Zimmer Biomet Holdings, Inc. (ZBH - Free Report) posted first-quarter 2019 adjusted earnings per share (EPS) of $1.87, ahead of the Zacks Consensus Estimate by a penny. However, the figure dipped 2.1% year over year.
On a reported basis, EPS came in at $1.20, a 41.2% improvement from the year-ago period.
Revenue Details
First-quarter net sales came in at $1.98 billion, a 2.1% decline (a 0.7% rise at constant exchange rate or CER) year over year. The figure beat the Zacks Consensus Estimate of $1.97 billion by a close margin.
During the quarter under review, sales generated in the Americas totaled $1.19 billion (down 0.9% year over year at CER), while the same in EMEA (Europe, the Middle East and Africa) grossed $464 million (up 1.5% year over year at CER). Asia-Pacific registered 5.6% growth at CER to $318 million.
Segments
Sales in the Knees unit inched up 0.5% year over year at CER to $694 million. Hips recorded a 1.7% increase at CER from the prior-year quarter’s tally to $484 million. Revenues in the S.E.T. (Surgical, Sports Medicine, Foot and Ankle, Extremities and Trauma) unit rose 1.7% year over year to $440 million.
Among the other segments, Spine & CMF were up 1.7% at CER to $183 million, while Dental declined 0.2% to $105 million. Other revenues were down 9.4% to $70 million.
Margins
Gross margin after excluding intangible asset amortization came in at 71.9%, reflecting an expansion of 53 bps in the first quarter. Selling, general and administrative expenses were 0.7% down to $796.4 million. Research and development expenses rose 6.3% to $101.7 million. Adjusted operating margin contracted 46 bps to 26.5% during the quarter.
Cash Position
Zimmer Biomet exited first quarter 2019 with cash and cash equivalents of $586.8 million compared with $542.8 million in 2018. Long-term debt at the end of the first quarter totaled $8.81 billion compared with $8.94 billion at the end of 2018.
At the end of the first quarter, net cash provided by operating activities was $283.6 million compared with $490.5 million a year ago.
2019 Guidance
The company stated that, it has reaffirmed its 2019 revenues and adjusted EPS guidance which is as follows:
Sales in 2019 are projected to be down 0.5% to up 0.5% compared with the previous year. Per management, projected sales growth figures include 100-150 basis points of impact from an adverse currency movement. Adjusted EPS for 2019 is expected in the range of $7.70-$7.90.
Our Take
Zimmer Biomet ended the quarter on a mixed note. While the quarter’s numbers exceeded the respective Zacks Consensus Estimate, the year-over-year performance remained sluggish.
While sales in Americas remained dull, the company witnessed strength in the Asia Pacific and EMEA regions as well as in the Spine & CMF business. However, the company’s declining dental sales at CER disappoint. We believe that escalating costs and expenses are putting pressure on the adjusted operating margin.
Zacks Rank & Key Picks
Zimmer Biomet has a Zacks Rank #3 (Hold).
Some better-ranked stocks which posted solid results this earning season are Stryker Corporation (SYK - Free Report) , Abbott Laboratories (ABT - Free Report) and CONMED Corporation (CNMD - Free Report) , each carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Stryker delivered first-quarter 2019 adjusted EPS of $1.88, beating the Zacks Consensus Estimate by 2.2%. Revenues of $3.52 billion were in line with the Zacks Consensus Estimate.
Abbott reported first-quarter 2019 adjusted EPS of 63 cents, surpassing the Zacks Consensus Estimate by 3.3%. Worldwide sales totaled $7.54 billion, beating the Zacks Consensus Estimate of $7.47 billion.
CONMED’s first-quarter 2019 adjusted EPS of 57 cents beat the Zacks Consensus Estimate of 54 cents. Revenues of $218.4 million also surpassed the Zacks Consensus Estimate of $213 million.
Zacks' Top 10 Stocks for 2019
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Zimmer Biomet Holdings, Inc. (ZBH - Free Report) posted first-quarter 2019 adjusted earnings per share (EPS) of $1.87, ahead of the Zacks Consensus Estimate by a penny. However, the figure dipped 2.1% year over year.
On a reported basis, EPS came in at $1.20, a 41.2% improvement from the year-ago period.
Revenue Details
First-quarter net sales came in at $1.98 billion, a 2.1% decline (a 0.7% rise at constant exchange rate or CER) year over year. The figure beat the Zacks Consensus Estimate of $1.97 billion by a close margin.
During the quarter under review, sales generated in the Americas totaled $1.19 billion (down 0.9% year over year at CER), while the same in EMEA (Europe, the Middle East and Africa) grossed $464 million (up 1.5% year over year at CER). Asia-Pacific registered 5.6% growth at CER to $318 million.
Segments
Sales in the Knees unit inched up 0.5% year over year at CER to $694 million. Hips recorded a 1.7% increase at CER from the prior-year quarter’s tally to $484 million. Revenues in the S.E.T. (Surgical, Sports Medicine, Foot and Ankle, Extremities and Trauma) unit rose 1.7% year over year to $440 million.
Among the other segments, Spine & CMF were up 1.7% at CER to $183 million, while Dental declined 0.2% to $105 million. Other revenues were down 9.4% to $70 million.
Margins
Gross margin after excluding intangible asset amortization came in at 71.9%, reflecting an expansion of 53 bps in the first quarter. Selling, general and administrative expenses were 0.7% down to $796.4 million. Research and development expenses rose 6.3% to $101.7 million. Adjusted operating margin contracted 46 bps to 26.5% during the quarter.
Cash Position
Zimmer Biomet exited first quarter 2019 with cash and cash equivalents of $586.8 million compared with $542.8 million in 2018. Long-term debt at the end of the first quarter totaled $8.81 billion compared with $8.94 billion at the end of 2018.
At the end of the first quarter, net cash provided by operating activities was $283.6 million compared with $490.5 million a year ago.
2019 Guidance
The company stated that, it has reaffirmed its 2019 revenues and adjusted EPS guidance which is as follows:
Sales in 2019 are projected to be down 0.5% to up 0.5% compared with the previous year. Per management, projected sales growth figures include 100-150 basis points of impact from an adverse currency movement. Adjusted EPS for 2019 is expected in the range of $7.70-$7.90.
Our Take
Zimmer Biomet ended the quarter on a mixed note. While the quarter’s numbers exceeded the respective Zacks Consensus Estimate, the year-over-year performance remained sluggish.
While sales in Americas remained dull, the company witnessed strength in the Asia Pacific and EMEA regions as well as in the Spine & CMF business. However, the company’s declining dental sales at CER disappoint. We believe that escalating costs and expenses are putting pressure on the adjusted operating margin.
Zacks Rank & Key Picks
Zimmer Biomet has a Zacks Rank #3 (Hold).
Some better-ranked stocks which posted solid results this earning season are Stryker Corporation (SYK - Free Report) , Abbott Laboratories (ABT - Free Report) and CONMED Corporation (CNMD - Free Report) , each carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Stryker delivered first-quarter 2019 adjusted EPS of $1.88, beating the Zacks Consensus Estimate by 2.2%. Revenues of $3.52 billion were in line with the Zacks Consensus Estimate.
Abbott reported first-quarter 2019 adjusted EPS of 63 cents, surpassing the Zacks Consensus Estimate by 3.3%. Worldwide sales totaled $7.54 billion, beating the Zacks Consensus Estimate of $7.47 billion.
CONMED’s first-quarter 2019 adjusted EPS of 57 cents beat the Zacks Consensus Estimate of 54 cents. Revenues of $218.4 million also surpassed the Zacks Consensus Estimate of $213 million.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
See Latest Stocks Today >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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