Zimmer Biomet Holdings, Inc.

Good morning, ladies and gentlemen, and welcome to the Zimmer Biomets second quarter 2024 earnings conference call. If anyone needs assistance at any time during the conference, please press the star followed by the zero. As a reminder, this conference is being recorded today, August 7th, 2024. Following today's presentation, there will be a question and answer session. At this time, all participants are in a listening mode. If you have a question, please press the star followed by the one on your push button phone. I would now like to turn the conference over to Zach Wiener, Director of Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. Welcome to Zimmerbaum at the second quarter 2024 earnings conference call. Joining me on today's call are Von Tornos, our President and CEO, and CFO and EVP, Finance, Operations, and Supply Chain, Sugi Upadhyay. Before we get started, I'd like to remind you that our comments during this call will include forward-looking statements. Actual results may differ materially from those indicated by the forward-looking statements due to a variety of risks and uncertainties. Please note we assume no obligation to update these forward-looking statements, even if actual results or future expectations change materially. Please refer to our SEC filing for a detailed discussion of these risks and uncertainties, in addition to the inherent limitations of such forward-looking statements. Additionally, the discussions on this call will include certain non-GAAP financial measures, some of which are forward-looking non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures and an explanation of our basis for calculating these measures is included within our second quarter earnings release, which can be found on our website, ZimmermanBioNet.com. With that, I'll turn the call over to Yvonne. Yvonne?

Thank you, Zach, and thank you, everyone, for joining today's call. Good morning. I would like to start the way that I usually do, by taking a quick moment to show my sincere gratitude to the north of 18,000 Zimmer Biomed team members across the world who each and every day go above and beyond in delivering on our mission, alleviating pain and improving the quality of life for people around the world. That's what you and I get to do each and every day, and you're doing an unreal job in bringing this mission into action. Thank you for your commitment to Zimmer Biomed. Thank you for your tireless work And thank you for the very strong performance so far in this year, 2024. We are now past the midpoint in the year, and we're growing 5% after having delivered strong performances in 2023, 2022, and 2021. So the trend is real, the performance is there, and I'm deeply proud of the work that you're doing daily. As I've said countless times, the Zimmer-Baume workforce and our culture here is truly one of our key competitive advantages. In today's call, I'm going to give some opening remarks, then Shuki will cover financials, and then, as always, we will leave ample time to answer your questions. The agenda for today, first, I'll cover some perspective on the quarter. Secondly, I'll discuss the drivers of our performance and why we are even more confident than ever in our updated full-year guidance for 2024 and why, already looking into 2025 and beyond, we're also very confident that we'll continue to deliver on the long-range plan commitments that we outlined at the end of May at our first ever Zimmer-Ballamette Investor Day. Recall those commitments were driving revenue growth at least at mid-single-digit growth rates, driving EPS at 1.5 revenue growth, and driving free cash flow growth at least 100 basis points above our EPS commitments. The third thing in the agenda will close with our strategic priorities, those being people and culture, operational excellence, and innovation and diversification. Starting with our Q2 results, we continue to be very encouraged by our global performance. In the second quarter of this year, 2024, we grew 5.6% on a constant currency basis. And with that, we have now closed the first half of 2024, growing 5%. Worth noting that this 5% is versus very tough comps in the first half of 2023. The second quarter of 2024 now marks the 10th consecutive quarter in which Zimmerman has grown mid-single-digit or above. So again, a trend in the making that is real, and we're very confident that this performance will continue, if not will accelerate, as we continue to move our business forward. Against the backdrop, in the quarter, we did see some weakness early in the first half of the quarter in the U.S., It's worth noting that May and June hitting the U.S. were better than April. And in July, the U.S. recon business actually delivered mid-single-digit growth. So choppiness through the first half of the quarter and then an improvement through the second half, which has continued with very strong performance through the month of July. Our OUS international business, after the U.S. business, has delivered above expectations. We saw a strong demand in the key markets. across both recon and the set categories. So overall, very diversified, solid performance coming out of these markets. I love the fact that in Q2, in our second quarter, we continue to deliver excellent performance in our other category. This category is primarily focused on enabling technologies, primarily ROSA. We saw a strong demand for ROSA, growing double-digit in the business, And we also saw strong demand in enabling technologies and navigation systems. As we have been saying for quite some time, we want to be more than just a leading, reconstructive Nissan Hips company. In key geographies, we have a really high market share. As an example, the U.S. or key countries of Europe and Asia-Pacific. One example of this diversification journey has been set. We've been committing to growing SET at least mid-single digits. And Q2 of 2024 is now the third quarter in a row in where we are growing mid-single-digit or above, a trend that we expect to continue towards the end of 2024 and moving into 2025 and 2026. So nice growth in other, nice growth in international, and nice growth in SET. One area that I'll tell you we've made significant strides is within our HIFS portfolio. We did lose some market-sharing hits in the U.S. and all U.S. markets over the last three to five years. And as I said over and over, this was due to lacking three key product items. Directed tier stems, what we call triple-tapered stems, elegant navigation, and surgical impactors. As we see here today, we have remediated those gaps. We have 510K approval for Z1 or triple-tapered stems. We are regaining market share already with Hemer or Surgical Impactor. And today, we have the most comprehensive navigation in hip arthroplasty. Not only do we have ROSA Hip, we also have the only 510k FDA clear augmented mixed reality hip navigation platform via a partnership with our colleagues at Hip Insights. And now, we have also signed and announced an agreement to acquire OrthoGrid that is going to give us a leading position in navigation using artificial intelligence devices. So we have the most comprehensive suite of solutions in navigation, in direct anterior stems, and in surgical impactors, not to mention having the best core implant technology with products like G7 and Avenir Complete. So the expectation is to grow again above market when it comes to hips and regain some of the market share that we lost over the last three to five years. Moving from HIBs, we have developed and we are today the first and only robotic assisted solder replacement platform in the world. The feedback on the cases we've done with ROSA solder continues to be very compelling. And as we enter late Q3 and early Q4, we expect to see an acceleration of those cases. And in 2025, We expect Rosa Solder to be a very meaningful growth driver for Zimmer Biomed. We recently announced the partnership with Think Surgical. This is gonna provide our surgeon customers optionality across the robotic landscape. We have conducted extensive training. We've done voice on customer and the feedback on this partnership with Think remains superb. With this partnership, Zimmer Biomed is the only orthopedic company in the world that will offer both a handheld CT scan-based system in the T-mini, exclusive for Zimmer Biomed platform, as well as a simplified CT scan-less robotic system in our current form factor of ROSA for total knee arthroplasty. We're excited about the optionality, and we're also excited about the fact that we continue to innovate at a very fast pace when it comes to ROSA. and we're expecting to launch at least three new ROSA modalities in the next three to eight quarters. From an earnings standpoint, we generated $2.01 of adjusted earnings per share in the quarter, or growth of 10%. This is in line with our long-range plan targets outlined at our investor day in May. Inside of the strong performance through the first half of the year, The team continues to execute on the three strategic priorities that I keep outlining in each and every earnings call and at every Zimmer-Bauman meeting around the world. The three priorities are people and culture, foundational to everything that we do, operational excellence, and innovation and diversification. As I said in my opening, people and culture continues to be a key competitive advantage for Zimmer-Bauman. I'm proud to share that Zimmer Bauman was recently named one of America's best midsize companies to work for by Time Magazine. This reflects the strength in team member satisfaction engagement or revenue growth profile and the turnaround of the organization now behind us. On the second imperative, operational excellence, we continue to expect to grow constant currency revenue at least at mid-single-digit level with adjusted earnings per share growing at least one and a half times revenue, and free cash flow growing at least 100 basis points faster than earnings. It's a commitment that we're making not just for 2024, but also for the long-range plan 2025, 2026, and beyond. This is a mindset that continues to proliferate throughout the organization. We pay people on delivering towards such commitments. We have trained people to deliver on those commitments, and the trend, as I've repeated a few times in my opening remarks, is in the making. In the past, when it comes to innovation and diversification, it's been very much portfolio-centric, moving from lower growth markets to higher growth markets, putting in case the super performance instead. But today, we're also thinking diversification from a geographic mix standpoint. We want to continue to invest in key markets outside of the U.S., where we see an opportunity to deliver sustainable revenue and profit growth. We're encouraged by the sound performance that we've seen in our OUS business, and we expect to continue to accelerate growth in these markets without compromising or margin performance. In conclusion, we are very proud of how far we have come as an organization in terms of the financial progress, the innovation progress, and the commercial execution. Our second quarter results are another proof point that we make commitments and deliver on those commitments. and we fully expect that the trend is going to continue for the balance of the year and beyond. We're confident in our guidance for the year, and we love the fact that we're impacting the lives of millions of people, and I'm deeply inspired every day in knowing that my teammates and I are living the Zimmer Biomed mission of alleviating pain and improving the quality of life for people around the world. With that, I'll turn the call over to Shuki. Thank you.