ZimVie (US:ZIMV)2024-05-08 20:11ZimVie First Quarter 2024 Financial Performance First Quarter 2024 Financial Highlights In the first quarter of 2024, ZimVie's continuing operations generated third-party net sales of $118.2 million, a slight decrease of 1.6% year-over-year, while significantly reducing its net loss and improving Adjusted EBITDA margin to 10.5% Q1 2024 Key Financial Metrics (Continuing Operations) | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Third Party Net Sales | $118.2M | $120.2M | -1.6% | | Net Loss | ($11.5M) | ($16.4M) | +$4.9M | | Net Loss Margin | (9.7%) | (13.6%) | +390 bps | | Adjusted Net Income | $2.2M | $0.3M (approx.) | +$1.9M | | Adjusted EBITDA | $12.5M | $10.7M | +$1.8M | | Adjusted EBITDA Margin | 10.5% | 8.8% | +170 bps | | Diluted EPS | ($0.42) | ($0.62) | +$0.20 | | Adjusted Diluted EPS | $0.08 | $0.01 | +$0.07 | - Net sales from continuing operations decreased by 1.4% on a constant currency basis compared to the first quarter of 20233 Corporate Developments ZimVie successfully reshaped its financial profile by completing the sale of its spine business for $375 million on April 1, 2024, using $275 million of proceeds to repay debt and re-focusing as a pure-play dental company - Completed the sale of the spine business for $375 million9 - Repaid $275 million of debt on April 1, 2024, strengthening the company's financial position9 - The company is now re-focused as a pure-play dental company with a comprehensive portfolio3 Full Year 2024 Financial Guidance ZimVie projects full-year 2024 net sales for continuing operations between $450 million and $460 million, with Adjusted EBITDA expected in the range of $60 million to $65 million Full Year 2024 Guidance (Continuing Operations) | Metric | Guidance Range | | :--- | :--- | | Net Sales | $450M - $460M | | Adjusted EBITDA | $60M - $65M | | Adjusted EPS | $0.55 - $0.70 | Consolidated Financial Statements Consolidated Statement of Operations For Q1 2024, ZimVie reported total net sales of $118.2 million, an improved operating loss of ($2.7 million), and a reduced net loss from continuing operations of ($11.5 million), alongside significant earnings from discontinued operations Q1 2024 vs Q1 2023 Statement of Operations Highlights (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total Net Sales | $118,195 | $120,406 | | Operating Loss | $(2,732) | $(6,187) | | Net Loss from Continuing Operations | $(11,483) | $(16,369) | | Earnings (Loss) from Discontinued Operations | $3,722 | $(13,599) | | Net Loss of ZimVie Inc. | $(7,761) | $(29,968) | | Diluted EPS (Continuing Operations) | $(0.42) | $(0.62) | Consolidated Balance Sheets As of March 31, 2024, ZimVie's total assets were $1.17 billion, with cash and cash equivalents at $43.5 million, total liabilities at $783.3 million, and total stockholders' equity at $388.3 million Balance Sheet Summary (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $43,528 | $71,511 | | Total Current Assets | $455,141 | $482,877 | | Total Assets | $1,171,607 | $1,205,345 | | Liabilities & Equity | | | | Total Current Liabilities | $169,648 | $173,614 | | Non-current portion of debt | $502,056 | $508,797 | | Total Liabilities | $783,278 | $795,852 | | Total Stockholders' Equity | $388,329 | $409,493 | Consolidated Statements of Cash Flows In Q1 2024, ZimVie used $11.5 million in cash from operating activities, with a total decrease in cash and cash equivalents of $19.2 million, ending the period with $68.6 million Q1 2024 vs Q1 2023 Cash Flow Highlights (in thousands) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(11,511) | $(7,196) | | Net cash used in investing activities | $(4,138) | $(5,832) | | Net cash used in financing activities | $(1,437) | $(10,936) | | Decrease in cash and cash equivalents | $(19,184) | $(23,187) | | Cash and cash equivalents, end of period | $68,584 | $66,414 | Segment and Geographic Performance Net Sales Analysis Q1 2024 total dental third-party sales decreased by 1.4% in constant currency, with U.S. dental sales down 3.1% and international sales up 1.1%, while the discontinued spine business saw a 10.1% decline Q1 2024 Net Sales Breakdown by Segment and Geography (in thousands) | Segment / Geography | Q1 2024 Sales | YoY Change (Reported) | YoY Change (Constant Currency) | | :--- | :--- | :--- | :--- | | Dental (Continuing Ops) | | | | | United States | $67,748 | -3.1% | -3.1% | | International | $50,447 | +0.4% | +1.1% | | Total Dental Third Party | $118,195 | -1.6% | -1.4% | | Spine (Discontinued Ops) | | | | | Total Spine Third Party | $93,824 | -10.6% | -10.1% | Non-GAAP Financial Measures and Reconciliations Reconciliation of Net Income (Loss) to Adjusted Net Income ZimVie's Q1 2024 GAAP net loss of ($11.5 million) was adjusted to a net income of $2.2 million, primarily by adding back intangible asset amortization, restructuring costs, and acquisition-related expenses, resulting in an adjusted diluted EPS of $0.08 Q1 2024 Reconciliation of GAAP Net Loss to Adjusted Net Income (in thousands) | Description | Amount | | :--- | :--- | | Net Loss from Continuing Operations (GAAP) | $(11,483) | | Intangible asset amortization | $6,022 | | Restructuring and other cost reduction initiatives | $2,579 | | Acquisition, integration, divestiture and related | $1,037 | | Tax effect of adjustments & other | $3,316 | | Other charges | $687 | | Adjusted Net Income (Non-GAAP) | $2,158 | Reconciliation of Net Loss to Adjusted EBITDA Adjusted EBITDA from continuing operations increased to $12.5 million in Q1 2024, reconciled from a GAAP net loss of ($11.5 million) by adding back interest, taxes, depreciation, amortization, share-based compensation, and restructuring costs Q1 2024 Reconciliation to Adjusted EBITDA (in thousands) | Description | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Loss (GAAP) | $(11,483) | $(16,369) | | Interest expense, net | $4,366 | $5,075 | | Income tax provision | $4,074 | $5,077 | | Depreciation and amortization | $8,430 | $8,628 | | EBITDA | $5,387 | $2,411 | | Share-based compensation | $2,762 | $4,223 | | Restructuring and other cost reduction | $2,579 | $1,172 | | Acquisition, integration, divestiture | $1,037 | $1,342 | | Adjusted EBITDA (Non-GAAP) | $12,452 | $10,630 | Reconciliation of Operating Expenses Adjusted cost of products sold was 37.2% of net sales in Q1 2024, with adjusted R&D at 5.3% and adjusted SG&A decreasing to 51.0%, reflecting improved operational efficiency Adjusted Operating Expenses as a % of Third Party Net Sales | Expense Line | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Adjusted cost of products sold | 37.2% | 35.4% | | Adjusted research and development | 5.3% | 4.9% | | Adjusted selling, general and administrative | 51.0% | 55.1% | Important Disclosures About Non-GAAP Financial Measures Management uses non-GAAP financial measures like Adjusted EBITDA and constant currency sales to evaluate business performance and provide supplemental information, with reconciliations to GAAP measures included - Management uses non-GAAP measures internally to evaluate business performance and believes they help investors identify operating trends by removing the impact of certain items17 - Non-GAAP measures presented include Adjusted EBITDA, constant currency sales, adjusted net income, and adjusted diluted EPS131415 Forward-Looking Statements This report contains forward-looking statements based on current management beliefs, subject to significant risks such as pricing pressures, regulatory changes, and competition, which could cause actual results to differ materially - The report includes forward-looking statements based on current management assumptions, which are not guarantees of future performance20 - Key risks that could affect future results include dependence on new products, pricing pressures, regulatory compliance, competition, and general economic conditions20