Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Zimmer Biomet Holdings Inc (ZBH, Financial) reported its 11th consecutive quarter of mid-single-digit or better constant currency revenue growth.
- The company successfully managed ERP implementation challenges, expecting the impact to be lower than initially anticipated.
- Strong performance in key segments such as knees and hips, with the U.S. hip business growing by almost 5% in Q3.
- Zimmer Biomet Holdings Inc (ZBH) has a robust product pipeline with over 50 planned product launches, enhancing its competitive position.
- Positive pricing trends were observed for the third consecutive quarter, indicating a favorable market environment.
Negative Points
- ERP implementation challenges led to slower shipping levels, impacting sales in the second half of 2024.
- The company updated its 2024 full-year guidance due to ERP-related headwinds, indicating potential revenue growth constraints.
- The 'Other' category declined by 9.5% due to difficult comps and ERP-related challenges.
- Gross margin is expected to be slightly down for the full year compared to 2023.
- The company remains cautious about macroeconomic factors and potential disruptions, such as those caused by hurricanes and supply chain issues.
Q & A Highlights
Q: Why are you carrying the guidance by more than the ERP issue on an organic basis for 2024, and how should we think about 2025 and the ERP?
A: Ivan Tornos, CEO, explained that they are being conservative with the guidance due to recent ERP challenges and potential macro factors. They want to ensure commercial execution around new product introductions before being more optimistic. For 2025, they are positive about new product introductions and the resolution of ERP issues.
Q: Can you provide updated thoughts on M&A and areas of interest, especially given that valuations have come down?
A: Ivan Tornos, CEO, stated that while they don't need to do deals to maintain mid-single-digit revenue growth, they are open to M&A if it makes strategic and financial sense. They are evaluating opportunities in higher growth segments within recon and ASC space.
Q: Could you dive deeper into the reconstructive business, particularly knees, and discuss geographic performance?
A: Ivan Tornos, CEO, noted that international knee growth was strong, and U.S. growth was impacted by ERP challenges. The previous supply chain issues have been resolved, and they are optimistic about future performance, especially with new product introductions.
Q: Could you provide more color on pricing trends and expectations for the full year?
A: Suketu Upadhyay, CFO, highlighted that the third quarter marked the third consecutive quarter of positive pricing. The U.S. saw modest declines, but overall, the market is in a better spot. They expect full-year pricing to be flat to slightly positive.
Q: How is the collaboration with TMINI progressing, particularly in the ASC setting?
A: Ivan Tornos, CEO, mentioned that the TMINI partnership provides optionality for customers preferring CT scanning capabilities in robotics. Early data suggests meaningful opportunities, and they are conducting additional training to support this collaboration.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
