reported operating results for the
third
quarter of 2024:
Third Quarter
Results
- Reported net sales
increased 11.9%
to $5.5 billion
- Organic net sales
increased 11.5%
- Reported operating income
margin of 19.7%
- Adjusted operating income
margin(1) increased
130 bps to
24.7%
- Reported EPS
increased 20.0%
to $2.16
- Adjusted
EPS(1) increased
16.7% to
$2.87
|
Third Quarter Net Sales Growth Overview |
|
Reported |
|
Foreign Currency Exchange |
|
Constant Currency |
|
Acquisitions / Divestitures |
|
Organic |
MedSurg and
Neurotechnology |
12.8 |
% |
|
(0.1) % |
|
12.9 |
% |
|
0.2 |
% |
|
12.7 |
% |
Orthopaedics and Spine |
10.7 |
|
|
(0.1)
|
|
|
10.8 |
|
|
1.1 |
|
|
9.7 |
|
Total |
11.9 |
% |
|
(0.1) % |
|
12.0 |
% |
|
0.5 |
% |
|
11.5 |
% |
"We delivered another strong quarter across our
businesses and geographies and are on track to achieve our adjusted
operating margin expansion goals," said Kevin A. Lobo, Chair and
CEO. "Our product innovation and acquisitions will help to sustain
our growth at the high end of MedTech."
Sales Analysis
Consolidated net sales of $5.5 billion increased
11.9% in the quarter and 12.0% in constant currency. Organic net
sales increased 11.5% in the quarter including 10.3% from increased
unit volume and 1.2% from higher prices.
MedSurg and Neurotechnology net sales of $3.2
billion increased 12.8% in the quarter and 12.9% in constant
currency. Organic net sales increased 12.7% in the quarter
including 11.0% from increased unit volume and 1.7% from higher
prices.
Orthopaedics and Spine net sales of $2.3 billion
increased 10.7% in the quarter and 10.8% in constant currency.
Organic net sales increased 9.7% in the quarter including 9.3% from
increased unit volume and 0.4% from higher prices.
Earnings Analysis
Reported net earnings of $834 million increased
20.5% in the quarter. Reported net earnings per diluted share of
$2.16 increased 20.0% in the quarter. Reported gross profit margin
and reported operating income margin were 64.0% and 19.7% in the
quarter. Reported net earnings include certain items, such as
charges for acquisition and integration-related activities, the
amortization of purchased intangible assets, structural
optimization and other special charges (including asset write-offs
and impairments), costs to comply with certain medical device
regulations, recall-related matters, regulatory and legal matters
and tax matters. Excluding the aforementioned items, adjusted gross
profit margin(1) was 64.5% in the quarter, and adjusted operating
income margin(1) was 24.7% in the quarter. Adjusted net earnings(1)
of $1.1 billion increased 17.3% in the quarter. Adjusted net
earnings per diluted share(1) of $2.87 increased 16.7% in the
quarter.
2024 Outlook
Based on our year-to-date performance, sustained
demand for our capital products and healthy procedural volumes, we
now expect full year 2024 organic net sales growth(2) to be in the
range of 9.5% to 10.0% with a favorable pricing impact in the range
of 0.5% to 1.0%. If foreign exchange rates hold near current
levels, we anticipate a slightly unfavorable impact on full year
net sales and now expect adjusted net earnings per diluted share(2)
will be negatively impacted by approximately $0.10. This is
reflected in our guidance. With a strong first nine months of the
year and our strong sales momentum going into the fourth quarter,
we now expect adjusted net earnings per diluted share(2) to be in
the range of $12.00 to $12.10.
(1) A reconciliation of the non-GAAP financial
measures: adjusted gross profit margin, adjusted operating income
and adjusted operating income margin, adjusted net earnings and
adjusted net earnings per diluted share, to the most directly
comparable GAAP measures: gross profit margin, operating income and
operating income margin, net earnings and net earnings per diluted
share, and other important information accompanies this press
release.
(2) We are unable to present a quantitative
reconciliation of our expected net sales growth to expected organic
net sales growth as we are unable to predict with reasonable
certainty and without unreasonable effort the impact and timing of
acquisitions and divestitures and the impact of foreign currency
exchange rates. We are unable to present a quantitative
reconciliation of our expected net earnings per diluted share to
expected adjusted net earnings per diluted share as we are unable
to predict with reasonable certainty and without unreasonable
effort the impact and timing of structural optimization and other
special charges, acquisition-related expenses and the outcome of
certain regulatory, legal and tax matters. The financial impact of
these items is uncertain and is dependent on various factors,
including timing, and could be material to our Consolidated
Statements of Earnings.
Conference Call on
Tuesday, October 29, 2024
As previously announced, we will host a
conference call on Tuesday, October 29, 2024
at 4:30 p.m., Eastern Time, to discuss our operating results for
the quarter ended September 30, 2024 and provide an
operational update.
Please register for this conference call at:
https://www.veracast.com/webcasts/stryker/events/SYK3Q24.cfm. After
registering, a confirmation will be sent via email, including
dial-in details and unique conference call access codes required
for call entry. Registration is open throughout the live call. To
ensure you are connected prior to the beginning of the call, we
suggest registering a minimum of 15 minutes before the start of the
call.
A simultaneous webcast of the call will be
accessible via the Investor Relations page of our website at
www.stryker.com. For those not planning to ask a question of
management, we recommend listening via the webcast. Please allow 15
minutes to register, download and install any necessary
software.
Following the conference call, a replay will be available on our
website up to one year from the time of the earnings call.
Caution Concerning Forward-Looking
Statements
This press release 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 expressed or implied in such
statements. Such factors include, but are not limited to: weakening
of economic conditions, or the anticipation thereof, that could
adversely affect the level of demand for our products; geopolitical
risks, including from international conflicts and elections in the
United States and other countries, which could, among other things,
lead to increased market volatility; pricing pressures generally,
including cost-containment measures that could adversely affect the
price of or demand for our products; changes in foreign currency
exchange markets; legislative and regulatory actions; unanticipated
issues arising in connection with clinical studies and otherwise
that affect approval of new products by the United States Food and
Drug Administration and foreign regulatory agencies; inflationary
pressures; increased interest rates or interest rate volatility;
supply chain disruptions; changes in labor markets; changes in
reimbursement levels from third-party payors; a significant
increase in product liability claims; the ultimate total cost with
respect to recall-related and other regulatory and quality matters;
the impact of investigative and legal proceedings and compliance
risks; resolution of tax audits; changes in tax laws and
regulations; the impact of legislation to reform the healthcare
system in the United States or other countries; costs to comply
with medical device regulations; changes in financial markets;
changes in our credit ratings; changes in the competitive
environment; our ability to integrate and realize the anticipated
benefits of acquisitions in full or at all or within the expected
timeframes; our ability to realize anticipated cost savings;
potential negative impacts resulting from climate change or other
environmental, social and governance and sustainability related
matters; the impact on our operations and financial results of any
public health emergency and any related policies and actions by
governments or other third parties; and breaches or failures of our
or our vendors' or customers' information technology systems or
products, including by cyber-attack, data leakage, unauthorized
access or theft. Additional information concerning these and other
factors is contained in our filings with the United States
Securities and Exchange Commission, including our Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q. We disclaim any
intention or obligation to publicly update or revise any
forward-looking statement to reflect any change in our expectations
or in events, conditions or circumstances on which those
expectations may be based, or that affect the likelihood that
actual results will differ from those contained in the
forward-looking statements.
Stryker is a global leader in medical
technologies and, together with our customers, we are driven to
make healthcare better. We offer innovative products and services
in MedSurg, Neurotechnology, Orthopaedics and Spine that help
improve patient and healthcare outcomes. Alongside our customers
around the world, we impact more than 150 million patients
annually. More information is available at www.stryker.com.
For investor inquiries please
contact:
Jason Beach, Vice President, Finance and
Investor Relations at 269-385-2600 or jason.beach@stryker.com
For media inquiries please
contact:
Yin Becker, Vice President, Chief Corporate
Affairs Officer at 269-385-2600 or yin.becker@stryker.com
STRYKER CORPORATION |
For the Three and Nine Months September 30 |
(Unaudited - Millions of Dollars, Except Per Share
Amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF EARNINGS |
|
|
|
|
|
|
|
|
|
Three Months |
|
Nine Months |
|
|
2024 |
|
|
|
2023 |
|
|
% Change |
|
|
2024 |
|
|
|
2023 |
|
|
% Change |
Net
sales |
$ |
5,494 |
|
|
$ |
4,909 |
|
|
11.9 |
% |
|
$ |
16,159 |
|
|
$ |
14,683 |
|
|
10.1 |
% |
Cost of sales |
|
1,977 |
|
|
|
1,751 |
|
|
12.9 |
|
|
|
5,893 |
|
|
|
5,328 |
|
|
10.6 |
|
Gross
profit |
$ |
3,517 |
|
|
$ |
3,158 |
|
|
11.4 |
% |
|
$ |
10,266 |
|
|
$ |
9,355 |
|
|
9.7 |
% |
% of sales |
|
64.0 |
% |
|
|
64.3 |
% |
|
|
|
|
63.5 |
% |
|
|
63.7 |
% |
|
|
Research, development and engineering expenses |
|
377 |
|
|
|
353 |
|
|
6.8 |
|
|
|
1,108 |
|
|
|
1,038 |
|
|
6.7 |
|
Selling, general and administrative expenses |
|
1,896 |
|
|
|
1,710 |
|
|
10.9 |
|
|
|
5,583 |
|
|
|
5,200 |
|
|
7.4 |
|
Amortization of intangible assets |
|
159 |
|
|
|
164 |
|
|
(3.0)
|
|
|
|
467 |
|
|
|
486 |
|
|
(3.9)
|
|
Total operating expenses |
$ |
2,432 |
|
|
$ |
2,227 |
|
|
9.2 |
% |
|
$ |
7,158 |
|
|
$ |
6,724 |
|
|
6.5 |
% |
Operating
income |
$ |
1,085 |
|
|
$ |
931 |
|
|
16.5 |
% |
|
$ |
3,108 |
|
|
$ |
2,631 |
|
|
18.1 |
% |
% of sales |
|
19.7 |
% |
|
|
19.0 |
% |
|
|
|
|
19.2 |
% |
|
|
17.9 |
% |
|
|
Other income (expense), net |
|
(42)
|
|
|
|
(62)
|
|
|
(32.3)
|
|
|
|
(144)
|
|
|
|
(184)
|
|
|
(21.7)
|
|
Earnings before income
taxes |
$ |
1,043 |
|
|
$ |
869 |
|
|
20.0 |
% |
|
$ |
2,964 |
|
|
$ |
2,447 |
|
|
21.1 |
% |
Income taxes |
|
209 |
|
|
|
177 |
|
|
18.1 |
|
|
|
517 |
|
|
|
425 |
|
|
21.6 |
|
Net
earnings |
$ |
834 |
|
|
$ |
692 |
|
|
20.5 |
% |
|
$ |
2,447 |
|
|
$ |
2,022 |
|
|
21.0 |
% |
Net earnings per share
of common stock: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
2.18 |
|
|
$ |
1.82 |
|
|
19.8 |
% |
|
$ |
6.42 |
|
|
$ |
5.33 |
|
|
20.5 |
% |
Diluted |
$ |
2.16 |
|
|
$ |
1.80 |
|
|
20.0 |
% |
|
$ |
6.35 |
|
|
$ |
5.27 |
|
|
20.5 |
% |
Weighted-average
shares outstanding (in millions): |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
381.1 |
|
|
|
379.8 |
|
|
|
|
|
380.9 |
|
|
|
379.5 |
|
|
|
Diluted |
|
385.6 |
|
|
|
384.0 |
|
|
|
|
|
385.4 |
|
|
|
383.7 |
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
September 30 |
|
December 31 |
|
|
2024 |
|
|
2023 |
Assets |
|
|
|
Cash and cash equivalents |
$ |
3,850 |
|
$ |
2,971 |
Short-term investments |
|
750 |
|
|
— |
Marketable securities |
|
84 |
|
|
82 |
Accounts receivable, net |
|
3,736 |
|
|
3,765 |
Inventories |
|
5,292 |
|
|
4,843 |
Prepaid expenses and other current assets |
|
961 |
|
|
857 |
Total current assets |
$ |
14,673 |
|
$ |
12,518 |
Property, plant and equipment, net |
|
3,429 |
|
|
3,215 |
Goodwill and other intangibles, net |
|
21,336 |
|
|
19,836 |
Noncurrent deferred income tax assets |
|
1,562 |
|
|
1,670 |
Other noncurrent assets |
|
2,833 |
|
|
2,673 |
Total
assets |
$ |
43,833 |
|
$ |
39,912 |
Liabilities and
shareholders' equity |
|
|
|
Current liabilities |
$ |
7,669 |
|
$ |
7,921 |
Long-term debt, excluding current maturities |
|
13,325 |
|
|
10,901 |
Income taxes |
|
368 |
|
|
567 |
Other noncurrent liabilities |
|
2,322 |
|
|
1,930 |
Shareholders' equity |
|
20,149 |
|
|
18,593 |
Total liabilities and
shareholders' equity |
$ |
43,833 |
|
$ |
39,912 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
Nine Months |
|
|
2024 |
|
|
|
2023 |
|
Operating
activities |
|
|
|
Net earnings |
$ |
2,447 |
|
|
$ |
2,022 |
|
Depreciation |
|
319 |
|
|
|
292 |
|
Amortization of intangible assets |
|
467 |
|
|
|
486 |
|
Changes in operating assets, liabilities, income taxes payable and
other, net |
|
(922)
|
|
|
|
(617)
|
|
Net cash provided by
operating activities |
$ |
2,311 |
|
|
$ |
2,183 |
|
Investing
activities |
|
|
|
Acquisitions, net of cash acquired |
$ |
(1,598)
|
|
|
$ |
(390)
|
|
Purchases of property, plant and equipment |
|
(489)
|
|
|
|
(430)
|
|
Other investing, net |
|
(610)
|
|
|
|
10 |
|
Net cash used in
investing activities |
$ |
(2,697)
|
|
|
$ |
(810)
|
|
Financing
activities |
|
|
|
Borrowings (payments) of debt, net |
$ |
2,378
|
|
|
$ |
(312)
|
|
Payments of dividends |
|
(914)
|
|
|
|
(854)
|
|
Other financing, net |
|
(195)
|
|
|
|
(142)
|
|
Net cash provided by
(used in) financing activities |
$ |
1,269
|
|
|
$ |
(1,308)
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
(4)
|
|
|
|
(49)
|
|
Change in cash and
cash equivalents |
$ |
879
|
|
|
$ |
16 |
|
STRYKER CORPORATION |
For the Three and Nine Months September 30 |
(Unaudited - Millions of Dollars) |
SALES GROWTH ANALYSIS |
|
Three Months |
|
Nine Months |
|
|
|
|
|
Percentage Change |
|
|
|
|
|
Percentage Change |
|
|
2024 |
|
|
2023 |
|
As Reported |
ConstantCurrency |
|
|
2024 |
|
|
2023 |
|
As Reported |
ConstantCurrency |
Geographic: |
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
$ |
4,109 |
|
$ |
3,678 |
|
11.7 |
% |
11.7 |
% |
|
$ |
12,070 |
|
$ |
10,901 |
|
10.7 |
% |
10.7 |
% |
International |
|
1,385 |
|
|
1,231 |
|
12.5 |
|
13.0 |
|
|
|
4,089 |
|
|
3,782 |
|
8.1 |
|
10.1 |
|
Total |
$ |
5,494 |
|
$ |
4,909 |
|
11.9 |
% |
12.0 |
% |
|
$ |
16,159 |
|
$ |
14,683 |
|
10.1 |
% |
10.6 |
% |
Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
MedSurg and Neurotechnology |
$ |
3,224 |
|
$ |
2,859 |
|
12.8 |
% |
12.9 |
% |
|
$ |
9,340 |
|
$ |
8,409 |
|
11.1 |
% |
11.5 |
% |
Orthopaedics and Spine |
|
2,270 |
|
|
2,050 |
|
10.7 |
|
10.8 |
|
|
|
6,819 |
|
|
6,274 |
|
8.7 |
|
9.2 |
|
Total |
$ |
5,494 |
|
$ |
4,909 |
|
11.9 |
% |
12.0 |
% |
|
$ |
16,159 |
|
$ |
14,683 |
|
10.1 |
% |
10.6 |
% |
SUPPLEMENTAL SALES GROWTH ANALYSIS |
|
Three Months |
|
|
|
|
|
|
United States |
|
International |
|
|
|
Percentage Change |
|
|
2024 |
|
|
2023 |
|
As Reported |
Constant Currency |
|
As Reported |
|
As Reported |
Constant Currency |
MedSurg and
Neurotechnology: |
|
|
|
|
|
|
|
|
|
|
|
Instruments |
$ |
679 |
|
$ |
620 |
|
9.6 |
% |
9.5 |
% |
|
9.9 |
% |
|
8.3 |
% |
7.8 |
% |
Endoscopy |
|
837 |
|
|
746 |
|
12.2 |
|
12.5 |
|
|
11.3 |
|
|
16.6 |
|
18.1 |
|
Medical |
|
938 |
|
|
798 |
|
17.6 |
|
17.7 |
|
|
18.6 |
|
|
12.7 |
|
13.2 |
|
Neurovascular |
|
329 |
|
|
311 |
|
5.5 |
|
5.9 |
|
|
1.5 |
|
|
8.1 |
|
8.6 |
|
Neuro Cranial |
|
441 |
|
|
384 |
|
15.0 |
|
15.0 |
|
|
16.2 |
|
|
9.4 |
|
9.6 |
|
|
$ |
3,224 |
|
$ |
2,859 |
|
12.8 |
% |
12.9 |
% |
|
13.3 |
% |
|
10.9 |
% |
11.4 |
% |
Orthopaedics and
Spine: |
|
|
|
|
|
|
|
|
|
|
|
Knees |
$ |
570 |
|
$ |
515 |
|
10.6 |
% |
10.7 |
% |
|
8.4 |
% |
|
17.1 |
% |
17.4 |
% |
Hips |
|
420 |
|
|
362 |
|
15.9 |
|
16.2 |
|
|
10.9 |
|
|
24.8 |
|
25.3 |
|
Trauma and Extremities |
|
849 |
|
|
752 |
|
12.8 |
|
12.6 |
|
|
12.9 |
|
|
12.6 |
|
12.0 |
|
Spine |
|
304 |
|
|
291 |
|
4.6 |
|
4.4 |
|
|
3.5 |
|
|
7.5 |
|
6.8 |
|
Other |
|
127 |
|
|
130 |
|
(2.4)
|
|
0.1 |
|
|
(0.6)
|
|
|
(6.1)
|
|
1.3 |
|
|
$ |
2,270 |
|
$ |
2,050 |
|
10.7 |
% |
10.8 |
% |
|
9.2 |
% |
|
14.4 |
% |
14.8 |
% |
Total |
$ |
5,494 |
|
$ |
4,909 |
|
11.9 |
% |
12.0 |
% |
|
11.7 |
% |
|
12.5 |
% |
13.0 |
% |
|
|
Nine Months |
|
|
|
|
|
|
|
|
United States |
|
International |
|
|
|
|
|
Percentage Change |
|
|
2024 |
|
|
2023 |
|
As Reported |
Constant Currency |
|
As Reported |
|
As Reported |
Constant Currency |
MedSurg and
Neurotechnology: |
|
|
|
|
|
|
|
|
|
|
|
Instruments |
$ |
2,044 |
|
$ |
1,808 |
|
13.1 |
% |
13.3 |
% |
|
13.9 |
% |
|
9.7 |
% |
10.9 |
% |
Endoscopy |
|
2,383 |
|
|
2,166 |
|
10.0 |
|
10.5 |
|
|
10.2 |
|
|
9.1 |
|
11.6 |
|
Medical |
|
2,710 |
|
|
2,417 |
|
12.1 |
|
12.3 |
|
|
15.7 |
|
|
(2.9)
|
|
(1.8)
|
|
Neurovascular |
|
966 |
|
|
906 |
|
6.6 |
|
8.3 |
|
|
2.2 |
|
|
9.4 |
|
12.4 |
|
Neuro Cranial |
|
1,237 |
|
|
1,112 |
|
11.3 |
|
11.7 |
|
|
11.4 |
|
|
10.7 |
|
12.9 |
|
|
$ |
9,340 |
|
$ |
8,409 |
|
11.1 |
% |
11.5 |
% |
|
12.4 |
% |
|
6.7 |
% |
8.7 |
% |
Orthopaedics and
Spine: |
|
|
|
|
|
|
|
|
|
|
|
Knees |
$ |
1,760 |
|
$ |
1,643 |
|
7.1 |
% |
7.7 |
% |
|
6.0 |
% |
|
10.2 |
% |
12.2 |
% |
Hips |
|
1,241 |
|
|
1,130 |
|
9.9 |
|
10.9 |
|
|
7.3 |
|
|
14.4 |
|
17.3 |
|
Trauma and Extremities |
|
2,511 |
|
|
2,287 |
|
9.8 |
|
10.0 |
|
|
10.8 |
|
|
7.1 |
|
7.8 |
|
Spine |
|
911 |
|
|
871 |
|
4.6 |
|
4.8 |
|
|
3.9 |
|
|
6.5 |
|
7.3 |
|
Other |
|
396 |
|
|
343 |
|
15.4 |
|
17.8 |
|
|
17.4 |
|
|
11.2 |
|
18.6 |
|
|
$ |
6,819 |
|
$ |
6,274 |
|
8.7 |
% |
9.2 |
% |
|
8.3 |
% |
|
9.7 |
% |
11.6 |
% |
Total |
$ |
16,159 |
|
$ |
14,683 |
|
10.1 |
% |
10.6 |
% |
|
10.7 |
% |
|
8.1 |
% |
10.1 |
% |
Notes: The three months 2024
had one more selling day than 2023. The nine months 2024 had the
same number of selling days as 2023. Beginning in the first quarter
2024, a product line previously included in Instruments has been
reclassified to Endoscopy to align with a change in our internal
reporting structure. We have reflected this change in all
historical periods presented.
SUPPLEMENTAL
INFORMATION - RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES
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; adjusted gross profit;
adjusted selling, general and administrative expenses; adjusted
research, development and engineering expenses; adjusted operating
income; adjusted other income (expense), net; adjusted income
taxes; adjusted effective income tax rate; adjusted net earnings;
and adjusted net earnings per diluted share (Diluted EPS). We
believe these non-GAAP financial measures provide meaningful
information to assist investors and shareholders in understanding
our financial results and assessing our prospects for future
performance. Management believes percentage sales growth in
constant currency and the other adjusted measures described above
are important indicators of our operations because they exclude
items that may not be indicative of or are unrelated to our core
operating results and provide a baseline for analyzing trends in
our underlying businesses. Management uses these non-GAAP financial
measures for reviewing the operating results of reportable business
segments and analyzing potential future business trends in
connection with our budget process and bases certain management
incentive compensation on these non-GAAP financial measures.
To measure percentage sales growth in constant
currency, we remove the impact of changes in foreign currency
exchange rates that affect the comparability and trend of sales.
Percentage sales growth in constant currency is calculated by
translating current and prior year results at the same foreign
currency exchange rate. To measure percentage organic sales growth,
we remove the impact of changes in foreign currency exchange rates,
acquisitions and divestitures, which affect the comparability and
trend of sales. Percentage organic sales growth is calculated by
translating current year and prior year results at the same foreign
currency exchange rates excluding the impact of acquisitions and
divestitures. To measure earnings performance on a consistent and
comparable basis, we exclude certain items that affect the
comparability of operating results and the trend of earnings. The
income tax effect of each adjustment was determined based on the
tax effect of the jurisdiction in which the related pre-tax
adjustment was recorded. These adjustments are irregular in timing
and may not be indicative of our past and future performance.
Because non-GAAP financial measures are not
standardized, it may not be possible to compare these financial
measures with other companies' non-GAAP financial measures having
the same or similar names. These adjusted financial measures should
not be considered in isolation or as a substitute for reported
sales growth, gross profit, selling, general and administrative
expenses, research, development and engineering expenses, operating
income, other income (expense), net, income taxes, effective income
tax rate, net earnings and net earnings per diluted share, the most
directly comparable GAAP financial measures. These non-GAAP
financial measures are an additional way of viewing aspects of our
operations that, when viewed with our GAAP results and the
reconciliations to corresponding GAAP financial measures below,
provide a more complete understanding of our business. We strongly
encourage investors and shareholders to review our financial
statements and publicly-filed reports in their entirety and not to
rely on any single financial measure.
The following reconciles the non-GAAP financial
measures discussed above with the most directly comparable GAAP
financial measures. The weighted-average diluted shares outstanding
used in the calculation of adjusted net earnings per diluted share
are the same as those used in the calculation of reported net
earnings per diluted share for the respective period.
STRYKER CORPORATION |
For the Three and Nine Months September 30 |
(Unaudited - Millions of Dollars, Except Per Share
Amounts) |
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Financial Measures to the Most
Directly Comparable GAAP Financial Measures |
Three Months 2024 |
Gross Profit |
Selling, General & Administrative
Expenses |
Research, Development & Engineering
Expenses |
Operating Income |
Other Income (Expense), Net |
Income Taxes |
Net Earnings |
EffectiveTax Rate |
Diluted EPS |
Reported |
$ |
3,517 |
|
$ |
1,896 |
|
$ |
377 |
|
$ |
1,085 |
|
$ |
(42)
|
|
$ |
209 |
|
$ |
834 |
|
20.0 |
% |
$ |
2.16 |
Reported percent net
sales |
|
64.0 |
% |
|
34.5 |
% |
|
6.9 |
% |
|
19.7 |
% |
(0.8) % |
nm |
|
15.2 |
% |
|
|
Acquisition and
integration-related costs: |
|
|
|
|
|
|
|
|
|
Inventory stepped-up to fair value |
|
29 |
|
|
— |
|
|
— |
|
|
29 |
|
|
— |
|
|
7 |
|
|
22 |
|
0.2 |
|
|
0.06 |
Other acquisition and integration-related (a) |
|
— |
|
|
(48)
|
|
|
— |
|
|
48 |
|
|
— |
|
|
11 |
|
|
37 |
|
0.3 |
|
|
0.10 |
Amortization of purchased
intangible assets |
|
— |
|
|
— |
|
|
— |
|
|
159 |
|
|
— |
|
|
32 |
|
|
127 |
|
0.7 |
|
|
0.32 |
Structural optimization and
other special charges (b) |
|
(2)
|
|
|
(26)
|
|
|
— |
|
|
24 |
|
|
— |
|
|
4 |
|
|
20 |
|
— |
|
|
0.05 |
Medical device regulations
(c) |
|
— |
|
|
— |
|
|
(13)
|
|
|
13 |
|
|
— |
|
|
2 |
|
|
11 |
|
0.1 |
|
|
0.03 |
Recall-related matters
(d) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
Regulatory and legal matters
(e) |
|
— |
|
|
1 |
|
|
— |
|
|
(1)
|
|
|
— |
|
|
— |
|
|
(1)
|
|
— |
|
|
— |
Tax matters (f) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(57)
|
|
|
57 |
|
(5.5)
|
|
|
0.15 |
Adjusted |
$ |
3,544 |
|
$ |
1,823 |
|
$ |
364 |
|
$ |
1,357 |
|
$ |
(42)
|
|
$ |
208 |
|
$ |
1,107 |
|
15.8 |
% |
$ |
2.87 |
Adjusted percent net
sales |
|
64.5 |
% |
|
33.2 |
% |
|
6.6 |
% |
|
24.7 |
% |
(0.8) % |
nm |
|
20.1 |
% |
|
|
Three Months 2023 |
Gross Profit |
Selling, General & Administrative
Expenses |
Research, Development & Engineering
Expenses |
Operating Income |
Other Income (Expense), Net |
Income Taxes |
Net Earnings |
EffectiveTax Rate |
Diluted EPS |
Reported |
$ |
3,158 |
|
$ |
1,710 |
|
$ |
353 |
|
$ |
931 |
|
$ |
(62)
|
|
$ |
177 |
|
$ |
692 |
|
20.4 |
% |
$ |
1.80 |
Reported percent net
sales |
|
64.3 |
% |
|
34.8 |
% |
|
7.2 |
% |
|
19.0 |
% |
(1.3) % |
nm |
|
14.1 |
% |
|
|
Acquisition and
integration-related costs: |
|
|
|
|
|
|
|
|
|
Inventory stepped-up to fair value |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
Other acquisition and integration-related (a) |
|
— |
|
|
1 |
|
|
— |
|
|
(1)
|
|
|
— |
|
|
(28)
|
|
|
27 |
|
(3.1)
|
|
|
0.07 |
Amortization of purchased
intangible assets |
|
— |
|
|
— |
|
|
— |
|
|
164 |
|
|
— |
|
|
36 |
|
|
128 |
|
1.6 |
|
|
0.34 |
Structural optimization and
other special charges (b) |
|
19 |
|
|
(9)
|
|
|
— |
|
|
28 |
|
|
— |
|
|
7 |
|
|
21 |
|
0.3 |
|
|
0.06 |
Medical device regulations
(c) |
|
1 |
|
|
— |
|
|
(18)
|
|
|
19 |
|
|
— |
|
|
4 |
|
|
15 |
|
0.2 |
|
|
0.04 |
Recall-related matters
(d) |
|
— |
|
|
(9)
|
|
|
— |
|
|
9 |
|
|
— |
|
|
2 |
|
|
7 |
|
0.1 |
|
|
0.01 |
Regulatory and legal matters
(e) |
|
— |
|
|
1 |
|
|
— |
|
|
(1)
|
|
|
— |
|
|
1 |
|
|
(2)
|
|
0.1 |
|
|
— |
Tax matters (f) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
|
(55)
|
|
|
56 |
|
(6.4)
|
|
|
0.14 |
Adjusted |
$ |
3,178 |
|
$ |
1,694 |
|
$ |
335 |
|
$ |
1,149 |
|
$ |
(61)
|
|
$ |
144 |
|
$ |
944 |
|
13.2 |
% |
$ |
2.46 |
Adjusted percent net
sales |
|
64.7 |
% |
|
34.5 |
% |
|
6.8 |
% |
|
23.4 |
% |
(1.2) % |
nm |
|
19.2 |
% |
|
|
nm - not meaningful
(a) Charges represent certain acquisition and
integration-related costs associated with acquisitions,
including:
|
Three Months |
|
|
2024 |
|
|
2023 |
|
Termination of sales relationships |
$ |
— |
|
$ |
2 |
|
Employee retention and workforce reductions |
|
13 |
|
|
3 |
|
Changes in the fair value of contingent consideration |
|
2 |
|
|
(4)
|
|
Manufacturing integration costs |
|
1 |
|
|
— |
|
Stock compensation payments upon a change in control |
|
22 |
|
|
— |
|
Other integration-related activities (e.g., deal costs and legal
entity rationalization) |
|
10 |
|
|
(2)
|
|
Adjustments to Operating
Income |
$ |
48 |
|
$ |
(1)
|
|
Charges for acquisition-related tax provisions |
|
— |
|
|
(28)
|
|
Other income taxes related to acquisition and integration-related
costs |
|
11 |
|
|
— |
|
Adjustments to Income
Taxes |
$ |
11 |
|
$ |
(28)
|
|
Adjustments to Net
Earnings |
$ |
37 |
|
$ |
27 |
|
(b) Structural optimization and other special charges represent
the costs associated with:
|
Three Months |
|
|
2024 |
|
|
|
2023 |
|
Employee retention and workforce reductions |
$ |
12 |
|
|
$ |
(5)
|
|
Closure/transfer of manufacturing and other facilities (e.g., site
closure, contract termination and redundant employee costs) |
|
2 |
|
|
|
12 |
|
Product line exits (e.g., inventory, long-lived asset and
specifically-identified intangible asset write-offs) |
|
4 |
|
|
|
7 |
|
Certain long-lived and intangible asset write-offs and
impairments |
|
12 |
|
|
|
9 |
|
Termination of sales relationships in certain countries |
|
6 |
|
|
|
— |
|
Other charges |
|
(12)
|
|
|
|
5 |
|
Adjustments to Operating
Income |
$ |
24 |
|
|
$ |
28 |
|
Adjustments to Income
Taxes |
$ |
4 |
|
|
$ |
7 |
|
Adjustments to Net
Earnings |
$ |
20 |
|
|
$ |
21 |
|
(c) Charges represent the costs specific to updating our quality
system, product labeling, asset write-offs and product
remanufacturing to comply with the medical device reporting
regulations and other requirements of the new medical device
regulations in the European Union.(d) Charges represent changes in
our best estimate of the probable loss, or the minimum of the range
of probable losses when a best estimate within a range is not
known, to resolve certain recall-related matters.(e) Charges
represent changes in our best estimate of the probable loss, or the
minimum of the range of probable losses when a best estimate within
a range is not known, to resolve certain regulatory or other legal
matters and the amount of favorable awards from settlements.(f)
Benefits / (charges) represent the accounting impact of certain
significant and discrete tax items, including:
|
Three Months |
|
|
2024 |
|
|
|
2023 |
|
Adjustments related to the transfer of certain intellectual
properties between tax jurisdictions |
$ |
(47) |
|
|
$ |
(44) |
|
Other tax matters |
|
(10) |
|
|
|
(11) |
|
Adjustments to Income
Taxes |
$ |
(57) |
|
|
$ |
(55) |
|
Charges / (benefits) for certain tax audit settlements |
|
— |
|
|
|
1 |
|
Adjustments to Other
Income (Expense), Net |
$ |
—
|
|
|
$ |
1 |
|
Adjustments to Net
Earnings |
$ |
57 |
|
|
$ |
56 |
|
Nine Months 2024 |
Gross Profit |
Selling, General & Administrative
Expenses |
Research, Development & Engineering
Expenses |
Operating Income |
Other Income (Expense), Net |
Income Taxes |
Net Earnings |
EffectiveTax Rate |
Diluted EPS |
Reported |
$ |
10,266 |
|
$ |
5,583 |
|
$ |
1,108 |
|
$ |
3,108 |
|
$ |
(144 |
) |
$ |
517 |
|
$ |
2,447 |
|
17.4 |
% |
$ |
6.35 |
Reported percent net
sales |
|
63.5 |
% |
|
34.6 |
% |
|
6.9 |
% |
|
19.2 |
% |
(0.9) % |
nm |
|
15.1 |
% |
|
|
Acquisition and
integration-related costs: |
|
|
|
|
|
|
|
|
|
Inventory stepped-up to fair value |
|
38 |
|
|
— |
|
|
— |
|
|
38 |
|
|
— |
|
|
9 |
|
|
29 |
|
0.3 |
|
|
0.08 |
Other acquisition and integration-related (a) |
|
— |
|
|
(49)
|
|
|
— |
|
|
49 |
|
|
— |
|
|
14 |
|
|
35 |
|
0.2 |
|
|
0.09 |
Amortization of purchased
intangible assets |
|
— |
|
|
— |
|
|
— |
|
|
467 |
|
|
— |
|
|
96 |
|
|
371 |
|
1.0 |
|
|
0.96 |
Structural optimization and
other special charges (b) |
|
41 |
|
|
(72)
|
|
|
— |
|
|
113 |
|
|
— |
|
|
24 |
|
|
89 |
|
0.2 |
|
|
0.23 |
Medical device regulations
(c) |
|
5 |
|
|
— |
|
|
(36)
|
|
|
41 |
|
|
— |
|
|
9 |
|
|
32 |
|
0.1 |
|
|
0.08 |
Recall-related matters
(d) |
|
11 |
|
|
(11)
|
|
|
— |
|
|
22 |
|
|
— |
|
|
5 |
|
|
17 |
|
0.1 |
|
|
0.04 |
Regulatory and legal matters
(e) |
|
— |
|
|
1 |
|
|
— |
|
|
(1)
|
|
|
— |
|
|
— |
|
|
(1)
|
|
— |
|
|
— |
Tax matters (f) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1)
|
|
|
(136)
|
|
|
135 |
|
(4.7)
|
|
|
0.35 |
Adjusted |
$ |
10,361 |
|
$ |
5,452 |
|
$ |
1,072 |
|
$ |
3,837 |
|
$ |
(145)
|
|
$ |
538 |
|
$ |
3,154 |
|
14.6 |
% |
$ |
8.18 |
Adjusted percent net
sales |
|
64.1 |
% |
|
33.7 |
% |
|
6.6 |
% |
|
23.7 |
% |
(0.9) % |
nm |
|
19.5 |
% |
|
|
Nine Months 2023 |
Gross Profit |
Selling, General & Administrative
Expenses |
Research, Development & Engineering
Expenses |
Operating Income |
Other Income (Expense), Net |
Income Taxes |
Net Earnings |
EffectiveTax Rate |
Diluted EPS |
Reported |
$ |
9,355 |
|
$ |
5,200 |
|
$ |
1,038 |
|
$ |
2,631 |
|
$ |
(184)
|
|
$ |
425 |
|
$ |
2,022 |
|
17.4 |
% |
$ |
5.27 |
Reported percent net
sales |
|
63.7 |
% |
|
35.4 |
% |
|
7.1 |
% |
|
17.9 |
% |
(1.3) % |
nm |
|
13.8 |
% |
|
|
Acquisition and
integration-related costs: |
|
|
|
|
|
|
|
|
|
Inventory stepped-up to fair value |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
Other acquisition and integration-related (a) |
|
— |
|
|
(7)
|
|
|
— |
|
|
7 |
|
|
— |
|
|
(25)
|
|
|
32 |
|
(1.0)
|
|
|
0.08 |
Amortization of purchased
intangible assets |
|
— |
|
|
— |
|
|
— |
|
|
486 |
|
|
— |
|
|
104 |
|
|
382 |
|
1.5 |
|
|
1.00 |
Structural optimization and
other special charges (b) |
|
30 |
|
|
(112)
|
|
|
— |
|
|
142 |
|
|
— |
|
|
32 |
|
|
110 |
|
0.5 |
|
|
0.29 |
Medical device regulations
(c) |
|
1 |
|
|
— |
|
|
(73)
|
|
|
74 |
|
|
— |
|
|
17 |
|
|
57 |
|
0.3 |
|
|
0.15 |
Recall-related matters
(d) |
|
— |
|
|
(12)
|
|
|
— |
|
|
12 |
|
|
— |
|
|
3 |
|
|
9 |
|
— |
|
|
0.02 |
Regulatory and legal matters
(e) |
|
— |
|
|
(19)
|
|
|
— |
|
|
19 |
|
|
— |
|
|
4 |
|
|
15 |
|
— |
|
|
0.04 |
Tax matters (f) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(8)
|
|
|
(121)
|
|
|
113 |
|
(4.9)
|
|
|
0.29 |
Adjusted |
$ |
9,386 |
|
$ |
5,050 |
|
$ |
965 |
|
$ |
3,371 |
|
$ |
(192)
|
|
$ |
439 |
|
$ |
2,740 |
|
13.8 |
% |
$ |
7.14 |
Adjusted percent net
sales |
|
63.9 |
% |
|
34.4 |
% |
|
6.6 |
% |
|
23.0 |
% |
(1.3) % |
nm |
|
18.7 |
% |
|
|
(a) Charges represent certain acquisition and
integration-related costs associated with acquisitions,
including:
|
Nine Months |
|
|
2024 |
|
|
|
2023 |
|
Termination of sales relationships |
$ |
3 |
|
|
$ |
2 |
|
Employee retention and workforce reductions |
|
17 |
|
|
|
3 |
|
Changes in the fair value of contingent consideration |
|
(12)
|
|
|
|
(7)
|
|
Manufacturing integration costs |
|
2 |
|
|
|
2 |
|
Stock compensation payments upon a change in control |
|
22 |
|
|
|
— |
|
Other integration-related activities (e.g., deal costs and legal
entity rationalization) |
|
17 |
|
|
|
7 |
|
Adjustments to Operating
Income |
$ |
49 |
|
|
$ |
7 |
|
Charges for acquisition-related tax provisions |
|
— |
|
|
|
(28)
|
|
Other income taxes related to acquisition and integration-related
costs |
|
14 |
|
|
|
3 |
|
Adjustments to Income
Taxes |
$ |
14 |
|
|
$ |
(25)
|
|
Adjustments to Net
Earnings |
$ |
35 |
|
|
$ |
32 |
|
(b) Structural optimization and other special charges represent
the costs associated with:
|
Nine Months |
|
|
2024 |
|
|
2023 |
Employee retention and workforce reductions |
$ |
14 |
|
$ |
63 |
Closure/transfer of manufacturing and other facilities (e.g., site
closure, contract termination and redundant employee costs) |
|
18 |
|
|
36 |
Product line exits (e.g., inventory, long-lived asset and
specifically-identified intangible asset write-offs) |
|
19 |
|
|
16 |
Certain long-lived and intangible asset write-offs and
impairments |
|
22 |
|
|
12 |
Termination of sales relationships in certain countries |
|
7 |
|
|
— |
Other charges |
|
33 |
|
|
15 |
Adjustments to Operating
Income |
$ |
113 |
|
$ |
142 |
Adjustments to Income
Taxes |
$ |
24 |
|
$ |
32 |
Adjustments to Net
Earnings |
$ |
89 |
|
$ |
110 |
(c) Charges represent the costs specific to updating our quality
system, product labeling, asset write-offs and product
remanufacturing to comply with the medical device reporting
regulations and other requirements of the new medical device
regulations in the European Union.(d) Charges represent changes in
our best estimate of the probable loss, or the minimum of the range
of probable losses when a best estimate within a range is not
known, to resolve certain recall-related matters.(e) Charges
represent changes in our best estimate of the probable loss, or the
minimum of the range of probable losses when a best estimate within
a range is not known, to resolve certain regulatory or other legal
matters and the amount of favorable awards from settlements.(f)
Benefits / (charges) represent the accounting impact of certain
significant and discrete tax items, including:
|
Nine Months |
|
|
2024 |
|
|
|
2023 |
|
Adjustments related to the transfer of certain intellectual
properties between tax jurisdictions |
$ |
(141) |
|
|
$ |
(138) |
|
Certain tax audit settlements |
|
(2) |
|
|
|
24 |
|
Other tax matters |
|
7 |
|
|
|
(7) |
|
Adjustments to Income
Taxes |
$ |
(136) |
|
|
$ |
(121) |
|
Charges / (benefits) for certain tax audit settlements |
|
(1) |
|
|
|
(9) |
|
Other tax related adjustments |
|
— |
|
|
|
1 |
|
Adjustments to Other
Income (Expense), Net |
$ |
(1) |
|
|
$ |
(8) |
|
Adjustments to Net
Earnings |
$ |
135
|
|
|
$ |
113 |
|
|
|
|
|
Grafico Azioni Stryker (NYSE:SYK)
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