{"id":4882,"date":"2015-01-30T10:07:10","date_gmt":"2015-01-30T16:07:10","guid":{"rendered":"http:\/\/news.medill.northwestern.edu\/chicago\/?p=4882"},"modified":"2015-02-02T09:22:42","modified_gmt":"2015-02-02T15:22:42","slug":"zimmer-q4-earnings-beat-estimates","status":"publish","type":"post","link":"https:\/\/news.medill.northwestern.edu\/chicago\/zimmer-q4-earnings-beat-estimates\/","title":{"rendered":"Zimmer Q4 earnings beat estimates"},"content":{"rendered":"

by Jin Wu<\/p>\n

Zimmer Holdings Inc. <\/a>(NYSE and SIX: ZMH<\/a>), the Indiana-based joint replacement manufacturer, reported lower profits in both the fourth quarter and the full year<\/a> due to foreign currency volatility and expenses of its pending merger with Biomet Inc.<\/a>, another medical devices manufacturer.<\/p>\n

For the quarter ended December 31, Zimmer earned $156.6 million, or 91 cents per diluted share, down 33.6 percent from $235.9 million, or $1.36 per diluted share, in the year-earlier quarter. The diluted EPS missed the $1.44 analysts\u2019 estimate compiled by Bloomberg.<\/p>\n

However, based on Zimmer\u2019s adjusted measurement, which excluded elements such as intangible asset amortization, Biomet merger expenses, inventory and manufacturing related expenses, the company earned $295.6 million, or $1.71 per diluted share, up from $288.6 million, or $1.66 per diluted share, in the year-earlier quarter, topping the consensus estimate of $1.705 on adjusted EPS.<\/p>\n

\"Zimmer<\/a>
Zimmer Holdings Inc. missed the consensus estimate on reported diluted earnings per share, but it beat the consensus estimate on adjusted diluted EPS, which excludes intangible asset amortization, Biomet merger expenses, inventory and manufacturing related expenses, etc. (Jin Wu\/Medill)<\/figcaption><\/figure>\n

About Zimmer\u2019s adjusted earnings measurement, analysts gave their explanations. \u201cThey didn\u2019t say it\u2019s a cash EPS. Zimmer is one of the few companies that haven\u2019t moved to using cash EPS. By moving to that, it essentially eliminates amortization from the reported number. In Zimmer\u2019s case, that means 40 cents,\u201d said Joanne K. Wuensch, research analyst at BMO Capital Markets Corp.<\/a><\/p>\n

In the fourth quarter, revenues decreased 14.3 percent to $1.22 billion from $1.24 billion. The company paid $37.2 million in dividends and declared a fourth quarter dividend of 22 cents per share, up 10 percent over the prior year period.<\/p>\n

For the 2014 fiscal year, Zimmer\u2019s net income dropped 5.4 percent to $720.1 million from $761 million. Earnings per diluted share decreased to $4.19 from $4.43 compared with 2013, missing the consensus estimate of $6.05 per diluted share. Adjusted diluted EPS increased to $6.06 from $5.75, topping the consensus estimate of $6.05.<\/p>\n

Full year 2014 revenues were 4.67 billion, up 1.1 percent from $4.62 billion.<\/p>\n

\"Untitled_2<\/a>
Zimmer’s reported net earnings dropped 33.6 percent compared to the year-earlier period, however, the adjusted net earnings increased 2.4 percent. According to Zimmer’s press release, special items are acquisition and integration costs and asset impairment charges related to prior and pending 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. (Jin wu\/Medill)<\/figcaption><\/figure>\n

The negative currency impact related to the recent strengthening of the U.S. dollar against the euro<\/a> and the Japanese yen is one of the key factors behind Zimmer\u2019s decreasing profits in fourth quarter.<\/p>\n

However, the Europe and Asia-Pacific regions still contributed to sales growth in the full year. The Europe region delivered 4.7 percent growth, the Asia-Pacific region increased sales by 2.4 percent, while sales in U.S. dropped by 0.98 percent.<\/p>\n

Zimmer\u2019s Extremities, Dental and Spine businesses delivered growth in both the fourth quarter and the full year.<\/p>\n

\u201cThe hip market is weaker than we expected, especially in the U.S. market,\u201d said Richard Newitter, senior analyst at Leerink Partners LLC<\/a>. \u201cBut the company offset it with businesses in other regions outside of U.S. and in other categories such as Spine.\u201d<\/p>\n

The impending $13.35 billion acquisition of Biomet is expected to bring Zimmer great opportunities.<\/p>\n

\u201cCurrently, revenues from the large-joints segment is 70 percent of Zimmer\u2019s revenue base,\u201d said Wuensch. \u201cWhen the two companies combined, it becomes 60 percent of the revenue base. The reason that\u2019s important is the remaining portion of Orthopedics market is actually growing a lot faster. So it\u2019s an opportunity to be able to more fully leverage some of the faster growing aspects of the Orthopedics market such as Spine, Dental, Trauma, Sports Medicine.\u201d<\/p>\n

In the interview, Newitter mentioned another economic benefit from merging with Biomet: relieving Zimmer from pricing pressure. \u201cIt will shift powers to the manufacturers,\u201d he said.<\/p>\n

In a conference call, James T. Crines<\/a>, the chief financial officer and executive vice president of finance at Zimmer, gave the company\u2019s outlook for first quarter revenues: \u201cOn a constant-currency basis, with the additional billing days, we expect first quarter revenues to grow between 4.5 percent and 5.5 percent. On a reported basis, taking into account the effect of foreign currency translation, our revenues are projected to be between 1.5 percent and 0.5 percent below the prior year.\u201d<\/p>\n

For first quarter 2015, Zimmer expects to post diluted EPS of $1.12 to $1.14 on a reported basis and $1.58 to $1.60 on an adjusted cash basis, which excludes about 46 cents per diluted share influenced by pending Biomet merger.<\/p>\n

Guidance for the full year of 2015 will be released after the Biomet transaction closed.<\/p>\n

The stock closed at $112.52, down $1.98 or 1.73 percent.<\/p>\n

Photo at top: Zimmer Holdings Inc. manufactured artificial joints that used in reconstructive surgeries. (Zimmer Holdings Inc.)<\/div>\n","protected":false},"excerpt":{"rendered":"

by Jin Wu Zimmer Holdings Inc. (NYSE and SIX: ZMH), the Indiana-based joint replacement manufacturer, reported lower profits in both the fourth quarter and the full year due to foreign currency volatility and expenses of its pending merger with Biomet Inc., another medical devices manufacturer. For the quarter ended December 31, Zimmer earned $156.6 million, […]<\/p>\n","protected":false},"author":35,"featured_media":4889,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[],"class_list":["post-4882","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"yoast_head":"\nZimmer Q4 earnings beat estimates - Medill Reports Chicago<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/news.medill.northwestern.edu\/chicago\/zimmer-q4-earnings-beat-estimates\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Zimmer Q4 earnings beat estimates - Medill Reports Chicago\" \/>\n<meta property=\"og:description\" content=\"by Jin Wu Zimmer Holdings Inc. (NYSE and SIX: ZMH), the Indiana-based joint replacement manufacturer, reported lower profits in both the fourth quarter and the full year due to foreign currency volatility and expenses of its pending merger with Biomet Inc., another medical devices manufacturer. 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