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Stryker Corporation SYK
Q1 2013 Earnings Call Transcript

Transcript Call Date 04/24/2013

Operator: Welcome to the Stryker's First Quarter 2013 Earnings Conference Call. My name is Vanessa and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Following the conference, we will conduct a question-and-answer session. During that time participants will have the opportunity to ask one question and one follow-up question. 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 in the Exhibit to Stryker's current report on Form 8-K filed today with SEC.

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

Kevin A. Lobo - President and CEO: Good afternoon, everyone, and welcome to Stryker's first quarter 2013 earnings call. Joining me is Dean Bergy, our Interim CFO; and Katherine Owen, Vice President of Strategy and Investor Relations. Also on the call today is Bill Jellison who joined Stryker as our Chief Financial Officer.

Dean will help to support Bill during a transition period through Q2 and will continue in his capacity as our Corporate Secretary. I'd like to both welcome Bill to our team and also thank Dean for his support during this period. My executive leadership team is now fully staffed. Also you may recall David Floyd joined as Group President of Orthopedics last November and Scott Bruder was added as Chief Scientific and Medical Officer in January.

With respect to today's call, I will provide opening comments and then turn the call over to Katherine for additional details and then Dean will cover the financials. We will then open the call to your questions.

Looking at our Q1 results, we achieved revenue and earnings growth in line with the targets we set out at the start of the year. On a reported basis, our first quarter sales increased 1.3% and excluding foreign exchange and acquisitions posted a gain of 2.5%. However, adjusting for less selling days in the quarter, which reduced sales by approximately 2.5%, topline growth was 5%, with all three of our franchises; Reconstructive, MedSurg and Neurotec and Spine achieving year-over-year gains. The U.S. had another strong showing with sales up 4% on a reported basis.

As anticipated, our international results were negatively impacted by year-over-year declines in Europe, which was partly offset by solid gains in emerging markets. We continue to anticipate improving trends in our European business as 2013 unfolds, reflecting the impact of a number of initiatives underway to better drive sales momentum.

Turning to our three franchises in more detail. On a global basis, Reconstructive sales were up roughly 1% on a reported basis, reflecting another strong showing in the U.S., which was up 6.5% reported. And encouragingly adjusting for the selling days in currency growth for our international Reconstructive business was positive for all of the key businesses, including hips, knees and trauma and extremities.

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