Financial Data and Key Metrics Changes - The company reported high single-digit growth in the first half of the year and generated cash in the second quarter, indicating progress towards set goals [20][21] - EBITDA margins are targeted to exceed 20% for sustainable positioning as a med tech company, with current margins at 17% to 18% [16][19] Business Line Data and Key Metrics Changes - The company aims for high single-digit growth in the recon segment and stable low single-digit growth in the PNR segment, with potential for double-digit growth in recon in 2025 [22][28] - New product launches, including the ARG system and MANIFUSE, are expected to drive growth in both recon and PNR segments [27][24] Market Data and Key Metrics Changes - Market trends show a stable environment with a pickup in the U.S. and a slight slowdown in Europe due to seasonal factors, but overall conditions are expected to stabilize [21] - The company has seen a shift in international sales from 22% to over 50% in the recon segment following the Lima acquisition [50] Company Strategy and Development Direction - The company is focusing on organic growth, operational excellence, and capital allocation, with a priority on debt reduction and free cash flow improvement [6][8][42] - The management emphasizes a robust product pipeline and innovation, aiming for a mix of singles and doubles rather than home runs [11][75] Management's Comments on Operating Environment and Future Outlook - Management acknowledges macroeconomic uncertainties as a wildcard affecting growth, particularly in Europe and Asia [33][28] - The company expects to be free cash flow positive in 2025, with a clear path to achieving 70% to 80% free cash conversion by 2026 [29][30] Other Important Information - The company plans to mitigate tariff impacts by shifting sourcing from China and increasing prices on the PNR side [37][39] - The ARVIS platform launch has been delayed by six months, but it is expected to enhance growth in the recon segment once fully operational [48][63] Q&A Session Summary Question: What are the business trends in July and August? - The company experienced high single-digit growth in the first half and anticipates stable market conditions for the third quarter [20][21] Question: Is there a pathway to double-digit recon growth in 2025? - The company believes it can achieve double-digit growth in recon, depending on new product launches and market conditions [22][23] Question: What are the key metrics for driving shareholder value? - The focus will be on meeting growth commitments, expanding EBITDA, and improving free cash flow [19] Question: What are the trends in the PNR market? - The PNR segment has shown resilience with stable growth of 3% to 4%, contributing significantly to cash generation [67] Question: What is the company's approach to capital allocation? - The immediate focus is on debt reduction, with M&A activities being deprioritized for the time being [42][46] Question: How will ARVIS contribute to revenue? - ARVIS is expected to start contributing meaningfully to revenues within a year, with initial contributions already noted [63] Question: What are the expectations for growth in 2026? - The company anticipates stable growth in recon and PNR, with potential headwinds from macroeconomic factors [31][33]

Financial Data and Key Metrics Changes - The company reported second quarter sales of $565 million, up 7% year-over-year and 5% on an organic basis, with approximately 200 basis points of positive currency tailwinds offset by a similar headwind from selling days [21][22][25] - Adjusted gross margins improved by 90 basis points in the quarter and 200 basis points year-to-date, driven by favorable segment and product mix [22] - Adjusted EBITDA margins were flat at 17.2% year-over-year, with year-to-date adjusted EBITDA margins expanding by 75 basis points [23][24] - Adjusted earnings per share increased by 27% year-over-year to $0.79, with first half adjusted EPS growing 42% [23][24] Business Line Data and Key Metrics Changes - The recon business saw organic growth of 8%, with U.S. extremities growing by 10% driven by strong double-digit growth in shoulders [14][21] - The P and R segment experienced stable growth of 3% in the quarter, with adjusted EBITDA margins improving by 130 basis points year-over-year [19][22] - U.S. hip and knee growth was flat, reflecting fewer selling days and headwinds in capital sales, but underlying implant growth was mid-single digit [16][22] Market Data and Key Metrics Changes - U.S. extremities growth was driven by the launch of the augmented reverse glenoid system, while international growth benefited from recent geographical expansion [15][17] - The company continues to take share in resilient international markets, with competitive share gains in hip and shoulder portfolios [17][18] Company Strategy and Development Direction - The company aims to focus on three key priorities: commercial execution and innovation, operational excellence, and financial discipline [10][12] - There is a commitment to maximizing organic growth, margin expansion, and cash flow generation through disciplined capital allocation [7][10] - The company plans to leverage its diverse portfolio and capitalize on cross-selling opportunities to drive growth [17][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the evolving market environment and maintain progress towards strategic goals [28] - The company anticipates acceleration in growth in the second half of the year, particularly with new product launches [16][22] - Management highlighted the importance of relationships with key opinion leaders and the commitment to medical education as critical to maintaining market leadership [82] Other Important Information - The company raised its revenue guidance for 2025 to a range of $2.245 billion to $2.275 billion, driven by improved currency outlook and organic growth execution [25][26] - The adjusted EBITDA range was also raised to $392 million to $400 million, reflecting an updated view on tariffs [26][27] - The company paid $6 million in tariffs in Q2, primarily related to the P and R segment, with expectations for mitigation efforts to accelerate through the year [27][28] Q&A Session Summary Question: What are the assumptions for ARVIS in the back half and other new products driving growth? - Management noted that the Nebula hip and ARG for shoulder are expected to drive growth in the back half, with positive early feedback from the market [32][33] Question: Concerns about adjusted EBITDA metrics and free cash flow normalization? - Management reassured that they maintain high standards of transparency and are confident in their adjusted EBITDA metrics, with expectations for improved free cash flow as integration costs decrease [36][39] Question: Insights on M&A strategy post-Lima and balancing debt paydown with acquisitions? - The focus is on debt reduction as the primary capital allocation priority, with potential for opportunistic share buybacks or focused M&A in the future [47] Question: Updates on the ARVIS shoulder launch and its importance? - The ARVIS launch has received tremendous feedback, and the next-gen updates are expected to enhance market share gains in the shoulder portfolio [74] Question: Competitive dynamics in the shoulder market and maintaining market leadership? - Management emphasized the importance of relationships, commercial execution, and new product releases to maintain and grow market share [81][85]