WARSAW, Ind., April 28, 2011 Zimmer Holdings, Inc. (NYSE and SIX: ZMH) today reported financial results for the quarter ended March 31, 2011. The Company reported first quarter net sales of $1,116 million, an increase of 5.0% reported and 3.3% constant currency over the first quarter of 2010. Diluted earnings per share for the quarter were $1.08 reported and $1.19 adjusted, an increase of 16.7% adjusted over the prior year period.
“Driven by the success of recently launched products, Zimmer delivered solid sales results across all geographic segments in the first quarter, resulting in improved margins and leveraged earnings,” said David Dvorak, Zimmer President and CEO. “Our first quarter performance demonstrated continued progress toward our goal of consistently achieving growth at or above market rates in all of our geographies and businesses. We will continue to deliver value to our stakeholders through product innovation, operational excellence initiatives and disciplined capital deployment.”
Net earnings for the first quarter were $208.9 million on a reported basis and $230.9 million on an adjusted basis, an increase of 11.4% adjusted over the prior year period. Operating cash flow for the first quarter was $182.2 million.
During the quarter, the Company utilized $236 million of cash to acquire 4.2 million shares. At the end of the first quarter, $969.7 million of share repurchase authorization remained available under the current program, which expires on December 31, 2013.
Guidance
The Company reaffirmed its full-year revenue and adjusted EPS guidance for 2011. Full-year revenues for 2011 are expected to increase between 2% and 4% on a constant currency basis from 2010. The Company estimates that foreign currency translation will increase revenues by approximately 3% for the full year 2011, resulting in reported revenue growth between 5% and 7%. Full-year 2011 diluted earnings per share are projected to be in a range of $4.25 to $4.45 on a reported basis and $4.60 to $4.80 on an adjusted basis.
Conference Call
The Company will conduct its first quarter 2011 investor conference call today, April 28, 2011, at 8:00 a.m. Eastern Time. The live audio webcast can be accessed via Zimmer’s Investor Relations website at http://investor.zimmer.com. It will be archived for replay following the conference.
Individuals who wish to dial into the conference call may do so at (888) 878-3901. International callers should dial (706) 634-9520. A digital recording will be available two hours after the completion of the conference call from April 28, 2011, to May 12, 2011. To access the recording, US/Canada callers should dial (800) 642-1687, or for International callers, dial (706) 645-9291, and enter the conference ID 55920510.
Sales Table
The following table provides sales results by geographic segment and product category, as well as the percentage change compared to the prior year quarter on both a reported and constant currency basis.
NET SALES - THREE MONTHS ENDED MARCH 31, 2011 | |||||||||||
(in millions, unaudited) | |||||||||||
Net Sales | Reported % Growth | Constant Currency % Growth | |||||||||
Geographic Segments | |||||||||||
Americas | $ | 630 | 2 | % | 2 | % | |||||
Europe | 299 | 5 | 4 | ||||||||
Asia Pacific | 187 | 16 | 7 | ||||||||
Total | 1,116 | 5 | 3 | ||||||||
Product Categories | |||||||||||
Reconstructive | |||||||||||
Americas | 465 | 1 | - | ||||||||
Europe | 238 | 3 | 2 | ||||||||
Asia Pacific | 139 | 16 | 6 | ||||||||
Total | 842 | 3 | 2 | ||||||||
Knees | |||||||||||
Americas | 278 | (3) | (3) | ||||||||
Europe | 117 | 3 | 3 | ||||||||
Asia Pacific | 67 | 11 | 2 | ||||||||
Total | 462 | - | (1) | ||||||||
Hips | |||||||||||
Americas | 155 | 5 | 5 | ||||||||
Europe | 114 | 2 | 2 | ||||||||
Asia Pacific | 68 | 20 | 10 | ||||||||
Total | 337 | 7 | 5 | ||||||||
Extremities | 43 | 12 | 11 | ||||||||
Dental | 63 | 21 | 21 | ||||||||
Trauma | 70 | 16 | 14 | ||||||||
Spine | 57 | (5) | (6) | ||||||||
Surgical and other | 84 | 10 | 7 | ||||||||
About the Company
Founded in 1927 and headquartered in Warsaw, Indiana, Zimmer designs, develops, manufactures and markets orthopaedic reconstructive, spinal and trauma devices, dental implants, and related surgical products. Zimmer has operations in more than 25 countries around the world and sells products in more than 100 countries. Zimmer’s 2010 sales were approximately $4.2 billion. The Company is supported by the efforts of more than 8,000 employees worldwide.
Website Information
We routinely post important information for investors on our website, www.zimmer.com, in the “Investor Relations” section. We intend to use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.
Note on Non-GAAP Financial Measures
As used in this press release, the term “adjusted” refers to operating performance measures that exclude inventory step-up and special items. Included in special items are acquisition and integration costs as well as employee termination benefits, certain contract terminations and asset impairment charges connected with global restructuring and transformation initiatives. The term “constant currency” refers to any financial measure that excludes the effect of changes in foreign currency exchange rates. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measure are included in this press release. Management uses this non-GAAP information internally to evaluate the performance of the business and believes that it provides useful information to investors by offering the ability to make more meaningful period-to-period comparisons of the Company’s on-going operating results, the ability to better identify operating trends that may otherwise be masked or distorted by these types of items and to perform related trend analysis, and a higher degree of transparency of certain items.
Zimmer Safe Harbor Statement
This press release contains forward-look
