Zimmer Biomet(US:ZBH)2025-05-05 20:00Financial Performance - Net sales for the three-month period ended March 31, 2025, increased by 1.1% year-over-year, totaling $1,909.1 million, driven by market growth and new product introductions [109][114]. - Net earnings rose to $182.0 million in the same period, up from $172.4 million, primarily due to lower restructuring charges and increased net sales [110]. - The company expects revenue growth of 5.7% to 8.2% in 2025, influenced by the Paragon 28 acquisition and new product launches [111]. - Changes in volume and mix of product sales positively affected year-over-year sales by 2.2% during the three-month period ended March 31, 2025 [116]. - International net sales increased by 0.7% year-over-year, totaling $795.5 million, despite a negative impact of 3.0% from foreign currency exchange rates [119][114]. Costs and Expenses - Anticipated additional expenses related to tariffs in 2025 are estimated between $60 million to $80 million, impacting costs significantly in the second half of the year [112]. - The cost of products sold as a percentage of net sales increased to 28.8% from 27.1% due to higher manufacturing costs driven by inflation [121]. - Research and development expenses increased to 5.8% of net sales, reflecting higher spending on technology-based projects [122]. - Operating profit as a percentage of net sales decreased in the Americas to 51.8% from 53.9% due to higher manufacturing costs and bad debt charges [130][131]. - Operating profit in EMEA decreased due to higher manufacturing costs, partially offset by restructuring savings [132]. - Operating profit in Asia Pacific also decreased, attributed to higher manufacturing costs and increased bad debt-related charges [133]. Cash Flow and Financing - Cash flows from operations were $382.8 million for the three-month period ended March 31, 2025, up from $228.0 million in the prior year [136]. - Cash flows used in investing activities decreased to $106.0 million from $195.0 million year-over-year, reflecting lower investments in property and equipment [137]. - Cash flows provided by financing activities were $575.4 million, with senior notes issued for proceeds of $1,748.1 million [138]. - As of March 31, 2025, the company had $1,384.5 million in cash and cash equivalents, with $1.0 billion available to borrow under a credit agreement [134]. - Outstanding debt as of March 31, 2025, was $7,176.3 million, with $600.0 million classified as current debt maturing on January 15, 2026 [142]. Strategic Initiatives - The company completed the acquisition of Paragon 28 for approximately $1.4 billion, utilizing cash and borrowing [143]. - The 2025 Restructuring Plan is expected to incur pre-tax charges of approximately $85 million, aiming to reduce annual operating expenses by $95 million by the end of 2027 [146]. - The company declared a quarterly cash dividend of $0.24 per share and has $1,020.2 million remaining under a $2.0 billion share repurchase program [145]. Taxation - The effective tax rate for the three-month period ended March 31, 2025, was 20.3%, up from 19.7% in the prior year, influenced by the mix of earnings between U.S. and foreign locations [129].