Stryker Corporation · NYSE:SYK
Stryker — Shareholder Meeting (May 2018)
38 slides from Stryker's shareholder meeting presentation, May 2, 2018
Slide 1: Annual meeting of shareholders
Annual meeting of shareholders Kevin A. Lobo Chairman and Chief Executive Officer
Slide 2: Disclaimer
Disclaimer Forward-looking statement This presentation contains information that includes or is based on forward-looking statements within the meaning of the federal securities law that are subject to various risks and uncertainties that could cause our actual results to differ materially from those
Slide 3: Call to order
Call to order
Slide 4: Board of directors
Board of directors From left to right: Louise L. Francesconi Srikant M. Datar, Ph.D. Mary K. Brainerd Andrew K. Silvernail Ronda E. Stryker Howard E. Cox, Jr. Kevin A. Lobo Allan C. Golston Roch Doliveux, D.V.M.
Slide 5: With appreciation
With appreciation Howard E. Cox, Jr.
Slide 6: New director nominees
New director nominees Sherilyn S. McCoy Rajeev Suri
Slide 7: Leadership team
Leadership team From left to right: Kevin A. Lobo Lonny J. Carpenter Glenn S. Boehnlein M. Kathryn Fink Chairman and Chief Executive Officer Group President and Advisor to the CEO VP, Chief Financial Officer VP, Chief Human Resources Officer Yin C. Becker David K. Floyd Katherine A. Owen Michael D.
Slide 8: With appreciation
With appreciation Lonny J. Carpenter
Slide 9: New leadership team member
New leadership team member Viju S. Menon
Slide 10: Other corporate officers
Other corporate officers Dean H. Bergy, Vice President, Corporate Secretary William E. Berry, Jr., Vice President, Corporate Controller Jeanne M. Blondia, Vice President, Finance and Treasurer Irene B. Corbe, Vice President, Internal Audit William J. Cymbaluk, Vice President, Corporate Regulatory Af
Slide 11: Division presidents
Division presidents Businesses Regions Xavier M. C. Berling, Trauma & Extremities Maurice Ben-Mayor, South Pacific Bradley W. Paddock, Spine Laurence F. I. Hipkin, Eastern Europe, Middle Mark H. Paul, Neurovascular East, Africa J. Andrew Pierce, Endoscopy Scott A. MacNair, Canada Bradford L. Saar, M
Slide 12: Corporate counsel and independent accountant
Corporate counsel and independent accountant Corporate counsel Richard C. Witzel, Jr. Partner of Skadden, Arps, Slate, Meagher & Flom LLP Independent accountants Christopher A. Larson Ernst & Young LLP
Slide 13: Voting on proposals
Voting on proposals
Slide 14: Business update
Business update
Slide 15: Mission and values
Mission Together with our customers, we are driven to make healthcare better. Values Integrity Accountability People Performance We do what’s right We do what we say We grow talent We deliver
Slide 16: Our company strategy
Our company strategy Drive market leading growth and achieve category leadership in Orthopaedics, MedSurg Equipment, and Neurotechnology/Spine Customer focus Innovation Globalization Cost transformation • Intense customer • Make healthcare better • Focus resources, investment • Drive operational eff
Slide 17: Diverse global Med Tech leader
Diverse global Med Tech leader Neuro Powered Instruments 4% Knees Neurovascular CMF 2% 13% 5% Spine 6% Sustainability Trauma & Solutions 2% Extremities 2017 12% Endoscopy net sales $12.4B 13% Hips 10% Other Medical 3% 16% Instruments 14%
Slide 18: Our history of growth
Our history of growth Net Sales ($B) ~12B+ $12.4 B $12 12 $10 10 $8 8 $6 6 $4 4 2 $2 00 1979 79 2017 2017
Slide 19: Stryker vs. S&P 500 2013-2017 stock price
Stryker vs. S&P 500 2013-2017 stock price 250% SYK 182% 200% S&P 87% 150% 100% 50% 0% J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
Slide 20: Growth at the high end of Med Tech
Growth at the high end of Med Tech Organic Sales Growth 8.0% 7.1% 7.0% 6.4% 6.1% 6.0% 5.8% 5.0% 4.6% 4.8% 4.2% 4.0% 2.9% 3.0% 2.0% 1.0% 0.0% 2014 2015 2016 2017 Med Tech Market* Stryker * Med Tech market growth has been compiled by Stryker from financial information and published guidance reported b
Slide 21: Delivering leveraged earnings
Delivering leveraged earnings 14.0% 13.3% 11.9% 12.0% 10.0% 8.2% 8.0% 7.1% 6.1% 6.4% 5.8% 6.0% 5.3% 4.0% 2.0% 0.0% 2014 2015 2016 2017 Organic sales growth Adj. EPS growth
Slide 22: Q1 results
Q1 results • 7.0% organic sales growth despite one less selling day • Strong balance across businesses and geographies • Adjusted operating income margin expanded 70 bps to 25.0% • Adjusted EPS increased 13.5% to $1.68, exceeding high end of guidance range
Slide 23: Long-term sustainable financial targets
Long-term sustainable financial targets Sales growth at the high end of Med Sales growth Tech, which allows us to drive… EPS 30 to 50 basis points of annual growth Operating operating income improvement over leverage the next 5 years, resulting in… Financial EPS growth of at least 9% annually effici
Slide 24: 2018 guidance
2018 guidance Q2 outlook • $1.70 - $1.75 adjusted net earnings per diluted share Full year outlook • 6.5% - 7.0% organic sales growth • $7.18 - $7.25 adjusted net earnings per diluted share
Slide 25: Business outlook in 2018
Business outlook in 2018 • Market leading growth in Orthopaedics with Mako, 3D-printing, and Trauma and Extremities specialization • MedSurg momentum continues behind new products and acquisitions • High growth in Neurotechnology and Spine, despite challenges in core Spine
Slide 26: Capital deployment
Capital deployment M&A to drive sales growth and innovation Dividends $1.7B Focused on driving sales growth in core and adjacent markets 2015-2017 Share Capital repurchases Deployment Dividend growth $0.9B History Committed to increasing the dividend in-line with M&A $5.9B adjusted EPS growth Share
Slide 27: Mergers and acquisitions
Mergers and acquisitions Color key: We continue to enhance our portfolio’s depth and Core business Adjacency breadth with strategic mergers and acquisitions. Synergetics Ivy Sports USA’s Neuro Medicine, Portfolio LLC Concentric Patient Safety Vertebral Compression NOVADAQ Technologies Fracture Portf
Slide 28: Stryker is a great place to work
Stryker is a great place to work World’s Best FORTUNE World’ s Most FORTUNE 500 Workplaces 2017 Admired Companies Largest U.S.-Based First time on the list, World’s Most Admired Companies Companies ranked #10 out of 25 in Medical Products & Equipment Joined the list in 2003 companies Recipient for t
Slide 29: Summary
Summary • Talented and experienced leadership • Driving strong organic sales growth • Delivering leveraged earnings gains • Continued focus on innovation and acquisitions • Enhancing global presence through focus and alignment • Effectively deploying capital to enhance shareholder returns
Slide 30: Voting results
Voting results
Slide 31: Q&A
Q&A
Slide 32: Trademarks
Stryker Corporation or its divisions or other corporate affiliated entities own, use or have applied for the following trademarks or service marks: AMagine, Apex, Colorado, Hoffman, LUCAS, Mako, NOVADAQ, Physio-Control, Sage, SOMA, SPY, Entellus, Stryker, Together with our customers, we are driven t
Slide 33: Appendix A
Appendix A We supplement the reporting of our financial information determined under accounting principles generally accepted in the United States (GAAP) with certain non-GAAP financial measures, including percentage sales growth in constant currency; percentage organic sales growth; percentage sale
Slide 34: Reconciliation of reported net sales growth to organic net sales growth
Reconciliation of reported net sales growth to organic net sales growth Three Months March 31, Years Ended December 31, 2018 2017 2016 2015 2014 Reported Net Sales Growth 9.7% 9.9% 13.9% 2.8% 7.3% Less: Foreign Currency Exchange 2.5 0.1 (0.4) (4.2) (1.0) Less: Acquisitions 1.2 2.7 7.9 0.9 2.5 Less:
Slide 35: Reconciliation of net earnings per diluted share to adjusted net earnings per diluted share
Reconciliation of net earnings per diluted share to adjusted net earnings per diluted share Millions of Dollars, Except Per Share Amounts Years Ended December 31, 2017 2016 2015 2014 Net Earnings Effective Tax Rate Diluted EPS Net Earnings Effective Tax Rate Diluted EPS Net Earnings Effective Tax Ra
Slide 36: Reconciliation of operating income and margin to adjusted operating income and margin
Reconciliation of operating income and margin to adjusted operating income and margin Millions of Dollars (Unaudited) Three Months March 31, 2018 2017 Reported $ 591 $ 556 Operating Income Margin 18.2% 18.8% Acquisition and integration-related charges (a) Inventory stepped-up to fair value 6 (1) Oth
Slide 37: Reconciliation of net earnings per diluted share to adjusted net earnings per diluted share
Reconciliation of net earnings per diluted share to adjusted net earnings per diluted share Millions of Dollars, Except Per Share Amounts (Unaudited) Three Months March 31, 2018 2017 Net Earnings Effective Tax Rate Diluted EPS Net Earnings Effective Tax Rate Diluted EPS Reported $ 443 18.3% $ 1.16 $
Slide 38: Reconciliation of expected net earnings per diluted share to expected adjusted
Reconciliation of expected net earnings per diluted share to expected adjusted net earnings per diluted share Three Months Full Year Low High Low High Expected - Reported $ 1.24 $ 1.34 $ 5.35 $ 5.60 Acquisition and integration-related charges: (a) 0.08 0.07 0.27 0.23 Amortization of purchased intang