ZimVie (US:ZIMV)2022-05-04 16:00Financial Performance - For the three months ended March 31, 2022, total net sales were $235.6 million, a decrease of 4.9% compared to $247.7 million in the same period of 2021[97]. - Spine product sales were $114.1 million, down 13.9% from $132.6 million in the prior year, while dental product sales increased by 6.4% to $120.6 million from $113.4 million[97]. - The spine segment's operating profit decreased to $5.1 million (4.5% of net sales) from $16.3 million (12.3% of net sales) in the previous year, primarily due to declining sales and increased pricing pressure[113]. - Cash flows used in operating activities were $9.9 million for the three months ended March 31, 2022, compared to cash flows provided of $20.0 million in the same period of 2021, due to a decline in profitability[115]. - The effective tax rate on loss before income taxes was 22.4% for Q1 2022, significantly lower than 324.7% in Q1 2021, influenced by prior losses calculated on a "carve-out" basis[110]. Cash and Debt Management - The company had $104.3 million in cash and cash equivalents as of March 31, 2022, up from $100.4 million at the end of 2021[114]. - Cash flows used in investing activities were $8.1 million for the three months ended March 31, 2022, a decrease from $14.2 million in the same period of 2021[116]. - Cash flows provided by financing activities were $22.2 million for the three months ended March 31, 2022, compared to cash flows used of $7.3 million in the same period of 2021[117]. - The company borrowed $595.0 million under a term loan on February 28, 2022, and repaid $34.0 million on March 1, 2022, transferring $540.6 million of the proceeds to Zimmer Biomet[119]. - As of March 31, 2022, the company had $561.0 million of floating rate debt potentially subject to SOFR, with a hypothetical 100 basis points increase in SOFR potentially decreasing annual pre-tax earnings by $5.6 million[126]. Market and Operational Insights - The company has a broad geographic revenue base with operations in approximately 25 countries, enhancing its market presence[93]. - The impact of COVID-19 has led to fluctuations in elective surgical procedures, affecting overall sales performance[94]. - The dental product category experienced strong growth in implants and digital products, contributing to the overall increase in dental sales[98]. Risk Management - The company is exposed to foreign currency exchange rate risks primarily with Euros, Chinese Renminbi, Israeli Shekel, New Zealand Dollar, and Swedish Krona, and manages this risk through derivative financial instruments[124]. - A 10% price change in raw material commodities such as cobalt chrome and titanium would not have a material effect on the company's financial position or cash flows[125]. - The company has no significant credit risk on cash and cash equivalents, as these are placed with highly rated financial institutions[127]. - Trade accounts receivable are concentrated in the healthcare industry, with exposure to public hospitals and healthcare sectors in various countries, particularly in Europe[128]. - The company believes that reserves for losses related to credit risk are adequate, despite potential exposure to government budget constraints affecting public hospitals[129]. Research and Development - Research and development expenses as a percentage of net sales increased to 7.5% in Q1 2022 from 5.4% in Q1 2021, reflecting an increase in share-based compensation[101].