Q4 2023 Enovis Corp Earnings Call

Chorus call: [music].

Operator: Good morning, and welcome to the Enovis fourth quarter 2023 earnings call. All participants will be in listen-only mode.

Good morning, and welcome to then all of its fourth quarter 2023 earnings call.

All participants will be in listen only mode. So didn't he does he says please signal a conference specialist by pressing the star key followed by zero.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star key, then 1 on your touch-tone phone.

After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your touch them phone to withdraw your question. Please press Star then two please.

Operator: To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Kyle Rose, VP, Investor Relations. Please go ahead.

Please note that this event is being recorded.

Speaker Change: I would like to turn the conference silver two kind of rules VP Investor Relations. Please go ahead.

Kyle William Rose: Good morning, everyone. Thank you for joining us today for our fourth quarter 2023 results conference call. I'm Kyle Rose, Vice President of Investor Relations. Joining me on the call this morning are Matt Trerotola, Chair and Chief Executive Officer, and Ben Barry, Chief Financial Officer. Our earnings release was issued earlier this morning and is available in the investor section of our website, Enovis.com. We will be using a slide presentation in today's call, which can also be found on our website. Both the audio and the slide presentation of this call will be archived on the website later today. During the call, we'll be making some forward-looking statements about our beliefs and estimates regarding future events and results. These forward-looking statements are subject to risks and uncertainties, including those set forth in the Safe Harbor language in today's earnings release and in our filings with the SEC. Actual results might differ materially from any forward-looking statements that we make.

Speaker Change: Good morning, everyone.

Speaker Change: Thank you for joining us today for our fourth quarter 2023 results Conference call I'm final Rose Vice President of Investor Relations. Joining me on the call. This morning are Matt firm, It's Ola Chair and Chief Executive Officer, and Ben Barry Chief Financial Officer.

Kyle William Rose: Our earnings release was issued earlier this morning and is available in the investors section of our website at <unk> Dot Com, we will be using a slide presentation in today's call, which can also be found on our website. Both the audio and the slide presentation of this call will be archived on the website later today.

Kyle William Rose: During the call, we'll be making some forward looking statements about our beliefs and estimates regarding future events and results. These forward looking statements are subject to risks and uncertainties, including those set forth in the safe Harbor language in today's earnings release and in our filings with the SEC actual results might differ materially from any forward looking statements that we make.

Kyle William Rose: The forward-looking statements speak only as of today, and we do not assume any obligation or intend to update them, except as required by law. With respect to any non-GAAP financial measures referenced during the call today, the accompanying reconciliation information relating to those measures can be found in our earnings press release and in the appendix of today's slide presentation. With that, let me turn it over to Matt, who will begin on slide 3. Okay, Matt?

Kyle William Rose: The forward looking statements speak only as of today, and we do not assume any obligation or intend to update them, except as required by law.

Kyle William Rose: With respect to any non-GAAP financial measures referenced during the call today. The accompanying reconciliation information relating to those measures can be found in our earnings press release and in the appendix of today's slide presentation with that let me turn it over to Matt who will begin on slide three Matt.

Matthew L. Trerotola: Thanks, Kyle. Hello, everyone. And thanks for joining us today. 2023 was a year of significant progress toward our long-term strategic goals. And I'm excited about the future of our high-value med tech growth company. We had a terrific year with continued share gains across geographies and business units, strong execution on new product initiatives, solid margin expansion, and a truly transformative acquisition. We completed the year with total revenue growth of 9%, which included 8% organic growth, right in line with our high single-digit strategic goal.

Matt Firm: Thanks Kyle.

Matt Firm: Hello, everyone and thanks for joining US today 2023 was a year of significant progress toward our long term strategic goals and I'm excited about the future of our high value Med Tech company.

Matt Firm: We had a terrific year with continued share gains across geographies and business units strong execution on new product initiatives solid margin expansion and truly transformative acquisitions.

Matt Firm: We completed the year with total revenue growth of 9%, which included 8% organic growth right on right in line with our high single digit strategic goal.

Matthew L. Trerotola: Our talented team continues to develop exciting technologies and solutions that improve patient outcomes and satisfaction around the world. In Recon, we made considerable progress expanding this high-growth and high-margin platform and drove full-year organic growth of 14%. We deliver double-digit organic growth across all major segments, continue to win in the ASC and in the U.S., and had strong execution internationally as we continue to ramp our very successful 2021 Mathis acquisition. We also close the year with the strategic acquisition of Lima that step changes our recon business starting in 2024. In PNR, we've been reshaping the business for sustained mid-signal digit organic growth. In 2023, we once again outgrew our markets with full-year organic growth of nearly 5%.

Matt Firm: Our talented team continues to develop exciting technology that solutions that improve patient outcomes and satisfaction around the world.

Matt Firm: In regard we made considerable progress expanding this high growth and high margin platform and drove full year organic growth of 14%.

Matt Firm: We delivered double digit organic growth across all major segments continued to win in the ASC and in the U S.

Matt Firm: It had strong execution internationally as we continue to ramp our very successful 2021 math its acquisition.

Matt Firm: We also closed the year with the strategic acquisition of Lima, It's step changes our recon business starting in 2024.

And PNR, we've been reshaping the business for sustained mid single digit organic growth in 2023, once again outgrew our markets with full year organic growth of nearly 5% we.

Matt Firm: We improved innovation vitality in this business from close to zero in 2018 did double digits as we exit 2023 and have a strong pipeline for 2024 and beyond.

Matt Firm: We also made good progress on margins in 2023, improving our EBITDA margins by 70 basis points more than offsetting growth investments and headwinds from M&A currency inflation.

Matthew L. Trerotola: We improved innovation vitality in this business from close to zero in 2018 to double digits as we exit 2023 and have a strong pipeline for 2024 and beyond. We also made good progress on margins in 2023, improving our EBITDA margins by 70 basis points, more than offsetting growth investments and headwinds from M&A, currency, and inflation. Our gross margin improvement is a result of our mix-enriching strategy and the powerful impact of our EGX business system driving operational productivity and pricing improvement. And finally, we continue to accelerate our growth through focused M&A. Our acquisitions from the past few years grew double digits and started to scale. We expanded geographically and enhanced our innovation capabilities with Lima and Novostep. And we continue to follow our proven EGX playbook to make sure each acquisition delivers strong strategic impact, financial contributions, and long-term shareholder return, and they bring great talent into our company. Now, let's go to slide four and talk about how we finished the year.

Matt Firm: Our gross margin improvement is a result of our mixed enriching strategy and the powerful impact of R. E T X business system, driving operational productivity and pricing improvements.

Matt Firm: And finally, we continue to accelerate our growth through focused M&A.

Matt Firm: Our acquisitions from the past few years grew double digits and starting to scale.

Matt Firm: We expanded geographically and enhanced our innovation capabilities with Lima, and Nova step.

Matt Firm: And we continue to follow our proven eject playbook to make sure each acquisition delivered strong strategic impact financial contributions and long term shareholder returns.

Matt Firm: And they bring great talent into our company.

Matt Firm: Let's go to slide four and talk about how we finished the year.

Matt Firm: We grew organically by 8% in the fourth quarter with 11% growth in recon and 6% growth in PNR.

Matt Firm: Continued our trend of double digit growth and share gain in recon as our markets had normal seasonality.

Matt Firm: We believe the elective surgery markets, we serve remain healthy with higher than normal procedural demand in early 2023, and the potential for above normal demand again in 2024.

Matt Firm: In PNR, we had another strong quarter, showing our reestablished leadership in these markets with global share gain and a stable market environment, plus a bit of tailwind from the light prior year comp.

Matt Firm: We expanded our gross margins by 150 basis points, reflecting continued impacts from productivity mix and the scaling of recent acquisitions.

Matthew L. Trerotola: We grew organically by 8% in the fourth quarter, with 11% growth in recon and 6% growth in P&R. We continued our trend of double-digit growth and share gain and recon as our markets had normal seasonality. We believe the elective surgery markets we serve remain healthy with higher than normal procedural demand in early 2023 and the potential for above normal demand again in 2024. In P&R, we have another strong quarter showing our re-established leadership in these markets with global share gain in a stable market environment plus a bit of tailwind from the light prior year. We expanded our gross margins by 150 basis points, reflecting continued impacts from productivity, mix, and the scaling of recent acquisitions.

Matt Firm: Overall, we exited 2023 with strong momentum in line with our strategic goals and are excited for a great 2024.

Matt Firm: Digging a little deeper in recon on slide five we had double digit growth in the U S led by 11% organic growth in hip and knee as well as extremities.

Matt Firm: Outside the U S. We grew 11% organically and our resilient market.

Speaker Change: I know there are a lot of elevens on the page Trust me, it's just a coincidence.

Speaker Change: We have a very strong recon innovation pipeline that will allow us to continue to gain share.

Speaker Change: We're off to a great start on the ramp of our empower revision knee and we've also launched an updated harvest 2.0 with full empower capability.

Speaker Change: Additionally, in foot and ankle we recently launched the evolve 34 lap of this correction system for Bunions, one of the fastest growing market segments in the U S. We've had terrific feedback from surgeons on all of these great new products.

Speaker Change: In PNR on slide six our organic growth reflects a healthy market environment and disciplined execution, albeit against the easiest comp of the year.

Matthew L. Trerotola: Overall, we exited 2023 with strong momentum in line with our strategic goals and are excited for a great 2024. Digging a little deeper in Recon on slide five, we had double-digit growth in the U.S., led by 11% organic growth in hip and knee, as well as extremity. Outside the U.S., we grew 11% organically in a resilient market. I know there are a lot of 11s on this page. Trust me, it's just a coincidence.

Speaker Change: Overall this business is performing in line with our strategic plan with global bracing grew 6% driving share gain from strong customer service improved innovation and motion M. D clinic conversions here too our pipeline is strong and includes a new OE brain called Rome and the next.

Speaker Change: Generation of clinical electrotherapy products for a recovery sciences team.

Speaker Change: Gross margins in this segment expanded by 240 basis points as we continued sustained traction on price versus cost and roll out additional egf's tools, which are driving consistent productivity improvements.

Matthew L. Trerotola: We have a very strong recon innovation pipeline that will allow us to continue to gain share. We're off to a great start on the ramp of our EmPOWER Revision cycle, and we've also launched and updated Arvis 2.0 with full EmPOWER capability. Additionally, in foot and ankle, we recently launched the Evolve 34 Lapidus correction system for bunions, one of the fastest growing market segments in the U.S. We've had terrific feedback from surgeons on all of these great new products.

Speaker Change: On slide seven I want to pause to quickly highlight our significant progress in our first two years as a standalone med Tech player.

Speaker Change: We continue to execute on our strategic pillars and have quickly built to consistent high single digit organic revenue growth.

Speaker Change: We've also delivered operationally with EBITDA expansion ahead of our annual commitment of 50 basis points, even with headwinds from inflation and dilutive strategic acquisitions.

Speaker Change: 2024 is setting up to be a transformative year for <unk>, as we integrate and Lima and execute on major new product launch.

Matthew L. Trerotola: In PR on slide six, our organic growth reflects a healthy market environment and disciplined execution, albeit against the easiest comp of the year. Overall, this business is performing in line with our strategic plan, with global bracing growing 6%, driving share gain from strong customer service, improved innovation, and motion MD clinic conversion. Here too, our pipeline is strong and includes a new OA brace called Roam and the next generation of clinical electrotherapy products for our recovery sciences team. Gross margins in this segment expanded by 240 basis points as we continue to sustain traction on price versus cost and roll out additional EGX tools, which are driving consistent productivity improvement.

Speaker Change: Launches.

Speaker Change: Yeah.

Speaker Change: We are confident in our ability to continue to drive this compounding growth and margin formula.

Speaker Change: On slide eight we highlight several of our key new products for 2020 for many of which were on display at last week's American Association of Orthopedic Surgeons conference in San Francisco.

Speaker Change: It's great to see the team work at our booth between our Novus team members and the talented leaders who have joined us with Lima.

Speaker Change: I am excited about the lineup of new products for 2024, and our R&D pipeline for the next several years is more robust than ever.

Speaker Change: On the recon side, we continued to make substantial progress with the rollout of our empower revision system.

Speaker Change: Gives us access to almost 20% of the knee market that we could not previously access and opportunity to sell deeper into existing surgeon and also to continue to drive conversions.

Speaker Change: Late 2022 launch like did very strong knee growth in 2023, even with inventory constraints and without cones for more difficult cases, we entered 2024 with healthy inventory and recently received five 10-K clearance for NIM is three D printed trabecular titanium clip cones for use with our empower revisions.

Matthew L. Trerotola: On slide seven, I want to pause to quickly highlight our significant progress in our first two years as a standalone MedTech player. We continue to execute on our strategic pillars and have quickly built to consistent high single-digit organic revenue growth. We've also delivered operationally with EBITDA expansion ahead of our annual commitment of 50 basis points, even with headwinds from inflation and dilutive strategic acquisitions. 2024 is setting up to be a transformative year for Enovis as we integrate Lima and execute on major new product launches. We're confident in our ability to continue to drive this compounding growth and margin formula. On slide 8, we highlight several of our key new products for 2024, many of which were on display at last week's American Association of Orthopedic Surgeons Conference in San Francisco. It was great to see the teamwork at our booth between our Enovis team members and the talented leaders who have joined us with Lima.

Speaker Change: System quickly, enabling one of our first major cross selling opportunities.

Speaker Change: Artists to point out that continues to get positive market feedback after the launch in Q4. This breakthrough, enabling technology gives our knee and hip surgeons space time and cost efficient solution for repeatable procedures and inter operative data capture.

Speaker Change: The 2.0 version brings a simplified procedural workflow and registration process to provide the position with a unique wearable navigation system suited for all operating settings, and the ASC to the hospital.

Speaker Change: This is our first step in inner operative, enabling technology, we plan to bring harvest to additional anatomies shortly and also have an exciting pipeline beyond Barnabas.

Speaker Change: Our foot and ankle business also continues to execute well with a powerful boost from the acquisition of Novus step in mid 2023, we have one of the most compelling product portfolios in the market and are excited about our expansion into the billion dollar fast growing four foot segment.

Speaker Change: Where we've recently launched the evolve 34 and <unk> systems.

Speaker Change: These products give our teams the most comprehensive suite of technologies for the bunyan indication, including Mis approaches.

Speaker Change: In PNR, we formally launched the Rome away single outbreak brace for patients with osteoarthritis at our sales meeting last month and the feedback has been very positive the single umbrella category. The sizeable growing segment, where we have limited share the simplicity and comfort offered by Rome will be meaningful.

Matthew L. Trerotola: I'm excited about the lineup of new products for 2024, and our R&D pipeline for the next several years is more robust than ever. On the Recon side, we continue to make substantial progress with the rollout of our Empower Revision system. This gives us access to almost 20% of the knee market that we could not previously access. An opportunity to delve deeper into existing surgeons and also to continue to drive conversion. The late 2022 launch led to very strong need growth in 2023, even with inventory constraints and without cones for more difficult cases. We enter 2024 with healthy inventory and recently received 510K clearance for Lima's 3D printed trabecular titanium clip cones for use with our Empower Revision system, quickly enabling one of our first major cross-selling opportunities.

Speaker Change: <unk> for patients and clinicians and we expect to capture significant share through our powerful channel in clinic presence.

Speaker Change: And we continue to build momentum with vitality and our rehab business with the global launch of our next generation electrotherapy product intellect legend and transport.

Speaker Change: He's breaking freshman freshness for our very strong Chattanooga brand and the largest global rehab treatment modality segment.

Speaker Change: Turning to slide nine I want to take a moment to remind everyone of the powerful strategic and financial impact of our Lima acquisition, which closed the first week in January.

Speaker Change: The addition of Lima and represents the next step in the evolution of <unk> as we execute against our strategic goals as a high growth Med Tech innovator with a clear pathway for sustained operating margin expansion.

Speaker Change: The transaction reshaped our mix to faster growing higher margin recurrent and increases our exposure to the fastest growing parts of recon the recon market in extremities.

Matthew L. Trerotola: Arbus 2.0 continues to get positive market feedback after the launch in Q4. This breakthrough enabling technology gives our knee and hip surgeons a space, time, and cost efficient solution for repeatable procedures and interoperative data capture. The 2.0 version brings a simplified procedural workflow and registration process to provide the physician with a unique wearable navigation system suited for all operating settings from the ASC to the hospital.

Speaker Change: We took advantage of the opportunity to do significant planning before the acquisition closed and really hit the ground running in January with the new combined leadership team and a robust integration process in place on day one.

Speaker Change: The feedback from customers has been very positive and we're already we already have strong traction on both cost and growth synergies.

Speaker Change: Really exciting seeing our team come together and start to shape global innovation Roadmaps that leverage our combined technologies.

We remain confident in our ability to deliver the 2024 financial benefits previously shared and exit the year with strong double digit organic growth momentum across all of recon.

Matthew L. Trerotola: This is our first step in interoperable enabling technology. We plan to bring ARBIS to additional anatomies shortly and also have an exciting pipeline beyond ARBIS. Our foot and ankle business also continues to do well, with a powerful boost from the acquisition of Novastep in mid-2023. We have one of the most compelling product portfolios in the market and are excited about our expansion into the billion dollar, fast growing forefoot segment, where we've recently launched the Evolve 34 and Pectoplasty system. These products give our teams the most comprehensive suite of technologies for the bunion indication, including the MIS approach. In PR, we formally launched the Roam OA single upright brace for patients with osteoarthritis at our sales meeting last month, and the feedback has been very positive. The single upright category is a sizable, growing segment where we have a limited share.

Speaker Change: I look forward to giving you additional updates throughout the year.

Speaker Change: Moving to slide 10, before I hand, it over to ban I want to reiterate my excitement about the momentum we built in 2023 and the great opportunities. We have in 2024 and beyond we have a diverse global business, a talented and energized team and a powerful business system and we will continue to use the dry.

Dan: Compounding value improvement journey.

Dan: I'll, let Ben take you through the P&L details in our 2024 guidance Ben.

Ben Barry: Thanks, Matt and Hello, everyone and as Matt said, we'll start on slide 10.

Ben Barry: We are pleased to report fourth quarter sales of $455 million up 11% versus the prior year.

Ben Barry: 8% organic growth, but the growth was fueled by strong demand for our products and solid commercial execution in both business segments.

Ben Barry: Quarter adjusted gross margin was 58, 6% up 150 basis points year over year.

Ben Barry: Growth was driven by leverage from higher sales favorable product mix and cost discipline, we continue to leverage our E. G X business system to drive productivity in the supply chain and the results continue to read through in our gross margins fourth quarter adjusted EBITDA margin of 18% was down 30 basis.

Matthew L. Trerotola: The simplicity and comfort offered by Roam will be meaningful differentiators for patients and clinicians, and we expect to capture significant share through our powerful channel and clinic presence. And we continue to build momentum and vitality in our rehab business with the global launch of our next generation of electrotherapy products, IntellectLegend and Transport, which bring freshness to our very strong Chattanooga brand in the largest global rehab treatment modality segment.

Ben Barry: Points versus 2022.

Ben Barry: Year over year decline was driven by one time cost benefits in 2022, and some dilution from recent acquisitions, but results came in as expected with a strong sequential step up to finish the year.

Ben Barry: The fourth quarter's effective tax rate was 22% this was compared to 22% last year interest expense was 4% $4 million in the quarter versus 5 million in 2022 overall, we posted strong adjusted earnings per share of <unk> 79 cents, 10% earnings growth versus the prior year.

Matthew L. Trerotola: Turning to slide nine, I want to take a moment to remind everyone of the powerful strategic and financial impact of our Lima acquisition, which closed the first week of January. The addition of Lima represents the next step in the evolution of Enovis as we execute against our strategic goals as a high-growth, mid-tick innovator with a clear pathway for sustained operating margin expansion. The transaction reshapes our mix to faster-growing, higher-margin recon and increases our exposure to the fastest-growing parts of the recon market in Extremity. We took advantage of the opportunity to do significant planning before the acquisition closed and really hit the ground running in January with a new combined leadership team and a robust integration process in place on day one. The feedback from customers has been very positive, and we already have strong traction on both cost and growth synergies.

Matthew L. Trerotola: It's been really exciting seeing our team come together and start to shape global innovation roadmaps that leverage our combined technologies. We remain confident in our ability to deliver the 2024 financial benefits previously shared and exit the year with strong double-digit organic growth momentum across all of RECON. I look forward to giving you additional updates throughout the year. Moving to slide 10.

Ben Barry: Mmm, notably stronger results in the first half of the ear driven by strong recon markets and some softer prior year pandemic related comparable.

Ben Barry: Overall, our results reflect the underlying share gains in both our businesses.

Ben Barry: Our adjusted EBITDA margins increased sequentially throughout 2023, as we improved mix and demonstrated operating productivity and our supply chain impacts from recent acquisitions in foreign currency offset our core margin improvement of 130 basis points.

Matthew L. Trerotola: Before I hand it over to Ben, I want to reiterate my excitement about the momentum we built in 2023 and the great opportunities we have in 2024 and beyond. We have a diverse global business, a talented and energized team, and a powerful business system that we will continue to use to drive our compounding value improvement journey. Now, I'll let Ben take you through the P&L details and our 2024 guidance.

Ben Barry: However for the year, we managed to improve margins by 70 basis points, while managing external headwinds and investing for future growth.

Ben Barry: Turning to find 13 and 2024, we are projecting another strong year of operating performance and expect revenues in the range of 2.05 billion to 2.15 billion. We expect another year of double digit growth and recon against the Normalised market backdrop and stable P. In our growth in the low.

Ben Barry: To mid single digits.

Ben Barry: Our expectation for Lima remains consistent with primary revenue guidance of 290 $300 million.

Ben Barry: Thanks, Matt. Hello, everyone. And as Matt said, we'll start on slide 10. We're pleased to report fourth quarter sales of $455 million, up 11% versus the prior year and 8% organic growth. The growth was fueled by strong demand for our products and solid commercial execution in both business segments. Fourth quarter adjusted gross margin was 58.6%, up 150 basis points year over year.

Ben Barry: On margins, we are expecting at least 50 basis points of underlining margin improvement in the core business, along with $70 million to $75 million contribution from Lima, resulting in an estimated range of 365 to 380 million of adjusted EBITDA.

Ben Barry: From a phasing perspective, we expect revenue in margins to follow a similar sequential trajectory over the course of the year likely experienced in 2023.

Ben Barry: Depreciation is expected to be in the range of 115 hundred and 20 million driven by growth investments in a recon segment and the addition of recent M&A, including Nova step in Lima, we.

Ben Barry: Growth is driven by leverage from higher sales, a favorable product mix, and cost discipline. We continue to leverage our EGX business system to drive productivity in the supply chain, and the results continue to read through in our gross margins. The fourth quarter adjusted EBITDA margin of 18% was down 30 basis points versus 2022. The year-over-year decline was driven by one-time cost benefits in 2022 and some dilution from recent acquisitions, but results came in as expected with a strong sequential step up to finish the year. The fourth quarter's effective tax rate was 22 percent.

Ben Barry: We expect interest and other expenses to be in the range of $70 million to $75 million.

Ben Barry: Considering the impact of pillar to in the composition of Lima revenues and profits. We expect an adjusted tax rate of approximately 21% in 2024. We note that this represents a three cent headwind two adjusted earnings per share.

Ben Barry: Along with these estimates we expect to share account of approximately 56 million chairs and are forecasting are adjusted earnings per share to be $2.50 to do with the $2.65. Overall, we are excited about our opportunity to create strong shareholder value in 2024.

Ben Barry: This is compared to 22 percent last year. Interest expense was four percent, four million dollars in the quarter versus five million in 2022. Overall, we posted strong adjusted earnings per share of seventy nine cents, which was 10% earnings growth versus the prior year. For the full year 2023, we delivered high single-digit organic growth of 8%, expanded our adjusted EBITDA margins by 70 basis points, and produced double-digit underlying earnings growth. We continue to strategically shape our business mix to reconfigure and utilize our EGX capabilities to scale and drive leverage across our business segments. We're delighted with these results and the momentum we've built in 2023. I would like to take a moment to thank and congratulate the entire Enovis team for delivering another strong year.

Ben Barry: To summarize on slide 14, we had another strong ear in 2023 and have been building solid momentum as we turn the page 2024, we have demonstrated.

Ben Barry: <unk> clear focus and execution towards achieving our strategic goals and have shaped the business towards accelerated growth and scale with the acquisition of Lima.

Ben Barry: Maria Please open the call for questions.

Maria: Thank you we will now begin the question and answer session.

Maria: To ask a question you May press.

Ben Barry: Huh.

Maria: One on your touch them upon you see I was using a speakerphone.

Maria: Pier handset before pressing the keys perfectly you a question. Please press Star then too.

Maria: The first question is from Vijay Kumar, we'd ever car ISI.

Vijay Muniyappa Kumar: Hey, guys Uhm convincing the nice prints hear nothing save it to my question.

Vijay Muniyappa Kumar: Hi, Matt maybe my my first one on on the queue for either a double digit freak on it's pretty solid, but then when I look at the market to computers had a pretty healthy queue for.

Ben Barry: Slide 11 lays out our execution in 2023 relative to our guidance over the course of the year. We are able to deliver results consistent with or better than our commitments to stakeholders and look forward to managing our business for more of the same in 2024. Moving to slide 12, it details our quarterly progression in 2023. Our 8% revenue growth was highlighted by 14.3% in recon and 4.6% in P&R, with notably stronger results in the first half of the year driven by strong recon markets and some softer prior year pandemic-related comparables. Overall, our results reflect underlying share gains in both our businesses. Our adjusted EBITDA margins increased sequentially throughout 2023 as we improved mix and demonstrated operating productivity in our supply chain. Impacts from recent acquisitions and foreign currency offset our core margin improvement of 130 basis points. However, for the year, we managed to improve margins by 70 basis points while managing external headwinds and investing for future growth. Turning to slide 13.

Matt Firm: <unk> well not taking anything away from 11, it just feels like the market accelerated and the relatives spread versus market. You know historically you guys who've been one of our market, perhaps that spread narrowed so I'm I'm. Just curious was there any timing element <unk> you know when you look at the 11% <unk>.

Matt Firm: In line with expectations.

Speaker Change: Yeah, <unk> I think we we finished in line in line with our expectations. I think you really have to look at the multi your numbers to to kind of.

Speaker Change: See the picture a little bit clearly you know where we're at got a strong cop and even even if you go back to the 2019 com. So you can you can see that the pattern from Q3 to Q4 is is quite normal one in and that some of the differences in sequential patterns kind of come out in the wash when you look at the multi your views.

Speaker Change: Understood and.

Speaker Change: <unk> <unk> the margin expansion.

Speaker Change: Thank you I heard your 50 basis points for core US maybe 75 for Lima.

Speaker Change: Lima was supposed to be 150 basis points of creative to grow smart. So I'm curious are there any.

Speaker Change: Makes assumptions third difference you know why the gross margin <unk> flew down to two operating margins and cadence of that 40 million cost synergies that's a zoom in the card.

Speaker Change: Yeah, a V J I mean, everything's coming in relatively consistent with what we kind of expect it in terms of the overall numbers, there's a little bit of shifting as you think about translation of U S gap verses I F. R. S. So that's probably you know kind of one area, where maybe our assumptions between gross margin and.

Ben Barry: In 2024, we are projecting another strong year of operating performance and expect revenues in the range of $2.05 billion to $2.15 billion. We expect another year of double-digit growth in recon against a normalized market backdrop and stable P&R growth in the low to mid-single digits. Our expectation for Lima remains consistent with prior revenue guidance of $290 to $300 million.

Speaker Change: <unk> kind of slipped a little bit, but overall cellphone fully in line with the kind of the the thoughts that we had in terms of the profit that we can generate an ear, one which would ensue assume some cost synergies that we get after right away, but still very much I'm confident in the pathway to 40 million by ear three.

Speaker Change: <unk>.

Speaker Change: I understood amount if I made one that quick one on on the Lima integration you had some helpful comments out there, but I think in the past you had mentioned the guide assume some disruption from integration I'm curious what the experience. The early experience has been are those disruptions in line with X.

Ben Barry: On margins, we are expecting at least 50 basis points of underlying margin improvement in the core business, along with $70 to $75 million of contribution from Lima, resulting in an estimated range of $365 to $380 million of adjusted EBITDA. From a phasing perspective, we expect revenue and margins to follow a similar sequential trajectory over the course of the year, like we experienced in 2023. Depreciation is expected to be in the range of 115 to 120 million, driven by growth investments in our recon segment and the addition of recent M&A, including Novostep and Lima. We expect interest and other expenses to be in the range of $70 to 75 million.

Speaker Change: Spectation, so perhaps coming in about plan would be helpful.

Speaker Change: Yeah. So I got as we shared we've we've added Lima numbers you know as as we sure then when we announced the deal we've added them on top of the core for for our guidance for this year certainly we've done a lot of very proactive working work on planning for and then starting to execute the integrations and the different more.

Speaker Change: <unk> around the world in our goal will be to have the minimum amount of of Lee kitchen in terms of how things come together, we know that to be a little bit or go would be to have the minimum we still feel very comfortable with what we've guide as to how much there will be and you know it's it's early days, we're executing our.

Speaker Change: [noise] way through that.

Speaker Change: Okay.

Young Lee: The next question is from young leave with that please.

Young Lee: Alright, great. Thanks, so much for taking my question.

Young Lee: Uhm I guess to start wanted to hear a little bit of.

Ben Barry: Considering the impact of Pillar 2 and the composition of Lima revenues and profits, we expect an adjusted tax rate of approximately 21% in 2024. We note that this represents a three cent headwind to adjusted earnings per share. Along with these estimates, we expect a share count of approximately 56 million shares and are forecasting our adjusted earnings per share to be $2.50 to $2.65.

Young Leave: Just the the the the new products a cycle that you mentioned earlier, you know multi your cycle. It seems like some attention being paid on enabling technologies and put an ankle but wanted to hear a little bit more about specific areas.

Young Lee: And.

Young Lee: When our son with the white spaces, or what kind of fear or improvements made an existing product.

Speaker Change: Yeah for sure. Thanks for the question Young <unk> as as we mentioned, we're really going through a period now where we've got some slow agree to this year from some of the launches in the last year or so is a ramp and then we've got other exciting launches coming within this year and next year and so it's very kind of healthy period in terms of our ability to drive.

Operator: Overall, we are excited about our opportunity to create strong shareholder value in 2024. To summarize on slide 14, we had another strong year in 2023 and have been building solid momentum as we turn the page to 2024. We have demonstrated clear focus and execution towards achieving our strategic goals and have shaped the business towards accelerated growth and scale with the acquisition of Lima. Maria, please open the call for questions. Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the key.

Speaker Change: Vitality across all of the businesses and and you know in in the retail side. That's you know a continued focus on vitality within those businesses, but for sure also now has enabling tech coming through with the <unk> in the go into.

Speaker Change: The 2.0 launched their late to last year, and knee and hip and then opportunities to bring.

Speaker Change: Next enabling checkup offerings into other anatomies as as we work through this year and then what over on the PNR side. We've gone from you know very little vitality years ago to now be in a in a in a period, where things are really inflicting and and we've had some really nice bracing launches across the last year or so that are.

Speaker Change: That are ramping through this year, and then and then more launches coming through through this year and the following year, new neat segments refreshments and other neat segments moving deeper into the attractive spying bracing segment, you know some extremities braces. So a really nice line up there.

Ben Barry: To withdraw your question, please press the star, then 2. And, Ben, one for you. The margin expansion, you know. I think I heard you had 50 basis points for Core, maybe 75 for Lima, but I thought Lima was supposed to be 150 basis points accretive to gross margin. So, I'm curious, are there any APEX assumptions that are different, you know, why the gross margin accretion shouldn't flow down to operating margins and cadence at the $40 million cost? And if that's assumed in the guide.

Speaker Change: That will work with you on the bracing front end and on the <unk> or whichever science is front you know, we we've got our our largest modality. There electric therapy is one that has to have a lot of innovation a long time, we got some great fresh new products, there and so yeah. It's a it's a nice period of time and a lot of it.

Speaker Change: Is gonna build as we as we go through this year, it's contributing nicely right now, but we'll have even stronger con contributions as we move through to the back half of the year.

Matthew L. Trerotola: Okay. I'm Matt. If I may, one quick question on the Lima integration. You had some helpful comments out there, but I think in the past, you'd mentioned the guide assumed some disruption from integration. I'm curious what the experience, the early experience has been.

Speaker Change: Alright, great very helpful and I guess, a follow up this I guess more specifically, our 2.0 and a or in general you know it's been getting a lot of attention from third in a Lotta times when we ask them probably what are you excited about.

Speaker Change: A R comes pretty frequently more often than not uhm I guess from your perspective, you know how's the receptivity then on the third inside and you know what do you think is needed to make it more of a mass market product.

Speaker Change: Yeah. Thanks, Thanks for the comments and we're getting some the same kind of positive feedback that you're getting you know.

Matthew L. Trerotola: Are those disruptions in line with expectations, or perhaps coming in about the plan would be helpful? You know, what are some of the white spaces you're looking to fill or improvements made on existing projects? Yeah, for sure. Thanks for the question, Young.

Speaker Change: Take the reason people are really excited about a R is is because it's you know ultimately searches looking for things that are going to improve the way that they can take a surgical plan and and flow in interactively and in surgery make the decisions. They Wanna may capture all that data, while there, while they're doing that and and.

Matthew L. Trerotola: As we mentioned, we're really going through a period now where we've got some flow over into this year from some of the launches of the last year or so as they ramp up. And then we've got other exciting launches coming this year and next year. And so it's a very kind of healthy period in terms of our ability to drive vitality across all of the businesses. And, you know, on the retail side, that's, you know, continued focus on vitality within those businesses, but for sure, enabling tech is coming through with Arbus in the knee, going to the 2.0 launch there late last year in the knee and hip, and then opportunities to bring the next enabling tech offerings into other anatomies as we work through this year.

Speaker Change: Have you know that ability to do efficient repeatable surgery.

Speaker Change: And kept her all the data.

Speaker Change: At the same time and they also wanted to be able to market that they've got the latest and greatest technologies in order to to do that you know at the same time, they're not looking to add cost and time into the procedures and so a R seems like it's it's the perfect solution for that right you can get get really those those <unk>.

Speaker Change: <unk> of that Interop it of guidance, while at the same time, having really limited cost and time into the procedure, we've gotten great feedback from surgeons, which is a combination right now.

Speaker Change: Surgeons that we've had in the past as well as new surgeons that have come over because of arbus getting great great feedback the improvements that we made last year. After the initial launch you know are are you know really have improved usability. This is a new to the world technology right. So at least you know in this industry and so.

Matthew L. Trerotola: And then over on the P&R side, we've gone from, you know, very little vitality years ago to now being in a period where things are really inflecting. And we've had some really nice bracing launches across the last year or so that are ramping up this year, and then more launches coming through this year and the following year. You know, new knee segments, refreshments, and other knee segments, moving deeper into the attractive spine bracing segment. You know, some extremities braces, so a really nice lineup there that we're working through on the bracing front. And on the recovery sciences front, you know, our largest modality there, electrotherapy, is one that hasn't had a lot of innovation in a long time.

Speaker Change: It's something that it's coming up the learning curve and we're getting really good feedback on the usage of this there's 2.0 version and looking forward to rolling it out brought her and brought her in the knee and hip space and then you know certainly actively working on the next anatomy for.

Speaker Change: <unk> because we we think it has every every bit of opportunity to to bring a I into shoulder that that there's been to bring it into me.

Speaker Change: Alright, Thank you very much.

Speaker Change: The next question is from <unk> life partner.

Speaker Change: Hey, good morning.

Speaker Change: Okay. So I was all good morning, and thanks for taking taking the questions I had two so maybe the first one just in the state of the market you know how long do you expect the above market growth for <unk> and maybe just talk about your expectations for 2024.

Speaker Change: Yeah. Thanks for thanks for the question are there you look I think we've consistently said that that if you look at the math back to 19, you know, there's there's there's a year and a half of the about of gross missing for the the market and and maybe we worked off of it.

Matthew L. Trerotola: We've got some great fresh new products there. And so, yes, it's a nice period of time, and a lot of this is going to build as we go through this year. It's contributing nicely right now, but we'll have even stronger contributions as we move through to the back half of the year. Yeah, thanks for the comments, and we're getting some of the same kind of positive feedback that you're getting. You know, I think the reason people are really excited about AR is because, ultimately, surgeons are looking for things that are going to improve the way that they can take a surgical plan and flow it in during surgery, make the decisions they want to make, capture all that data while they're doing that, and have, you know, that ability to do efficient, repeatable surgery and capture all the data.

Speaker Change: Little bit of that last year with with somebody above market growth, but I think there's definitely a fact based that suggests that there should be some some pent up demand around the world for surgery, because the you know the the patients continued to need it but there was a period of time when let surgery can be done. So we still believe that there's more <unk>.

Speaker Change: Up demand to calm and we saw some of it last year and what you really saw last year was it there was period periods of the year, where capacity utilization was able to go to very high levels in the U S. It was early in the year. There was just a very good period. There early in the year, where I think surgeons were able to really kind of you know kind of run it the.

Speaker Change: Ran to their capacity utilization there were certain countries around the world that consciously opened up capacity utilization early in the year and when that happened, we ran above normal rates and and so I I think that email certainly last year had you know at least the point or to a extra gross.

Matthew L. Trerotola: You know, at the same time, and they also want to be able to market that they've got the latest and greatest technologies in order to do that. You know, at the same time, they're not looking to add cost and time to the procedures, and so AR seems like it's the perfect solution for that, right? You can really get those benefits of that interoperative guidance while at the same time having really limited cost and time for the procedure.

Speaker Change: In the elective surgery orthopedic surgeon surgery area from a market standpoint, and you can see that extra and are are very strong 14 per cent growth for the year and certainly this year, if we get periods, where you have that extra utilization opportunity in the market place there should be an opportunity for that above normal.

Speaker Change: Type of demand as well we plan for a normal <unk> growth year, and then you can see we've we've got a double digit growth again in light of a normal.

Matthew L. Trerotola: We've gotten great feedback from surgeons, which is a combination right now of surgeons that we've had in the past, as well as new surgeons that have come over because of ARVIS. We're getting great feedback. The improvements that we made last year after the initial launch, you know, are, you know, really improving usability. This is a new-to-the-world technology, right?

Speaker Change: Recon growth year, there's certainly the opportunity for more uhm and certainly the shape of the year. It is gonna is gonna be your last year, because there are some very very tough comps early in the year and so the groceries got a bill through the year just in terms of the market environment and then for US will also have the ramp of the innovation pipeline.

Matthew L. Trerotola: So, at least, you know, in this industry, and so it's something that is coming up the learning curve, and we're getting really good feedback on the usage of this, you know, this 2.0 version, and looking forward to rolling it out broader and wider in the knee and hip space, and then, you know, certainly actively working on the next anatomy for ARVIS, because we think it has every bit of opportunity to bring AI into the shoulder that there' The next question is from Vic Chopra with Wells Fargo. Hey, good morning.

Speaker Change: Great. Thanks for that question I'm, just sticking to the same same theme maybe just a follow up question on G. L T ones.

Speaker Change: You're starting to see an impact of patients coming into the final. Thanks for taking my questions.

Speaker Change: Yeah, I mean, certainly we have you know heard from the market place an expectation that there there can be you know more patients and in the final due to weight loss. It could come from from G. L. P. One and I I wouldn't say that it's a meaningful effect at this point, but we can continue to have the same.

Speaker Change: View that we've stated that for our portfolio raw likely that's you know over time more of a slight positive or negative, but but I wouldn't say that it's having any meaningful impact at this point in time.

Matthew L. Trerotola: Great, thanks for that question. And just sticking to the same theme, maybe. The next question is from Brandon Vasquez with William Blair. Hi, everyone, thanks for taking the question. Maybe first, can we focus on Lima for a second? Just wanted to go through it. You mentioned a little bit on the revision side. You've already started to cross-sell kind of the cone from Lima, but can you remind us maybe what are the biggest products that you can take maybe from your U.S. organization over into the international markets with Lima and then vice versa? And maybe what are the milestones for these products through 2024? Yeah, yeah, I think there's a great cross-selling opportunity with Lima and even quite a bit left to go with Mathis that we acquired a few years ago.

Speaker Change: The next question is from random baskets.

Speaker Change: Yeah.

Random Baskets: Hi, everyone. Thanks for taking the question.

Speaker Change: Maybe first can we focus on Lima for a second just wanted to go through you mentioned a little bit on the revision side, you've already restarted across so kind of a comb from Lima, but can you remind us maybe what are the biggest products that you can take maybe from U S organization over into the international markets with Lima, and then vice versa and maybe one.

Random Baskets: Are the milestones for these products sort of 2024.

Speaker Change: Yeah, Yeah, I think there there's great cross selling opportunity with with Lima, and even quite a bit left to go with math is that we acquired a few years ago and you know if we started from from the shoulder you know our market leading <unk> shoulder is you know is.

Matthew L. Trerotola: And, you know, if we start from the shoulder, our market-leading Altivate shoulder is, you know, the lateralized, inferiorized design of the reverse shoulder, which is, you know, very strong here in the U.S. And, you know, starting to build more and more momentum outside the U.S. And so we see a nice opportunity to sell our Altivate reverse shoulder in certain markets outside the U.S. While at the same time, Lima has got, you know, a few different shoulder designs, one that is a little different design of a reverse that'll set up for surgeons that want to stick with a little bit less lateralized design.

Speaker Change: The ladder Lateralisms theorize design of reverse shoulder, which is you know become you know very strong here in the U S and is starting to build more and more of them that amount outside that the U S and so we we see a nice opportunity to sell are all debate reverse shoulder.

Speaker Change: Certain markets outside the U S wallet at the same time Lima has has got you know a few different show off the shoulder design. One that is a little different design will be <unk> reverse that old setup for searches they want to stick with a little bit less ladder lies design, but then they also have this S M.

Matthew L. Trerotola: But then they also have this SMR, which is a convertible platform that really has been something that is very good for some of the more, you know, toughest indications and enabling, you know, surgeons to make interruptive choices between an anatomic and a reverse or to go back to an anatomic after the fact and convert to a reverse. And so, really nice complementarity in the shoulder portfolio, taking the Altivate outside the U.S. and bringing some of those technologies Lima has for some of the toughest revisions in the shoulder into the U.S. Kind of a similar picture, you know, as we get over into the, you know, the knee space. Our Empower 3D knee, with its dual pivot capability, has shown to be a better knee that leads to better There's been a lot of excitement about that knee. But at the same time, we have not historically had as much of a focus on revisions.

Speaker Change: <unk>, which is.

Speaker Change: Convertible platform that really has been something that is very good for some of the more you know the toughest <unk> indications and enabling you know surgeons to make interrupted choices between an anatomic in in reverse or to go back to an anatomic after the fact and and <unk> and convert to our version so really.

Speaker Change: Nice complementarity in the shoulder portfolio taken the hours of eight outside the.

Speaker Change: The U S in in bringing some some of those technologies Lena has for some of the the the toughest revisions and shoulder into the U S. You know kind of a similar picture you know as we get over into the the knee space you know our our empower <unk> with its dual pivot capability has shown.

Speaker Change: B.

Speaker Change: Better knee that leads to better patient satisfaction in the U S and in the places we've taken it into you are outside the U S. There's been a lot of excitement.

Speaker Change: About that about that knee, but at the same time, we have not had historically as much of a focus on revisions we've been just moving into revisions here in the U S. Lima. You know has has not had the strongest primary knee, but has been very strong and revisions around the world, including you know a little.

Speaker Change: [noise] attraction here in the U S and so so again, just a perfect opportunity to cross so great great products from here to there lehman's excited to start to bring our enabling technologies with arbus into the business.

Matthew L. Trerotola: We've been just moving into revisions here in the U.S. Lima, you know, has not had the strongest primary knee, but it has been very strong in revisions around the world, including, you know, a little bit of traction here in the U.S. And so, again, just a perfect opportunity to cross-sell great products from here to there. Lima's excited to start to bring our enabling technologies with Arbus into And we're very excited about 3D printing. ProMate is, you know, a custom 3D printing capability that, at this point, is used for some of the very toughest revisions and situations but, over time, could have some good broader applicability as well.

Speaker Change: We're very excited about the three D printing pro made is a custom three D printing capability that you know at this point is used on some of the very toughest revisions sent in situations a bit over time could have some some good brought her application facility as well so a whole set of of cross selling opera <unk>.

Speaker Change: <unk> and yeah, we've been able to hit the ground running in terms of having plans in place and and you know in some cases already having the market access to start to pursue those cross selling opportunities and in other cases, having active initiatives to go ahead and get the additional market access.

Speaker Change: Great. Thanks, and then on on the EBITDA margin guidance for the year I think if I'm I'm backing out similarly, but benefits, it's implying EBITDA margins for legacy of notice to increase by about 80 basis points you over here first time I kind of write on this mat and if so which kind of.

Matthew L. Trerotola: So, a whole set of cross-selling opportunities. And, yeah, we've been able to hit the ground running in terms of having plans in place and, you know, in some cases already having the market access to start to pursue those cross-selling opportunities, and in other cases, having, you know, active initiatives to go ahead and get additional market access. Great, thanks. And then on the EBITDA margin guidance for the year, I think if I back out some of the LEBA benefits, it's implying EBITDA margins for legacy Enovis to increase by about 80 basis points year over year. First, am I kind of right on this math?

Speaker Change: Giving you guys the confidence to deliver another what seems to be a good strong year of legacy margin expansion, even with what I'll call, maybe some noise from the integration of Lima. Thanks.

Speaker Change: Yeah. Thanks, Thanks, Brandon I mean, I I think the way that we're thinking about is what we continue to execute our our strategy of of driving good mix improvement in the business continuing to scale.

Speaker Change: Acquisitions that we've done and then you know generating operating leverage into the plan. So as we think about it you know we we remain consistent in terms of feeling our confidence surround generating at least 50 basis points or more of core margin improvement, while we add on Lima, and do the work to integrate that.

Speaker Change: At a high level. So overall, we feel confident with the with the guidance that we put out there and we feel it's a good kind of strong step up year for us in terms of overall margins with the additional Lima.

Ben Barry: And if so, what's kind of giving you guys the confidence to deliver another, what seems to be a good, strong year of legacy margin expansion, even with what I'll call maybe some noise from the integration of LEBA. Thanks. The next question is from Caitlin Cronin with CannaCore Genetics.

Speaker Change: The next question from Kathleen crying, we'd kind o'clock January 10th.

Kathleen: Hi, Thanks for taking the questions and congrats on a great corner just starting next 2024 revenue guidance E. Seven per cent <unk> <unk>, <unk>, <unk>, <unk> <unk> et cetera.

Matthew L. Trerotola: Yeah, I think I wouldn't really look at it as a slowdown in terms of our performance versus the market. I think it's sort of broadly accepted that the recon market had at least a point or two, maybe two or three points of tailwind on it last year. And then we also, on the P&R side, had some extra price that we know is going to start to moderate. And so the 7% guide is pretty similar relative growth performance versus the markets. But also, it's consistent with our approach of trying to be a little conservative in terms of how we're creating our plans and how we're guiding as we come out of the year until you see how the markets are going to unfold a little bit in the early parts of the year. And then you said earlier, similar cadence sequentially throughout the year, you know, versus last year, but Q1 was particularly strong in 2023. Do you kind of expect that similar strength? Got it, that makes sense. And then just one more quick one.

Kathleen: Yeah I think.

Kathleen: I wouldn't really look at as a slowdown in terms of our performance versus the market I think it's sort of broadly accepted that.

Kathleen:

Speaker Change: Recon market head.

Speaker Change: At least a point or two maybe two or three points a tailwind on it last year and and and.

Speaker Change: And then we also wanted to be in our side had some extra price that.

Speaker Change: No it is gonna start to moderate.

Speaker Change: And so it is 7% guide is you know he's pretty similar a relative growth performance versus the markets, but but also it's it's consistent with our approach. It you know trying to be a little conservative and in terms of how we are creating our plans and how a guiding as we as we come out of the year until we see you know how the <unk>.

Speaker Change: The market is going to unfold, a little bit in Europe and parts of the year.

Speaker Change: Got it and then you said earlier <unk> you know fresh as last year. If that Q1 was particularly strong in 2023, just kind of expect that similar strength into you wanted to sir.

Speaker Change: Yeah, Katelyn I think in terms of my comments. There is if I think about kind of a percentage of the year in terms of what Q1 was of the full year in terms of revenue and EBITDA, that's kind of what the comments I was trying to convey in my commentary as we think kind of what we've seen in 2022 and 22.

Speaker Change: 23 is kind of a new normal kind of seasonality that will see so if he's kind of do the math and look at how 2023 played out and look at kind of the percentage of each of those quarters, that's kind of how we're thinking about providing the guidance of quarterly movement.

Ben Barry: The 40 million cost synergies for Lima by year three, what does that really look like in years one and two and where do you really see most of the effect down the P&L? The next question is from Daniel Altafi with UPS. Okay, great. Thanks for that.

Speaker Change: Got it that makes sense and then just add one more quick one be $49 cost synergies email by your three what does that look like and you said you wanted to and wherever you're relaxed most of the effect Oh damn It you know.

Matthew L. Trerotola: And then on Lima, I know your guidance for Lima sales includes some exits of product lines, etc. Have you guys confirmed where you're exiting yet, or how should we think about that happening over the year? Yeah, so that's something that will play out through the year. You know, there are a few things that we've just, you know, kind of small amounts of revenue that we've stepped away from because they were not, you know, not as attractive pieces of the revenue.

Speaker Change: Yeah, I'll start with kind of first the first year. So again as we contemplate at our guidance for for what we had said when we close there are only announced the deal of the 70 to 75 EBIT a million dollars of EBITA that would include some of it the near term sits synergy that we're able to capitalize on and what you think about.

Speaker Change: Kind of there in terms of cost synergy opportunity is areas, where there's you know duplicative nature or overlap. So again like double a O. S is a good example, we both don't need to pay for a booth now that we're one company. There's some overlap in terms of leadership positions that were able to make quick.

Matthew L. Trerotola: But, you know, most of the revenue impact that we've factored in for this year is related to, you know, working by country by country and putting the channels together, and in some cases, having to make some choices as we do that, that can result in some revenue going away from that and from us. And definitely, you know, some of that will start to hit in the first quarter, but I'm not really seeing much. And then in the next few quarters, we'd like to be seeing the rest of whatever impact we're going to have this year. We're working very hard to minimize that and working very hard to try to find more synergy. Certainly, each time that we have a little bit of breakage, there's an opportunity to have synergy on the flip side of that. And so, you know, there's a little bit of a question of how the timing plays out and whether, you know, how quickly we can cover whatever breakage with synergy.

Speaker Change: <unk>, so able to capitalize on some kind of synergies early on here and in the program and and so that would be kind of I'd say in that five to 10 million range per year, one and then building up to the 40 million kind of by by your three.

Speaker Change: Got it thank you so much.

Daniel CUPS: The next question is from Daniel C U P S.

Daniel: Thanks, [laughter] Oh excuse me good morning. Thank you guys for taking requests congrats on it that good entity. Yeah. Uhm just one quick question on the competitive landscape. This morning, you could have a competitor announce.

Daniel: Qualified some can't prove all for their robotics <unk> I'm, just curious what's baked into your guidance as far as you know potential competition ramping heating up here on the robotic side and if you could remind us where are you guys are with it.

Daniel: <unk> and then just one quick follow up on Lima after that.

Speaker Change: Yeah sure first I'll say, our guide contemplates the full competitive environment that you know that we're in right now your mind shoulder, where a leader and shoulder we've been an innovation leader and shoulder for many years, we got the best shoulder and planting it ultimate with the longest data and also.

Speaker Change: We've got continuing innovation that we've done around that enabling Jack has been a significant force and shoulder for awhile. We we've had you know industry, leading match point solution for creating preoperative plans being able to then feed them in you know in into the surge.

Matthew L. Trerotola: <unk> Ah being able to do patient specific instrumentation to be able to find the glenoid Bolton and difficult cases, and and so we have also been a leader in enabling tech in shoulder for for many years and that ability to you know kind of Doo doo.

Matthew L. Trerotola: Do Presurgical planning and use the patient specific instruments is is something that's been around for awhile and shoulder and as well used and and part of it. So what's enabled us to continue to succeed.

Matthew L. Trerotola: But that's something that we feel very confident about what we've put into our guidance in terms of what the Lima revenue, you know, will be. And, you know, we're off to a good, strong start so far, and we'll keep you posted as we work through the year. Yeah, and Danielle, I would just pile on top of that and say that, you know, as we think about kind of how Lima strengthens the overall portfolio and the registration environment around the world, there's not going to be any kind of major product line discontinuation. We're going to make the full portfolio available to our customers. And then over time, we're going to continue to refine that and strengthen it as we drive new innovation, as we, you know, get registrations cleared in certain countries and things like that. So, I wouldn't expect any kind of major gaps or discontinuations in the product line in the near term.

Matthew L. Trerotola: <unk>, we definitely see opportunities overtime for additional enabling check in shoulder, we've made significant investments as a company and augmented reality as well as predictive analytics and we can see opportunities to take what is already quite valuable to shoulder surgeons in terms of the preoperative planning.

Speaker Change: <unk> and some of the patient specific and instrumentation simplify the work flow of that with augmented reality guidance and predictive analytics and and you know create the next step change in terms of work flow in the shoulder and do it in a cost effective and space efficient way.

Matthew L. Trerotola: That you know I think there's quite a bit of excitement about over on the D side is we're bringing <unk> into that so we're confident that as the ear plays out we will remain a technology leader in shoulder and it will have the the right offering at the right time to.

Matthew L. Trerotola: To move that next step in the shoulder.

Matthew L. Trerotola: Okay, great. Thanks for that and then or Lima. Your your guidance for sales include some I guess a product lines et cetera have you guys.

Matthew L. Trerotola: Have you guys confirmed where you're exiting that or how should we think about that transpiring over a year.

Matthew L. Trerotola: Yeah. So that's something that will play out through through the year. You know there there are a few things that that we've just you know cut small amounts of revenue that we've stepped away or wait for them because they were not you know not.

Ben Barry: There are some kind of choiceful things, as Matt said, that we'll be doing kind of in the near term. But overall, I think this only strengthens our portfolio in terms of our ability to serve customers. Yeah, I mean, first of all, I think that looking at last year, it was a pretty normal P&R market overall, and maybe a tiny bit of tailwind on the market, but not as significant as on the recon side. But a healthier price environment in terms of recovering some of the inflationary pressure from the previous years.

Ben Barry: Not as attractive pieces of the revenue, but but you know most of the revenue impact that we factored in for this year is is related to working by country by country and putting the channels together and in some cases, having to make some choices as we do that that that can wreak relate to result in some <unk>.

Ben Barry: Some revenue going away from that and from US and definitely you know some of that will will will start to hit in the first quarter, but we're really not seeing much and and then in the next few quarters you know we'd like.

Ben Barry: <unk> you know the rest of whatever impact we're gonna have in the year, we're working very hard to minimize that and we're working very hard to try to find more synergy certainly each time that we have a little bit of breakage, there's an opportunity to have synergy on the flip side of that typically and and so you know it was a little bit of a question of how the timing plays out and whether you know how.

Matthew L. Trerotola: And so when you look at our growth that was pushing 5% on a full-year basis, you know, that's a little bit elevated from what we anticipate being able to do on a go-forward basis in that business. You know, we've got a percent or so of price that we expect to more flatten out, and probably a little bit of tailwind there was on the market last year. And so, you know, we still have a P&L long-term view in the sort of 3% to 4% range, which would reflect kind of getting to a more normal price environment. And then as the innovation that we've been talking about continues to ramp its way through the, Hey, everyone. This is Joseph.

Matthew L. Trerotola: How quickly can we cover whatever breakage with synergy, but that's something that we feel very confident with what we put into our guidance in terms of what the Lima revenue will be and.

Speaker Change: We're off to a good strong start so far and we'll keep you posted as we work through the year, Yeah, Daniella I would just tough pile on on that and say that you know as we think about kind of how Lima strengthens the overall portfolio and the registration environment around the world, there's not gonna be any kind of major product line discontinuation.

Joseph: We're gonna make the full portfolio available to our customers and then over time, we're gonna continue to refine that and strength in it as we drive new innovation as we you know get registrations cleared in certain countries and things like that so I wouldn't expect any kind of major you know kind of gaps are discontinuations and product line in the near term there.

Matthew L. Trerotola: I'm from Mike. I will start with a question on our. Could you maybe remind us all how you guys expect to sell the product? You know, I guess will this be a direct source of revenue? Will you use it to drive, you know, implant sales indirectly or some combination of both?

Matthew L. Trerotola: Kind of choice for things as Matt said that will be doing kind of in the near term, but overall I think this only strengthens our portfolio in terms of our ability to serve customers.

Speaker Change: Perfect. Thank you die.

Speaker Change: Mmm the.

Matthew L. Trerotola: The next question is from Georgia tell Us with Stephens, Inc.

Matthew L. Trerotola: Yeah, sure. So far, we are primarily placing Arbus as CapEx, you know; it has a relatively low cost. And so, you know, in most of the places we've put Arbus, we've placed it there, we're getting a recurring revenue stream on that on a per procedure basis, which we've been able to get on contracts at rates, you know, consistent with some of the other enabling tech devices out there. And in some cases, where we've placed them, it's one of our existing surgeons, and it's a way to strengthen and deepen our relationship with them.

Speaker Change: Hey, good morning, Thanks for taking the question maybe switching the PNR segment, you mentioned a few new launches there could you just parse out that that's a load of mid single digit growth what's assumed from from the new launches maybe once assume from pricing and then.

Matthew L. Trerotola: Just from an underlying market growth perspective, what it's all baked them.

Speaker Change: Yeah. So first I'd say, you know I I think that looking at last year. It was you know pretty a pretty normal PNR market overall with maybe a tiny bit of tailwind on the market, but but not as significant as on the <unk> side.

Matthew L. Trerotola:

Matthew L. Trerotola: But but a healthier price environment in terms of recovering some of the inflationary pressure from the from the previous years and so when when you look at you know our our growth that was pushing five per cent on the full year basis, you know, that's a little bit a little bit of elevated from what we envision being able to do on a go forward base.

Matthew L. Trerotola: And in other cases, we've been able to convert surgeons and get new implant sales with it. So we're tracking both the way that we ramp the recurring revenue there with placements and the way that we ramp the recurring revenue there. But then also the pull through revenue on implants where we bring them into competitive environments, and we expect to contribute in all those ways. We have also been able to very successfully sell it at capital. And, you know, we'll make thoughtful decisions about when it's better to sell it versus place it. But one of the real advantages that we have with Arbus is that it is primarily a software-based solution.

Matthew L. Trerotola: <unk> in that business you know.

Matthew L. Trerotola: We've got a a percent or so of price that that we expect a more flat now and probably a little bit of tailwind there wasn't the market last year and so we still have a piano or a longterm view and in this sort of 3% to 4% range, which would reflect kind of get into a more normal price environment.

Matthew L. Trerotola: <unk> and then as the innovation that we've been talking about continues to ramp its way through is through the.

Matthew L. Trerotola: Through the business, that's how we can kind of push towards that 4% realm that we've been showing consistently over the past few years, but but with an extra little extra price into it. We also continue to work on shaping that business to be you know, let's say more of a solid mid single digit growers versus a low to mid single digit growing and we see opportune.

Matthew L. Trerotola: And so there is not a very large cost related to placing it or selling it. And that gives us a lot of business model flexibility. And I think in a health care environment where there's a lot of pressure on the system around health care and economics, you know, I think that, you know, over the next couple of years, you're going to see a lot of excitement, as was mentioned earlier in the call, around augmented reality and mixed reality as a way to really bring some of the real marketing benefits, as well as the procedural benefits of enabling tech in me and Okay, yeah, thanks very much for that color.

Matthew L. Trerotola: No need for that and we've been working on them step by step and so we're still guiding it in 3% to 4% range, we're still working on making it something that we can guide into four to five per cent range.

Speaker Change: Okay that that's helpful. And then maybe on on margins I talked about a little bit about price and then also with the new product launches how should we think about the flow through to March in fact, I think some of the E X G initiatives as you've been developing some of these or maybe driving some more.

Matthew L. Trerotola: Attractive March profiles with these new devices, but just curious for this segment specifically how should we think about margins progressing through this year.

Matthew L. Trerotola: Then maybe just one on Lima, in the quarter. Could you maybe give us some color or tell us what Lima's gross margin or operating margins were in the quarter? And just given the, you know, the ongoing integration of Lima, could you maybe talk about your outlook for M&A? You know, can we assume that some deals may be on hold as you guys continue to integrate the LEMA? Yeah, so let me let me comment.

Matthew L. Trerotola: <unk>.

Speaker Change: Yeah. So again, George I think from a from a PNR perspective, I think that's your question what Matt said as we you know we continue to look at how do we drive you know shaping moves within that portfolio, which wouldn't focus on higher margin.

Matthew L. Trerotola: Product. So it would be around you know continuing to try to drive you know some some improvements in the mix of the business within PNR driving some some leverage on the growth that we're getting the consistent growth that we're getting as as we're continuing to just kind of.

Matthew L. Trerotola: You know drive.

Matthew L. Trerotola: Behavior and productivity within the supply chain. There. So overall I think that you know the contribution of mixing the portfolio shaping moves and then just operating leverage slash productivity is what we would see kind of helping drive you know incremental increases in the margins of that business over.

Matthew L. Trerotola: First of all, Lima is coming into our financial picture. You know, exactly as we expected it to. They had a good, healthy finish to the year in terms of their growth, as well as their margin profile. And as we've created our plan for 2024, we've been able to take our base plan that we're already working on and then put a Lima, you know, compound, you know, put on top of that, the Lima revenue and profit and margin impact, right in line with what we had expected in the acquisition process. And we have good, strong confidence in that from everything that we've learned and from everything that we've got in flight.

Matthew L. Trerotola: Time, and and as we kind of think about that business, we see it consistently increased margins year over here.

Speaker Change: Okay, Great. That's helpful. I'll leave it there and thank you all for the time.

Matthew L. Trerotola: Mmm.

Matthew L. Trerotola: The next question is from Mike Mattson, we'd need time.

Matthew L. Trerotola: Hey, everyone. This is joseph onto Mike.

Speaker Change: I'll start with a question on Arbus could you maybe remind us all.

Matthew L. Trerotola: You guys are expected to tell the <unk>. The product you know I guess, who the speed direct source of revenue you use it to drive implant sales indirectly or some combination of both.

Speaker Change: Yeah sure.

Matthew L. Trerotola: So far we are primarily placing arbus says capex. It you know it has a relatively low cost and so you know in most of the places we put our this week we've placed it there were getting a recurring revenue stream on that on a on a per procedure basis, which we've been able to you know get on contract that at rates.

Matthew L. Trerotola: So I feel very good about the start on Lima and the growth and margin picture that's going to emerge from that, as we execute through it. As far as acquisitions go, there's no question that we've got a significant amount of work to do this year, making sure that Lima is a tremendous success. And we've even still been, you know, coming up the curve of taking full advantage of all the great foot and ankle acquisitions that we made. And even the laser acquisition we made three or four years ago now, we're still kind of ramping up further and further in terms of where we take that product line.

Matthew L. Trerotola: Consistent with some of the other enabling tech devices out there and in some cases, where we place. It. It's it's one of our existing surgeons and it's a way to strengthen and deepen our relationship with them and in other cases, we've been able to convert surgeons and get new implant sales with it so we're tracking both.

Matthew L. Trerotola: The way that we ran through recurring revenue there will placements the way to revamp the occurring revenue there, but then also the pull through revenue on implants, where where we bring it into into competitive environments and and we expect it to contribute in all those ways. We have also been able to very successfully sell it is capital and and we'll make thoughtful this.

Matthew L. Trerotola: <unk> about when it's better to you know sell it versus place it but one of the real advantages that we have with Arbus is is that it is primarily software based solution.

Matthew L. Trerotola: So we've got a lot that we're doing in terms of taking advantage of the things that we've acquired over the past handful of years. At the same time, we've got a little bit of financial space for attractive strategic both on acquisitions. Certainly, it's a healthy environment out there for both on acquisitions. So we've got a healthy funnel of opportunities that will be very judicious about the acquisitions that we make in 2024. And we'll focus really only on the most strategic ones and on ones that are more in that kind of range and in terms of their, you know, how they affect our balance sheet picture and how they affect our execution bandwidth. At the same time, we can, you know, continue to do the work on, you know, medium or larger things that we could think about in 25 and beyond, you know, once we get through a fantastic integration of Lima and as we, Okay, great, great.

Matthew L. Trerotola: And so there is not a very large cost related to placing it or selling it and that gives us a lot of business model flexibility and and I can have health care environment, where there's a lot of pressure on the system around health care and by Economics, you know I I think that you know over the next couple of years, you're gonna see a lot.

Matthew L. Trerotola: Of excitement as was mentioned earlier in the call around the augmented reality, even mixed reality as as a way to really.

Matthew L. Trerotola: Bring some of the real marketing benefits as well as as the procedural benefits of enabling tech and knee and then other anatomies while at the same time being much more cost space and time efficient.

Speaker Change: Okay. Yeah, thanks, very much for that color and it may be just one on Lima in the quarter could you maybe give us some color or tell us what the name is gross margin or.

Matthew L. Trerotola: Operating margins, where in the quarter and.

Speaker Change: Just given that the you know the ongoing integration of blame could you maybe talk about your outlook for for M&A. You know can we assume that some deals may be on hold as you guys continue to integrate the Lima.

Speaker Change: Yeah. So let me let me comment <unk> first of all Lima is coming into our financial picture exactly as we expected it too they had a good healthy finished of the year in terms of their growth as well as their margin profile and as we've created our plan for 2024, when you've been able to take our.

Matthew L. Trerotola: Base plan that we're already working on and then put a Lima you know <unk>.

Operator: Thank you for taking all our questions and congrats on the quarter. Thank you. Thank you.

Operator: <unk> you know put on top of that the the Lima revenue and profit margin impact.

Operator: The next question is from Dean Reinhardt with Baird. Hey guys, thanks for taking the questions. Maybe just two kinds of follow-ups at this point in the call.

Operator: Right in line with with what we had expected in the acquisition process and and we have good strong confidence in that from everything that we've learned and from everything that we've got in flight. So feeling very good about the start on Lima, and the <unk> the growth and margin picture, that's gonna emerge from that.

Ben Barry: The first one though, kind of on the revenue guidance, if we just take out Lima, can you just kind of help us level set kind of what other factors you're kind of expecting in there as it relates to FX? I think you still have some contributions from NovaStep and Seal in there, and then it looks like you also pointed out some selling day impacts in the slide deck, so just help us kind of frame all those things together. Yeah, Dean, thanks.

Speaker Change: As we execute through it.

Dean: As as far as acquisitions look there's no question that we've got a significant amount of work to do this you're making sure that email Lima is a tremendous success and we've even still been coming up the curve of taking full advantage of all the great foot and ankle acquisitions that we made and even the laser acquisition we made three.

Ben Barry: Four years back now, we're still kind of ramping up further and further in terms of where we take that product line. So we've got a lot that that we're doing in terms of taken advantage of the things that we've acquired over the past handful of years at the same time, we got a little bit of a space financially for attractive strategic bolt on acquisitions.

Ben Barry: So again, the guidance, you know, range that we've put together contemplates the factors that you mentioned, which, again, I think from an underlying core business growth perspective, we're kind of seeing around 7%. Right now, if you look at kind of where currencies are, we would say that's kind of relatively flat. In terms of the impact outlook for the year, you've got kind of within the guidance there the full contribution of both Novostep and Lima as well. So overall, you know, kind of feel like it, you know, all the components are there and kind of fit within the guidance that we gave. Okay, sounds good.

Speaker Change: Certainly, it's a healthy environment out there for for both on acquisitions. So we've got a healthy funnel of opportunities, but will be very judicious here in 2024 about the acquisitions that we do and will focus really only on the the most strategic and on ones that have you know that are more.

Ben Barry: That kind of both on range in terms of their you know how the effect our balance sheet picture and how they affect our execution bandwidth at the same time. We can you know continue to do the work on medium or larger things that we can think about in 25 and beyond you know once we get through a fantastic integration.

Matthew L. Trerotola: And then the second one, just kind of a follow up on Vijay's point with the hip and knee growth, I think 11% this quarter relative to 18% last quarter, and I think your prior year comp from last year actually eased a little bit. So, I mean, anything else that we can kind of point to regarding that comp adjusted slowdown, even either from a competitive standpoint or potentially end markets? Thank you, Yeah, I mean our knee growth is still, you know, driving that hip and knee growth number. We got, you know, nice growth in the hips, but the knee growth is still, you know, very strong.

Ben Barry: Of Lima, and N. As we you know start to Delever and have more space on the balance sheet.

Speaker Change: Okay, great great. Thank you for taking all our questions and congrats on the corner.

Speaker Change: Thank you. Thank you.

Matthew L. Trerotola: The next question is from Dean Hancock with that.

Speaker Change: Hey, guys. Thanks for taking the questions, maybe just to kind of follow ups at this point in the call. The first one they'll kind of on the revenue guidance. If we just take out Lima can you just kind of help us level set kind of what other you know what other factors, you're you're kind of expecting in there as it relates to F X I think.

Matthew L. Trerotola: Have some contributions from Nova step in seal in there and then it looks like you're also pointed out some selling day impacts in the flight deck. So just help us kind of frame all those things together.

Speaker Change: Yeah Jane Thanks, So again, the the guidance you know range that we've put together contemplates the factors that you mentioned, which again I think from an underlying core business grows we're kind of saying around seven per cent.

Matthew L. Trerotola: You know, I certainly, within the knee, we lapped some of the strong contributions from the revision launch ramping, and so that, you know, had some impact on a little bit of deceleration in the knee from Q3 to Q4. But yeah, I mean, the market environment from the front half of last year to the back half of last year was certainly a slower, you know, elevated market environment in the first half and then more normal in the back half. But, you know, at any given quarter, you know, sometimes things are going to bounce around a little bit.

Matthew L. Trerotola: Right now if you look at kind of work currencies are we would say that's kind of relatively flat in terms of the impact outlook for for the year, you've got kind of within the the the guidance. There you know the the full contribution of blame our of of both Nova step and Lima as well so overall.

Matthew L. Trerotola: You know kind of feel like it you know all the components are there and kind of fit within the the guidance that we gave.

Speaker Change: Okay sounds good and then the second one just kind of a follow up on V. Jay's point with the hip and knee girls I think 11 per cent this corner relative to 18% last corner and I think your prior year comp from lashed you're actually he's a little bit. So I mean, just anything else that we can kind of point too.

Ben Barry: And we try to focus on making sure that each year we're driving that full, you know, full W growth and, you know, the, you know, the growth in relation to markets in each of our anatomies that we've committed to and talked about. The next question is from Jason Weitz with Loop Capital. It's a rough MKM, but that's okay.

Jason Weitz: Regarding that comp adjusted slow down even neither from a competitive standpoint or potentially end markets. Thanks.

Jason Weitz: Yeah, I mean, our our <expletive>. This is still you know driving that if indeed growth number. We got you know a nice growth of hair, but the knee growth is still you know it is very strong.

Jason Weitz: You know I certainly within the knee we lap some of the strong contributions from the revision launch ramping and so that that you know I had.

Operator: So just some follow-ups at this point as well. First off, in terms of just, you know, the margin expansion this year, can we assume most of that's in gross margin and there's some offsets in SG&A, or how do we think about..., how to model that for 2024. Yeah, I mean, I think I would say that, yeah, you're thinking about it right, in terms of how the composition happens here

Operator: At some impact in a little bit of deceleration in need from from Q3, two Q for but yeah, I mean, the market environment from the front half of last year to the back half of last year was certainly a slower and.

Operator: An elevated market environment in the first half and then more normal in in the back half, but you know at any given quarter you know sometimes.

Operator: The the things that are gonna bounce around a little bit and you know we tried to focus on making sure that each year were driving at full full double digit growth and and you know the the growth in relation to markets in each of our Anatomies that we've that we've committed and talked about.

Ben Barry: Again, we'll work through that as we go, as we kind of get the full integration of Lima into the organization. But again, in terms of the kind of the macro-level picture, again, we see really strong EBITDA margin improvement lift by adding Lima plus getting the core expansions, you know, that we've also talked about. So overall, we would say a lot of that comes from gross margin, but then we'll kind of see how it all plays in as we start to integrate Lima. Okay, okay. That's helpful. And then, you know, in terms of just modeling as well, I know you weren't specific about 24 until now. Yeah, you did mention Lehman v. Accretive, which, which, which it is.

Ben Barry: The next question from Jayson, we we didn't loop capital.

Speaker Change: <unk> <unk> can but that's okay.

Ben Barry: So just some calls at this point as well first off in terms of just you know the the margin expansion. This year can we assume most of that's in gross margin.

Ben Barry: And there's some offsets an estimate or how how do we think about.

Ben Barry: How to model that for the 2024.

Ben Barry: Yeah, I mean, I I I think I would say that the yeah, you're thinking about it right in terms of how the the composition happens here again, what will work through that if we go as we kind of get the full integration of Lima and to the organization, but but again in terms of the the kind of the macro level.

Ben Barry: Picture again, we see it really strong EBITDA margin improvement list by adding Lima, plus getting the core expansions you know that we've also talked about so overall, even say a lot of that comes from gross margin, but then we'll kind of see how it all plays N as we start to integrate Lima.

Ben Barry: But, you know, if I look at my way at least we modeled and even consensus, EBITDA is much better, which is great. EPS is a little bit lower, I guess, from the guidance standpoint. I assume much of that has to do with interest rates. Or are there other give and takes in there that I'm not aware of?

Ben Barry: Okay. Okay. That's helpful. And then you know in terms of just modeling as well I know you weren't specific about 24 until now yeah, you did mention gleam, it'd be accretive, which which which it is but you know if I look at my the way at least we moslems even consensus EBITDA is much better which is great E. P. S is a little bit lower I.

Ben Barry: Guess from the garden standpoint, I assume much of that has to do with interest rates or are there. Other given takes I know that I'm I'm not aware of.

Ben Barry: Yeah, I think you're right on Jason. So think about it this way: underlying core business EPS growth of double digits slightly accretive Lima. You got about one point of tax headwind. So that's about three, three cents.

Speaker Change: Yeah, I think you're right on J since I'll think about it this way underlying core business EPS growth, a double digit slightly accretive Lima.

Ben Barry: We got about a one point tax headwind. So that's about three three cents and then with interest rates and the pay down that we were able to do in queue for with the financing that we did for Lima. So we pay down the revolver, we got about a nipple benefit as well. So if you kind of you know take all of those components and you look at the underlying.

Ben Barry: And then with interest rates and the paydown that we were able to do in Q4 with the financing that we did for Lima, so we paid down the revolver, we got about a nickel benefit as well. So if you kind of, you know, take all those components and you look at the underlying growth, you would say, you know, kind of you see nice strong core EPS improvement as well as, you know, contribution from Lima. Okay, that's helpful.

Ben Barry: Both you would say you know kind of you seek nice strong core EPS improvement as well as you know contribution from Lima.

Ben Barry: Okay. That's helpful. Then coming to you made earlier about having sort of Tailwinds in 2023, you know largely catch up from Covid and et cetera.

Matthew L. Trerotola: And a comment you made earlier about having sort of tailwinds in 2023, you know, largely catch up from COVID and etc. But it sounds like you don't feel that initially that will repeat for 2024. Just curious in terms of what you're basing that on. Is that just looking at physician backlogs? Or just kind of what indicators are out there from a macro standpoint?

Matthew L. Trerotola: But it sounds like you don't feel that you'd naturally that will repeat for 2024 I'm just curious in terms of what you're basing that offer is that just looking at physician backlogs or just kind of what it is or out there from a macro standpoint.

Matthew L. Trerotola: Yeah, I mean, it's really a conservative planning assumption, right? I think, as I said earlier in the call, last year demonstrated that if you get periods of time when the utilization of surgery can be high, you know, that for whatever reason, you know, if you get periods of time when there's extra ability to drive, you know, surgery, last year showed that both in the US and outside the US, there is pent up demand. And we can have elevated growth rates as that pent-up demand gets worked through. I think the math suggests that there's still quite a bit of pent-up demand that really wasn't satisfied through the COVID period. And so we would expect that this year and in the coming years, if you hit parts of the year where things are really, really clean, you have, you know, not a lot of COVID or flu or storms or whatever, you know, hit parts of the year that are very clean, like the early part of last year, the system is going to run at a higher utilization rate in the US, and you're going to get extra growth. And we saw that early last year, as well as an easy comp early last year.

Matthew L. Trerotola: Yeah sure I mean, it's really a conservative planning assumption right I think as I said earlier to call you know bless your demonstrated that if you get periods of time when the utilization.

Matthew L. Trerotola: Utilization of surgery can be high you know that for whatever reason you know maybe if you get periods of time, when there's extra ability to drive you know surgery.

Matthew L. Trerotola: You know last year showed that both in the U S N outside the U S. There is pent up demand and we can have elevated growth rates as as that pent up demand gets work through I think the mass suggests that there's still quite a bit of pent up demand that really wasn't satisfied through the COVID-19 period, and so we would expect that this year.

Matthew L. Trerotola: And in the coming years, if you hit parts of the year, where things are really really clean right. You have you know not like COVID-19 or flu or storms or whatever you don't hit parts of the year that are very clean like the early part of last year. The system's gonna run at Ohio higher utilization rate in the U S and you're gonna get extra gross and we saw that.

Matthew L. Trerotola: Early last year as well as an easy cop early last year, an outside the U S. There was you know decisions early in the year by a couple of countries to put extra capacity and of the system and pay for more surgery in a period of time, so that some of that backlog could get cleared and that led to things running at a higher rate for some of the early part of last year.

Matthew L. Trerotola: And outside the US, there were, you know, decisions early in the year by a couple countries to put extra capacity into the system and pay for more surgery over a period of time so that some of that backlog could get cleared. And that led to things running at a higher rate for some of the early part of last year. And so, you know, we think a reasonable planning assumption for this year is a normal recon growth rate, which would mean that a little bit of that tailwind from last year gets recreated, but we don't get any extra, you know, growth. But at the same time, there's certainly the opportunity for more of that pent-up demand to be worked off and for another oversized market growth rate. We just think it's more prudent not to plan for that.

Matthew L. Trerotola: And so you know we think a reasonable planning assumption for this year is a normal <unk> gross rate, which would mean that a little bit of that tailwind from last year gets gets recreated, but we don't get an extra.

Matthew L. Trerotola: Gross but but at the same time, there's certainly the opportunity for more of that pent up demand to be worked off and and to have another oversized market growth rate. We we just think it's more prudent not to plan for that.

Matthew L. Trerotola: Got it. Thank you very much. I appreciate it. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Mr. Trerotola for any closing remarks. Thank you for joining us this morning. I want to end the call by thanking our team members around the world for the success of 2023. We're stepping into 2024 with a lot of momentum and excitement across the organization to remain committed to delivering value for all of our internal and external stakeholders. Thank you for listening today, and we look forward to sharing our first quarter results with you in May. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: Got it. Thank you very much I appreciate it thank you.

Speaker Change: This concludes our question and answer session I would like to turn the conference call back from a sitter.

Trerotola: For any closing remarks.

Matthew L. Trerotola: Thank you for joining us. This morning, I went to end the call by banking our team members around the world for the success of 2023, we're stepping into 2024 with a lot of momentum and excitement across the organization to remain committed to delivering value for all of our internal and external stakeholders. Thank you for listening today and.

Matthew L. Trerotola: We look forward to sharing our first quarter results with you and Max.

Matthew L. Trerotola: The conference now concluded. Thank you for attending today's presentation you may now disconnect.

Matthew L. Trerotola: Yeah.

Matthew L. Trerotola:

Matthew L. Trerotola: [music].