Zimmer Biomet Holdings, Inc.

Good morning, ladies and gentlemen, and welcome to the Zimmer Biomet third 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, October 30th, 2024. Following today's presentation, there will be a question and answer session. At this time, all participants are in a listen-only 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 David DiMartino, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. Welcome to Zimra Finance's third quarter 2024 earnings conference call. Joining me on today's call are Yvonne Tornos, our President and CEO, and CFO and EVP Finance Operations and Supply Chain, Sukhya Padhyay. 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 filings 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, ZimmerBiomed.com. With that, I'll turn the call over to Yvonne. Yvonne?

Good morning, everyone, and thank you for joining today's call. Welcome, David, to your very first Zimmer Biomed earnings call. Truly lucky to have you. We love what you bring to the team already. I'd like to start today the way that I always do, by taking a moment to recognize and to show my gratitude to the over 18,000 Zimmer Biomed team members who each and every day across the globe move our business and our mission forward. Thank you for your commitment to the organization. Thank you for your tireless work. Thank you for your very strong performance. And most importantly, thank you for what you do for our customers and patients every single day. As I said in the past, And as I will continue to say as long as I'm here, the Zimmer-Baume workforce and the culture that we have truly is one of our key competitive advantages. During the call today, I'm going to cover four things. First, I'll give an update on the recent ERP implementation and the challenges associated with it. Secondly, I'll cover some general comments on the quarter and the broader market dynamics. I'll move to then talk about a brief innovation overview. And then fourth and last, I'll close with a usual update on our three strategic priorities. After this, Suk is going to cover our financials in more detail, and we'll make sure to leave plenty of time for questions at the end of the prepared remarks. To begin, I'm very excited to report that we've made great strides in managing the ERP implementation challenges outlined in early September. Through the dedicated work of the Zimmer-Baume team and our external partners, we now expect the impact of this challenge in the second half of 2024 being lower than the 100 basis points of annual sales that we initially communicated. And we also fully expect to be back to normal shipping levels by the end of the year 2024. Turning to results, in Q3, we grew sales at mid-single-digit level, including strong results in knees, in hips, and in sets. This quarter, the third quarter, now marks the 11th consecutive quarter of mid-single-digit or better constant currency revenue growth for Zimmer Biomed. In addition to the strong revenue performance, adjusted EPS once again grew faster than revenue. Our combined knee and hip businesses, what we call our reconstructive platform, grew in the mid-single-digit range globally while SED delivered upper single-digit growth aided by strong performance across our key growth drivers. Suk is going to cover this later, but I'm very proud of these results, and specifically, I love the consistency of growth in the key categories. Beyond commercial execution, our performance was fueled by mid-single-digit growth in our end markets, which we anticipate continuing based on all the analytics that we have at hand. An aging and increasing active population combined with technological advancements, driving procedures to outpatient settings like the ASC here in the U.S., accelerating recovery times, and best-in-class outcomes should continue to provide tailwinds to market growth in the coming years. So again, we see the markets being healthy, and we don't foresee these markets slowing down. From an innovation standpoint, Zimmer Biomed has the most robust product cycle in recent memory, with over 50 meaningful plant product launches over a long-range plant horizon. I'm particularly excited about the momentum we are generating in our hips platform as evidenced by the improved results in this business, and particularly in the U.S., where we delivered almost 5% growth in the third quarter. With Z1, our new triple taper hip stem for anterior hip implant procedures, and with our surgical impactor hammer, as well as comprehensive navigation, robotics, and platforms in navigation like OrthoGrid, we are going to continue to be on the offense when it comes to gaining sharing hips. So great innovation, and we expect consistency in execution over the next several quarters. In this, Orsa Mendes Persona Oceotide continues to gain rapid traction while the recently launched Persona IQ Stubby, the short stem for Persona IQ, is driving continued uptake of this differentiated technology. Early in the launch, the feedback has been superb. Within extremities, ROSA Solder has the potential to change the treatment paradigm in solder implants. It's a platform that allows for reproducible, anatomic, and reverse procedures. Finally, Zimmer Biomed is the only orthopedic company offering both a CT scanless robotic system in ROSA And through our recent partnership with Think Surgical, we also offered a smaller footprint, handheld CT scan-based system in T-mini. So when it comes to navigation and robotics, we got the most comprehensive suite of solutions. Beyond all of this, we're expecting to launch a cadre of new robotic applications in the short to mid-term with and without CT scan capabilities, as well as other differentiated features. In the ROSA franchise alone, we expect to launch three new indications in the next 18 to 36 months. While the underlying business performance remains strong, the team continues to execute on the same three strategic priorities that I have outlined in the past, those being people and culture, which is foundational to everything that we do, operational excellence, innovation and diversification. As I said at the beginning of the call, people and culture are key competitive advantages for Zimmer Biomed. Recently, we appointed new leadership in our HIPs, NIS, SET, in our ASC, and in our digital technology and solutions businesses. I'm excited about these leadership changes, and I'm confident that the growth and that the leadership of these new individuals is going to accelerate. In addition, we have upgraded talent in critical areas like IT, information technology, and operations. On the second imperative, operational excellence, we are maintaining expectations for the long-term financial commitments that we outlined at our investor day earlier in the year. With the terrific progress we made towards the resolution of the ERP issues, we feel even more confident in delivering mid-single-digit revenue growth, adjusted earnings per share growth of at least one and a half times revenue, and free cash flow growing at least 100 basis points faster than earnings throughout 2027. So again, the same commitments towards revenue, EPS, and free cash flow remain. Finally, we continue to make progress in diversifying our business to increase the company's growth and profitability profile. This includes a highly disciplined approach towards M&A as well as internal capital allocation dynamics. To that extent, the value of Zimmer Biomed's pipeline of new products expected to be launched over a long-range plan is more than twice the value that it was just a short five years ago. And 80% of these new product launches are accretive to the Zimmer Biomed WEMGAR of 4%. In conclusion, we're very proud of the progress in our organization, and we look forward to continuing to execute above and beyond expectations. I 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 Zimmerman mission of alleviating pain and improving the quality of life for people around the world. And with that, I'll turn the call over to Suki. Thank you very much.