Good morning, ladies and gentlemen, and welcome to the Zimmer Biomet fourth quarter 2023 earnings conference call. If anyone needs assistance at any time during the conference, please press the star followed by the 0. As a reminder, this conference is being recorded today, February 8th, 2024. Following today's presentation, there will be a question-and-answer session. At this time, all participants are in a listen-only mode. If you have a question, please press the star followed by the one on your push button phone. I would now like to turn the conference over to Keri Mattox, Chief Communications and Administration Officer. Please go ahead. Thank you, operator, and good morning, everyone. Welcome to Zimmer Biomet's fourth quarter 2023 earnings conference call. Joining me today are Ivan Tornos, our President and CEO, and CFO and EVP, Finance, Operations, and Supply Chain, Suky Upadhyay. Before we get started, I'd like to remind you that our comments during this call will include forward-looking statements. Actual results may differ materially from those indicated by the forward-looking statements due to a variety of risks and uncertainties. Please note, we assume no obligation to update these forward-looking statements, even if the actual results or future expectations change materially. Please refer to our SEC filings for a detailed discussion of these risks and uncertainties, in addition to the inherent limitations of such forward-looking statements. Additionally, the discussions on this call will include certain non-GAAP financial measures, some of which are forward-looking non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures and an explanation of our basis for calculating these measures is included within our Q4 earnings release, which can be found on our website, zimmerbiomet.com. With that, I'll turn the call over to Ivan. Ivan? Hey, thank you, Keri, and thanks everyone for joining the call here this morning. I'd like to, I'd like to start the way that I typically do, taking a moment to recognize, to show my gratitude to the almost 20,000 Zimmer Biomet team members for their dedication, for their commitment, for their strong resilience, and for their superb performance in 2023. Simply put, 2023 was just a great year for our company, and, I wanna say thank you. In 2023, we impacted the lives of almost four million patients, and along the way, we delivered best-in-class financial performance, growing our constant currency revenue by 7.5%, while adjusted EPS, earnings per share, grew almost 9.5% in the year. That's 200 basis points of leverage between the 7.5% revenue growth and the 9.5% growth in EPS. In the year, we generated almost $1 billion in free cash flow, and that's with some turbulence around inventory management and whatnot. So again, strong performance, top to bottom, and I'm just very, very proud of the execution in the year. It's worth noting that this level of execution and performance came in a year in which we still had to deal with fairly complex micro issues, whether it's inflation, FX, geopolitical challenges. I don't think I need to talk much about that, and also some micro challenges in the year. We did struggle with some supply challenges throughout some of the periods. I'm happy that's behind, but it was a headwind in many periods in 2023. Again, delivering 7.5% in 2023 against some tough comparables, having grown constant currency revenue in 2022, the year before, by 6.6. So clearly, a great trend in the making, clearly strong performance, and I'm just so grateful and so proud of all of you, the Zimmer Biomet team. At the same time, beyond grateful, I'm truly excited as I know that this is just the very beginning when it comes to the level of performance that we can realize here at Zimmer Biomet. Multiple drivers are why I'm confident that this is just the very beginning, but I'll start with highlighting the bold pipeline that we have in place. The size of our pipeline is twice what it used to be in 2018. We got great new product launches that are happening here early in 2024. We have a stable supply. We've created a stable supply environment, and we got great commercial execution. We're developing flawless commercial execution, as evidenced by these growth rates that I just highlighted. To compound our belief behind this level of excitement ahead, is the fact that we have seen, and we continue to see, a substantial improvement in our end markets. This is not the same market growth profile that we used to have. Patient demand is strong, procedure volume is very strong, given a variety of reasons, and as the market leader in both knees and hips, being in better markets is just very exciting as we enter 2024. Back 5 years ago, when I joined the company, we used to think of for a WAMGR, Weighted Average Market Growth Rates, as being somewhere in the 3% range. And today, we peg our WAMGR as being very near, if not at 4%. And again, that's a meaningful increase, and we believe is sustainable. So we're not going back to the 3% days when it comes to market growth rates. So again, internal and external dynamics gives me, gives us confidence that the best is truly ahead. When you add to all of these variables, the fact that we have the strongest balance sheet in the history of the company, there is no doubt then that we can claim that our future is nothing short or truly right. So again, very pleased, very proud, and very confident. I'd like to thank our investors, as well for their support in 2023 and for their confidence in 2024 and beyond. We continue to take big strides forward, toward being a company with a very different growth profile from top to bottom, committing to an expectation to grow at least 100-200 basis points above market in revenue, with our EPS, with our earnings per share, growing faster than revenue, and our free cash flow dollars growing faster than EPS. The guidance that we are providing today for 2024 already reflect such a commitment to this type of financial discipline, and I'm very much looking forward to our Analyst Day on May 29th, in when we will provide additional details in terms of our, long range plan, which will illustrate that, this is not a one-year wonder, this is a, a multiyear commitment, and you will see then that Zimmer Biomet has truly entered our growth stage era, and we're no longer in turnaround mode. We're ready to deliver by being laser-focused on the 3 strategic imperatives that I highlighted during my very first, earnings call as CEO back in November. Three strategic imperatives that I continue to repeat over and over at every Zimmer Biomet meeting, and frankly, I will continue to repeat because those are the three drivers that we know are gonna drive our performance. Those being, number one, people and culture, number two, operational excellence, and number three, innovation and diversification. So let's talk about our 2024 commitments, and how different initiatives across these three strategic imperatives will drive our growth forward. First, in the area of people and culture, and again, I've explained this in the past what it means, it's about having the right people in the right roles within the right culture. We must make sure that we support team members to act as owners and operators of the business. This means decentralizing decision-making, driving agility, and empowering team members at every level, across every function around the world. We must become leaner, and we've got to be closer to the customer. Equally important, we must truly live in an environment of pay for performance, and this is something that has already kicked off in a very meaningful way in the fiscal year, in this fiscal year, 2024. An example of that is the fact that we're incentivizing free cash flow dollar generation or growth in a much more disciplined way across the enterprise, knowing that revenue is also the most durable driver of free cash flow performance. Incentives are also set for revenue growth to meaningfully drive compensation across our firm at every level. So again, we change the way we pay people in terms of growing revenue above market, and we change the way that we pay people, giving a larger percentage of compensation in adherence to the fact that we as a company need to grow free cash flow dollars at double-digit rates. In the second area of operational excellence, and again, this is about how we think about growing the business top to bottom. You can see already in today's update, in the press release, that we mean it. It is tough to restructure a company. It's certainly something that we don't take lightly. You read the press release. We had to do it. It's a tough choice, once again, but we needed to make operational changes to simplify our structure, to deliver greater efficiency, and to ensure that we're enhancing investments in the right areas of the business, again, closer to the customer. So again, not an easy thing to do, but something that we had to do and something that we have done. Beyond the restructuring, other initiatives in the area of operational excellence that are already in full motion are the new programs that we got in place, kicking off how to drastically reduce inventory levels at Zimmer Biomet. This will drive substantial improvement in our free cash flow dollar growth, while also reducing our days on hand, DOH, by 50 days or more, and will reduce our excess and obsolescence exposure, which is something that frankly, we've not done that well in previous years. Second thing we're doing is the rollout of a global initiative to drive new product launch excellence across the key new product introductions that we have in the year 2024. In simple terms, the seven or eight most meaningful product launches, let's make sure we have a cadence of operating mechanisms with proper governance to ensure that we're maximizing these product launches across each key geography. And then the third thing we're doing in operational excellence beyond the restructuring, is the integration of the pricing organization under the finance structure, reporting directly to Suky, our CFO, to ensure maximum governance and accountability across the enterprise. While we are pleased with the reduction in price erosion over the last two-three years, we believe there is much greater opportunity to drive even better and more durable pricing dynamics. So again, in the area of operational excellence, beyond the restructuring, it's about drastically reducing inventory levels to generate improved free cash flow, dollar growth. It's about governance beyond or behind the new product launches, and then thirdly, it's around doing better in the area of pricing dynamics. In the third, strategic imperative of innovation and diversification, we're gonna continue to invest in innovative R&D, in customer-centric R&D. We're gonna continue to fuel our pipeline with meaningful product launches. We're gonna continue to drive our vitality index, which has already expanded very meaningfully over the last three years, and we're gonna make sure that as we continue to launch new products, we also see margin expansion coming from these new products. I'm excited about where we are today. Our pipeline, the dollar value associated with our pipeline, is twice what it was at the end of 2018. As we enter 2024, we have very meaningful product launches, particularly in the hip area, in where we lost market share in the last two years, given the lack of products in key categories like surgical impactors, triple tapered stems, or hip navigation. So again, 2024 is the year in where, through very meaningful product launches, we will regain the momentum that we lost. Beyond hips, I'm excited about where we are in shoulder. Identity continues to generate great excitement. We will enter 2024 in full launch mode when it comes to Identity. We're excited about stemless shoulders entering the market, and yes, very excited about being first to market in the category of shoulder robotics, with a very highly differentiated offering in robotics for shoulders, that will apply for both anatomic and reverse surgeries. In the area of knees, we're in the early days of our cementless knee launch. In 2024, we seek to increase our penetration rates drastically. Here in the U.S., our penetration rate in cementless is not even in the 20% range, and we are committing to drive the penetration rate into the 50%-60% range at a very rapid pace. Again, more details to those plans at our Analyst Day, but rest assured that our knee penetration rate in the cementless category is not gonna stay in the teens or even the low 20s for long. Beyond cementless, we're excited about next-generation robotics in knee. We are excited about partial cementless knees, and we're excited about the fact that in 2024, we're gonna be entering the full launch for Persona IQ, the only smart knee in the world that fully integrates data, technology, and best-in-class implants in a way that nobody else is doing. In the category of SET, which is six different businesses, sports, foot and ankle, restorative therapies, trauma, extremities, and CMFT, craniomaxillofacial and thoracic, we are seeing great growth already, exiting 2023. The second semester of 2023, we grew SET by mid-single digit or above, and as we enter, 2024 and beyond, the expectation is that SET will continue to grow mid-single digit or above. And this is something that, as a company, we've not realized, ever since the merger in 2015, with exclusion of the post-COVID year, given comps. So really excited about the return on the multiple investments we made in SET, particularly in the areas of innovation and commercial execution. There's a great cadence of product launches in SET. I already mentioned some of those, and more to come when we do our Analyst Day in later in the spring. So excited about SET, excited about innovation as a whole. Our new product development pipeline is strong. We're gonna be launching over 40 different new products in the next 24 months or so. Most of them are gonna enable category leadership, establishing Zimmer Biomet as the leader or the second position in the category. And virtually, virtually all of them are gonna be in market spaces that are growing 4%+ or above. So I like the quantity, I like the quality, and I like the market growth profile in terms of where our innovation is going. I'm also particularly excited about the innovation plans that we have for the ASC here in the U.S., ASC site of care. We've made meaningful investments in innovation during all stages of the episode of care, what happens before surgery, what happens during surgery, and what happens after surgery. And relative to the ASC, in the intra op stage of the ASC, we are best-in-class when it comes to solving problems and delivering efficiency, best-in-class outcomes, and safety. So again, truly excited about our ASC strategy and where we're going relative to this site of care. Diversification of Zimmer Biomet's end markets will happen not just by innovation internally, but will happen through smart M&A, which will remain the number one category when it comes to capital allocation. With a best-in-class leverage ratio and with deep confidence in our free cash flow generating plans over the next few years, our strategy is to make a smart, smart M&A the top recipient of our capital. But at the same time, I just love the fact that we have the optionality to continue to do share buybacks, as we announced this morning, and perhaps at a more meaningful level. So the combination of a smart M&A and buybacks can coexist given the strong free cash flow dollar generation that we are seeing incoming in this regard. I'm energized by the very detailed and focused plans that the team has put in place, which I know that, upon their execution, will position Zimmer Biomet to deliver on the growth profile that we keep recommitting, and that is to grow above 100-200 basis points. So that's a minimum point of entry commitment of 5% in the year 2024, with earnings per share always growing faster than revenue, and free cash flow always growing faster than EPS. This is not a one-year commitment, this is a multi-year commitment, and again, I know based on the very detailed plans, we will get there. In closing, we are very excited about where we're at, the track record over the last two years, and most importantly, we're deeply excited in terms of where we're gonna go in 2024 and beyond. The team is ready. We are establishing the right trend, and we're gonna continue to drive flawless execution, delivering on our commitments. Along the way, we're gonna help patients, we're gonna create shareholder value, and we will live our mission of alleviating pain and improving the quality of life for people around the world. With that, I'll turn the call over to Suky. Thanks, and good morning, everyone. As Ivan mentioned, our fourth quarter results ended a successful year for Zimmer Biomet, with full-year constant currency revenue growing 7.5% and adjusted earnings growing more than 9.5% on a reported basis, while generating just under $1 billion in free cash flow. Inside of that, our business segments performed well for the year. With global knees constant currency growth of over 10%, hips growth of 5%, and SET growth of almost 4%, all while also expanding adjusted operating margin by almost 100 basis points, the second consecutive year of operating margin expansion in a challenging environment. Also, as previously guided, we closed the second half of 2023 with mid-single-digit revenue growth and levered earnings growth, a profile we expect to continue moving forward. Let's dive into the fourth quarter results. Unless otherwise noted, my statements will be about the fourth quarter of 2023 and how it compares to the same period in 2022, and my commentary will be on a constant currency and adjusted operating basis. Net sales in the fourth quarter were $1.94 billion, an increase of 6.3% on a reported basis and an increase of 6.1% on a constant currency basis. We had a selling day tailwind of about 100 basis points in the quarter. U.S. growth was 4.4%, and international growth was 8.7%. As expected, we saw a robust sequential step-up versus the third quarter across all regions. Global knees grew 5.6% in the quarter, with the U.S. growing 5.4% and international growing 5.8%. The knee business continues to be driven by our Persona product portfolio, combined with our ROSA Robotics platform, and we remain excited about the positive feedback around our recently launched cementless form factor for Persona OsseoTi. For the full year, global knees grew 10.2%. Global hips grew 3.6% in the quarter, with the U.S. growing 4% and international growing 3.2%. We are eager to accelerate performance of this segment with the addition of multiple new product offerings in 2024. For the full year, global hips grew 5.1%. Next, the SET category grew 6.4% in the quarter, with our key focus areas of sports, CMFT, and upper extremities all growing in the mid-single digit to low-double-digit range. The strong growth in these focus areas was partially offset by other subsegments within the category. For the full year, SET grew 3.8%, including a step-up to mid-single-digit growth in the second half of the year. Finally, our other category grew 15.9% in the quarter, driven by another strong quarter of global ROSA sales. Now moving to the P&L. In Q4, we reported GAAP diluted earnings per share of $2.01, compared to GAAP diluted loss per share of $0.62 in the prior year. The increase in GAAP results was driven by higher revenue, a goodwill impairment charge in 2022 that did not repeat, favorable one-time tax benefits in 2023, and a lower share count. The details around our financial performance can be found in today's press release. On an adjusted basis, we reported diluted earnings per share of $2.20, compared to $1.88 in the prior year, representing year-over-year reported growth of 17%. The step-up is driven by revenue growth, better gross margins, lower OpEx margin in tandem with a lower tax rate. Our adjusted gross margin was 72.5%, up 80 basis points from the prior year, driven by favorable mix, higher volumes, and lower royalties. For the full year, we came in slightly above expectations, representing 90 basis points of year-over-year expansion. Adjusted operating margin was 30.3%, up 200 basis points from the prior year. The year-over-year operating margin step-up was primarily driven by revenue leverage, better gross margin, and realized efficiencies across SG&A. For the full year, operating margin was slightly ahead of expectations at 28.2%, up 90 basis points year-over-year. Net interest and other adjusted non-operating expenses were $43 million in the quarter and $194 million for the full year, and our adjusted tax rate was 15.8%. The slightly more favorable tax rate was driven by discrete one-time items in the quarter, bringing our full-year tax rate to 16.3% and in line with overall expectations. Turning to cash and liquidity, we generated operating cash flows of $588 million, and free cash flow totaled $447 million, and we ended the year with cash and cash equivalents totaling $416 million. As Ivan mentioned earlier, we completed a $500 million share buyback program in early 2024, which is more than required to offset annual dilution. For the full year, we generated operating cash flow of just under $1.6 billion and free cash flow of $979 million. Our balance sheet remains strong, leaving us continued financial flexibility and strategic optionality as we move forward. Now, moving on to our financial outlook for 2024. Our outlook takes into account certain key assumptions, including pricing, which is expected to be about 100-150 basis points of erosion, but it's a continued step change improvement from historical trends. We expect to see continued strength in our end markets in tandem with new product introductions and continued improvement in product supply. Against that backdrop, we expect 2024 constant currency revenue growth of 5%-6%, including a foreign currency exchange headwind of approximately 50 basis points, translating to reported growth of 4.5%-5.5%. Adjusted diluted earnings per share in the range of $8-$8.15, representing reported growth of 6%-8%. Currency is expected to have about a $0.08 headwind on EPS based on recent rates, and the implementation of Pillar Two has a $0.18 or about a 250 basis points headwind on earnings per share growth for the year. This implies operating margin expansion of greater than 50 basis points at the EPS guidance midpoint when compared to 2023. We expect slightly lower year-over-year gross margins to be more than offset by efficiency and restructuring programs that were initiated in 2023. Net interest and other non-operating expenses are expected to be about $205 million. As previously discussed, our effective tax rate is expected to step up to 18% in conjunction with the implementation of Pillar Two. We expect to end the year with about 207 million shares outstanding, lower than 2023, due to the $500 million share buyback plan that I referenced earlier. Finally, we expect our free cash flow to be in the range of $1.05 billion-$1.1 billion, or growth of about 10% at the midpoint. As Ivan mentioned, we initiated a global restructuring program along with other cost savings initiatives in late 2023. These programs further streamline our organizational structure, shift select reporting lines, prioritize how we spend across the organization, and further evolve our operational footprint in order to simplify and maximize efficiency. This program is expected to result in total cash charges of about $125 million-$150 million over the next two years and deliver up to $200 million in run rate savings as we exit 2025, enabling us to invest in priority areas while driving margin expansion and earnings leverage despite a meaningful step-up in tax rate. In terms of cadence through the year, we expect constant currency revenue growth for the first half of the year to be at the lower end of the mid-single digits, while the second half will be at the higher end of mid-single digits. Also, quarterly results are expected to be choppy due to billing day impacts. Q1 will be about 150-200 basis point headwind. Q2 and Q3 will be 150 basis point tailwind in each quarter, and Q4 will be a 50 basis point tailwind. Full year impact will be immaterial or less than 50 basis point tailwind. 2024 gross margin is expected to step down slightly versus 2023 due to lower FX hedge gains and the realization of capitalized third-party manufacturing cost increases observed in the second half of 2023. From a cadence standpoint, gross margin will be higher in the first half of the year. Additionally, because of the timing of the restructuring program, we expect operating margin will be higher in the second half than in the first half, with Q4 being our high-water mark, followed by Q2. In summary, 2023 was another strong year for the company, and we expect to maintain that momentum into 2024 and beyond. With that, I'll turn the call back over to Keri for the Q&A. Thanks, Suky. Before we start the Q&A session, just a quick reminder to please limit yourself to a single question and one brief follow-up so that we can get through as many questions as possible during the call. With that, operator, may we have the first question, please? We'll go first to Larry Biegelsen with Wells Fargo. Good morning. Thanks for taking the question. Ivan, congratulations on a nice first year here as CEO. Yeah, I'd love to ask about the 2024 guidance. You know, just talk about the key assumptions for the 5%-6% constant currency growth in 2024. You know, what you're assuming for the recon market. And Ivan, talk about your guidance philosophy. You know, have you incorporated any conservatism in the guidance? You know, what would get you to the high end of the range? And just quickly, Suky, on the buyback, the $500 million, does that imply that it's hard to find good M&A targets? You know, how should we interpret that? Thanks for taking the question. Hey, thank you, Larry. Always great to hear from you. So I'll take the first two parts, and then, Suky can talk about the rest. So embedded in the guidance for 2024, which we're very confident on the 5%-6%, is macro and micro reasons. So from a macro perspective, by now, you heard from most of our peers, the markets are very healthy. We believe beyond the backlog, the markets are gonna continue to be healthy. You got better patient demographics, younger patients. You got the dynamic of cases moving into an ASC. You got more days of surgery in the U.S., where it's not just two days, you're seeing three days. You're seeing shorter, better rehabilitation processes. I can go on and on, but the markets are very healthy. And then from a micro perspective, we got a cadence of new product launches. Most of them are gonna be very meaningful as you hit the second semester of the year. We got three new product launches in hips early in 2024, which again, will be more material later in the year. We're launching ROSA shoulder. We got a cadence of new product introductions in SET, and we're gonna continue to increase our penetration in cementless and ROSA. So again, the combination of new product launches, great commercial execution, amplified by the healthier market dynamics, gives us confidence on a minimum 5% and a range of 5%-6%.... Relative to my philosophy when it goes to guidance, it's very basic. We make commitments, and we don't miss them. So we study the different dynamics, we study where we're at. We know that operationally we're in a better place. We don't have the headwinds that we had in 2023 around supply and whatnot. So my guidance represents or exemplifies my philosophy of making commitments and delivering on those commitments. I'm not gonna, I'm not gonna comment today on whether there is opportunities to beat on race for the year. I'll just leave it at that. My philosophy is to make commitments and deliver commitments, and these are very well-studied commitments. So with that, I'll pass it on to Suky for the, your second question. Yeah. Hey, good morning, Larry. Thanks for the question. I'd say, first of all, the $500 million share buyback, I think, demonstrates our confidence and our outlook in the business. The short answer to your question, does this imply some deterioration in M&A targets? I would say absolutely not. I think based on where the company is from a firepower perspective, we feel that we've got the balance sheet strength and power, as well as the forward-looking results to really do both. We still will prioritize smart M&A, as Ivan has talked about. We still favor tuck-in acquisitions to mid-size acquisitions. But even in the backdrop of doing a heightened level of share buyback, we still see very significant M&A firepower to execute that strategy as well. So, short answer, again, is no, we don't see this as a, any type of deterioration in targets. All right. Thanks for taking the question. Thanks, Larry. Yeah, thanks so much. Katie, can we go to the next question in the queue? We'll go next to Matthew O'Brien with Piper Sandler. Morning. Thanks for taking the questions. Just maybe start a little bit, Ivan or Suky, on the knee performance in the quarter. It was a little bit below what we were expecting, still better than one of your competitors, but below another one. On a two-year stack basis, it's not quite 50% of sales, but close to it. So I would anticipate that that's gonna need to see very good performance here in 2024 in order to hit the guidance range, which I think is maybe being questioned a little bit this morning. So what is it there specifically between cementless, between robotic, between Persona IQ, that gives you the confidence in the knee franchise, outside of the macro environment here in 2024? And then I do have a quick follow-up. Thanks, Matt. So, you know, performance relative to the quarter, we're very pleased with the quarter. We perform in line with our expectations for knees and frankly, for the entire business. And for the year, it was a solid year, with our knees growing double-digit and the entire business growing at 7.5 with nice CPS expansion. We really don't pay acute attention to what happens to one quarter. I know that is your job to do that, but we just don't. There's 60-62 working days in a quarter. There is all kinds of volatility. Then you add comps. So when it comes to performance, we look to 8-12 quarters. And, if you do run the analysis, 8-12 quarters, you're talking about knees, but take a look at hip, hips and whatnot, the performance is there. Speaking of, volatility in, in Q4, for knees, we did see in the U.S., some timing of orders, that impacted some of our largest IDNs here. We also had, let's remember, some tougher comps, versus Q4 of 2022, particularly in the U.S., where we were at, 500 basis points ahead of our, our strongest competitors in knees. And then again, when you look at Q3, that's, that's the quarter where both in knees and hips, we outperformed all competitors in the U.S. So again, given all this volatility, all these ups and downs, we just don't pay any attention to one particular quarter. We look acutely at the trends, and the trends do show that two-three years later, we continue to be the number one player in knees, and we continue to gain market share. Relative to the second part of your question, around 2024, what gives us confidence around the guidance is the fact that we continue to see increases in cementless penetration. We continue to see increases in ROSA penetration. We have solved the backorder challenge that we had in knees, which was a headwind for the many periods in 2023, and we've seen just great commercial execution in the ASC. So we're very confident about where we are in knees, and we are very confident around the acceleration in knees going into 2024. Appreciate that. Follow-up is just on, there's a lot of good things coming this year as far as new products, et cetera, but you know, you're trying to lower inventory levels significantly. 50 days is a ton in this space. And then, you know, the restructuring as well, you know, are those, how have you factored in those potential headwinds in 2024 and even into 2025, in terms of, you know, potentially some lost revenues or dislocation you may suffer as a result? Thank you. Thank you. Well, let me just begin with the with a simple answer. Anything and everything we do in restructuring-wise and inventory management-wise is embedded in the guidance we've given. So that, that's part of that. In terms of inventory management or inventory reductions, we're gonna be bold but not reckless. So we're not reducing inventories in the key categories. We actually are making sure that inventory is where it needs to be for those key brands, whether it's Persona, whether it's the key components in hip, whether it's the key components in SET. This is a lot of the leftover from the integration that we didn't do. So the inventory reduction is gonna be in non-critical areas, frankly, in non-critical countries. So again, we're doing this thoughtfully. In terms of the restructuring, the reductions that we announced this morning, these are happening in back office. I will tell you, virtually all reductions are non-customer facing. And again, the changes we make in inventory and people are, embedded in the guidance that we've given. Thanks, Matt. Katie, can we go to the next question in the queue, please? We'll go next to Robbie Marcus with J.P. Morgan. Oh, great. Thanks for taking the questions. I wanted to ask on SET and other, those were the two line items that beat versus the street. Was just hoping you could break out some of the trends there. What did well, what, you know, might have underperformed, if anything, and how we think about those different line items as part of the guide in 2024, and how much of the, you know, the strong growth is coming from that versus hips and knees? Thanks. Hey, thank you, Robbie. So, solid, solid quarter for SET, frankly, solid last semester of 2023 for SET, growing around mid-single digit, around 5%, and committing to growing mid-single digit or above in 2024. The key drivers are the usual suspects. We continue to do really well with upper extremities, growing upper single digit, double digit in, in most geographies. That's new product launches, that's focus in the ASC, that's stable supply, just great commercial execution. Our CMFT business, craniomaxillofacial thoracic, continues to do really well. Recall that we did two, three acquisitions over the last 3 years, and those continue to do really well. And again, CMFT is a business where we see upper single digit, double digit. We finally stabilize our restorative therapies business here in the U.S. Recall that we had some reimbursement challenges there, and those are behind. So you're seeing the biologics restorative therapy business growing at a nice clip now. And then sports med, we've done some acquisitions. We have had some challenges, but that continues to perform in line with expectations. So I will tell you, Robbie, out of the six businesses within the category, four are going really well. Trauma, foot, and ankle, we got some work to do. We got some decisions, some strategic considerations to make. As we enter 2024, mid-single digit is the point of entry. This has to be the year where we see sales growing mid-single digit. Frankly, in some geographies, I think it's gonna be higher than that. We got the innovation, we got the investments in terms of dedicated infrastructure and specialization, heavy emphasis here in the U.S. in the ASC environment. So again, full confidence in the growth profile that we're gonna see moving forward. Great, thanks. Maybe just a quick follow-up for Suky on the guidance and a clarification. You know, the lower end of mid-single digit in the first half and then higher end second half, is that inclusive or exclusive of the selling day benefit? Thanks. That is, that is inclusive of the selling day benefit, Robbie. Okay, thanks a lot. Yep. Thanks, Robbie. Katie, can we go to the next question in the queue, please? We'll go next to Joanne Wuensch with Citi. Excuse me. Good morning, and thank you for taking the questions. Putting them both right up front. I'm curious why gross margins are expected to be somewhat down year-over-year, what the dynamics are for that. And then my second question has to do with cementless. Can you walk us through the math of what you think moving to 50%-60% of your knees being cemented or cementless, excuse me, either way, it's 50%, what the benefit is of that? Thank you. Yeah. Hey, Joanne, it's Suky. I'll start with the gross margin one and then toss it over to Ivan on cementless. Overall, we had a really good year on gross margin in 2023, up 90 basis points year-over-year. Drivers of that are really around, we had some FX hedge gains, which we had talked about at length throughout 2023, as well as improved mix and better pricing. Still pricing erosive year-over-year, but better than we expected. Overall, generated a pretty nice profile for 2023. We had previously communicated that we had thought that gross margins might dip down slightly into 2024, primarily driven by the loss of those FX hedge gains. They won't repeat at the same level in 2024 as they did in 2023. But also we're seeing in the capitalization of some increased costs in the back end of 2023 around third-party manufacturing, which will feather into the P&L towards the back end of 2024. Despite those two headwinds, we're able to offset a large component of that. But overall, we do expect to see gross margins down just slightly versus 2023 in the backdrop of those headwinds. Now, having said that, if you take the midpoint of our EPS guidance, I think that would back you into an implied operating margin of about 29%, which represents about an 80 basis points increase year-over-year. And so while gross margin may step down slightly, you are seeing operating margins increase as we drive better efficiency and revenue growth through the company. So, again, there are a lot of puts and calls throughout the, the P&L. The great thing is we've got optionality where we see headwinds in one area, we can make that up, with efficiency and tailwinds in other areas. I think you've seen that now, once we deliver 2024, three years in a row, which, in a challenging environment, in all three years, we're able to continue to grow, operating margin and levered earnings. Thanks for the question. Joanne, relative to your question on cementless, I'll give you as much as I can. Starting with the basic pricing dynamics, we see with cementless Persona OsseoTi, we see an ASP uplift of around 10%-15%, frankly, closer to the 15% than the 10. Around 40%-50% of the time, we combo the cementless knee with robotics, with ROSA, and that drives additional uplift in our revenue in the form of disposables and whatnot. That's a great dynamic we're seeing, particularly in the ASC. Our penetration today on cementless would exit in 2023, somewhat near 18%-20%, with bold expectations to get into the 50%-60% range. I'm not gonna give you a commitment today, but at our analyst day, you will see the long-range plans and some of the trending when it comes to getting to 60%. We believe that there's gonna be a fairly quick uplift, given the fact that the market is already being developed by some of the work that our peers have done. So again, you should not expect that getting to 50%-60% is gonna be a long journey. All of these dynamics are in the U.S. We're launching in 2024 in other markets outside of the U.S., and I will disclose the pricing dynamics when the time is right, but excited about the launch in Japan in 2024, another key market. Those are the dynamics here when it comes to cementless. Thank you very much. Thanks, Joanne. Thanks. Yeah, absolutely. Katie, can we go to the next question in the queue? We'll go next to Ryan Zimmerman with BTIG. Thank you. Thanks for taking the questions. Following up maybe on Larry's questions about guidance. You know, you talked about the WAMGR being at 4% and, you know, clearly we're in this stronger market environment. So as I think about the components of guidance, you know, with pricing as a headwind of 100-150 basis points, you know, it suggests product mix is gonna contribute 200-300 basis points. I just wanna see, one, if that's how you're thinking about it, or if you're thinking about the market contribution to guidance at a higher rate in 2024 and maybe potentially the product mix contribution lower. Maybe just help us flesh a little of that out. Yeah, I'll try to simplify it, and Suky, by all means, elaborate. But we believe the market is around 4%, all in. And again, we model this in different ways, but let's call it 4%. I'm not gonna quantify the new product contribution, but pretty significant. You know, we have 40 new products getting launched in the next two years, and these are meaningful products. I mentioned we got 3 large hip products that are gonna get launched early in 2024. We got ROSA Shoulder, which we believe is gonna be meaningful in the year 2024, given the fact that it's not a late-year launch. We got a lot of products in the same category. So again, you should think of new product introductions as a very meaningful contributor of the guidance. Add to that the fact that we don't have the headwinds that we had in 2023 when it comes to supply. I would say between number one and number two, we got confidence on, on where we're going. Beyond that, we don't see a headwind when it comes to the shift to the ASC. We actually see that as a tailwind. We're excited about some of the dynamics we're hearing about when it comes to the movement of shoulders into the ASC. That's gonna be a contributor. And as I mentioned to Joanne, the uplift that we see on cementless and ROSA, which are products that we launched two years ago but are now gonna get accelerator, are the main contributors to the confidence in the guidance. I don't know, Suky, if you have anything else here. I think that's well said. You know, one of the key points in there, Ryan, is, as Ivan said, that pricing erosion is assumed in that 4% WAMGR. Right. Okay. That's helpful from both of you. And then just to kind of dovetail on Joanne's question around margins. You talked about gross margins, Suky. You know, clearly operating margins are doing, you know, more heavy lifting this year. And so, you know, how much from the restructuring program is benefiting, is driving some of that operating margin expansion? You know, how much are you assuming for top-line leverage in that 80 basis points or so of expansion? And, yeah, that's about it. Thanks for taking the question. Yeah. So the key driver with gross margin, you know, being sort of flattened down slightly, it really is coming from revenue leverage and operating margin. Now, you could expect overall OpEx as a percentage of sales to drop by about 100 basis points, give or take, and that's even with R&D increasing year-over-year. So the efficiency and the restructuring programs in the near term are really focused on SG&A. However, inside of that full program, we are working on things inside COGS to help maintain and keep gross margins stable over time. Those are gonna be a little bit more midterm in nature in how they get realized, things like SKU rationalization, site optimization, inventory reductions, and corresponding E&O reductions. Those are all things that have a little bit longer lead time, naturally, as you can expect, as you're moving your supply chain around and not wanting to disrupt the ability to supply demand. But they are definitely gonna take more of a prominence as we move forward beyond 2024. But for 2024, the way you characterize it is right. It's primarily revenue driven and SG&A. Thank you. Yep. Thanks for the questions, Ryan. Katie, can we go to the next question in the queue? We'll go next to Travis Steed with Bank of America. Hey, thanks for taking the question. I wanted to ask about the $200 million in cost savings that you guys called out this year. Curious if the plan is for that to kind of drop through to the bottom line, or are you gonna reinvest that? And what does that mean for kind of margins beyond this year and longer term? Yeah. So the way we characterized it was that it would be $200 million run rate as we exit 2025. In 2024, we expect that to be about $100 million, or about half of the run rate savings that we're predicting over a two-year period. You know, we're dropping a lot of that to the bottom line, as you can see, with our implied guidance at the midpoint would suggest about an 80 basis point increase in operating margins. So we're actually taking a good portion of that, dropping it to the bottom. But we're also reinvesting a pretty significant portion back into our priority areas, ensuring that we've got the appropriate amount of sets and instruments for cementless uptake, as well as Persona uptake through ROSA. Ensuring that we've got the right level of commercialization and execution in our new ROSA Shoulder launch. Ensuring and ramping up commercialization efforts in our hip franchise around the product launches that we have for hip. So it really is a combination of both, and that's the great thing about this efficiency program. It enables us to reinvest back into our priority areas while dropping pretty significant, substantial margin expansion now for the third year in a row. Yep, helpful. And on the new comp plan that you called out, curious if that's gonna have an impact on margins or it's just not material enough to impact the margins? And then on M&A, just curious if there's been any change on the two years of EPS dilution from M&A. Yeah. On the comp plan, it's not really gonna have any material impact, and it's embedded in our guidance. I think it's more about a mix shift of how that comp plan is designed, right? Whereas previously, it was more focused and biased towards revenue growth. I think now what we're trying to do is get a greater balance between top and bottom line, all the way through cash flow. So it's really a mix shift in how we think about comp versus an increase in comp. And again, all of that is embedded into our guidance for 2024. Relative to the dilution, you know, we still think about two years from a dilution standpoint is reasonable. Of course, we'd like it to be inside of that. But just given where valuations are today, as well as the cost of debt, which hopefully is gonna come down over time, that's kind of like where we see one of our guardrails. Very helpful. Thanks a lot. Thank you. Thanks, Travis. Katie, can we go to the next question in the queue, please? We'll go next to Jeff Johnson with Baird. Thank you. Good morning, guys. Congratulations on the quarter. Ivan, maybe you mentioned in passing that shoulder for ROSA is not gonna be a late year 2024 launch. Just could you dial in that timing any more? And I'd be interested in hearing about, you know, kind of your view on the uptake of ROSA shoulder. You know, obviously, shoulder surgeries, replacements, technically more challenging. I think some questions about what role robots can initially play in those procedures. So just how does that help the uptake of ROSA? And I don't think I heard a ROSA placement number. I think sometimes you give it on kind of an annualized basis. Any updates on kind of exiting 2023, where ROSA placements were? Thanks. Hey, thank you, Jeff. So, I gotta be careful what I say about timelines for the ROSA Shoulder. I'll just say that I'm very confident that this is not a late 2024 launch. And as I mentioned, I think it's gonna be. I think it's gonna be very meaningful. So beyond being first to market, it's a high-quality product. It's gonna be applicable for both reverse and anatomic surgeries. It's gonna simplify a very complex procedure. It's gonna be fully integrated with the rest of the shoulder ZBH ecosystem. I believe it's gonna get great traction in an ASC environment where speed and accuracy matters. And, we're gonna hopefully demo this next week at the Academy meeting. Whether it is ready or not, it will be demoed there at the Academy meeting. Relative to your second question on the ROSA placements and the numbers, you should expect us to do around 300 installations per year. You should expect us to drive penetration rates of minimum 5%-10%, at least, per year. You should expect that one third of these ROSA, overall ROSA installations are gonna go into an ASC environment. And as I mentioned earlier to Joanne, you should expect that in a large percentage of cases, these ROSA installations are gonna pull cementless. So again, great momentum with ROSA, and I'm very excited about where we are with shoulder. Thank you. And maybe as a follow-up, just as I think about the 5%-6% constant currency guidance and the 100-200 basis points above market, it seems like market is settling in at a good rate. If I like think about gross margin, obviously some of the hedge settlements should normalize as you get into 2025, E&O coming down, pricing getting less bad. So it sounds like gross margin, at least not a big, big headwind going forward. And then, of course, you've got the cost savings initiatives here on the SG&A side. You know, if I roll all that together, including the improving balance sheet and cash flow and a commitment to some share buyback, it feels like, you know, 10%-10.5% EPS growth, which is kind of the midpoint of your guidance this year, if it weren't for tax rate and FX headwinds, that sounds like it could be a sustainable kind of target. I'm sure you don't want to lay out an LRP here out of your Analyst Day, but is there anything in my thinking there that would say 10%, plus or minus, is not a reasonable kind of longer-term EPS growth rate to be thinking about? Thank you. Yeah. Hey, Jeff, I think that was actually a really good articulation and summarization of what we're trying to get across today. In fact, if you look at our guidance today, on reported EPS, it would suggest 6%-8%, at both ends of the range. That's after overcoming about 400 basis points of headwind between non-operational things like interest expense, FX, and tax rate, right? So again, that's about a 400 basis point drag that's embedded in that 6%-8%. The way you're thinking about it, could we be in that, you know, low double digit ZIP code, on EPS in a sustainable, durable way? I think yes. Thank you. Thanks for the questions, Jeff. Katie, do you have another question in the queue? We'll go next to Richard Newitter with Truist Securities. Hi. Thanks for taking the questions. Just with AAOS next week, I was wondering, anything that we should be on the lookout for and, with respect to Canary? Or Persona IQ rather, and data presentations. I think you had also mentioned on a prior call, you were expecting a GLP-1 kind of data analysis, possibly at AAOS. And then I have a follow-up. So the answer is yes to both, Richard. So we will have some data points on Persona IQ, and we'll have some data on GLP-1s. On Persona IQ, we moved from limited market release in 2023 to a full market release in 2024. We got the value proposition finalized. We got over two billion data points. We understand this is a product that is gonna enable clinicians to intervene when needed. We got data points on how this product will reduce overall complexity in the episodic care. How we can, by intervening soon, reduce costs, especially post-surgery, when it can be pretty taxing. We're done with reimbursement. We spoke about the NTAP, new technology add-on payment, which we got back in October, so that's in full launch mode. We will submit. Larry always asks me this question, we will submit for a TPT coming some point in the spring, summer. We're gonna bring some data around some of the experiences that we've seen with Persona IQ at the Cleveland Clinic, HSS, and other facilities. So excited in terms of where we are with Persona IQ. More to come at the Academy. Then for GLP-1s, yeah, we're gonna be sharing some of the data we've done in conjunction with the Academy. What I will tell you is that so far, everything we've seen with GLP-1s is that it remains a tailwind. We're actually tracking the number of patients that are using a GLP-1 pre-surgery, and that number is in the 20%-30%. So by all means, this is not a headwind. And, you know, I'm glad that that conversation is being muted. Great. Then, just to piggyback off of Jeff's question, you know, even with potential earnings dilution, if, if you know, if you're potentially gonna be in a low double-digit or a 10+ earnings growth range, and, and, Ivan, given your commitment to growing earnings faster than the top line, where it sounds like 5% is kind of a sustainable floor, given your end market and your WAMGR. It sounds like no matter what, even with dilution over a 1.5-2-year period, you're, you're, you feel confident, or we should feel confident in a high single-digit earnings growth rate at worst. Is that also a reasonable assumption based on all the different commitments and commentary that you provided? Well, you know, I think, I think what you're asking is, can you still sustain that in a world where you do a sizable M&A transaction? If, if I've gotten that correct. That's really difficult to tell, right? Because no, no, no two deals are created equal. It's very situational, and so I, I don't wanna get out there front-footed to kind of hypothesize theoretically what could happen to EPS inside of a, of a sort of, you know, make-believe deal. So, I, I think that what you should take away is that from an underlying perspective, at 5%-6% organic growth with the levers that we have operationally, but also with the strength of our balance sheet, organically, that we can, we can deliver that attractive earnings per share profile. Okay, thank you. Thanks, Rich. Katie, I think we have time for one more question, if there's one in the queue. We'll go next to Jason Bedford with Raymond James. Mr. Bedford, your line is open. Please go ahead. Please check your mute function. Oh, sorry, I was up. Yeah, sorry about that. I'll be quick. On the supply challenges that you incurred in 2023, can you just remind me, what was the impact of these challenges on the P&L last year? Meaning, is there a way to quantify the impact on revenue? Yeah. Hey, Jason, it's Suky. It's a bit more to try and say exactly how, you know, days on backorder really impact sales. Because one, obviously, you have an impact on actual cases, but the more meaningful impact is the ability for our sales rep to go out there and actually hunt for new business, right? They're gonna be a little bit hesitant to go shift and make conversions if they don't feel like they can supply. So that's actually probably the bigger impact. But trying to frame that in percentage points is very difficult to do. The way I look at it is a tailwind from last year. We believe it's part of the. Sorry, it was a headwind for last year. We believe it's part of the tailwinds that's gonna help give us confidence in delivering that 5%-6% organic growth for this year. We, we have some internal data points that we don't share. What, what I will tell you, Jason, is that, new product launches, we had to do limited market releases instead of, full market releases. Persona OsseoTi is an example. Conversion, as Suky mentioned, we had to prioritize our friends and family customers, versus, converting accounts. And then the third, headwind of supply from a revenue perspective, we couldn't, embark on, global expansion of these new product launches. So the example that I used earlier around Japan, second-largest market in the world, we could have done things differently. We could have been another market. So it is sizable, and it is behind us. Okay, that, that's helpful. Maybe just along a similar vein. I think you talked about a 50 basis point impact to revenue growth in the second half from Russia. Is Russia a net tailwind as we look to 2024? It is. I would say it's less than 50 basis points, but given that we now have all the licenses secured we need to operate, that will be a tailwind. Probably most pronounced in the third quarter, because that's when we saw the biggest impact in 2023. Thanks for the questions, Jason. Thank you. I think we're wrapped up with the queue and just hitting 9:30, so I'll turn it over to Ivan for some closing remarks. Sure. Thanks, Keri. I'll keep it short. I know we gotta get going here. So a minute or less. I wanna end the way that I started the call by thanking the team members, the almost 20,000 team members here at Zimmer Biomet, who are doing a remarkable job in executing the plans that we lay forward. So grew 7.5% constant currency in 2023, with a nice EPS expansion of 200 basis points. That's after growing 6.6% in 2022, and now we're committing to at least 5% revenue growth, 5.5 midpoint, with nice EPS expansion and double-digit growth in free cash flow. So very proud of the work that team members are doing, and we're very excited about 2024. We have moved from remediation to innovation. I'm excited about the pipeline of products. I'm excited about the financial profile that we're committing to, of growing EPS faster than revenue and free cash flow faster than EPS. So far during the year, everything that we're seeing gives us confident or confidence that it's gonna be a very solid year for Zimmer Biomet. Thank you for your attention this morning, and thank you, team members at Zimmer Biomet. Thank you. For participating in today's conference call, you may now disconnect.