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January 2023
November 2022
October 2022
July 2022
May 2022
May 2022
April 2022
February 2022
February 2022
January 2022
• | Reported net sales increased 7.9% to $3.2 billion |
• | Organic net sales increased 7.9% |
• | Reported operating income margin of 17.8% |
• | Adjusted operating income margin(1) expanded 60 bps (40 bps excluding ASC 606(2)) to 24.9% |
• | Reported EPS increased 36.0% to $1.55 |
• | Adjusted EPS(3) increased 11.2% to $1.69, at the high end of guidance range |
2018 Net Sales Growth Overview | |||||||||||||||||
Reported | Excluding ASC 606 Adoption(2) | Foreign Currency Exchange | Constant Currency | Acquisitions | Organic | ||||||||||||
Orthopaedics | 3.4 | % | 4.0 | % | (1.0 | )% | 5.0 | % | — | % | 5.0 | % | |||||
MedSurg | 8.0 | 9.5 | (0.9 | ) | 10.4 | 1.6 | 8.8 | ||||||||||
Neurotechnology and Spine | 16.7 | 17.4 | (0.9 | ) | 18.3 | 6.4 | 11.9 | ||||||||||
Total | 7.9 | % | 8.8 | % | (1.0 | )% | 9.8 | % | 1.9 | % | 7.9 | % |
STRYKER CORPORATION | |||||||||||||||||||||
For the Three and Nine Months September 30 | |||||||||||||||||||||
(Unaudited - Millions of Dollars, Except Per Share Amounts) | |||||||||||||||||||||
CONSOLIDATED STATEMENTS OF EARNINGS | |||||||||||||||||||||
Three Months | Nine Months | ||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | ||||||||||||||||
Net sales | $ | 3,242 | $ | 3,006 | 7.9 | % | $ | 9,805 | $ | 8,973 | 9.3 | % | |||||||||
Cost of sales | 1,087 | 1,022 | 6.4 | 3,323 | 3,034 | 9.5 | |||||||||||||||
Gross profit | $ | 2,155 | $ | 1,984 | 8.6 | % | $ | 6,482 | $ | 5,939 | 9.1 | % | |||||||||
% of sales | 66.5 | % | 66.0 | % | 66.1 | % | 66.2 | % | |||||||||||||
Research, development and engineering expenses | 221 | 198 | 11.6 | 641 | 582 | 10.1 | |||||||||||||||
Selling, general and administrative expenses | 1,242 | 1,103 | 12.6 | 3,668 | 3,335 | 10.0 | |||||||||||||||
Recall charges | 4 | 66 | (93.9 | ) | 10 | 164 | (93.9 | ) | |||||||||||||
Amortization of intangible assets | 112 | 92 | 21.7 | 324 | 275 | 17.8 | |||||||||||||||
Total operating expenses | $ | 1,579 | $ | 1,459 | 8.2 | % | $ | 4,643 | $ | 4,356 | 6.6 | % | |||||||||
Operating income | $ | 576 | $ | 525 | 9.7 | % | $ | 1,839 | $ | 1,583 | 16.2 | % | |||||||||
% of sales | 17.8 | % | 17.5 | % | 18.8 | % | 17.6 | % | |||||||||||||
Other income (expense), net | (42 | ) | (54 | ) | (22.2 | ) | (140 | ) | (169 | ) | (17.2 | ) | |||||||||
Earnings before income taxes | $ | 534 | $ | 471 | 13.4 | % | $ | 1,699 | $ | 1,414 | 20.2 | % | |||||||||
Income taxes | (56 | ) | 37 | (251.4 | ) | 214 | 145 | 47.6 | |||||||||||||
Net earnings | $ | 590 | $ | 434 | 35.9 | % | $ | 1,485 | $ | 1,269 | 17.0 | % | |||||||||
Net earnings per share of common stock: | |||||||||||||||||||||
Basic net earnings per share of common stock | $ | 1.58 | $ | 1.16 | 36.2 | % | $ | 3.97 | $ | 3.39 | 17.1 | % | |||||||||
Diluted net earnings per share of common stock | $ | 1.55 | $ | 1.14 | 36.0 | % | $ | 3.90 | $ | 3.34 | 16.8 | % | |||||||||
Weighted-average shares outstanding (in millions): | |||||||||||||||||||||
Basic | 374.1 | 374.2 | 374.0 | 373.8 | |||||||||||||||||
Diluted | 380.2 | 380.2 | 380.4 | 379.8 |
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
September 30 | December 31 | ||||||
2018 | 2017 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 1,918 | $ | 2,542 | |||
Marketable securities | 292 | 251 | |||||
Accounts receivable, net | 2,076 | 2,198 | |||||
Inventories | 2,893 | 2,465 | |||||
Prepaid expenses and other current assets | 739 | 537 | |||||
Total current assets | $ | 7,918 | $ | 7,993 | |||
Property, plant and equipment, net | 2,178 | 1,975 | |||||
Goodwill and other intangibles, net | 11,097 | 10,645 | |||||
Other noncurrent assets | 891 | 1,584 | |||||
Total assets | $ | 22,084 | $ | 22,197 | |||
Liabilities and shareholders' equity | |||||||
Current liabilities | $ | 4,153 | $ | 3,485 | |||
Long-term debt, excluding current maturities | 5,928 | 6,590 | |||||
Income taxes | 1,251 | 1,261 | |||||
Other noncurrent liabilities | 892 | 881 | |||||
Shareholders' equity | 9,860 | 9,980 | |||||
Total liabilities and shareholders' equity | $ | 22,084 | $ | 22,197 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
Nine Months | |||||||
2018 | 2017 | ||||||
Operating activities | |||||||
Net earnings | $ | 1,485 | $ | 1,269 | |||
Depreciation | 223 | 198 | |||||
Amortization of intangible assets | 324 | 275 | |||||
Changes in operating assets and liabilities and other, net | (468 | ) | (862 | ) | |||
Net cash provided by operating activities | $ | 1,564 | $ | 880 | |||
Investing activities | |||||||
Acquisitions, net of cash acquired | $ | (770 | ) | $ | (712 | ) | |
Change in marketable securities, net | (41 | ) | (29 | ) | |||
Purchases of property, plant and equipment | (418 | ) | (412 | ) | |||
Net cash used in investing activities | $ | (1,229 | ) | $ | (1,153 | ) | |
Financing activities | |||||||
(Payments) borrowings of debt, net | $ | (13 | ) | $ | 300 | ||
Dividends paid | (528 | ) | (477 | ) | |||
Repurchases of common stock | (300 | ) | (230 | ) | |||
Other financing, net | (110 | ) | (115 | ) | |||
Net cash used in financing activities | $ | (951 | ) | $ | (522 | ) | |
Effect of exchange rate changes on cash and cash equivalents | (8 | ) | 71 | ||||
Change in cash and cash equivalents | $ | (624 | ) | $ | (724 | ) |
STRYKER CORPORATION |
For the Three and Nine Months September 30 |
(Unaudited - Millions of Dollars) |
CONDENSED SALES ANALYSIS | |||||||||||||||||||||||||||
Three Months | Nine Months | ||||||||||||||||||||||||||
Percentage Change | Percentage Change Ex-ASC 606(2) | Percentage Change | Percentage Change Ex-ASC 606(2) | ||||||||||||||||||||||||
2018 | 2017 | As Reported | Ex-ASC 606(2) | Constant Currency | 2018 | 2017 | As Reported | Ex-ASC 606(2) | Constant Currency | ||||||||||||||||||
Geographic: | |||||||||||||||||||||||||||
United States | $ | 2,381 | $ | 2,182 | 9.1 | % | 10.4 | % | 10.4 | % | $ | 7,080 | $ | 6,546 | 8.2 | % | 9.4 | % | 9.4 | % | |||||||
International | 861 | 824 | 4.5 | 4.6 | 8.1 | 2,725 | 2,427 | 12.3 | 12.5 | 9.1 | |||||||||||||||||
Total | $ | 3,242 | $ | 3,006 | 7.9 | % | 8.8 | % | 9.8 | % | $ | 9,805 | $ | 8,973 | 9.3 | % | 10.3 | % | 9.4 | % | |||||||
Segment: | |||||||||||||||||||||||||||
Orthopaedics | $ | 1,171 | $ | 1,132 | 3.4 | % | 4.0 | % | 5.0 | % | $ | 3,615 | $ | 3,408 | 6.1 | % | 6.6 | % | 5.4 | % | |||||||
MedSurg | 1,443 | 1,336 | 8.0 | 9.5 | 10.4 | 4,325 | 3,977 | 8.8 | 10.4 | 9.8 | |||||||||||||||||
Neurotechnology and Spine | 628 | 538 | 16.7 | 17.4 | 18.3 | 1,865 | 1,588 | 17.4 | 18.1 | 16.8 | |||||||||||||||||
Total | $ | 3,242 | $ | 3,006 | 7.9 | % | 8.8 | % | 9.8 | % | $ | 9,805 | $ | 8,973 | 9.3 | % | 10.3 | % | 9.4 | % |
SUPPLEMENTAL SALES GROWTH ANALYSIS | |||||||||||||||||||
Three Months | |||||||||||||||||||
Percentage Change Ex-ASC 606(2) | |||||||||||||||||||
Percentage Change | International | ||||||||||||||||||
2018 | 2017 | As Reported | Ex-ASC 606(2) | Constant Currency | United States | Ex-ASC 606(2) | Constant Currency | ||||||||||||
Orthopaedics: | |||||||||||||||||||
Knees | $ | 395 | $ | 369 | 7.0 | % | 7.7 | % | 8.7 | % | 8.4 | % | 5.7 | % | 9.6 | % | |||
Hips | 316 | 313 | 1.0 | 1.2 | 2.5 | 2.4 | (0.6 | ) | 2.8 | ||||||||||
Trauma and Extremities | 376 | 367 | 2.5 | 3.2 | 4.0 | 3.2 | 3.1 | 5.5 | |||||||||||
Other | 84 | 83 | 1.2 | 1.6 | 2.7 | (0.9 | ) | 13.1 | 19.3 | ||||||||||
$ | 1,171 | $ | 1,132 | 3.4 | % | 4.0 | % | 5.0 | % | 4.4 | % | 3.0 | % | 6.3 | % | ||||
MedSurg: | |||||||||||||||||||
Instruments | $ | 442 | $ | 404 | 9.4 | % | 10.7 | % | 11.6 | % | 13.7 | % | 0.3 | % | 4.3 | % | |||
Endoscopy | 443 | 404 | 9.7 | 10.8 | 11.9 | 11.0 | 10.4 | 15.2 | |||||||||||
Medical | 492 | 464 | 6.0 | 7.5 | 8.5 | 12.4 | (8.1 | ) | (4.2 | ) | |||||||||
Sustainability | 66 | 64 | 3.1 | 7.0 | 7.0 | 7.0 | 10.9 | 15.0 | |||||||||||
$ | 1,443 | $ | 1,336 | 8.0 | % | 9.5 | % | 10.4 | % | 12.0 | % | 0.2 | % | 4.5 | % | ||||
Neurotechnology and Spine: | |||||||||||||||||||
Neurotechnology | $ | 435 | $ | 353 | 23.2 | % | 23.8 | % | 24.8 | % | 28.7 | % | 15.4 | % | 18.2 | % | |||
Spine | 193 | 185 | 4.3 | 5.2 | 5.9 | 2.4 | 13.4 | 16.5 | |||||||||||
$ | 628 | $ | 538 | 16.7 | % | 17.4 | % | 18.3 | % | 18.6 | % | 14.9 | % | 17.8 | % | ||||
Total | $ | 3,242 | $ | 3,006 | 7.9 | % | 8.8 | % | 9.8 | % | 10.4 | % | 4.6 | % | 8.1 | % |
Nine Months | |||||||||||||||||||
Percentage Change Ex-ASC 606(2) | |||||||||||||||||||
Percentage Change | International | ||||||||||||||||||
2018 | 2017 | As Reported | Ex-ASC 606(2) | Constant Currency | United States | Ex-ASC 606(2) | Constant Currency | ||||||||||||
Orthopaedics: | |||||||||||||||||||
Knees | $ | 1,236 | $ | 1,149 | 7.6 | % | 8.0 | % | 7.1 | % | 7.3 | % | 9.8 | % | 6.6 | % | |||
Hips | 983 | 955 | 2.9 | 3.3 | 2.2 | 1.9 | 5.5 | 2.6 | |||||||||||
Trauma and Extremities | 1,152 | 1,070 | 7.7 | 8.5 | 6.9 | 6.3 | 12.5 | 8.0 | |||||||||||
Other | 244 | 234 | 4.3 | 4.2 | 3.9 | 3.9 | 5.4 | 4.2 | |||||||||||
$ | 3,615 | $ | 3,408 | 6.1 | % | 6.6 | % | 5.4 | % | 5.3 | % | 9.2 | % | 5.7 | % | ||||
MedSurg: | |||||||||||||||||||
Instruments | $ | 1,292 | $ | 1,190 | 8.6 | % | 10.2 | % | 9.5 | % | 10.8 | % | 8.0 | % | 5.0 | % | |||
Endoscopy | 1,335 | 1,183 | 12.8 | 14.2 | 13.6 | 14.8 | 11.8 | 9.5 | |||||||||||
Medical | 1,508 | 1,413 | 6.7 | 8.3 | 7.7 | 7.4 | 11.5 | 8.7 | |||||||||||
Sustainability | 190 | 191 | (0.5 | ) | 2.5 | 2.5 | 2.4 | 17.3 | 15.7 | ||||||||||
$ | 4,325 | $ | 3,977 | 8.8 | % | 10.4 | % | 9.8 | % | 10.3 | % | 10.5 | % | 7.8 | % | ||||
Neurotechnology and Spine: | |||||||||||||||||||
Neurotechnology | $ | 1,282 | $ | 1,036 | 23.7 | % | 24.5 | % | 23.0 | % | 25.3 | % | 23.1 | % | 19.1 | % | |||
Spine | 583 | 552 | 5.6 | 6.1 | 5.2 | 1.1 | 22.1 | 18.2 | |||||||||||
$ | 1,865 | $ | 1,588 | 17.4 | % | 18.1 | % | 16.8 | % | 15.8 | % | 22.9 | % | 18.9 | % | ||||
Total | $ | 9,805 | $ | 8,973 | 9.3 | % | 10.3 | % | 9.4 | % | 9.4 | % | 12.5 | % | 9.1 | % |
STRYKER CORPORATION | ||||||||||||||||||||
For the Three and Nine Months September 30 | ||||||||||||||||||||
(Unaudited - Millions of Dollars, Except Per Share Amounts) | ||||||||||||||||||||
Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures | ||||||||||||||||||||
Three Months 2018 | Gross Profit | Selling, General & Administrative Expenses | Amortization of Intangible Assets | Operating Income | Net Earnings | Effective Tax Rate | Diluted EPS | |||||||||||||
Reported | $ | 2,155 | $ | 1,242 | $ | 112 | $ | 576 | $ | 590 | (10.5 | )% | $ | 1.55 | ||||||
Reported percent net sales | 66.5 | % | 38.3 | % | 3.5 | % | 17.8 | % | 18.2 | % | ||||||||||
Acquisition and integration-related charges (a) | ||||||||||||||||||||
Inventory stepped-up to fair value | (11 | ) | — | — | (11 | ) | (11 | ) | 0.3 | (0.03 | ) | |||||||||
Other acquisition and integration-related | — | (19 | ) | — | 19 | 17 | — | 0.05 | ||||||||||||
Amortization of purchased intangible assets | — | — | (112 | ) | 112 | 92 | 0.5 | 0.24 | ||||||||||||
Restructuring-related and other charges (b) | 4 | (35 | ) | — | 39 | 31 | 0.4 | 0.08 | ||||||||||||
European Medical Devices Regulation (c) | — | — | — | 2 | 2 | — | — | |||||||||||||
Rejuvenate and other recall-related matters (d) | — | — | — | 4 | 2 | 0.1 | 0.01 | |||||||||||||
Regulatory and legal matters (e) | — | (66 | ) | — | 66 | 50 | 1.0 | 0.13 | ||||||||||||
Tax matters (f) | — | — | — | — | (130 | ) | 24.3 | (0.34 | ) | |||||||||||
Adjusted | $ | 2,148 | $ | 1,122 | $ | — | $ | 807 | $ | 643 | 16.1 | % | $ | 1.69 | ||||||
Adjusted percent net sales | 66.3 | % | 34.6 | % | — | % | 24.9 | % | 19.8 | % |
Three Months 2017 | Gross Profit | Selling, General & Administrative Expenses | Amortization of Intangible Assets | Operating Income | Net Earnings | Effective Tax Rate | Diluted EPS | |||||||||||||
Reported | $ | 1,984 | $ | 1,103 | $ | 92 | $ | 525 | $ | 434 | 7.9 | % | $ | 1.14 | ||||||
Reported percent net sales | 66.0 | % | 36.7 | % | 3.1 | % | 17.5 | % | 14.4 | % | ||||||||||
Acquisition and integration-related charges (a) | ||||||||||||||||||||
Inventory stepped-up to fair value | 2 | — | — | 2 | 2 | — | 0.01 | |||||||||||||
Other acquisition and integration-related | — | (9 | ) | — | 9 | 6 | 0.2 | 0.01 | ||||||||||||
Amortization of purchased intangible assets | — | — | (92 | ) | 92 | 66 | 2.7 | 0.18 | ||||||||||||
Restructuring-related and other charges (b) | 1 | (35 | ) | — | 36 | 27 | 0.7 | 0.07 | ||||||||||||
Rejuvenate and other recall-related matters (d) | — | — | — | 66 | 48 | 1.9 | 0.13 | |||||||||||||
Regulatory and legal matters (e) | — | — | — | — | (5 | ) | 1.2 | (0.02 | ) | |||||||||||
Adjusted | $ | 1,987 | $ | 1,059 | $ | — | $ | 730 | $ | 578 | 14.6 | % | $ | 1.52 | ||||||
Adjusted percent net sales | 66.1 | % | 35.2 | % | — | % | 24.3 | % | 19.2 | % |
Nine Months 2018 | Gross Profit | Selling, General & Administrative Expenses | Amortization of Intangible Assets | Operating Income | Net Earnings | Effective Tax Rate | Diluted EPS | |||||||||||||
Reported | $ | 6,482 | $ | 3,668 | $ | 324 | $ | 1,839 | $ | 1,485 | 12.6 | % | $ | 3.90 | ||||||
Reported percent net sales | 66.1 | % | 37.4 | % | 3.3 | % | 18.8 | % | 15.1 | % | ||||||||||
Acquisition and integration-related charges (a) | ||||||||||||||||||||
Inventory stepped-up to fair value | — | — | — | — | (4 | ) | 0.2 | (0.01 | ) | |||||||||||
Other acquisition and integration-related | — | (49 | ) | — | 49 | 41 | — | 0.11 | ||||||||||||
Amortization of purchased intangible assets | — | — | (324 | ) | 324 | 263 | 0.5 | 0.69 | ||||||||||||
Restructuring-related and other charges (b) | 9 | (115 | ) | — | 124 | 98 | 0.3 | 0.26 | ||||||||||||
European Medical Devices Regulation (c) | 1 | — | — | 5 | 4 | — | 0.01 | |||||||||||||
Rejuvenate and other recall-related matters (d) | — | — | — | 10 | 7 | — | 0.02 | |||||||||||||
Regulatory and legal matters (e) | — | (121 | ) | — | 121 | 92 | 0.6 | 0.24 | ||||||||||||
Tax matters (f) | — | — | — | — | (35 | ) | 2.1 | (0.09 | ) | |||||||||||
Adjusted | $ | 6,492 | $ | 3,383 | $ | — | $ | 2,472 | $ | 1,951 | 16.3 | % | $ | 5.13 | ||||||
Adjusted percent net sales | 66.2 | % | 34.5 | % | — | % | 25.2 | % | 19.9 | % |
Nine Months 2017 | Gross Profit | Selling, General & Administrative Expenses | Amortization of Intangible Assets | Operating Income | Net Earnings | Effective Tax Rate | Diluted EPS | |||||||||||||
Reported | $ | 5,939 | $ | 3,335 | $ | 275 | $ | 1,583 | $ | 1,269 | 10.3 | % | $ | 3.34 | ||||||
Reported percent net sales | 66.2 | % | 37.2 | % | 3.1 | % | 17.6 | % | 14.1 | % | ||||||||||
Acquisition and integration-related charges (a) | ||||||||||||||||||||
Inventory stepped-up to fair value | 2 | — | — | 2 | 2 | — | 0.01 | |||||||||||||
Other acquisition and integration-related | — | (27 | ) | — | 27 | 20 | 0.2 | 0.05 | ||||||||||||
Amortization of purchased intangible assets | — | — | (275 | ) | 275 | 190 | 3.0 | 0.50 | ||||||||||||
Restructuring-related and other charges (b) | 12 | (107 | ) | — | 119 | 95 | 0.4 | 0.25 | ||||||||||||
Rejuvenate and other recall-related matters (d) | — | — | — | 164 | 123 | 1.1 | 0.33 | |||||||||||||
Regulatory and legal matters (e) | — | (30 | ) | — | 30 | 20 | 0.4 | 0.05 | ||||||||||||
Adjusted | $ | 5,953 | $ | 3,171 | $ | — | $ | 2,200 | $ | 1,719 | 15.4 | % | $ | 4.53 | ||||||
Adjusted percent net sales | 66.3 | % | 35.3 | % | — | % | 24.5 | % | 19.2 | % |
(a) | Charges represent certain acquisition and integration-related costs associated with acquisitions. |
(b) | Charges represent the costs associated with certain restructuring-related activities associated with workforce reductions and other restructuring-related activities. |
(c) | Charges represent the costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with the medical device reporting regulations and other requirements of the European Union's regulation for medical devices. |
(d) | Charges represent changes in our best estimate of the minimum end of the range of probable loss to resolve the Rejuvenate recall and other recall-related matters. |
(e) | Our best estimate of the minimum of the range of probable loss to resolve certain regulatory or other legal matters and the amount of favorable awards from settlements. |
(f) | Benefits and charges represent the accounting impact of certain significant and discrete tax items, including adjustments related to the Tax Cuts and Jobs Act of 2017. |
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Ticker: SYKEvents:
CIK: 310764
Form Type: 8-K Corporate News
Accession Number: 0000310764-18-000202
Submitted to the SEC: Thu Oct 25 2018 4:11:47 PM EST
Accepted by the SEC: Thu Oct 25 2018
Period: Thursday, October 25, 2018
Industry: Surgical And Medical Instruments And Apparatus