&A. the term restructuring focused the really efficiency the on near in

margin help are of keep stable that we and to of maintain full program, over working on inside things gross time. However, inside COGS,

to supply going the around to revenue-driven XXXX. more as wanting but SG&A. they take forward supply your we have move to to are you as definitely not primarily moving Those longer beyond corresponding are you're reductions. going and But expect, ability time. nature disrupt of realized, and a can demand, right. It's how bit things in for and is prominence little like 'XX, characterize you way that chain and reductions a and be they bit little E&O get Those as site more things a SKU midterm are inventory all lead the optimization, rationalization, Naturally,

Katie, can in the next queue? the we go to question

with Steed of We'll America. go next Travis Bank to

million for is you I the the for and and to year to that Or that $XXX cost mean drop ask wanted longer going beyond that margins line? does called -- reinvest out this of are year. in guys about the kind of to savings plan to that what this Curious if you term? bottom through kind

Yes.

that a for would predicting be was exit the be line. run million savings of the or dropping we in lot of bottom about that rate a that we XXXX. it XXXX, year we X-year So characterize $XXX to we're expect period. over we're rate $XXX way And half it the to as million run that about

you operating midpoint at see As . can with point in our the suggest margins. about increase XX guidance implied basis would an

cementless hip amount [indiscernible], And uptake so bottom, franchise and the uptake launches we've to Persona of we're in that efforts that portion we've around taking also ensuring a it commercialization hip. commercialization and the up dropping our product of actually got significant a shoulder ensuring sets reinvesting ensuring back but that appropriate that launch, areas, portion got pretty the priority instruments our have for as good we're through as for in right the the well level ramping and we execution ROSA new of into our

the back areas the that's pretty of program. a So row. it us and while our now enables to about really margin dropping into great significant substantial for expansion efficiency both, is It a reinvest this in third thing combination priority year

impact comp Helpful. you on margins to And an that's out, And curious new M&A. going that then impact on on material plan or just enough not have called if the to margins?

change the there's on EPS years any curious if from M&A? of been Just solution X

Yes.

really in have and material embedded any our to guidance. impact, it's not plan, comp the it's On going

right? of biased mix how focused shift I think it is more more growth. Whereas about comp previously, plan designed, that a it's towards and revenue was

balance way is do a and bottom top between all line to greater trying flow. get we're what now think I through cash the

a guidance standpoint in embedded So into dilution, the of in that a again, increase from to is still dilution think all think for how about comp. 'XX. shift it's years And is our we versus we Relative about an X mix really comp reasonable.

hopefully Of cost as kind time, debt, where of course, just inside today we But be guardrails. one that's like come as . to our well it the given that. valuations over is going of of of are where down which to we'd see

can next queue? go to in the question we Kate,

We'll to go Baird Johnson next Jeff with

Ivan, Congratulations passing is ROSA 'XX maybe going for shoulder that to be a mentioned you in year launch. not late

replacements. that -- timing shoulder, you anymore. And the of in technically I'd hearing dial obviously, shoulder of could interested surgeries ROSA uptake on be Just about on view kind more your challenging.

I role in think some robots questions what procedures. those about play initially can

of that don't placement does ROSA how I uptake the help number. think heard just So I a ROSA

an kind were placements I exiting you on it of give where annualized think Any on ROSA . of basis. sometimes kind updates XX

Jeff.

it's to late this think So meaningful. I as launch. confident got say what to just I a be think very going And mentioned, going it's to Rosa be not careful that -- say I'm lines very be I Shoulder. is for I'll I I that about time XXXX

demo academy there matters. And at demo very year. numbers, shoulder It Relative the a the you or being placements ecosystem. where surgeries, it environment it's should be us believe this reverse the installations hopefully with second medium. beyond your ASC procedure. not, and week going meeting. next product. to speed be XXX fully anatomic to question going integrated and academy per going accuracy an and CVH the we're on be the market, expect get of to first ROSA do to it's around simplify high-quality to ready is would both whether at rest going It's to traction complex applicable I to a for the is going to great he's So in

expect to You to year. at rates per should minimum us X% drive least of X% penetration

large I expect installations You environment. of ASC going an should shall of you mentioned these the [indiscernible], Ross ROSA pull are percentage in to Rosa into installations a cases, to go going that as -- X/X to are overall cementless. that expect And earlier

are I'm very welder. again, ROSA and So with momentum excited where we about great

in think hedge in bad. rate. market, gross basis at settlements get obviously, think a If as as seems just normalize X% above maybe as I should is to XXX constant the margin, of into X% follow-up, points good And getting guidance E&L currency about settling about it like down, you the I less to a the pricing market some XXX coming XXXX,

out FX sounds want tax be thinking But of that Analyst for an if not target. of And guidance If then, it kind share SG&A here it to feels LRP you going margin, sustainable got were balance So say gross buyback, commitment year in I'm XX.X% and midpoint headwinds. a it savings and out . And don't like could a lay headwind growth, here sure rate facing sounds XX%-ish there my your to all of together, longer-term a at there cost kind your big or you've plus that and be reasonable minus a is is Day. kind EPS about? anything EPS improving day that of I flow like course, the which of least including roll the this initiatives the of sheet like forward. on is cash XX%, not to growth would rate it some side.

of Jeff, what I think articulation that trying across. we're and to was get summarization actually a really good

expense, after rate, reported like guidance . suggest about overcoming X% of and the both would right? to In you at of FX range. at tax look today our That's ends headwind fact, points interest EPS, on basis things X% between if XXX it nonoperational

X%. X% point So in to again, basis drag XXX that's a that that's embedded about

that a you're double-digit it, way. durable ZIP way EPS in sustainable about be the thinking code we So could on low in

I think, yes.

the in question queue. another have you do Katie,

Newitter next Truist go Securities. Richard to . We'll with

and Just I on for anything presentations. or to respect we was Canary to lookout should be with week, the data AAOS with wondering, that next rather

had a I then at of mentioned prior expecting you possibly And analysis, a think were . on AAOS. have also follow-up. kind GLP-X the I call, you data

the Richard. So yes both, answer is to

going some costs, soon, reimbursement. value got how on have spoke We from market data intervene on 'XX. in Personal back finalized. and we got October. points this how Persona product We We release we enable We be billion On proposition we release surgery in product IQ, in when reduce that add-on especially there some full data X a overall to complexity a will in GLP-X. which taxing. on can the have got a can, moved XX is by will we needed. reduce about IQ, technology with the understand NTAP market we'll So of data when done got to is limited it intervening data episode points the We've over new pretty to We payment, care, clinicians post points.

So launch full that's mode. in

that a will at and going we've submit facilities. always will at other Clinic, some We for -- point the some question, HSS very of IQ the Persona experiences submit coming me spring the we And seen data [indiscernible] some ask Cleveland to this in around summer. with we're bring

patients So done to excited IQ we've of with the that And a yes, be , with And are then what everything of number in by what it remains sharing presurgery, will a is I that to of in the we're going to some we're that more using we've so and tell have Persona you conjunction the is data GLP-X actually terms is that XX%. come the Academy. in seen the we Academy. with far, tracking GLP-Xs, GLP-X for tailwind number XX%

conversation And So a by I'm is glad all this headwind. muted. that, is being not means that

what, or a if where line and to to like piggybacking given off the XX% in range earnings over commitments single-digit period, be sustainable or it Jeff's high And market based given with your sounds be all top end at X-year Great. confident plus also the a potential you have feel earnings you the -- should reasonable your even just earnings like in assumption double confident the kind that even no Is question, or that floor, and and X% than a dilution earnings going growing potential faster on is potentially dilution then digit a with feel matter growth different provided? growth to you're low worst. we a commitment your WAMGR. rate It X.X, of commentary sounds to

a sizable what really are Well, difficult still world tell, a you can do no very correct? deals to gotten sustain asking I've right? in M&A equal. situational. if Because That's transaction you're that X It's where you created I that is, think

Leaf front to get don't out I of to so happen theoretically EPS And to what of footed inside deal. Maple kind sort there of hypothesize want could

what our the can perspective I per from growth the also that you we organic have So underlying balance take that with earnings at that think is away operationally, X% that should profile. with that levers sheet of deliver strength an organically X% to attractive but we share

the time think if I more there's have . in Katie, X queue. X question we for

We'll Raymond Jayson go next Bedford to James. with

Yes.

I'll quick. Sorry be about that.

remind me the impact these the what challenges just you 'XX, that On incurred way was there on year, the impact of supply to challenges in meaning revenue? the quantify can P&L you . last on a is

more to new our don't Suky. for make business, reps hunt It's more if how you cases. of actual They're But to Jayson, impact hesitant exactly supply. bit they say an Yes. really one, there and a days little for can they to the is go have a right? like is out Because and feel impact impact go actually going conversions sales. on ability try obviously, the to sales on back order meaningful be and shift bit

the that as frame help to the going confidence that impact bigger sorry, for very I in that's growth of it's year. of to organic believe headwind in way points believe to for it's difficult is the probably last actually tailwind trying to tailwind percentage it is a year. but it delivering year. a We at look X% We was give in us -- last this part from that's X% So part The do.

will to that some converting as expansion instead headwind accounts. Suky launches, new revenue Persona internal from couldn't releases market I And friends product then market third on our have we had Conversions, of don't tell the versus a these we had we we data of of family full Jayson, mentioned, an embark and What new prioritize launches. product you, supply share. perspective, global to We do limited example. that customers releases points Osiatis, is

we in that So done the earlier the could Japan, in markets. largest world, been around have We market second used other have I could differently. example things

us. So it behind is sizable, and it is

vein, XX look Okay. That's about to second similar to just point half the a Russia. impact in I you we basis as net Is helpful. growth 'XX? talked Maybe a a Russia from think tailwind revenue along

biggest is. that's we licenses the in secured have XX would third the to we is. it's less impact It but that all a that tailwind, say saw basis in It given need when now most 'XX. operate, because pronounced quarter we than the I will probably points, be

Jayson. the question, Thanks for

wrapped and the we're think I queue X:XX. just up with hitting

So remarks. some for I'll turn it over to Ivan . closing

Thanks, I'll Sure. Kerri. here. keep short. to got it get going We

the almost minute in I members or the job the call -- a want executing thanking here we So less. the that team lay by want a plans to I remarkable end XX,XXX that start Biomet, way I team we're the forward. started at doing Zimmer to members,

revenue flow. growth double-digit in 'XX in with after X% So XXXX. And EPS cash grew of points, X.X% we're a at X.X% and expansion nice expansion X.X% XXX nice constant currency now growing midpoint growth, in EPS that's free basis with committing least to

But team are that doing. about proud XXXX. very we're of work So the members very excited

to financial moving revenue to than moved committed about excited the remediation I'm I'm We remediation from and have excited faster profile are free faster we that products. we're than growing cash the EPS about -- to from pipeline flow innovation. of EPS.

so that Biomed. confidence the going everything or Zimmer is year confident we're is during be that far And solid year, very for seeing Biomet to as a

thank team you, this Zimmer your Biomet. So attention and at thank you morning, for members

participating you today's for call. in Thank conference

disconnect. now may You