Zimmer Holdings Earnings Call Insights: Target EPS Growth and the Surgical Portfolio

Zimmer Holdings Inc (NYSE:ZMH) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

Target EPS Growth

Derrick Sung – Sanford Bernstein: I just wanted to start with guidance here, you talked about previously, EPS growth in the 8% to 12% range is kind of something sustainable, sustainable target for you. Your guidance for next year I think gets us to kind of 6.5% to 10% range. Can you just talk about sort of where the difference between so that aspirational goal and what you are setting for next year and how you see that sort of increasing to your goal?

James T. Crines – EVP, Finance and CFO: We have also said Derrick all along that, 2013 did not provide the same kind of opportunity for operating leverage as other years since as you very well know, we are now in a position in 2013 to have to absorb the medical device exercise tax. We’ve done that and I would reflect – I would focus on the fact that midpoint of that range is certainly well within the aspirational targets that we discussed and I’d also reflect on the fact that, when you look at our guidance particularly when you look at the detailed guidance that provided on the various operating expense line in terms of what’s implied in operating profit growth. We are still driving leverage in 2013. As a result of the progress that we are making on the transformational agenda and behind the anticipated growth, we look to achieve with launch of all these new products that David mentioned.

Derrick Sung – Sanford Bernstein: On coming to the hip and knee markets, it looks like you did a bit of an acceleration in your Americas knee sales consistent with that we’ve seen from some of the other companies that have reported in the US or in Americas your Hip sales kind of stayed flat or I think we saw a bit of an acceleration than the other larger competitors, so I was wondering if you could comment, first kind of broadly on how you’re seeing the market dynamics in Hips and Knees in full this quarter, in particular, there has been some questions around, are we seeing bit of a pull forward in procedures in Q4, as a result of some of the concerns around fiscal cliff et cetera by patient? Then in particular, then, could you comment on your own performance relative to your competitor and maybe the lack of acceleration that you are seeing in Hips and maybe talk about what’s driving that improvement in your Knee sales?