Zimmer Biomet Announces First Quarter 2024 Financial Results
- First quarter net sales of
$1.889 billion increased 3.2% and 4.4% on a constant currency1 basis - First quarter diluted earnings per share were
$0.84 ; adjusted1 diluted earnings per share were$1.94 - Company reiterates full-year 2024 financial guidance
Diluted earnings per share were
1. |
Reconciliations of these measures to the corresponding |
"We are very pleased with the execution, progress and strong performance the team delivered in the first quarter," said Ivan Tornos,
Recent Highlights
Aligned with the ongoing transformation of
-
Received U.S. Food and Drug Administration 510(k) clearance for the ROSA® Shoulder System – the world's first robotic assistant for shoulder replacement surgery and announced that the first surgery was successfully completed in April atMayo Clinic . -
Received U.S. Food and Drug Administration 510(k) clearance for the Z1 Femoral Hip Stem – Z1 is a modern triple taper system that provides a comprehensive stem offering to provide more solutions and treat more patients all within the same platform. Z1 is expected to launch later this year. -
Showcased the latest innovations
across our comprehensive portfolio at the 2024
American Academy of Orthopaedic Surgeons (AAOS) annual meeting inSan Francisco , including hands-on demonstrations of key growth drivers, such as Persona® OsseoTi® Keel Tibia for cementless knee replacement, ROSA® Robotics (ROSA Knee and ROSA Hip), AmbulatorySurgery Center (ASC) Solutions, as well as recently launched surgical tools, including HAMMR™ Automatic Hip Impaction System and the ViVi® Surgical Helmet System. -
Announced partnerships
with three top pickleball organizations in
the United States –Association of Pickleball Players ,Professional Pickleball Association , andUSA Pickleball – becoming the first medical device partner for the sport of pickleball and bringing joint health education and the importance of movement to America's fastest-growing sport as well as raising awareness as a trusted partner for joint replacement. -
Signed
the Global Health Equity Network's Zero Health Gaps Pledge – a commitment from CEOs across industries and regions for their organizations to embed health equity in core strategies, operations and investments – and expanded our longstanding commitment to advancing health equity through a newly established Health Equity Division, which leads
Zimmer Biomet's efforts to address disparities in health access and outcomes. - Rang the closing bell at the
New York Stock Exchange (NYSE) onMay 1 to commemorate our Founders Day onMay 2 . Additionally,Zimmer Biomet will host an Investor Day event at the NYSE onWednesday, May 29, 2024 . Investors and analysts should register prior to attending the event viaZimmer Biomet's Investor Relations website at https://investor.zimmerbiomet.com/news-and-events/events-and-presentations. - Continued recognition for our Diversity, Equity and Inclusion (DEI) efforts with recognition from Newsweek as one of America's Greatest Workplaces for Women and America's Greatest Workplaces for Job Starters. In addition, we received recognition from Forbes as one of America's Best Large Employers 2024, which is an acknowledgement of our ongoing focus on our people and culture, and being a destination workplace.
- Received recognition for our Environmental, Social and Governance (ESG) efforts from CDP with recognition as a Supplier Engagement Leader for the second consecutive year.
Geographic and Product Category Sales
The following sales table provides results by geography and product category for the three-month period ended
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(in millions, unaudited) |
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Constant |
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Net |
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Currency |
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Sales |
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% Change |
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% Change |
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Geographic Results |
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$ |
1,099.2 |
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3.7 |
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% |
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3.7 |
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% |
International |
|
790.0 |
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2.5 |
|
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5.4 |
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Total |
$ |
1,889.2 |
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3.2 |
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% |
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4.4 |
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% |
Product Categories |
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Knees |
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$ |
458.0 |
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2.2 |
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% |
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2.2 |
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% |
International |
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330.1 |
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5.0 |
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7.3 |
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Total |
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788.1 |
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3.4 |
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4.3 |
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Hips |
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254.9 |
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1.0 |
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1.0 |
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International |
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236.3 |
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(1.7) |
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2.0 |
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Total |
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491.2 |
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(0.3) |
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1.5 |
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S.E.T. * |
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452.6 |
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4.4 |
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5.3 |
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Other |
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157.3 |
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10.6 |
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12.2 |
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Total |
$ |
1,889.2 |
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3.2 |
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% |
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4.4 |
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% |
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* Sports Medicine, Extremities, Trauma, Craniomaxillofacial and Thoracic |
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Amounts reported in millions are computed based on the actual amounts. As a result, the sum of the components reported in millions may not equal the total amount reported in millions due to rounding. Percentages presented are calculated from the underlying unrounded amounts. |
Financial Guidance
The Company is reiterating its current full-year 2024 financial guidance.
Projected Year Ending |
|
2024 Reported Revenue Change |
4.5% - 5.5% |
Foreign Currency Exchange Impact |
(0.5) % |
2024 Constant Currency Revenue Change |
5.0% - 6.0% |
Adjusted Diluted EPS (1) |
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(1) |
This measure is a non-GAAP financial measure for which a reconciliation to the most directly comparable GAAP financial measure is not available without unreasonable efforts. See "Forward-Looking Non-GAAP Financial Measures" below, which identifies the information that is unavailable without unreasonable efforts and provides additional information. It is probable that this forward-looking non-GAAP financial measure may be materially different from the corresponding GAAP financial measure. |
Conference Call
The Company will conduct its first quarter investor conference call today,
About the Company
With 90+ years of trusted leadership and proven expertise,
For more information about our product portfolio, our operations in 25+ countries and sales in 100+ countries or about joining our team, visit www.zimmerbiomet.com or follow on LinkedIn at www.linkedin.com/company/zimmerbiomet or X / Twitter at www.twitter.com/zimmerbiomet.
Website Information
We routinely post important information for investors on our website, www.zimmerbiomet.com, in the "Investor Relations" section. We use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases,
The information contained on, or that may be accessed through, our website or any other website referenced herein is not incorporated by reference into, and is not a part of, this document.
Note on Non-GAAP Financial Measures
This press release and our commentary in our investor conference call today include non-GAAP financial measures that differ from financial measures calculated in accordance with
Net sales change information for the three-month period ended
Net earnings and diluted earnings per share for the three-month periods ended
Free cash flow is an additional non-GAAP measure that is presented in this press release. Free cash flow is computed by deducting additions to instruments and other property, plant and equipment from net cash provided by operating activities.
Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in this press release. This press release also contains supplemental reconciliations of additional non-GAAP financial measures that the Company presents in other contexts. These additional non-GAAP financial measures are computed from the most directly comparable GAAP financial measure as indicated in the applicable reconciliation.
Management uses non-GAAP financial measures internally to evaluate the performance of the business. Additionally, management believes these non-GAAP measures provide meaningful incremental information to investors to consider when evaluating the performance of the Company. Management believes these measures offer the ability to make period-to-period comparisons that are not impacted by certain items that can cause dramatic changes in reported income but that do not impact the fundamentals of our operations. The non-GAAP measures enable the evaluation of operating results and trend analysis by allowing a reader to better identify operating trends that may otherwise be masked or distorted by these types of items that are excluded from the non-GAAP measures. In addition, constant currency sales changes, adjusted operating profit, adjusted diluted earnings per share and free cash flow are used as performance metrics in our incentive compensation programs.
Forward-Looking Non-GAAP Financial Measures
This press release also includes certain forward-looking non-GAAP financial measures for the year ending
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding financial guidance, statements regarding macro pressures, including the impact of such pressures on our business, and any statements about our forecasts, expectations, plans, intentions, strategies or prospects. All statements other than statements of historical or current fact are, or may be deemed to be, forward-looking statements. Such statements are based upon the current beliefs, expectations and assumptions of management and are subject to significant risks, uncertainties and changes in circumstances that could cause actual outcomes and results to differ materially from the forward-looking statements. These risks, uncertainties and changes in circumstances include, but are not limited to: competition; pricing pressures; dependence on new product development, technological advances and innovation; changes in customer demand for our products and services caused by demographic changes, obsolescence, development of different therapies or other factors; shifts in the product category or regional sales mix of our products and services; the effects of business disruptions, either alone or in combination with other risks on our business and operations; the risks and uncertainties related to our ability to successfully execute our restructuring plans; control of costs and expenses; our ability to attract, retain and develop the highly skilled employees, senior management, independent agents and distributors we need to support our business; the possibility that the anticipated synergies and other benefits from mergers and acquisitions will not be realized, or will not be realized within the expected time periods; the risks and uncertainties related to our ability to successfully integrate the operations, products, employees and distributors of acquired companies; the effect of the potential disruption of management's attention from ongoing business operations due to integration matters related to mergers and acquisitions; the effect of mergers and acquisitions on our relationships with customers, suppliers and lenders and on our operating results and businesses generally; the ability to form and implement alliances; dependence on a limited number of suppliers for key raw materials and other inputs and for outsourced activities; the risk of disruptions in the supply of materials and components used in manufacturing or sterilizing our products; breaches or failures of our information technology systems or products, including by cyberattack, unauthorized access or theft; challenges relating to changes in and compliance with governmental laws and regulations affecting our
Note: Amounts reported in millions within this press release are computed based on the actual amounts. As a result, the sum of the components reported in millions may not equal the total amount reported in millions due to rounding. Certain columns and rows within tables may not add due to the use of rounded numbers. Percentages presented are calculated from the underlying unrounded amounts.
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CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS |
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FOR THE THREE MONTHS ENDED |
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(in millions, except per share amounts, unaudited) |
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2024 |
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2023 |
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$ |
1,889.2 |
|
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$ |
1,831.0 |
|
Cost of products sold, excluding intangible asset amortization |
|
512.3 |
|
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500.8 |
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Intangible asset amortization |
|
142.1 |
|
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133.4 |
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Research and development |
|
107.9 |
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110.4 |
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Selling, general and administrative |
|
736.2 |
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|
715.9 |
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Restructuring and other cost reduction initiatives |
|
124.4 |
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41.8 |
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Acquisition, integration, divestiture and related |
|
0.4 |
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1.3 |
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Operating expenses |
|
1,623.3 |
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|
1,503.7 |
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Operating Profit |
|
265.9 |
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|
327.3 |
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Other (expense) income, net |
|
(0.1) |
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7.7 |
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Interest expense, net |
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(50.7) |
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|
(48.2) |
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Earnings before income taxes |
|
215.1 |
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|
286.8 |
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Provision for income taxes |
|
42.3 |
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|
54.1 |
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Net Earnings |
|
172.8 |
|
|
|
232.8 |
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Less: Net earnings attributable to noncontrolling interest |
|
0.4 |
|
|
|
0.2 |
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Net Earnings of |
$ |
172.4 |
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$ |
232.5 |
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Earnings Per Common Share |
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Basic |
$ |
0.84 |
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$ |
1.11 |
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Diluted |
$ |
0.84 |
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$ |
1.11 |
|
Weighted Average Common Shares Outstanding |
|
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Basic |
|
205.2 |
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|
209.4 |
|
Diluted |
|
206.2 |
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|
210.4 |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(in millions, unaudited) |
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2024 |
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2023 |
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Assets |
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Cash and cash equivalents |
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$ |
393.0 |
|
|
$ |
415.8 |
|
Receivables, net |
|
|
1,446.4 |
|
|
|
1,442.4 |
|
Inventories |
|
|
2,388.2 |
|
|
|
2,385.2 |
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Other current assets |
|
|
403.8 |
|
|
|
366.1 |
|
Total current assets |
|
|
4,631.5 |
|
|
|
4,609.5 |
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Property, plant and equipment, net |
|
|
2,090.9 |
|
|
|
2,060.4 |
|
|
|
|
8,791.5 |
|
|
|
8,818.5 |
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Intangible assets, net |
|
|
4,734.1 |
|
|
|
4,856.4 |
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Other assets |
|
|
1,204.4 |
|
|
|
1,152.1 |
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Total Assets |
|
$ |
21,452.4 |
|
|
$ |
21,496.9 |
|
Liabilities and Stockholders' Equity |
|
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Current liabilities |
|
$ |
1,826.9 |
|
|
$ |
1,957.5 |
|
Current portion of long-term debt |
|
|
970.0 |
|
|
|
900.0 |
|
Other long-term liabilities |
|
|
1,223.2 |
|
|
|
1,283.4 |
|
Long-term debt |
|
|
4,826.2 |
|
|
|
4,867.9 |
|
Stockholders' equity |
|
|
12,606.0 |
|
|
|
12,488.1 |
|
Total Liabilities and Stockholders' Equity |
|
$ |
21,452.4 |
|
|
$ |
21,496.9 |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
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FOR THE THREE MONTHS ENDED |
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(in millions, unaudited) |
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|
2024 |
|
|
2023 |
|
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Cash flows provided by (used in) operating activities |
|
|
|
|
|
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||
Net earnings |
|
$ |
172.8 |
|
|
$ |
232.8 |
|
Depreciation and amortization |
|
|
238.6 |
|
|
|
231.8 |
|
Share-based compensation |
|
|
29.0 |
|
|
|
25.0 |
|
Changes in operating assets and liabilities, net of acquired assets and liabilities |
|
|
|
|
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Income taxes |
|
|
(8.6) |
|
|
|
21.5 |
|
Receivables |
|
|
(22.7) |
|
|
|
8.6 |
|
Inventories |
|
|
(55.3) |
|
|
|
(94.2) |
|
Accounts payable and accrued liabilities |
|
|
(119.4) |
|
|
|
(91.8) |
|
Other assets and liabilities |
|
|
(6.4) |
|
|
|
(26.0) |
|
Net cash provided by operating activities |
|
|
228.0 |
|
|
|
307.7 |
|
Cash flows provided by (used in) investing activities |
|
|
|
|
|
|
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Additions to instruments |
|
|
(82.0) |
|
|
|
(82.8) |
|
Additions to other property, plant and equipment |
|
|
(55.1) |
|
|
|
(46.7) |
|
Net investment hedge settlements |
|
|
10.2 |
|
|
|
13.4 |
|
Acquisition of intellectual property rights |
|
|
(12.5) |
|
|
|
(14.0) |
|
Business combination investments, net of acquired cash |
|
|
- |
|
|
|
(18.9) |
|
Investments in other assets |
|
|
(55.6) |
|
|
|
(0.3) |
|
Net cash used in investing activities |
|
|
(195.0) |
|
|
|
(149.4) |
|
Cash flows provided by (used in) financing activities |
|
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Net proceeds from revolving facilities |
|
|
70.0 |
|
|
|
210.0 |
|
Redemption of senior notes |
|
|
- |
|
|
|
(86.3) |
|
Payment on term loan |
|
|
- |
|
|
|
(33.9) |
|
Dividends paid to stockholders |
|
|
(49.4) |
|
|
|
(50.3) |
|
Proceeds from employee stock compensation plans |
|
|
56.4 |
|
|
|
36.0 |
|
Business combination contingent consideration payments |
|
|
(1.5) |
|
|
|
(9.6) |
|
Deferred business combination payments |
|
|
(1.5) |
|
|
|
- |
|
Repurchase of common stock |
|
|
(113.6) |
|
|
|
(267.6) |
|
Other financing activities |
|
|
(10.5) |
|
|
|
(5.1) |
|
Net cash used in financing activities |
|
|
(50.1) |
|
|
|
(206.7) |
|
Effect of exchange rates on cash and cash equivalents |
|
|
(5.7) |
|
|
|
2.9 |
|
Change in cash and cash equivalents |
|
|
(22.7) |
|
|
|
(45.5) |
|
Cash and cash equivalents, beginning of year |
|
|
415.8 |
|
|
|
375.7 |
|
Cash and cash equivalents, end of period |
|
$ |
393.0 |
|
|
$ |
330.2 |
|
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RECONCILIATION OF REPORTED |
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CONSTANT CURRENCY % CHANGE |
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(unaudited) |
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For the Three Months Ended |
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Foreign |
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Constant |
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|||
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Exchange |
|
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Currency |
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|
|||
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% Change |
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Impact |
|
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% Change |
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|||
Geographic Results |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
3.7 |
|
% |
|
|
- |
|
% |
|
|
3.7 |
|
% |
International |
|
2.5 |
|
|
|
|
(2.9) |
|
|
|
|
5.4 |
|
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Total |
|
3.2 |
|
% |
|
|
(1.2) |
|
% |
|
|
4.4 |
|
% |
Product Categories |
|
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|
|
|
|
|
|
|
|
|
|||
Knees |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
2.2 |
|
% |
|
|
- |
|
% |
|
|
2.2 |
|
% |
International |
|
5.0 |
|
|
|
|
(2.3) |
|
|
|
|
7.3 |
|
|
Total |
|
3.4 |
|
|
|
|
(0.9) |
|
|
|
|
4.3 |
|
|
Hips |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
1.0 |
|
|
|
|
- |
|
|
|
|
1.0 |
|
|
International |
|
(1.7) |
|
|
|
|
(3.7) |
|
|
|
|
2.0 |
|
|
Total |
|
(0.3) |
|
|
|
|
(1.8) |
|
|
|
|
1.5 |
|
|
S.E.T. |
|
4.4 |
|
|
|
|
(0.9) |
|
|
|
|
5.3 |
|
|
Other |
|
10.6 |
|
|
|
|
(1.6) |
|
|
|
|
12.2 |
|
|
Total |
|
3.2 |
|
% |
|
|
(1.2) |
|
% |
|
|
4.4 |
|
% |
|
|
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RECONCILIATION OF REPORTED TO ADJUSTED RESULTS |
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FOR THE THREE MONTHS ENDED |
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(in millions, except per share amounts, unaudited) |
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|
|
|
|
|
|
|
||||||||||
FOR THE THREE MONTHS ENDED |
|
|||||||||||||||||||||||||||||||||||||||
|
|
Cost of products |
|
|
Intangible asset amortization |
|
|
Research and |
|
|
Selling, general and |
|
|
Restructuring and |
|
|
Acquisition, integration, |
|
|
Other (expense) |
|
|
Provision for |
|
|
Net Earnings of |
|
|
Diluted earnings |
|
||||||||||
As Reported |
|
$ |
512.3 |
|
|
$ |
142.1 |
|
|
$ |
107.9 |
|
|
$ |
736.2 |
|
|
$ |
124.4 |
|
|
$ |
0.4 |
|
|
$ |
(0.1) |
|
|
$ |
42.3 |
|
|
$ |
172.4 |
|
|
$ |
0.84 |
|
Inventory and manufacturing-related charges(1) |
|
|
(1.1) |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
0.8 |
|
|
|
0.3 |
|
|
|
- |
|
Intangible asset amortization(2) |
|
|
- |
|
|
|
(142.1) |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
27.8 |
|
|
|
114.3 |
|
|
|
0.55 |
|
Restructuring and other cost reduction initiatives(3) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(124.4) |
|
|
|
- |
|
|
|
- |
|
|
|
27.8 |
|
|
|
96.6 |
|
|
|
0.47 |
|
Acquisition, integration, divestiture and related(4) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(0.4) |
|
|
|
- |
|
|
|
0.4 |
|
|
|
- |
|
|
|
- |
|
European Union Medical Device Regulation(5) |
|
|
- |
|
|
|
- |
|
|
|
(5.7) |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1.3 |
|
|
|
4.4 |
|
|
|
0.02 |
|
Other charges(6) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
0.2 |
|
|
|
- |
|
|
|
- |
|
|
|
2.3 |
|
|
|
0.5 |
|
|
|
1.6 |
|
|
|
0.01 |
|
Other certain tax adjustments(7) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(10.0) |
|
|
|
10.0 |
|
|
|
0.05 |
|
As Adjusted |
|
$ |
511.2 |
|
|
$ |
- |
|
|
$ |
102.2 |
|
|
$ |
736.4 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
2.1 |
|
|
$ |
90.9 |
|
|
$ |
399.7 |
|
|
$ |
1.94 |
|
FOR THE THREE MONTHS ENDED |
|
|||||||||||||||||||||||||||||||||||||||
|
|
Cost of products |
|
|
Intangible asset |
|
|
Research and development |
|
|
Selling, general and |
|
|
Restructuring and |
|
|
Acquisition, integration, |
|
|
Other (expense) |
|
|
Provision for |
|
|
Net Earnings of |
|
|
Diluted earnings |
|
||||||||||
As Reported |
|
$ |
500.8 |
|
|
$ |
133.4 |
|
|
$ |
110.4 |
|
|
$ |
715.9 |
|
|
$ |
41.8 |
|
|
$ |
1.3 |
|
|
$ |
7.7 |
|
|
$ |
54.1 |
|
|
$ |
232.5 |
|
|
$ |
1.11 |
|
Inventory and manufacturing-related charges(1) |
|
|
(3.6) |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2.4 |
|
|
|
1.2 |
|
|
|
0.01 |
|
Intangible asset amortization(2) |
|
|
- |
|
|
|
(133.4) |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
27.0 |
|
|
|
106.4 |
|
|
|
0.51 |
|
Restructuring and other cost reduction initiatives(3) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(41.8) |
|
|
|
- |
|
|
|
- |
|
|
|
10.3 |
|
|
|
31.5 |
|
|
|
0.15 |
|
Acquisition, integration, divestiture and related(4) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1.3) |
|
|
|
- |
|
|
|
0.3 |
|
|
|
1.0 |
|
|
|
- |
|
European Union Medical Device Regulation(5) |
|
|
- |
|
|
|
- |
|
|
|
(14.0) |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3.3 |
|
|
|
10.7 |
|
|
|
0.05 |
|
Other charges(6) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1.1 |
|
|
|
- |
|
|
|
- |
|
|
|
(5.7) |
|
|
|
(2.0) |
|
|
|
(4.8) |
|
|
|
(0.02) |
|
Other certain tax adjustments(7) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(18.3) |
|
|
|
18.3 |
|
|
|
0.09 |
|
As Adjusted |
|
$ |
497.2 |
|
|
$ |
- |
|
|
$ |
96.4 |
|
|
$ |
717.0 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
2.0 |
|
|
$ |
77.1 |
|
|
$ |
396.8 |
|
|
$ |
1.89 |
|
|
|
(1) |
Inventory and manufacturing-related charges include excess and obsolete inventory charges on certain product lines we intend to discontinue, the acceleration of depreciation and fixed overhead costs expensed immediately related to a manufacturing plant shutdown, and other inventory and manufacturing-related charges or gains. |
|
|
(2) |
We exclude intangible asset amortization as well as deferred tax rate changes on our intangible assets from our non-GAAP financial measures because we internally assess our performance against our peers without this amortization. Due to various levels of acquisitions among our peers, intangible asset amortization can vary significantly from company to company. |
|
|
(3) |
In |
|
|
(4) |
The acquisition, integration, divestiture and related gains and expenses we have excluded from our non-GAAP financial measures resulted from various acquisitions, post-separation costs we have incurred related to ZimVie and gains related to a transition services agreement for services we provide to ZimVie and a transition manufacturing and supply agreement for products we supply to ZimVie for a limited period. |
|
|
(5) |
The European Union Medical Device Regulation imposes significant additional premarket and postmarket requirements. The new regulations provided a transition period until |
|
|
(6) |
We have incurred other various expenses from specific events or projects that we consider highly variable or that have a significant impact to our operating results that we have excluded from our non-GAAP measures. These include gains and losses from changes in fair value on our equity investments, among other various costs. |
|
|
(7) |
Other certain tax adjustments are related to certain significant and discrete tax adjustments including intercompany transactions between jurisdictions, ongoing impacts of tax only amortization resulting from certain restructuring transactions and impacts of significant tax reform including Swiss reform. |
|
|
||||||
RECONCILIATION OF NET CASH PROVIDED BY OPERATING |
|
||||||
ACTIVITIES TO FREE CASH FLOW |
|
||||||
FOR THE THREE MONTHS ENDED |
|
||||||
(in millions, unaudited) |
|
||||||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
Three Months Ended |
|
|||||
|
2024 |
|
|
2023 |
|
||
Net cash provided by operating activities |
$ |
228.0 |
|
|
$ |
307.7 |
|
Additions to instruments |
|
(82.0) |
|
|
|
(82.8) |
|
Additions to other property, plant and equipment |
|
(55.1) |
|
|
|
(46.7) |
|
Free cash flow |
$ |
90.9 |
|
|
$ |
178.2 |
|
|
||||||||
RECONCILIATION OF GROSS PROFIT & MARGIN |
||||||||
TO ADJUSTED GROSS PROFIT & MARGIN |
||||||||
FOR THE THREE MONTHS ENDED |
||||||||
(in millions, unaudited) |
||||||||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
Three Months Ended |
|
|
|||||
|
2024 |
|
|
2023 |
|
|
||
|
$ |
1,889.2 |
|
|
$ |
1,831.0 |
|
|
Cost of products sold, excluding intangible asset amortization |
|
512.3 |
|
|
|
500.8 |
|
|
Intangible asset amortization |
|
142.1 |
|
|
|
133.4 |
|
|
Gross Profit |
$ |
1,234.8 |
|
|
$ |
1,196.8 |
|
|
|
|
|
|
|
|
|
||
Inventory and manufacturing-related charges |
|
1.1 |
|
|
|
3.6 |
|
|
Intangible asset amortization |
|
142.1 |
|
|
|
133.4 |
|
|
Adjusted gross profit |
$ |
1,378.0 |
|
|
$ |
1,333.8 |
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Gross margin |
|
65.4 |
|
% |
|
65.4 |
|
% |
Inventory and manufacturing-related charges |
|
0.1 |
|
|
|
0.2 |
|
|
Intangible asset amortization |
|
7.5 |
|
|
|
7.3 |
|
|
Adjusted gross margin |
|
72.9 |
|
% |
|
72.8 |
|
% |
|
||||||||
RECONCILIATION OF OPERATING PROFIT & MARGIN TO ADJUSTED OPERATING PROFIT & MARGIN |
||||||||
FOR THE THREE MONTHS ENDED |
||||||||
(in millions, unaudited) |
||||||||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
Three Months Ended |
|
|
|||||
|
2024 |
|
|
2023 |
|
|
||
Operating profit |
$ |
265.9 |
|
|
$ |
327.3 |
|
|
Inventory and manufacturing-related charges |
|
1.1 |
|
|
|
3.6 |
|
|
Intangible asset amortization |
|
142.1 |
|
|
|
133.4 |
|
|
Restructuring and other cost reduction initiatives |
|
124.4 |
|
|
|
41.8 |
|
|
Acquisition, integration, divestiture and related |
|
0.4 |
|
|
|
1.3 |
|
|
European Union Medical Device Regulation |
|
5.7 |
|
|
|
14.0 |
|
|
Other charges |
|
(0.2) |
|
|
|
(1.1) |
|
|
Adjusted operating profit |
$ |
539.4 |
|
|
$ |
520.3 |
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Operating profit margin |
|
14.1 |
|
% |
|
17.9 |
|
% |
Inventory and manufacturing-related charges |
|
0.1 |
|
|
|
0.2 |
|
|
Intangible asset amortization |
|
7.5 |
|
|
|
7.3 |
|
|
Restructuring and other cost reduction initiatives |
|
6.6 |
|
|
|
2.3 |
|
|
Acquisition, integration, divestiture and related |
|
- |
|
|
|
0.1 |
|
|
European Union Medical Device Regulation |
|
0.3 |
|
|
|
0.8 |
|
|
Other charges |
|
- |
|
|
|
(0.1) |
|
|
Adjusted operating profit margin |
|
28.6 |
|
% |
|
28.4 |
|
% |
|
||||||||
RECONCILIATION OF EFFECTIVE TAX RATE TO ADJUSTED EFFECTIVE TAX RATE |
||||||||
FOR THE THREE MONTHS ENDED |
||||||||
(unaudited) |
||||||||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
Three Months Ended |
|
|
|||||
|
2024 |
|
|
2023 |
|
|
||
Effective tax rate |
|
19.7 |
|
% |
|
18.9 |
|
% |
Tax effect of adjustments made to earnings before taxes(1) |
|
3.4 |
|
|
|
3.7 |
|
|
Other certain tax adjustments (2) |
|
(4.6) |
|
|
|
(6.3) |
|
|
Adjusted effective tax rate |
|
18.5 |
|
% |
|
16.3 |
|
% |
|
|
|
|
|
|
|
(1) Includes inventory and manufacturing-related charges; intangible asset amortization; restructuring and other cost reduction initiatives; acquisition, integration, divestiture and related; European Union Medical Device Regulation; and other charges |
||||||||
(2) Other certain tax adjustments are related to certain significant and discrete tax adjustments including intercompany transactions between jurisdictions, ongoing impacts of tax only amortization resulting from certain restructuring transactions and impacts of significant tax reform including Swiss reform |
|
|
||||||
RECONCILIATION OF DEBT TO NET DEBT |
|
||||||
AS OF |
|
||||||
(in millions, unaudited) |
|
||||||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
Debt, both current and long-term |
$ |
5,796.2 |
|
|
$ |
5,767.9 |
|
Cash and cash equivalents |
|
(393.0) |
|
|
|
(415.8) |
|
Net debt |
$ |
5,403.2 |
|
|
$ |
5,352.1 |
|
Media |
Investors |
|
|
(445) 248-0577 |
(908) 591-6955 |
|
|
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