Zimmer Biomet(US:ZBH)2019-07-26 18:18Financial Data and Key Metrics Changes - Net sales totaled $2 billion in Q2 2019, a decrease of 0.9% from the prior year period, but an increase of 1.2% on a constant currency basis [35] - GAAP diluted earnings per share for the quarter was $0.65, while non-GAAP adjusted diluted earnings per share were $1.93 [39] - Adjusted operating margin was 27.4% for the quarter, in line with expectations [41] Business Line Data and Key Metrics Changes - The Knee franchise grew 2.5% on a constant currency basis, with solid performance across all geographic regions [38] - The S.E.T. business grew 4.3% on a constant currency basis, while the Dental business grew 1.7% [38] - The company experienced growth deceleration in the Spine & CMF business, with expectations for improvement as new products launch [32] Market Data and Key Metrics Changes - Asia-Pacific region delivered strong performance with 4.7% sales growth, while EMEA increased sales by 1.9% [36] - The Americas region saw a slight increase of 0.1%, reflecting improved performance across most product categories [37] Company Strategy and Development Direction - The company is focused on driving efficiency throughout its supply chain and has rolled out a culture program called "Quality Begins With Me" [22][23] - New product introductions, including the ROSA robotics platform and mymobility digital health platform, are part of the strategy to deliver customer-centric solutions [23] - The company plans to increase investment in robotics and specialized sales channels to enhance growth in high-potential markets [29][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the turnaround progress and updated guidance for 2019, expecting to achieve weighted average market growth rate six months ahead of schedule [33] - The leadership team noted that the organization is more engaged and focused than in previous years, with a strong corporate culture emerging [24] - Management highlighted the importance of maintaining momentum in the Knee franchise and S.E.T. business for future growth [57] Other Important Information - A $70 million one-time non-cash charge was recorded in Q2 related to the termination of certain in-process R&D projects [40] - The company is committed to increasing shareholder value through revenue growth, margin expansion, and free cash flow [33] Q&A Session Summary Question: U.S. Knee growth drivers and market share - Management noted that the company closed the gap to market in the quarter and sees potential for further growth in the knee arena, driven by improved confidence and new product launches [50] Question: Increased confidence for the second half of the year - Management attributed increased confidence to the performance of the knee franchise and the need to maintain focus on S.E.T. [56] Question: Allocation of investments in the back half of the year - Investments will focus on R&D, commercial infrastructure, and specialization in sales organization to drive growth above the weighted average market growth rate [63] Question: Clarification on U.S. Knee growth contributions - Management indicated that while ROSA contributed to growth, the overall strong performance in knees was significant even without it [108] Question: Future performance of the Spine segment - Management expressed confidence in the leadership changes and the potential for positive momentum in the Spine business as new products launch [89]