Q1 2013 Earnings Call Transcript

Transcript Call Date 04/25/2013

Operator: Good morning. I would now like to turn the call over to Bob Marshall, Vice President, Investor Relations and Treasurer. Mr. Marshall, you may begin your call.

Robert J. Marshall Jr. - VP, IR and Treasurer: Thank you. Good morning, and welcome to Zimmer's First Quarter 2013 Earnings Conference Call. I'm here with our CEO, David Dvorak; and our CFO, Jim Crines.

Before we start, I'd like to remind you that discussions during this call will include forward-looking statements. Actual results may differ materially from those indicated by forward-looking statements due to a variety of risks and uncertainties.

Please refer to our SEC filings for a detailed discussion of these risks and uncertainties. Also, the discussions during this call will include certain non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP financial measures are included within the earnings release, which is available on our website at

With that, I'll now turn the call over to David Dvorak. David?

David C. Dvorak - President and CEO: Thank you, Bob. Good morning everyone, and welcome to our earnings call for the first quarter of 2013. This morning I'll review our first quarter financial results providing commentary on the year's progress to-date and highlights from our performance. Jim will then provide additional financial details. I'll state all sales in constant currency terms, and I'll discuss our earnings results on an adjusted basis.

We achieved our financial commitments in the first quarter, delivering leveraged earnings per share growth. During the quarter, we continued the introduction of significant new product offerings across the portfolio which will accelerate top line growth for the balance of 2013.

Ongoing progress in our commercial and operational excellence initiatives continues to generate savings in line with our long-term goals while enabling us to make the necessary investment in support of the new product launches.

Consolidated net sales for the quarter were $1.14 billion, an increase of 1% and our earnings per share were $1.41, an increase of 8.5% over the prior year period. In the first quarter, Americas sales grew by 0.1% while Europe, Middle East and Africa experienced growth of 1.8% and Asia Pacific achieved growth of 2.8% year-over-year.

We continue to deliver attractive growth in key emerging markets around the world. It's important to note that the quarter included two fewer billing days in the United States and in a number of other key markets compared with the prior year period. On a like billing day basis, relative to prior year, we estimate consolidated net sales growth for the quarter would have been 3.4%.

Turning now to the results of our product categories, knee sales for the first quarter were flat, reflecting positive volume and mix of 2.2% and negative price of 2.2%.

In the quarter, our Americas segment reported a sales decrease of 2.5% while Europe, Middle East, and Africa sales increased by 3.2% and the Asia Pacific region delivered 4.1% growth compared with the prior year.

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