Zimmer Biomet Holdings, Inc. (ZBH) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. And welcome to the webcast of the 2020 Annual Meeting of Shareholders of Zimmer Biomet Holdings, Inc. Please note that today's meeting is being recorded. However, participants are not permitted to use any reporting device. I would now like to introduce Zimmer Biomet's Senior Vice President, General Counsel and Secretary, Chad Phipps, to begin the meeting. Please go ahead, sir.

Thank you. Good morning. And welcome to Zimmer Biomet's 2020 Annual Meeting of Shareholders Webcast. During today's webcast, the company may make forward-looking statements. Forward-looking statements are based upon the current beliefs, expectations and assumptions of management and are subject to significant risks and uncertainties and that could cause actual outcomes and results to differ materially from the forward-looking statements. Please refer to our 2019 annual report on Form 10-K and our subsequent SEC filings for a description of some of these risks and uncertainties. We expressly disclaim any intention or obligation to update or revise any forward-looking statements. With that, I will turn the webcast over to Bryan Hanson, our President and CEO, to share a few opening remarks before we call the shareholder meeting to order.

Thank you for joining our Virtual 2020 Annual Meeting of Shareholders. I'm Bryan Hanson, Zimmer Biomet's President and CEO. Today, I'll be providing a brief overview of our 2019 results and a look ahead to 2020, including an update with regard to the global COVID-19 pandemic. Turning to 2019, overall, Zimmer Biomet delivered solid performance across our entire business, with almost every region and business delivering their best growth since the Zimmer Biomet merger in 2015. Our 2019 sales reflected improved growth in many areas of our business, driven by supply stabilization and new product launches, along with ongoing strong performance in our Asia Pacific business. I'd like to share some of our highlights from 2019. First, improvements in our supply chain allowed us to consistently meet demand and deliver exceptional customer service. Having now achieved stability in this area, we'll be focused on moving forward on opportunities to increase operational efficiency and remove unnecessary complexity from our supply chain. Second, key product launches in 2019, including ROSA Knee system for robotically assisted surgeries and the Persona Revision knee system. The ROSA Robotics platform brings together Zimmer Biomet's robotics technology with our industry-leading knee implants to help surgeons personalize surgical procedures for their patients. Finally, our company's repositioning continues to be fundamentally driven by our global teams focused on one Zimmer Biomet corporate mission to alleviate pain and improve the quality of life for people around the world. Since 2018, we have hosted mission ceremonies across our global locations, meeting with more than 90% of our team members to ensure everyone in the organization has a direct and personal connection to our mission and considers themselves part of one team. This mission-driven approach empowers every level of the organization to collaborate and innovate with an emphasis on the future, while working with purpose to deliver on our commitments and make an impact each and every day. We have made significant progress with our turnaround plan for the company in the past 2 years. We are establishing Zimmer Biomet as a best and preferred place to work for our team members. We are becoming a trusted partner to key stakeholders, including our customers, patients, regulators, team members and our shareholders. And we continue to work towards being a top quartile performer in terms of total shareholder returns. We're certainly in an unprecedented and challenging time right now. I'm sure all of us would agree that there really is no proxy for COVID-19. There's no road map that we can look at to understand how to deal with the situation right now. What I do know is this, that we, as a team, have been working to strengthen Zimmer Biomet. We have a talented, dedicated global ZB team, and our base business is strong. We think our progress better positions us overall, but also enables us to weather the current storm and to emerge even stronger on the other side. More so than ever before, Zimmer Biomet is prepared to rise to the current challenge and service of patients, health care providers, institutions and the communities we serve. So thank you, and I'll turn it over to Larry.

Thank you, Bryan. Good morning. I'm Larry Glasscock, Nonexecutive Chairman of the Board of Directors of Zimmer Biomet. Before officially calling the annual meeting to order, I'd like to acknowledge the extraordinary efforts of Zimmer Biomet's management and team members during this extraordinarily challenging time and thank them for their continued focus and dedication to our mission. I now call the 2020 annual meeting of shareholders to order. It is my intent to chair and conduct the meeting in the manner stated in the agenda and the rules of conduct and procedures. The polls are now open for voting. [Voting]

All members of Zimmer Biomet's Board of Directors are attending today's meeting through this webcast. Also attending the meeting through this webcast are members of the company's senior management team, a representative of Pricewaterhousecoopers LLP, the company's independent registered public accounting firm and a representative of Broadridge Financial Solutions, who will act as the inspector of election for this meeting. Chad will now address some of the formalities of today's meeting.

Thank you, Larry. The agenda and the rules of conduct and procedures are posted with other meeting materials at the bottom of the webcast screen. The procedures we are following are simple and are designed to ensure that we have a fair and orderly meeting. As noted, the polls are open. Most shareholders have already voted by proxy, and the proxy votes have been tallied. If you want to vote your shares now or change your vote, you may do so by clicking on the Vote Here button at the bottom right corner of the webcast screen. The polls will remain open until the conclusion of the review of the matters to be voted on. Shareholders may submit questions electronically during the meeting by typing the question in the box located at the bottom-left corner of the webcast screen. Your question will not be visible to other participants. Shareholders were also able to submit questions in advance of today's meeting via the proxy vote website. Questions received during the meeting will not be answered live, but instead, we will consider a response to such questions following the conclusion of the meeting in accordance with the procedural rules. This could include a direct response to the shareholder or a response posted to the Investor Relations section of the company's website, depending on the subject matter and relevance. This meeting is being held pursuant to proper notice. Approximately 207 million shares of the company's common stock were outstanding and eligible to vote as of March 9, the record date for this meeting. Proxies representing a majority of those shares have been received, and accordingly, a quorum is present, and the meeting should proceed. We will now review the matters to be voted on. The first item of business is the election of 11 directors to serve until the 2021 Annual Meeting of Shareholders. The Board has nominated the 11 incumbent directors. Those individuals are: Chris Begley, Betsy Bernard, Gail Boudreaux, Mick Farrell, Larry Glasscock, Bob Hagemann, Bryan Hanson, Arthur Higgins, Teresa Hilado, Syed Jafry and Mike Michelson. The company's bylaws require nominations made by shareholders to be received at least 90 days prior to the meeting. Since no other nominations were received, the nominations are closed. The second item of business is the ratification of the Audit Committee's appointment of Pricewaterhousecoopers LLP as the company's independent registered public accounting firm for 2020. The third item of business is the annual Say on Pay vote. Shareholders are asked to approve, through a nonbinding advisory vote, the compensation of the named executive officers as disclosed in the proxy statement. It is the Board's recommendation that shareholders vote for all proposals. This concludes the review of the matters to be voted on. The polls are now closed. At this point, we will report the preliminary results of the matters voted on today based on information provided by Broadridge Financial Solutions. Any votes that have not been considered in the preliminary report will be included in the final vote tallies reported in a current report on Form 8-K to be filed with the Securities and Exchange Commission within 4 business days. All of the Director nominees have been elected to serve 1 year terms until the 2021 Annual Meeting. Shareholders have ratified the appointment of Pricewaterhousecoopers LLP as the company's independent registered public accounting firm for 2020. And shareholders have approved, on an advisory basis, the compensation of the named executive officers as disclosed in the proxy statement.

Thank you, Chad. There being no other matters required to come before this Annual Meeting of Shareholders, I declare the formal meeting to be adjourned.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating, you may now disconnect.