{ "docId": "019dd923-622c-750b-8b99-38d956541145", "docSlug": "a8618aad4c6b", "documentTitle": "Stryker Corp. (SYK)", "authorId": "54_Spruce_Point_Capital", "authorName": "Ben Axler", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2022-04-06 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 52, "pageCount": 195, "prevPage": 51, "nextPage": 53, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 14, "notes": "Uses a direct quote comparison to highlight management's lack of specificity and subsequent failure to improve margins.", "elementsJson": [ "headline_text", "callout_box", "comparison_table", "footnote" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b99-38d956541145/52", "deckHref": "/decks/019dd923-622c-750b-8b99-38d956541145", "deckJsonHref": "/decks/019dd923-622c-750b-8b99-38d956541145.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b99-38d956541145#slide-52", "components": [ { "bbox": { "h": 0.12, "w": 0.92, "x": 0.07, "y": 0.0017 }, "kind": "callout", "text": "Stryker has talked about cost transformation opportunities for a long time, and stepped up its big talk in 2016 when CFO Boehnlein was appointed. We believe management has always been dodgy about committing to specifics, though a core part of the game plan was to implement a new ERP system. We observe that since 2016, Stryker's SG&A margin is largely unchanged.", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "08d5e08f-60bb-4b02-9d6e-bacae5d58aea", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "callout", "text": "We observe that since 2016, Stryker's SG&A margin is largely unchanged.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-25b1-715b-8bda-9b2c236c8717", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "SG&A margin: 37.6%", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd953-25b1-715b-8bda-a0502bdde927", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.83, "x": 0.16, "y": 0.0043 }, "kind": "quote", "text": "I have a new CFO we named earlier this year, and he's -- we're working through our plans. And at this stage we're not really ready to sort of throw out a number. What I'm telling you is each year I have -- the cost transformation that we have underway, with moving from 41 different ERP systems to 1 ERP system, having indirect procurement, rationalizing some of our products, closing some of our factories, all of this activity that we have underway will deliver. That gives us the confidence that we can year after year deliver leveraged earnings.", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3421baa2-9b1d-4406-af55-5044cb457077", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.83, "x": 0.16, "y": 0.003 }, "kind": "quote", "text": "I'm going to come back to the number you're not going to give in a second, but before I do that, this topic of restructuring, most of your company, you've hinted at this notion of there's cost inside Stryker, largely SG&A cost that can come out, but you've been sort of hesitant to give us that number. Why not come out and say, \"We have a $500 million cost plan, it's got a 3-year term, thank you very much, this is what you're going to get?\"", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "d7520349-be97-4839-a673-ae89992992e2", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "I'm going to come back to the number you're not going to give in a second, but before I do that, this topic of restructuring, most of your company, you've hinted at this notion of there's cost inside Stryker, largely SG&A cost that can come out, but you've been sort of hesitant to give us that number. Why not come out and say, \"We have a $500 million cost plan, it's got a 3-year term, thank you very much, this is what you're going to get?\" — Morgan Stanley Analyst Lewis, Sept 2016. \"I have a new CFO we named earlier this year, and he's -- we're working through our plans. And at this stage we're not really ready to sort of throw out a number. What I'm telling you is each year I have -- the cost transformation that we have underway, with moving from 41 different ERP systems to 1 ERP system, having indirect procurement, rationalizing some of our products, closing some of our factories, all of this activity that we have underway will deliver. That gives us the confidence that we can year after year deliver leveraged earnings.\" — CEO Lobo, MS Conf, Sept 2016.", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-25b1-715b-8bda-9fd865fd31b0", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.7, "x": 0.16, "y": 0.0095 }, "kind": "source-note", "text": "1) We estimate 2.0% - 3.0% (2016) and 2.5% - 3.5% (2021) of revenue are shipping and handling costs. We reclassify these costs to SG&A since most of Stryker's largest peers report this way", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3029f18e-b651-4629-ae46-218447befc01", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.25, "w": 0.83, "x": 0.16, "y": 0.0063 }, "kind": "table", "text": "Spruce Point Estimated SG&A Margin: 2016 vs. Today", "attrs": null, "subkind": "data", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "17dedf62-9a0f-4805-a3a9-96a01ce05548", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.65, "x": 0.28, "y": 0.03 }, "kind": "title", "text": "SG&A Bloat And Stryker's Big Talk of Cost Transformation Plans", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "8e4dd92e-178c-4ca3-9a20-b6de18fef1c3", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "ceo-quote-contradiction", "slug": null, "matchId": "090455e4-852f-477b-8fbd-9e56d6f08f61", "evidence": "Contrasting 2016 analyst question with CEO response to highlight lack of progress.", "confidence": 0.9 } ], "arcBeats": [ { "to": 60, "from": 41, "beatId": "ef5ec403-e508-48f5-824a-a6a4bebc6f34", "arcName": "Overcoming the Monster", "arcSlug": "overcoming-monster", "beatName": "Climax", "beatSlug": "mountain-climax", "evidence": "The document reaches a climax with a detailed analysis of Stryker's financial performance and management issues.", "position": 3, "confidence": 0.8, "parentBeatName": "Turn", "parentBeatSlug": "turn" } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }