ZIMMER BIOMET HOLDINGS, INC. Q4 FY2024 earnings call

• People and Culture: Continued to ensure right people in right jobs, added new leadership in key categories like Global Hips, Global Knees, etc.
• Operational Excellence: Focus on elevating U.S. market performance, specializing in S.E.T., enhancing go-to-market in key franchises, expanding in ASC environment, launching innovative robotics solutions, and announcing a bold direct-to-patient program.
• Innovation and Diversification: Plan to launch over 50 new products in 36 months, including new knees, hip products, ROSA Shoulder advancements, and acquisition of Paragon 28 to diversify into foot and ankle space.

Net sales were $2 billion 23 million, an increase of 4.3% on a reported basis and 4.9% excluding foreign currency. U.S. business grew 4.7% driven by strong high single digit growth in S.E.T., while International grew 5.2% driven by high single digit growth in knees and S.E.T. Global knees grew 5.6% in the quarter (U.S. 3.9%, International 8%), Global Hips grew 4% (U.S. 3.2%, International 4.8%). S.E.T. segment grew 8.4% led by CMFT at 13%, Sports at 22%, and Upper Extremities at 8%. Technology and Data, Bone, Cement and Surgical declined 4.3% due to tough comps from the prior year.

• 2025 constant currency revenue growth: 3% to 5%. Reported revenue growth: 1% to 3.5% due to FX headwinds.
• Adjusted earnings per share: $8.15 to $8.35.
• Free cash flow: $1.1 billion to $1.2 billion.
• Paragon 28 acquisition: Anticipated to be immediately accretive to revenue growth, ~3% dilutive to adjusted EPS in 2025, ~1% dilutive in 2026, and accretive within 24 months of closing.

• ERP Implementation: Impacted 2024 results but exited 2024 at pre-ERP shipping levels.
• Foreign Exchange: Significant impact on reported revenue and earnings.
• Integration: Potential disruption during Paragon 28 acquisition integration.
• Tariffs/Manufacturing: Impact on manufacturing costs, though embedded in guidance.

Q: Robbie Marcus with JPMorgan on guidance philosophy.

A: Ivan Tornos discussed appropriate guidance range considering factors like selling days, new products, and investments.

Q: Patrick Wood with Morgan Stanley on Paragon 28 integration.

A: Ivan Tornos talked about preserving Paragon's channel, management, and minimal disruption.

Q: Steven Lichtman with Oppenheimer on 2025 guidance cadence.

A: Suketu Upadhyay discussed revenue cadence, FX impact, and margin progression.

Q: David Roman with Goldman Sachs on gross margins.

A: Suketu Upadhyay updated on gross margin trajectory and path to improvement.

Q: Vik Chopra with Wells Fargo on tariffs/manufacturing.

A: Ivan Tornos and Suketu Upadhyay discussed manufacturing locations and impact on guidance.

Q: Danielle Antalffy with UBS on ASC opportunity.

A: Ivan Tornos talked about ASC growth, market share, and product portfolio for ASC.

Q: Travis Steed with Bank of America on EPS growth and revenue ramp.

A: Suketu Upadhyay and Ivan Tornos discussed EPS guide, margin expansion, and revenue acceleration in second half.

Q: Rick Wise with Stifel on innovation products.

A: Ivan Tornos highlighted key innovative products like Oxford Partial Cementless Knee and Z1 Triple Tapered Stem.

Q: Matt Miksic with Barclays on Paragon 28 salesforce and ankle portfolio.

A: Ivan Tornos discussed salesforce integration and Paragon's ankle portfolio.

Q: Jayson Bedford with Raymond James on ERP impact and Oxford Cementless launch.

A: Ivan Tornos discussed ERP impact and timing of Oxford Cementless full launch.