Good afternoon, everyone. Before the conference begins, let me remind you that during this call, management will be making comments and statements regarding its financial outlook and its plans and objectives, which represent forward-looking statements, that involve risks and uncertainties as these terms are defined under the federal securities laws. Investors are cautioned that any such forward-looking statements are not guarantees of future events, performance or results and the Company's actual results may differ materially from its current expectations. Please refer to the risks and other uncertainties disclosed under the forward-looking information in today's press release as well as the Company's SEC filings for more details on the risks and uncertainties that may cause actual results to differ materially. The Company disclaims any obligation to update any forward-looking statements that may be discussed during the call, except as many -- may be required by applicable law. You will also hear management refer to certain non-GAAP adjusted measurements during this discussion. While these figures are not substitute for the GAAP measurements, management uses these figures to aid in monitoring the Company's ongoing financial performance from quarter-to-quarter and year-to-year on a regular basis and for the benchmarking against other medical technology companies. Adjusted net income and adjusted earnings per share measure the income of the Company, excluding credits and charges that are considered by the Company to be special or outside of its normal ongoing operations. These adjusting items are specified in the reconciliation supporting the Company's earnings release posted to the Company's website. With these required announcements completed, I will now turn the call over to Curt Hartman, CONMED's Chair of the Board, President and Chief Executive Officer for opening remarks. Mr. Hartman?

Thank you, Angela. Good afternoon and thank you for joining us for CONMED's fourth quarter and full year 2020 earnings call. With me on the call is Todd Garner, Executive Vice President and Chief Financial Officer. Today, I will provide a brief overview of the financial and operating highlights for the fourth quarter and full year. Todd will then provide a more detailed analysis of our financial performance and discuss our initial 2021 financial guidance. After that, we'll open the call to your questions. Turning to our results. Total sales for the fourth quarter were $252.8 million, representing a year-over-year decrease of 4.5% as reported and a decrease of 5.2% in constant currency. For the full year, sales reached $862.5 million, representing a year-over-year decrease of 9.7% as reported and 9.3% in constant currency. From an earnings perspective, during the fourth quarter, our GAAP net income totaled $24.1 million. This compares to net income of $14.9 million in the fourth quarter of 2019. Excluding special items that affected comparability, our adjusted net income of $25 million decreased 6.6% year-over-year and our adjusted diluted net earnings per share of $0.84 decreased 6.7% year-over-year. For the full year, our GAAP net income totaled $9.5 million compared to net income of $28.6 million in 2019. Excluding special items that affected comparability, our adjusted net income of $64.2 million decreased 17.6% year-over-year and our adjusted diluted net earnings per share of $2.18 decreased 17.4% year-over-year. We ended 2020 with a great deal of enthusiasm, given our expanding market opportunities and product portfolio. As you all know, the COVID-19 pandemic presented unique operating challenges for every company. Many markets around the world have operated intermittently or shut down for varying periods of time. This dynamic continued in the fourth quarter. Throughout the year, including the…

Thanks, Curt. All sales growth numbers I reference today will be given in constant currency. The reconciliation to GAAP numbers is included in our press release. Normally, on this call, we will discuss the numbers for both Q4 and the full year. Today, we will discuss Q4 only and refer you to the press release for the full year comparables. We don't believe spending time on that view is terribly relevant or helpful at this specific time. For the fourth quarter of 2020, our total sales declined 5.2%. While COVID had a meaningful impact on the full quarter, the first two months of the quarter were very close to the prior-year revenue performance, but December revenue was well short of the prior year. For the fourth quarter, our sales in the U.S. decreased 0.7% versus the prior year quarter. Our single-use products grew 4.0% in the U.S., the capital sales were down double-digits. Our international sales decreased 10.5% for the quarter compared to the prior year. The most impacted geographies during the quarter were Japan and Latin America. The sharp reduction in Japan was largely due to distributors decreasing their inventories. We believe this is good news for future sales due to less inventory in the distribution channel. The rest of Asia and Europe declined in the single-digits in the quarter, while Canada and Australia both grew. Worldwide orthopedics revenue declined 9.6% in the fourth quarter. In the U.S., orthopedic sales decreased 12.3% and internationally, orthopedic sales decreased 7.9%. Capital sales were down double-digits globally in orthopedics in the fourth quarter. As Curt said, we've taken a light touch with our customers when it comes to the timing of capital purchases in 2020, and believe this will strengthen our customer relationships over the long-term. Total worldwide general surgery revenue decreased…

[Operator Instructions] And your first question is from the line of Richard Newitter with SVB Leerink. Please go ahead.

Hi, this is Aaron on for Rich. Thanks so much for taking our questions. Just a quick one. Thanks so much for the color that you provided in the guidance, I was just wondering if you could maybe talk about some of the dynamics between ortho and gen surge that you've seen, maybe throughout the fourth quarter and then into early 1Q? Obviously, understanding that you did give some color on the overall procedures, but just maybe a little bit of information on how those were broken out between those segments?

Aaron, help me just a little here when you said differences between ortho and gen surge, are you talking about the procedure trends or what specific are you asking?

Yeah. Yeah, sorry, just the procedure trends that you saw in the respective segments throughout 4Q and then maybe in early 1Q.

Okay. Okay. I think the way I would frame it would be around 4Q, I think October, November seem to continue what we saw in the third quarter. We did start to see more deceleration, broadly speaking in procedures as we got into the month of December. And I think that was applicable both to the general surgery, as well as the orthopedics business. Obviously as Todd commented, we continue to see good volume, good attention on the Buffalo Filter and AirSeal platforms. But again, AirSeal is a more established platform. So as procedures are down that consumable business also decreases. On orthopedics, it's a more heavily weighted business on capital, in a normal year, about 30% capital and obviously capital has not been anywhere near the levels of past years and that continued again in the fourth quarter. So again more impact in ortho because of the bigger percentage being capital and capital just overall being tightened. I don't think that change from Q2, Q3 and Q4, but it just stayed very suppressed overall and I think, again, a little bit of that intermittent comment that I noted against geographies outside the U.S. as we got deeper into the fourth quarter, you saw more of Europe really tightening up, you saw various markets across Asia tightening up or reserving capacity if you will not opening things all the way up, again both general surgery side and orthopedic side. I think that would kind of summarize my comments. Probably not going to comment on what we're seeing at this point in Q1.

Okay, great. Thanks so much. And then just quickly on Buffalo Filter, obviously, it's been very strong, has you guys seen or heard of any more states passing legislation on around the aerosolization. Thanks so much.

No, great question. There is a lot of legislation in the works, but I think with COVID, priorities have shifted, so a lot of that legislative movement has stalled, if you will. But as we've said many times, we think the legislation, and we said this candidly during the announcement of the acquisition, that legislation would be additive, that the broad-based healthcare worker insistence on a safe operating room environment is really what's driving the growth in this market and that has not let up one bit. And in fact with 2020 in the events of the pandemic and the safe OR legislation -- or not legislation, excuse me, the safe OR comments that the various societies have put out, it's further accelerated the movement towards the safe operating room environment of which Buffalo Filter and AirSeal are both a key component of.

Okay, great, thank you so much for taking the questions. Really appreciate it.

And your next question is from the line of Robbie Marcus with JP Morgan. Please go ahead.

Hi, this is actually Lily on for Robbie. Thanks for taking the question and thanks for all the helpful color you gave. So in the past you've talked about how AirSeal and Buffalo Filter comprise about 25% of revenues, which is a bit higher than what we were thinking, and how they should continue to grow over 20%. So on the other side of COVID, do you think that that could make CONMED an 8% to 10% grower, rather than a mid-single digit grower?

Thanks, Lily, that's a great question. I think if you just do the math right, 25% growing 20%, you get a 5% growth on the total if everything else were flat, right. And I think to your -- to the premise of your question, we certainly don't -- we don't expect everything else to be flat post-pandemic. We expect all of our markets to grow better than -- all of our segments to grow better than the markets. And so, I think, it is logical that we should do better than the 5%. What that number is, we'll have to talk about when we are finally in a post-pandemic place to guide, but I think there is good logic and that CONMED has got a strong growth engine in those two products together and we're working on making sure the other part of portfolio also contributes to stronger growth. So that's the game plan and we're happy with how that's worked through the pandemic, and we think when the pandemic is done that strength will be more obvious.

And your next question is from the line of Todd Garner. Please go ahead.

Afternoon. Thanks for taking the questions. Maybe Curt or Todd, either one, just commentary about lighter touch on the capital side of things, how long do you think that's going to persist for you guys? Do you think it's going to be the first half of this year, we're going to continue that lighter touch? And then what benefits -- tangible benefits do you see other than hey goodwill with the customers. Are you expecting back half of this year and even into '22?

So it's a great question. And I think we refer to it as lighter touch, but it's been more receptive to what the customer environment is at the moment. I would contrast that just candidly with two of the products we introduced in the fourth quarter were both capital items, a new large bone power tool platform and a new video system. We're excited about both of those and we're in the stages of rolling those out right now on a global geographic region-by-region basis. So our sales force is excited to start the new year, you put a couple of new products in their hands and I think they're going to probably work just a little bit harder and candidly maybe not have quite as a lighter touch. But again, that's going against a capital market that's still is not the priority for the majority of our customers. And I think more than anything that's what we hear from our customers. And so we're referring to that a lighter touch, we're hearing them say, it's just not our priority right now. So we're as patiently as we can waiting for them and hoping that our goodwill in that sense buys us that opportunity. But to the guidance comment, if the back half of the year starts to normalize more, I think certainly be in a position with new capital products in our portfolio, it should bode well for us in the back half.

On the financial side, Curt, you're expecting some benefit on the back half of this to the results?

I've said if the markets return to normal in the back half of the year and we've got a sales force with two new capital products, it should show up in our numbers and obviously would benefit us financially.

Got it. Okay, thank you. And then the follow-up question for Todd, is just on the EBIT expansion side of things. Can you just be a little bit more granular with exactly what we're expecting here in '21 back half and then there's just some things that are kind of masking some of these benefits. Can you just talk about the level of the headwinds that you're seeing on the EBIT side of things and when some of those may ease? And then the high-end as far as EBIT goes, are you thinking 50 to 100 basis points of expansion that we should expect maybe even if it's masked a little bit? Just little more color on that metric specifically be helpful. Thanks.

It's a great question, Matt, and I'm not at all surprised that you'd like a little more granular detail in the guidance. And I'd love to be in a position to give you more granular detail on the guidance, but we're not going to do that today, but I will do my best to address your question. Yeah. So the biggest headwind is the gross margin hangover from these lower volumes and higher freight, right, and that's really hit us in the back half of 2020. And the way it gets recognized that hits you essentially for another quarter after the problem is solved and the problem is not solved yet, sitting here today, right? So we expect more headwinds like that to occur in the first part of the year here and so you really need to get a quarter past when volumes are depressed before you can start to see more normalized margins. And so the way that probably plays out is the back half, looks a whole lot better than the first half. And then the reason we're not being more granular is, we've been kind of agile and responsive and resilient through the pandemic. We're going to continue those operating principles and make sure that we're putting the resources in the right places at the right times and not spending resources before we need to, right. So I think we've done a great job of protecting profitability through this unprecedented challenge and we're going to continue to do that. You can see in our guidance, that the profitability guide is, I think if you do the math and if you use the mid-range of what we've given, you will see that we're growing at least twice as fast on the bottom as we are on the top and that's consistent with CONMED operating principles. And when we've talked about margin improvement longer-term, even pre-pandemic, right, we talked about 50 to 100 basis points kind of annually in margin improvement, right. And then we've told you through the pandemic, we've kind of had to get smarter and leaner and more sophisticated in certain areas. And so, it's probably more realistic that the engine is operating closer to the top end of that or better than to the bottom end of that range. And I think that will -- I think once the clouds clear and the muddiness kind of is behind us, I think that will be apparent to investors. But -- and you can kind of see that actually happening through 2020, right? We've been able to deliver good profitability with very challenging revenue numbers and we believe that as -- hopefully the pandemic progressively gets better through the year that that margin profile will become increasingly clearer. And I think that's about as much as I can help you with today.

Very granular. Thank you so much.

Your next question is from the line of Rick Wise with Stifel. Please go ahead.

Good evening, gentlemen. First, I just wanted to follow-up on, Matt's excellent question as always. Just kind of sort of take another step when we're -- when you're -- you said a couple of things, both of you about sort of post-recovery environment, I mean improved mix, better margin products, more compelling portfolio of products, lower cost potentially and infrastructure I think Todd you said that plenty of room to sort of grow into. I think if you're -- oh I think you said infrastructure can support a higher level of sales things thoughts like that. Maybe just help us think through whether -- let's just assume '22 is your pretty decent recovery, who knows. Let's assume it. Is that CONMED coming out of this environment and I'm not talking about strange optics of year-over-year comps, but are you back to growing topline upper-single digits margins steadily progressing towards 60%? And I mean, how do we think about the longer-term outlook here? How are you thinking about it?

Sure, Rick.

Yeah. All plays a theoretical game with you, obviously, we're not guiding to -- we're not guiding to 2022 today, right? But I love the idea of being in a post-pandemic world and the hope is and the assumption is that by then we will be. And yeah, I think your premise is correct. I think that when that cloud has passed, you will see a CONMED with healthier margins than we had going into the pandemic both in gross and operating and I think we are progressing towards the 60 number on gross and we're moving towards that 20 number on operating. And I'm not prepared yet to say what those 2022 numbers will be, but what I can tell you is we're doing all the right things, right, the mix is improving as you said, we're getting smarter and more sophisticated and our procurement specifically. And as we get -- as volumes kind of return, we think there is lots of room for CONMED to grow faster on the bottom than we do on the top and we expect to grow faster on the top than our markets do. And so that's the playbook. The pandemic has delayed some of that and certainly muddied some of that, but in some ways, it's made us -- it's shored that up even, right, and improves the chances that those things actually come true in the future once the pandemic is behind us. And so we're optimistic, but we're focused on executing in the current environment and make sure we do that wisely and make sure we focus on the long-term strength of the business.

Makes sense. That's great. Maybe, it sounds like you talking Todd, maybe share your balance sheet priorities for 2021 in terms of your thinking about cash generation, debt paydown, where you hope to be at the end of the year under the scenarios you've laid out?

Sure. Thanks, Rick. Yes. So we -- as you know, as I think everybody knows when the pandemic started, we went and did an amendment with our banks to make sure that we had the flexibility necessary to make the right decisions and right strategic decisions through the pandemic, no matter how ugly it could be. It turns out, even though the pandemic has lasted a while, our customers have been more resilient, we've been more resilient. It turns out, in hindsight, we probably didn't need to do that amendment at all at the peak of the trough, which was the end of Q2. Our leverage was at 5.4 turns. We're ending the year at 4.9 and we said at a recent healthcare conference that based on our 2021 projections, we should be under 3.5 turns by the end of 2021, absent any significant M&A, which is not anticipated in the guidance. And so, we feel like that's a pretty good trajectory, it's not all the way down to 3 turns, which is what we talked about when we bought Buffalo Filter. We said, we'd be down to 3 turns by the end of 2021, but even given the pandemic, we're going to be kind of close to that, we think on that same calendar. So the priorities are definitely profitability of the company, make sure that cash is tied to income and there is not a big gap there. We've done a really good job with that and we plan to continue to do a good job with that. And we will continue to look for assets that add to the growth profile and margin profile of the company. And obviously, we haven't had anything to announce since Buffalo Filter to-date, but we continue to be active on that front and if we find something that we think makes the company stronger, we'll look for ways to act on that. So those are the kind of the priorities. Continued strong blocking and tackling, good management of the business and focused on the long term profitability of the company.

Great. And just two last quick ones, if I could. The -- if 75% of the businesses, sorry, non-smoke at this point, what percentage is capital of all I sort of remember some number like 30%? And I'll sneak in one last one, on the gross margin just normalizing for some of these freight variance headwinds that you were talking about. What -- how would we think about gross margins in the fourth quarter, first quarter kind of range, if you wouldn't mind? Thank you so much.

Okay. I will try. So first on capital, in general what we talk about is on the general surgery side of the business. It's about 10% capital and 90% single use. And I would say, Buffalo Filter and AirSeal are in that range, right. They might be just slightly more capital, but they're essentially in that similar range as general surgery. And then, the orthopedic business is essentially 30% capital and 70% single use. And so if -- you would have to do the math on the mix there to -- in general overall CONMED is about 20% capital. But if you take away -- yeah, I think your question was, if you took away AirSeal and Buffalo, what is the rest? And the answer would be, it would be a little higher than the 20% because they are lower than the 20% and so the mix would be a little higher than the 20%. But somewhere in that 20% to 30% would be the answer to that question mathematically. On the gross margin and kind of breaking down Q4 a little better, I am happy to do that. We talked about the impact of these unfavorable variances and the increased freight, which the whole world is dealing with. If you just take the headwind that happened to Q4 because of those line items, which is all the manufacturing cost plus freight, you get a 190 basis point headwind between Q4 '19 and Q4 2020. So that's kind of the magnitude of the -- of that headwind that we're experiencing currently. And I'd say it's a similar kind of range that we're talking about. We -- well, we said 50 basis points in total for Q1.

And your next question is from the line of Mike Matson with Needham. Please go ahead.

Yeah, hi, Curt and Todd, this is David Saxon on for Mike. Thanks for taking the questions. I guess, first just on the end markets, as these end market that you participate in rebound later this year and into next year, how are you thinking about your market share? You talked about growing above market, but just wondering what opportunities you see to gain share as trends improve?

Well, it's certainly the longer term goal in a more normalized market given our position, given our focus on innovation. Just to grow faster than the markets we serve. That has been a goal since day one, the first couple of years were about turning around the business, getting the innovation engine moving. We've supplemented that with M&A and obviously I think everybody in the market place took a little bit of a detour here in 2020. But as things get back to normal, whenever that may be, our philosophy, our strategies aren't changing. We want to continue to go aggressively, innovate, serve our customers, earn their trust and take market share. And given our overall market share positions, we have a lot of opportunity in front of us. Obviously you go product by product, we're in different market share positions for different products. In the case of AirSeal, we're in only-in-class products. We kind of define that market and so you go through the list, I would say, the broad percentage of our portfolio, we have a lot of market share to go after and that remains the goal. And I think as we step into '21, our sales organizations understand that we've all learned a lot through 2020 as Todd said, we know better how to operate in this environment, we have a great understanding of what customers are dealing with and we're ready to get back after it.

Great, thanks. And then my second question is just on international. You talked about distributors in Japan lowering their inventories, just wondering, I guess, if first you can quantify that and do you expect that to continue into the first quarter?

Thank you, David. The answer is no, we don't expect it to continue into the first quarter. We think that was -- we think they got down to good levels through 2020. We worked with them to kind of allow that, right? The logic being there is no -- you don't want the distribution channels to be full because that would mask the level of recovery when it comes back. And the answer on the magnitude -- we're not going to get too -- first of all, it's impossible to get entirely precise, but I can tell you that we're talking about a few million dollars of adjustment. So it's a meaningful impact on the growth rate in the quarter, but it sets us up better for the future.

And your final question is from the line of Matthew Mishan with KeyBanc. Please go ahead.

Great and thank you for taking the questions. Curt, Todd, last quarter I asked a question around quoting activity and evaluation times, if some of what changed in 4Q versus 3Q in general surgery? If maybe you receive some really rushed orders placed in 2Q and 3Q when the guidelines had change and you placed those orders? And then things may have normalized in quoting and evaluations, as you said last quarter and the backlog is really building, which is giving you confidence in the 20% plus growth in those areas, discussed in recent conference.

I mean, I am not sure -- I don't think there has been a change in enthusiasm for Buffalo Filter and AirSeal. We said that those were going to grow north of 20%. We've told you even in Q4 despite the lower procedures, they did grow about 20%. I wouldn't say there has been a change there. The -- where we grew slower or we -- the decline -- we declined in Q4 and we grew slightly in Q1 was really about the procedural side of the business on the full portfolio and then of course capital was down significantly, right. And so, I would not tie the difference -- if I understood your question correctly, I would not tie the delta between Q3 revenue and Q4 revenue to any sort of quoting time or change in enthusiasm around those two growth drivers, I would tie it directly to the virus. And the situation that hospital -- they thought they were in tough situation in Q3, we all thought that the hospitals were challenged in Q3. I think in Q4, they would have loved to have gone back to the Q3 environment. And so, I think that's really what is the difference between Q3 and Q4, if I understood your question correctly.

That -- that was exactly what I was asking and getting at. And I think investors really appreciate that you were able to break out Buffalo Filter and AirSeal as 20% plus growers at that conference. I know you don't like to call that kind of stuff out on a quarter-in quarter-out basis. So are you planning to do that on -- moving forward or was that something you're going to highlight directionally? I'm just curious how you can update those numbers moving forward?

No, I mean, our principles on disclosure and guidance remain the same, that we don't want to get into specific product lines. With all the mud and clouds or whatever term we want to use for the pandemic, how it's masking, what's happening underneath, we thought that would be helpful for our investors to understand that about a quarter of the business is from these two really strong growth drivers, our two most recent meaningful acquisitions that have been incredibly successful and have really changed the profile, both from a mix and margin perspective and growth perspective of the company and those are -- those have been incredibly successful even through the pandemic, we expect them to be successful as were post-pandemic. And as the rest of the portfolio returns to kind of normal, what we would claim above market growth rates, we think it's an exciting place to be. We think the portfolio looks really strong for the future if we can just get out of this pandemic situation.

Okay. And then last question just on AirSeal as a platform that you're building out. I think you introduced a product for pediatric surgery. I know you've already done the thoracic indication. How are you thinking about AirSeal as more of a platform-technology in that regard?

Now you said it correctly, Matt, it is a platform-technology and the expansion into those other indications, gives us a unique position. And then further, there is our own internal continuation of R&D across that platform, which is obviously a high priority for very obvious reasons. The market is very large, whether it's the robotic market or the broad laparoscopic market and we said on some previous calls that because of COVID, there has been more awareness to AirSeal in the broad laparoscopic markets. That's more of a U.S. specific comment, that was already happening outside the U.S., because they don't have as many robots outside the U.S. But again, it's a key long-term platform for CONMED and our general surgery business and our efforts are focused and continuing to drive that in the marketplace through awareness, but also continuing to drive in the marketplace through continued innovation and focus from an R&D standpoint and that will not change for the foreseeable future. It's a great platform, very differentiated, very beneficial to customers and the patients they serve and that's what we're here to do, be a help to the customers and the patients they serve.

Okay, thank you very much.

And I would now like to turn the call back over to Mr. Hartman for any closing remarks. Mr. Hartman?

All right, thank you, Angela. And I just want to end by thanking everybody for your time today and appreciate you hearing more about the CONMED story. We look forward to speaking with you during our next earnings call. Thank you.

This concludes today's conference call. Thank you for your participation. You may now disconnect your lines.