First-quarter profit jumped 1.3 percent to $221.5 million while sales rose 2 percent (3.2 percent at constant currency) to $1.2 billion, meeting analyst expectations (they expected revenues of $1.18 billion). CEO David Dvorak said the company "produced solid results during the first quarter, providing further validation of our long-term growth and stockholder value creation strategies."
Q1 reconstructive product sales increased 3 percent versus the year-ago period to $872 million, with revenue from knee devices up 4 percent to $488 million and hip product sales flat at $332 million. Sales of surgical and other devices rose 1 percent to $101 million. Meanwhile, revenue from trauma products fell 3 percent year-over-year to $79 million, as spine product sales rose 1 percent to $48 million.
Earnings per share edged up 0.8 percent to $1.29 from $1.28. Adjusted earnings totaled $258.1 million or $1.50 per share , while it was $1.41 per share in last year's first quarter. On average, 29 analysts polled by Thomson Reuters expected earnings of $1.47 per share. Analysts estimates typically exclude special items.
The company’s R&D expense fell 11.1 percent or $6 million on a reported basis to 4.1 percent of net sales compared with Q1 2013. Selling, general and administrative expenses were $464 million in the first quarter and at 40 percent of sales, were 50 basis points below last year.
Adjusted operating profit in the quarter amounted to $352 million at 30.3 percent; adjusted operating profit to sale ratio was 100 basis points higher than the first quarter of 2013.
The company trimmed its forecast for fiscal 2014 earnings and backed sales growth view. Zimmer expects earnings per share to be in a range of $4.90 to $5.10 on a reported basis and $6.00 to $6.20 on an adjusted basis. The company previously estimated adjusted earnings per share of $6.10 to $6.30. Analysts look for earnings of $6.21 per share.
The company attributed the revision in forecast to a change in outstanding shares for 2014 as share repurchases would be discontinued ahead of the proposed Biomet deal.