Stryker Corporation (NYSE:SYK) Q3 2019 Earnings Conference Call - Final Transcript

Oct 29, 2019 • 04:30 pm ET


Stryker Corporation (NYSE:SYK) Q3 2019 Earnings Conference Call - Final Transcript


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Ladies and gentlemen, welcome to the Third Quarter 2019 Stryker Earnings Call. My name is Simon and I will be your operator for today's call. At this time, all participants are in a listen-only mode. [Operator Instructions].

Before we begin, I would like to remind you that the discussions during the conference call today will include forward-looking statements. Factors that could cause actual results to differ materially are discussed in the Company's most recent filings with the SEC. Also, the discussions will include certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures can be found in today's press release that is an exhibit to Stryker's current report on Form 8-K filed today with SEC.

I will now turn the call over to Mr. Kevin Lobo, Chairman and Chief Executive Officer. You may proceed, sir.

Kevin A. Lobo

Welcome to Stryker's third quarter earnings call. Joining me today are Glenn Boehnlein, Stryker's CFO, and Katherine Owen, Vice President of Strategy and Investor Relations. For today's call, I will provide opening comments followed by Katherine with an update on Mako and Mobius. Glenn will then provide additional details regarding our quarterly results, before we open the call to Q&A.

As I start my eighth year as CEO of Stryker, I am feeling as good as ever about our performance and our outlook for the future. Our Q3 organic sales growth of 8.6% demonstrated balanced strength across business segments and regions. With over 8% organic sales growth year-to-date, we are well positioned to deliver toward the higher end of our most recent full year guidance of 7.5% to 8% growth. Orthopaedics had an impressive quarter with organic growth of nearly 9%, reflecting excellent results across the portfolio of Mako hips and knees. MedSurg continued its strong and steady growth coming in at approximately 9% as medical led the way with double-digit growth. Neurotechnology and Spine was up approximately 8% as strong double-digit growth in international helped to offset soft legacy Stryker US Spine performance.

On a geographic basis, total Stryker organic sales growth approached 8% in the US with robust gains of nearly 12% outside the United States. As you know, international has been an area of focus and has become a sustainable and consistent above-market grower. This quarter we had double-digit organic growth in Europe, Japan and Canada. And emerging markets once again grew strong double digits. Looking ahead, we expect international to be a source of high growth for many years to come. Our conviction stems from several factors, including our lower relative market shares, investments in our Trans-Atlantic operating model and the benefits from strengthened leadership in emerging markets.

Turning to the P&L, we saw good results from our cost transformation for growth initiatives, which translated into a 50 basis point year-over-year expansion, after absorbing deal-related dilution and impacts from foreign currency. We also continue to invest in sales, marketing and R&D to support our long-term growth targets and have a healthy pipeline of new products across our divisions. Overall,