Stryker Corporation (NYSE:SYK) Q2 2020 Earnings Conference Call - Final Transcript

Jul 30, 2020 • 04:30 pm ET


Stryker Corporation (NYSE:SYK) Q2 2020 Earnings Conference Call - Final Transcript


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Welcome to the Second Quarter 2020 Stryker Earnings Call. My name is Michelle, and I will be your operator for today's call. [Operator Instructions] This conference call is being recorded for replay purposes.

Before we begin, I would like to remind you that the discussions during this conference call 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 the 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 second quarter earnings call. Joining me today are Glenn Boehnlein, Stryker's CFO; and Preston Wells, Vice President of Investor Relations. For today's call, I'll provide opening comments, followed by Preston with some perspectives on the recovery trends across our diverse businesses. Glenn will then provide additional details regarding our quarterly results before opening the call to Q&A.

As we begin today's call, I would like to start by thanking all our employees for their continued commitment to ensuring the safety of their colleagues, their families and our customers. I am very pleased with the resiliency of our organization, which has maintained high employee engagement and customer connections through the pandemic, from our sales forces, who have remained present and essential to the doctors and caregivers they support; to our manufacturing teams that have worked around the clock to optimize supply with ever-changing demand; and across our workforce, most of whom continue to collaborate virtually. The Stryker spirit remains alive and well.

Our second quarter sales declined organically by 24%, reflecting the impacts of COVID-19 across all geographies and the majority of our product lines. The results reflect progressive improvement in overall sales through the quarter but do vary by region. The sequential improvement can be tied to the initial cancellation and subsequent gradual return of elective procedures during the quarter.

As mentioned in our first quarter call, we took aggressive steps early on to ensure the safety of our employees and customers while managing discretionary spending across our P&L in response to the slowdown in sales. Our cost containment measures included significant reductions in travel and meetings, a slowdown in hiring and salary reductions across senior leaders. In addition, we made other efforts to focus on cash conservation, including the idling of select product lines and facilities across our network starting in May. These actions, combined with our sales performance resulted in adjusted earnings per share of $0.64, a decline of nearly 68% versus the prior year.

As we look at the quarter, the low point in sales occurred in April and then improved sequentially through the end of June. As a reminder, implants and disposables represent about 75% of our sales and small