- Net Sales of
$1.76 billionrepresent an increase of 59.3% over the prior year period on a reported basis, and an increase of 0.7% on an adjusted pro forma, constant currency basis
- Reported diluted EPS decreased 89.1% for the third quarter to
$0.11, and adjusted diluted EPS increased 13.1% to $1.64
- Company reinstates share repurchase program
- Company updates 2015 revenue and earnings guidance, raises estimate for first twelve months post-closing net synergies to
"We are pleased with the achievements of our global teams during
Zimmer Biomet's first quarter as a combined company," said David Dvorak, President and CEO of Zimmer Biomet. "In an operating period marked by significant progress in the execution of our sales channel integration, we generated sequential top-line improvement and strong earnings growth. As we exit this year and progress through 2016, we are well positioned to continue improving revenue growth and delivering on our synergy commitments."
Net earnings for the third quarter were
$22.2 million on a reported basis and $338.4 million on an adjusted basis, an increase of 35.5% adjusted over the prior year period. Operating cash flow for the third quarter was $151.3 million.
During the quarter, the Company paid
$37.6 million in dividends, or $0.22 per share.
Additionally, the Company is reinstating its share repurchase program. The existing program was temporarily suspended in
April 2014 in anticipation of the Biomet transaction. Currently, $599.5 million of share repurchase authorization remains available under this program.
The Company updated its full-year 2015 sales and adjusted earnings per share guidance. Full-year 2015 constant currency revenue, relative to comparable adjusted pro forma 2014 revenue, is now expected to increase between 1.0% and 1.5%. Previously, the Company had expected full-year constant currency revenue to increase between 1.5% and 2.0%. The Company expects foreign currency translation to decrease revenues by approximately 5.75% for the full year, resulting in reported revenue decreasing between 4.25% and 4.75% when compared to adjusted pro forma 2014 revenue for the comparable period.
The Company now expects full-year 2015 adjusted earnings per share to be in a range of
$6.83 to $6.87. Previously, the Company estimated full-year 2015 adjusted earnings per share to be in a range of $6.65 to $6.80.
The Company will conduct its third quarter 2015 investor conference call today,
October 29, 2015, at 8:00 a.m. Eastern Time. The live audio webcast can be accessed via Zimmer Biomet's Investor Relations website at http://investor.zimmerbiomet.com. It will be archived for replay following the conference call.
Individuals in the U.S. and
Canada who wish to dial into the conference call may do so by dialing (877) 941-1227 and entering conference ID 4696683. For a complete listing of international toll-free and local numbers, please visit http://investor.zimmerbiomet.com. A digital recording will be available 24 hours after the completion of the conference call, from October 30, 2015 to November 29, 2015. To access the recording, U.S. and Canada callers should dial (800) 406-7325 and enter the Access Code ID 4696670. International callers should dial +1 (303) 590-3030.
The following sales table provides results by geographic segment and product category, as well as the percentage change compared to the prior year quarter, on a reported basis, a pro forma reported basis, and an adjusted pro forma constant currency basis.
NET SALES - THREE MONTHS ENDED SEPTEMBER, 30 2015
(in millions, unaudited)
Spine & CMF
(1) Surgical, Sports Medicine, Foot and Ankle, Extremities and Trauma
About the Company
Founded in 1927 and headquartered in
Warsaw, Indiana, Zimmer Biomet is a global leader in musculoskeletal healthcare. We design, manufacture and market orthopaedic reconstructive products; sports medicine, biologics, extremities and trauma products; spine, bone healing, craniomaxillofacial and thoracic products; dental implants; and related surgical products.
We collaborate with healthcare professionals around the globe to advance the pace of innovation. Our products and solutions help treat patients suffering from disorders of, or injuries to, bones, joints or supporting soft tissues. Together with healthcare professionals, we help millions of people live better lives.
We have operations in more than 25 countries around the world and sell products in more than 100 countries. For more information, visit www.zimmerbiomet.com, or follow
Zimmer Biomet on Twitter at www.twitter.com/zimmerbiomet.
We routinely post important information for investors on our website, www.zimmerbiomet.com, in the "Investor Relations" section. We 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
Adjusted earnings per share and adjusted net earnings exclude the effect of inventory step-up and other inventory and manufacturing related charges, certain claims, special items, intangible asset amortization, financing and other expenses related to the
Biomet merger and certain tax adjustments. Included in special items are acquisition and integration costs and asset impairment charges related to acquisitions, as well as employee termination benefits, consulting and professional fees, certain litigation matters, dedicated personnel expenses, certain contract terminations and asset impairment charges connected with global restructuring and operational excellence initiatives. "Pro forma" revenue refers to revenue for prior year periods adjusted to reflect the inclusion of Biomet revenue on a GAAP (reported) basis. "Adjusted pro forma" revenue refers to pro forma revenue adjusted to reflect the impact of the previously announced divestiture remedies. "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.
Updated Quarter Closing Convention
Beginning with the three months ended
March 31, 2015, we have changed our quarter-end closing convention for the majority of our international reporting units. As a consequence, our results of operations for the nine months ended September 30, 2015 include up to three more billing days for such international reporting units than were included in our results of operations for the nine months ended September 30, 2014. We have not restated the presentation of our 2014 financial statements to conform to this change of closing convention because the impact of the change is not material to the results of operations or to the comparisons between the 2015 and 2014 periods.
Cautionary Statement Regarding Forward-Looking Statements
This communication contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of forward-looking terms such as "may," "will," "expects," "believes," "anticipates," "plans," "estimates," "projects," "assumes," "guides," "targets," "forecasts," and "seeks" or the negative of such terms or other variations on such terms or comparable terminology. Such forward-looking statements include, but are not limited to, statements about the benefits of the merger between
Zimmer and LVB Acquisition, Inc. ("LVB"), the parent company of Biomet, including future financial and operating results, the combined company's plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of management and are subject to significant risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include, but are not limited to: the possibility that the anticipated synergies and other benefits from the merger will not be realized, or will not be realized within the expected time periods; the risks and uncertainties related to our ability to successfully integrate the operations, products, employees and distributors of the legacy companies; the effect of the potential disruption of management's attention from ongoing business operations due to integration matters related to the merger; the effect of the merger on our relationships with customers, vendors and lenders and on our operating results and businesses generally; Biomet's compliance with its Deferred Prosecution Agreement through March 2016; the outcome of government investigations; price and product competition; the success of our quality and operational excellence initiatives; changes in customer demand for our products and services caused by demographic changes or other factors; the impact of healthcare reform measures, including the impact of the U.S. excise tax on medical devices; reductions in reimbursement levels by third-party payors and cost containment efforts of healthcare purchasing organizations; dependence on new product development, technological advances and innovation; shifts in the product category or regional sales mix of our products and services; supply and prices of raw materials and products; control of costs and expenses; the ability to obtain and maintain adequate intellectual property protection; the ability to form and implement alliances; challenges relating to changes in and compliance with governmental laws and regulations, including regulations of the U.S. Food and Drug Administration (the " FDA") and foreign government regulators, such as more stringent requirements for regulatory clearance of products; the ability to remediate matters identified in any inspectional observations or warning letters issued by the FDA; changes in tax obligations arising from tax reform measures or examinations by tax authorities; product liability and intellectual property litigation losses; the ability to retain the independent agents and distributors who market our products; dependence on a limited number of suppliers for key raw materials and outsourced activities; changes in general industry and market conditions, including domestic and international growth rates and general domestic and international economic conditions, including interest rate and currency exchange rate fluctuations; and the impact of the ongoing economic uncertainty affecting countries in the Euro zone on the ability to collect accounts receivable in affected countries. For a further list and description of such risks and uncertainties, see our periodic reports filed with the U.S. Securities and Exchange Commission. Copies of these filings, as well as subsequent filings, are available online at www.sec.gov, www.zimmerbiomet.com or on request from us. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be set forth in our periodic reports. Readers of this communication are cautioned not to place undue reliance on these forward-looking statements, since, while management believes the assumptions on which the forward-looking statements are based are reasonable, there can be no assurance that these forward-looking statements will prove to be accurate. This cautionary statement is applicable to all forward-looking statements contained in this communication.