{ "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": 60, "pageCount": 195, "prevPage": 59, "nextPage": 61, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "dense", "nDataPoints": 0, "notes": "Uses a 'villain' critique style to highlight management inconsistency.", "elementsJson": [ "headline_text", "paragraph", "quote_block", "footnote" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b99-38d956541145/60", "deckHref": "/decks/019dd923-622c-750b-8b99-38d956541145", "deckJsonHref": "/decks/019dd923-622c-750b-8b99-38d956541145.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b99-38d956541145#slide-60", "components": [ { "bbox": { "h": 0.12, "w": 0.86, "x": 0.07, "y": 0.16 }, "kind": "callout", "text": "Spruce Point doesn't believe the narrative that Stryker is a disciplined and successful capital allocator towards acquisitions. We believe it miserably failed in its objective to unify its ERP systems under 1 platform. Even worse, it blamed COVID-19 as an excuse for project abandonment.", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "8812b444-16e9-4ec1-8856-b8ded5640bc4", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "callout", "text": "Spruce Point doesn't believe the narrative that Stryker is a disciplined and successful capital allocator towards acquisitions. We believe it miserably failed in its objective to unify its ERP systems under 1 platform.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-25b1-715b-8bdb-9aec3fd3fe13", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "\"Think, first off, on ERP, we are executing our program. We're now live with sort of 3 of our entities on our global SAP platform, corporate, CMF and Instruments. We have an active rollout plan for all of our divisions. And honestly, it's 2 to 3 a year, so that will roll out over the next couple of years here before we really start to feel that the platform is spread enough across the company that will drive significant efficiencies.\" — CFO Boehnlein, Q3 2019 Earnings Call. \"Yes. So certainly, we've delivered the 30 to 50, but the underlying performance has been better than that, as you know, because we -- our acquisitions have had dilution. So underlying op margin has been expanding more sort of the 70, 80 bps range. And we really are just started on our -- on the big heavy lifting margin expansion. The way we've been getting it is through indirect procurement. It's been through I'd call it sort of hustle and sort of old-fashioned cost reduction. The bigger rocks, we haven't moved those yet and that has to do with the plant network. That has to do with the ERP. We've gone live with 3 of our divisions right now, but we still have a lot more to do, and frankly, globally to move to one SAP system. We had a huge implementation that occurred in July this year, which went very well. So we're really excited that we do have the right platform of ERP. We've been through some big integrations. Now it's just a question of rolling them out. That will take us 2 to 3 years to move to one ERP system.\" — CEO Lobo, MS Conf, Sept 10, 2019. \"Impairment charges in the six months 2021 were not significant. In the second quarter of 2020, due to the significant negative impact the COVID-19 pandemic had on our operations and financial results, we suspended certain in-process investments resulting in charges of $189 to impair certain long-lived assets (primarily the portion of our investment in a new global ERP system that was in-process of being developed for future deployment) and product line and other exit costs. These charges were included in cost of sales and selling, general and administrative expenses.\" — Q2 2020 10-Q.", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-25b1-715b-8bdb-9debe19bc265", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.65, "w": 0.96, "x": 0.02, "y": 0.29 }, "kind": "table", "text": "Comparison of 2019 management statements vs 2020 10-Q disclosure regarding ERP project status.", "attrs": null, "subkind": "data", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "1b50b0d0-2c73-4dac-a6fc-206987f3cc11", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.35, "x": 0.305, "y": 0.05 }, "kind": "title", "text": "Abandoning The ERP", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "0aad6a6f-5535-4363-ad04-32119c14d734", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "ceo-quote-contradiction", "slug": null, "matchId": "d8d0c39b-ddc0-474c-81b7-cb1108993e12", "evidence": "Contrasts 2019 management quotes with 2020 financial disclosures to prove project failure.", "confidence": 0.95 } ], "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 }