Zimmer Holdings Inc. today reported financial results for the quarter ended June 30. The company reported second quarter net sales of $1.17 billion, an increase of 4 percent reported and an increase of 5.5 percent constant currency over the second quarter of 2012. Diluted earnings per share for the quarter were $0.89 reported and $1.43 adjusted, an increase of 6.7 percent adjusted over the prior year period.
“In the second quarter, Zimmer delivered strong sales results, driven by our innovative new product offerings and growth in key geographies,” said David Dvorak, Zimmer President and CEO. “We are confident that the company will sustain this accelerated top line performance in the second half of the year. Through disciplined capital deployment and our commitment to operational excellence, we will remain focused on creating value for our stockholders.”
Net earnings for the second quarter were $152.1 million on a reported basis and $243.4 million on an adjusted basis, an increase of 3.3 percent adjusted over the prior year period. Operating cash flow for the second quarter was $189.7 million.
In the second quarter, the company recorded an additional $47.0 million provision before taxes for known and anticipated worldwide claims related to the Durom Acetabular Component. Adjusted second quarter 2013 figures in this release exclude the impact of this provision.
On May 2, Zimmer announced the acquisition of U.S.-based Knee Creations, LLC, which has expanded the company’s knee treatment offerings with the addition of a proprietary new joint preservation procedure, Subchondroplasty. Additionally, on June 4, the company announced the acquisition of Germany-based NORMED Medizin-Technik GmbH. The acquisition of NORMED’s portfolio has expanded Zimmer’s Extremities and Trauma offerings, while strengthening the company’s product development capabilities in the rapidly growing foot and ankle and hand and wrist segments.
During the quarter, the company utilized $68.8 million of cash to acquire 0.88 million shares. At the end of the second quarter, $553.9 million of share repurchase authorization remained available under the current program, which expires on December 31, 2014. The company also declared cash dividends of $33.6 million on its outstanding shares in the second quarter.
The company updated its full-year revenue and EPS guidance for 2013. Full-year revenues for 2013 are now expected to increase between 4.0 percent and 5.0 percent on a constant currency basis from 2012. Previously, the company had estimated full-year revenues would increase between 2.5 percent and 4.5 percent constant currency. The company now estimates that foreign currency translation will decrease revenues by approximately 2.0 percent for the full year 2013, resulting in reported revenue growth between 2.0 percent and 3.0 percent. Previously, the company had estimated foreign currency translation would decrease revenues by approximately 1.5 percent.
The company now projects full-year 2013 diluted earnings per share to be in a range of $4.70 to $4.80 on a reported basis and $5.70 to $5.80 on an adjusted basis. Prior guidance for full-year 2013 reported and adjusted diluted earnings per share was $5.05 to $5.25 and $5.65 to $5.85, respectively. This updated guidance reflects estimated charges for inventory step-up and other inventory and manufacturing related charges, certain claims and special items of $250 million on a pre-tax basis, or approximately $1.00 per diluted share, on an after-tax basis. Prior guidance reflected an estimate of $135 million, on a pre-tax basis, for these items.
Source: Zimmer Holdings Inc., Inside INdiana Business