Third-Quarter Sales Jump 8 Percent at Zimmer

Zimmer Holdings Inc. had quite a lucrative third quarter.

Net sales grew 3 percent to $1.11 billion and net earnings swelled to $165.5 million (96 cents per share), up 8 percent from $154.4 million, or 90 cents per share in Q3 2013. On an adjusted basis, the company reported net earnings of $232.6 million, or $1.35 a share for the recent period, beating analysts’ expectations. On average, 26 analysts polled by Thomson Reuters expected earnings of $1.30 per share for the quarter (excluding special items).

The company’s $1.11 billion in sales also beat analysts’ expectations of $1.10 billion for the quarter.

“Zimmer’s third quarter was marked by solid revenue growth in key product categories and geographies, building on a strong prior year performance,” President/CEO David Dvorak said. “Our financial results reflect the ongoing execution of our operational initiatives. Looking to future quarters, we believe that our pending combination with Biomet, which we expect to close in the first quarter of 2015, will enhance stockholder value.”

Overseas proceeds outpaced those in the Americas, with sales in Asia and Europe both increasing 6 percent to $197 million and $271 million, respectively. North/South American sales, by contrast, edged up 1 percent to $638 million, according to Zimmer’s latest earnings statement.

The company posted solid gains in five of its eight product divisions, reporting losses in Dental, Trauma and Surgical/Other. Knees and (surprisingly) Spine experienced the largest gains, with each growing 6 percent to $461 million and $51 million, respectively. Reconstructive was close behind, increasing 4 percent to $824 million, followed by Extremities, up 3 percent to $47 million, and Hips bringing up the rear with a 2 percent gain ($316 million). European sales were well ahead of Americas proceeds in Reconstructive, Knees and Hips, while Americas sales outpaced Asia-Pacific revenue in Knees.

Looking ahead, the company updated its full-year revenue and earnings guidance for 2014. Full-year revenues now are expected to grow nearly 2.25 percent on a constant currency basis from 2013. Previously, annual revenues were estimated to increase 2 percent to 3 percent constant currency. The company expects foreign currency translation to decrease revenues by about 0.75 percent for the full year, resulting in reported revenue growth of around 1.5 percent.

Zimmer projects full-year 2014 earnings per share to be approximately $4.65 on a reported basis and$6.05 on an adjusted basis. Prior guidance for full-year 2014 reported and adjusted earnings per share was $4.65 to $4.75 and $6.00 to $6.10, respectively.