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November 1, 2017
Cautionary Note on Forward-Looking Statements and Non-
GAAP Financial Measures
Our discussions during this presentation will include forward-looking statements concerning, among other things, our anticipated future
operating and financial performance, business plans and prospects, product and service offerings, including new product launches and
potential clinical successes, capital allocation plans and priorities, business development plans and priorities and the benefits expected from
our acquisitions and other business development activities. Such statements are based upon the current beliefs and expectations of
management and are subject to significant risks, uncertainties and changes in circumstances that could cause actual outcomes and results to
differ materially. For a list and description of some of such risks and uncertainties, see our Annual Report on Form 10-K for the year ended
December 31, 2016, including in the section thereof captioned Risk Factors, as well as our subsequent reports on Form 8-K and Form 10-
Q, all of which are available at www.sec.gov and www.zimmerbiomet.com. The forward-looking statements in this presentation speak only
as of the original date of this presentation and we undertake no obligation to update or revise any of these statements.
Also, this presentation refers to certain financial measures that differ from financial measures calculated in accordance with U.S. generally
accepted accounting principles (GAAP). Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP
financial measures can be found in the Appendix to this presentation. Investors and other readers should consider non-GAAP financial
measures only as supplements to, and not as substitutes for or superior to, the measures of financial performance prepared in accordance
with GAAP.
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Table of Contents
Company Overview
Appendix
3
2017 Q3 Financial Summary
3rd Quarter 2017 Net Sales Results
Product Category Performance
Q3 Year to Date
Constant Currency % Constant Currency %
Product (in millions) Net Sales Net Sales
Change (3) Change (3)
Knees $624 -1.7% $2,006 -0.8%
Hips 434 -1.7% 1,380 0.2%
S.E.T. 407 1.1% 1,255 3.7%
Dental 93 -4.4% 311 -3.4%
Spine & CMF 185 0.3% 565 20.1%
Other 75 -5.3% 233 -4.5%
(1)
Total $1,818 -1.2% $5,750 1.8%
(2)
Ex LDR, Billing Day Adjusted -0.2%
(1) Includes approximately 30 basis points of contribution from the LDR acquisition and a negative impact of approximately 130 basis points as a result of having one
less billing day during the quarter.
(2) Excludes approximately 30 basis points of contribution from the LDR acquisition and a negative impact of approximately 130 basis points as a result of having one
less billing day during the quarter.
(3) Non-GAAP financial measure; see reconciliation. 5
Reconstructive Product Category
KNEES Americas
EMEA
$ 383
135
-3.9%
0.6%
$ 1,217
463
-2.2%
-0.1%
APAC 106 3.9% 326 3.8%
Total Knees $ 624 -1.7% $ 2,006 -0.8%
Persona
Partial Knee System
Persona Partial Knee System launched in September
Persona The Personalized Knee System continues to drive growth
New products key catalyst in 2018 including Cementless, PSI X-Ray Guides, and Revision
Growth impacted by continued supply constraints from the Warsaw North Campus
Q3 Year to Date
Arcos Modular
Constant Currency Constant Currency
Femoral Revision System USD (millions) Revenue Revenue
% Change (1) % Change (1)
HIPS Americas
EMEA
$ 228
115
-4.7%
-1.5%
$ 720
382
-1.9%
-0.6%
APAC 91 6.1% 278 7.2%
Total Hips $ 434 -1.7% $ 1,380 0.2%
Taperloc Complete
Hip System
Strong demand for G7 Acetabular System
First Clinical Graphics case performed in Q3
OsseoTi Porous Metal Technology continues success in G7 Dual Mobility Construct
Growth impacted by continued supply constraints from the Warsaw North Campus
Q3 Year to Date
SPINE & CMF USD (millions) Revenue
Constant Currency
Revenue
Constant Currency
% Change (1) % Change (1)
GLOBAL REVENUE Spine & CMF $185 0.3% $565 20.1%
SternaLock Continued to see steady sales for RibFix Blu Thoracic Fixation System, as
CMF Blu Closure well as our SternaLock Blu and SternaLock 360 Primary Closure
System
systems
Q3 Year to Date
DENTAL USD (millions) Revenue
Constant Currency
(1) Revenue
Constant Currency
(1)
% Change % Change
GLOBAL REVENUE Dental $93 -4.4% $311 -3.4%
Joint
Preservation
Product Pipeline
Persona Partial Knee (September 2017) Persona
Motion Partial Knee System
Fixed bearing partial knee
Preservation Clearance received in major markets across the globe
Persona TM Tibia Knee (2H 2018)
Cementless knee utilizing clinically proven Trabecular Metal
Personalized
Procedures Persona Revision Knee (2H 2018 Limited Launch)
Adds revision offering to Persona portfolio
(1) Includes approximately 30 basis points of contribution from the LDR Key Call-Outs:
acquisition and a negative impact of approximately 130 basis points as a Gross Profit YoY quarterly performance impacted due to the impact of price
result of having one less billing day during the quarter. declines, product mix, additional manufacturing costs and lower gains from our
(2) Excluding the impact of foreign exchange, Adj. Net Earnings (3) and Adj. cash flow hedging program.
Diluted EPS (3) grew 0.2% and (0.6)%, respectively. SG&A Continue to incur higher freight expenses due to expedited product
(3) Non-GAAP financial measure; see reconciliation shipments, partially offset by savings from synergy capture initiatives.
(4) Includes instrument depreciation
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Free Cash Flow
($ In millions)
YTD 2017 YTD 2016 Inc/(Dec) vs PY
CapEx
Instruments (256) (251)
Traditional PP&E (109) (130)
Total CapEx (365) (381)
Q4 2017 FY2017
Metric
Growth Growth
Reported 0.0% to 2.0% 1.0% to 1.5%
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Company Overview
Leading Musculoskeletal Portfolio
SPINE & Products for face and skull reconstruction, back and neck pain
CRANIOMAXILLOFACIAL (CMF) caused by deformities or injuries of the spine, and
& THORACIC stabilization of the chest following open heart surgery
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Broad Portfolio of Solutions
in the Musculoskeletal Market
Spine
$9.0B Market CMF / Thoracic
5%-7% Est. Share $1.1B Market
14%-16% Est. Share
Hip Dental
$6.0B Market $4.2B Market
31%-32% Est. Share 9%-11% Est. Share
Knee S.E.T.*
$7.5B Market $15.0B Market
36%-37% Est. Share 10%-11% Est. Share
1,487M
Population 65 and
Supportive utilization trends Older musculoskeletal
1,252M
11.7%
969M
developed markets
7.6%
714M
Expanding access to healthcare
523M
in emerging markets
Utilization at a fraction of
developed market rates
2010 2020 2030 2040 2050
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Leading Musculoskeletal Portfolio
*S.E.T. = Surgical, Sports Medicine, Foot & Ankle, Extremities and Trauma
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Broad Portfolio
Mobi-C Osseotite
Quattro
Timberline MPF Link Knotless Anchors
Lateral Fusion System
Comprehensive
Reverse
Persona Shoulder DVR Crosslock Distal
Personalized Knee System System Radius Plating System
& ePAK Delivery System
New
SternaLock
Vanguard ID Blu
Total Knee System
G7 Acetabular System
Gel-One
Cross-Linked Hyaluronate
Arcos Modular
Femoral Revision System
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Guided by our Value Creation Framework
21
Key Strategies
22
Zimmer + Biomet = Transformative Combination
Revenue (in millions) Adj. Diluted EPS (1)
$1,000
$- $-
2014 2015 2016 2017E
Revenue Adj. Diluted EPS
Musculoskeletal Health
Platform Technologies
Diversification
Hips
25%
Knee
36%
17%
24
Global Footprint: Operating Locations
25
Appendix
Reconciliation of Reported Net Sales % Change to
Constant Currency % Change and % Change Excluding
LDR Holding Corporation (unaudited)
27
Reconciliation of Reported Net Sales % Change to
Constant Currency % Change and % Change Excluding
LDR Holding Corporation (unaudited)
28
Reconciliation of Cash Flow from Operating Activities to
Free Cash Flow
For the Quarterly and Year-to-Date Periods in Calendar Year Ending December 31, 2017
(in millions, unaudited)
Three Months Ended Three Months Ended Three Months Ended Nine Months Ended
March 31, 2017 June 30, 2017 September 30, 2017 September 30, 2017
Net cash provided by operating activities $ 275.4 $ 440.5 $ 463.5 $ 1,179.4
Additions to instruments (86.4) (86.2) (83.1) (255.7)
Additions to other property, plant and equipment (43.1) (30.7) (36.0) (109.8)
Free cash flow $ 145.9 $ 323.6 $ 344.4 $ 813.9
For the Quarterly and Year-to-Date Periods in Calendar Year Ending December 31, 2016
(in millions, unaudited)
Three Months Ended Three Months Ended Three Months Ended Nine Months Ended
March 31, 2016 June 30, 2016 September 30, 2016 September 30, 2016
Net cash provided by operating activities $ 272.8 $ 379.6 $ 352.6 $ 1,005.0
Additions to instruments (85.1) (72.2) (94.0) (251.3)
Additions to other property, plant and equipment (27.6) (46.1) (56.4) (130.1)
Free cash flow $ 160.1 $ 261.3 $ 202.2 $ 623.6
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Reconciliation of Gross Profit & Margin to Adjusted Gross
Profit & Margin
For the Quarterly and Year-to-Date Periods in Calendar Year Ending December 31, 2017
(in millions, unaudited)
Three Months Ended Three Months Ended Three Months Ended Nine Months Ended
March 31, 2017 June 30, 2017 September 30, 2017 September 30, 2017
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Reconciliation of Gross Profit & Margin to Adjusted Gross
Profit & Margin
For the Quarterly and Year-to-Date Periods in Calendar Year Ending December 31, 2016
(in millions, unaudited)
Three Months Ended Three Months Ended Three Months Ended Three Months Ended Year Ended
March 31, 2016 June 30, 2016 September 30, 2016 December 31, 2016 December 31, 2016
31
Reconciliation of Operating Profit & Margin to Adjusted Operating
Profit & Margin
For the Quarterly and Year-to-Date Periods in Calendar Year Ending December 31, 2017
(in millions, unaudited)
Three Months Ended Three Months Ended Three Months Ended Nine Months Ended
March 31, 2017 June 30, 2017 September 30, 2017 September 30, 2017
32
Reconciliation of Operating Profit & Margin to Adjusted Operating
Profit & Margin
For the Quarterly and Year-to-Date Periods in Calendar Year Ending December 31, 2016
(in millions, unaudited)
Three Months Ended Three Months Ended Three Months Ended Three Months Ended Year Ended
March 31, 2016 June 30, 2016 September 30, 2016 December 31, 2016 December 31, 2016
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Reconciliation of Net Earnings to Adjusted Net Earnings
Three Months
Ended September30,
2017 2016
Net Earnings of Zimmer Biomet Holdings, Inc. $ 98.8 $ 158.8
Inventory step-up and other inventory and manufacturing-related charges 10.4 22.8
Intangible asset amortization 152.7 164.3
Special items
Biomet merger-related 81.1 113.8
Other special items 84.3 56.6
Merger-related and other (income) expense in other expense, net (0.5) (2.6)
Taxes on above items (1) (79.1) (111.6)
Other certain tax adjustments (2) 2.2 (39.7)
Adjusted Net Earnings $ 349.9 $ 362.4
(1)
The tax effect for the U.S. jurisdiction is calculated based on an effective rate considering federal and state taxes,
as well as permanent items. For jurisdictions outside the U.S., the tax effect is calculated based upon the statutory
rates where the items were incurred.
(2)
In 2017, other certain tax adjustments relate to net unfavorable resolutions of various tax matters. The 2016
adjustment primarily relates to a favorable adjustment to certain deferred tax liabilities recognized as part of
acquisition-related accounting.
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Reconciliation of Net Earnings to Adjusted Net Earnings
Nine Months
Ended September30,
2017 2016
Net Earnings of Zimmer Biomet Holdings, Inc. $ 582.4 $ 236.3
Inventory step-up and other inventory and manufacturing-related charges 58.5 357.7
Intangible asset amortization 452.4 424.7
Special items
Biomet merger-related 206.3 313.5
Other special items 227.8 83.5
Merger-related and other (income) expense in other expense, net 0.5 (1.1)
Taxes on above items (1) (264.4) (297.0)
Biomet merger-related measurement period tax adjustments (2) - 52.7
Other certain tax adjustments (3) (55.6) 6.4
Adjusted Net Earnings $ 1,207.9 $ 1,176.7
(1)
The tax effect for the U.S. jurisdiction is calculated based on an effective rate considering federal and state taxes,
as well as permanent items. For jurisdictions outside the U.S., the tax effect is calculated based upon the statutory
rates where the items were incurred.
(2)
The 2016 period includes negative effects from finalizing the tax accounts for the Biomet merger. Under the
applicable U.S. GAAP rules, these measurement period adjustments are recognized on a prospective basis
in the period of change.
(3)
In 2017, other certain tax adjustments relate to a tax restructuring that lowered the tax rate on deferred tax liabilities
recorded on intangible assets recognized in acquisition-related accounting, net favorable resolutions of various tax
matters, and charges from internal restructuring transactions that provide the Company access to cash in a tax efficient
manner. The 2016 adjustment primarily relates to a favorable adjustment to certain deferred tax liabilities recognized as
part of acquisition-related accounting offset by internal restructuring transactions that provide the Company access to
cash in a tax efficient manner.
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Reconciliation of Diluted EPS to Adjusted EPS
Three Months
Ended September30,
2017 2016
Diluted EPS $ 0.48 $ 0.78
Inventory step-up and other inventory and manufacturing-related charges 0.05 0.11
Intangible asset amortization 0.75 0.81
Special items
Biomet merger-related 0.40 0.56
Other special items 0.41 0.28
Merger-related expense in other expense, net - (0.01)
Taxes on above items (1) (0.38) (0.55)
Other certain tax adjustments (2) 0.01 (0.19)
Adjusted Diluted EPS $ 1.72 $ 1.79
(1)
The tax effect for the U.S. jurisdiction is calculated based on an effective rate considering federal and state taxes,
as well as permanent items. For jurisdictions outside the U.S., the tax effect is calculated based upon the statutory
rates where the items were incurred.
(2)
In 2017, other certain tax adjustments relate to net unfavorable resolutions of various tax matters. The 2016
adjustment primarily relates to a favorable adjustment to certain deferred tax liabilities recognized as part of
acquisition-related accounting.
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Reconciliation of Diluted EPS to Adjusted EPS
Nine Months
Ended September30,
2017 2016
Diluted EPS $ 2.86 $ 1.17
Inventory step-up and other inventory and manufacturing-related charges 0.29 1.77
Intangible asset amortization 2.22 2.10
Special items
Biomet merger-related 1.01 1.55
Other special items 1.12 0.41
Merger-related and other expense in other expense, net - (0.01)
Taxes on above items (1) (1.30) (1.47)
Biomet merger-related measurement period tax adjustments (2) - 0.26
Other certain tax adjustments (3) (0.27) 0.04
Adjusted Diluted EPS $ 5.93 $ 5.82
(1)
The tax effect for the U.S. jurisdiction is calculated based on an effective rate considering federal and state taxes,
as well as permanent items. For jurisdictions outside the U.S., the tax effect is calculated based upon the statutory
rates where the items were incurred.
(2)
The 2016 period includes negative effects from finalizing the tax accounts for the Biomet merger. Under the
applicable U.S. GAAP rules, these measurement period adjustments are recognized on a prospective basis
in the period of change.
(3)
In 2017, other certain tax adjustments relate to a tax restructuring that lowered the tax rate on deferred tax liabilities
recorded on intangible assets recognized in acquisition-related accounting, net favorable resolutions of various tax
matters, and charges from internal restructuring transactions that provide the Company access to cash in a tax efficient
manner. The 2016 adjustment primarily relates to a favorable adjustment to certain deferred tax liabilities recognized as
part of acquisition-related accounting offset by internal restructuring transactions that provide the Company access to
cash in a tax efficient manner.
37
Reconciliation of 2017 Projected Revenue % Change to 2017
Projected Constant Currency % Change and Change Excluding LDR
Holding Corporation (unaudited)
38
Reconciliation of 2017 Projected Diluted EPS and Projected Adjusted
Diluted EPS (unaudited)
(1)
The tax effect for the U.S. jurisdiction is estimated based on an effective rate considering federal and state taxes,
as well as permanent items. For jurisdictions outside the U.S., the tax effect is estimated based upon the statutory
rates where the items are projected to be incurred.
39
Reconciliation of GAAP Net Earnings to non-GAAP Adjusted Net
Earnings (unaudited)
(1)
The tax effect for the U.S. jurisdiction is calculated based on an effective rate considering federal and state taxes,
as well as permanent items. For jurisdictions outside the U.S., the tax effect is calculated based upon the statutory
rates where the items were incurred.
(2)
The 2016 period includes negative effects from finalizing the tax accounts for the Biomet merger. Under the
applicable U.S. GAAP rules, these measurement period adjustments are recognized on a prospective basis
in the period of change.
(3)
Other certain tax adjustments primarily include internal restructuring transactions to integrate Biomet operations and facilitate
access to offshore earnings, partially offset by resolution of certain matters with taxing authorities and adjustments to
deferred tax liabilities recognized as part of acquisition-related accounting.
40
Reconciliation of GAAP Diluted Earnings Per Share to non-GAAP
Adjusted Diluted Earnings Per Share (unaudited)
(1)
The tax effect for the U.S. jurisdiction is calculated based on an effective rate considering federal and state taxes,
as well as permanent items. For jurisdictions outside the U.S., the tax effect is calculated based upon the statutory
rates where the items were incurred.
(2)
The 2016 period includes negative effects from finalizing the tax accounts for the Biomet merger. Under the
applicable U.S. GAAP rules, these measurement period adjustments are recognized on a prospective basis
in the period of change.
(3)
Other certain tax adjustments primarily include internal restructuring transactions to integrate Biomet operations and facilitate
access to offshore earnings, partially offset by resolution of certain matters with taxing authorities and adjustments to
deferred tax liabilities recognized as part of acquisition-related accounting.
41
Reconciliation of Net Earnings and Diluted EPS to Adjusted Net Earnings and
Adjusted Diluted EPS and Adjusted Net Earnings and Adjusted Diluted EPS
Excluding the Estimated Effects of Changes in Foreign Currency Exchange Rates
FOR THE FOR THE YEARS ENDED DECEMBER 31, 2017 and 2016 and THREE MONTHS ENDED SEPTEMBER 30, 2017 and 2016
(unaudited)
(1) The tax effect for the U.S. jurisdiction is calculated based on an effective rate considering federal and state taxes, as well as permanent items. For jurisdictions outside the U.S., the tax effect is calculated
based upon the statutory rates where the items were or are projected to be incurred.
(2) We enter into foreign currency exchange rate forward contracts to minimize the effects of foreign currency exchange rate movements on the cash flows from our intercompany sales of inventory. We
designate these contracts as cash flow hedges and defer any gains or losses on these contracts until the inventory is sold to a third party. Based upon actual and estimated foreign currency exchange rates, we
estimate that we will recognize lower hedge gains in the applicable periods when compared to the same prior year period.
(3) Under U.S. GAAP, we consolidate our foreign operations by translating their statement of earnings in their functional currency into U.S. Dollars using average foreign currency exchange rates during the
applicable time period. We have estimated the effects of changes in foreign currency exchange rates on our consolidated statement of earnings by translating the current period functional currency results using
the same exchange rates from the prior year period. This estimate is complex and may not actually reflect the changes in our consolidated statement of earnings had foreign currency exchange rates not
changed. This effect also includes the estimated tax impact on the foreign currency exchange forward contract cash flow hedges.
(4)
Adjusted Diluted EPS excluding the estimated effects of changes in foreign currency exchange rates excludes the effects of incremental changes in foreign currency exchange rate forward contract cash flow
hedges, incremental changes in remeasurement of monetary assets and liabilities denominated in a currency other than its functional currency and the effects of changes in foreign currency exchange rates on
functional currency translation.
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