On Oct. 25, Zimmer Holdings (NYSE:ZMH), which makes orthopedic implants, released third-quarter earnings for the period ended Sept. 30.

  • Revenues fell just shy of analyst estimates, but EPS beat the Street by a penny.
  • Revenues grew by 7.5% to $820 million, with steady performance across all product lines and geographical regions.
  • Net profit increased 8.7% to $183 million as the company maintained strong margins.
  • EPS rose 13.4% to $0.76, driven by higher earnings and a 3% decrease in diluted share count.
  • Free cash flow improved by 42.4% to $616 million, caused by higher cash from operations along with lower capital spending.

(Figures in millions, except per-share data)

Income Statement Highlights

Avg. Est.

Q3 2006

Q3 2005

Change

Sales

$828

$819.8

$762.5

7.5%

Net Profit*

--

$183.3

$168.6

8.7%

EPS

$0.75

$0.76

$0.67

13.4%

Diluted Shares

--

242.6

250.2

(3.0%)

*Net profit does not include income from discontinued operations

Get back to basics with a look at the income statement.

Margin Checkup

Q3 2006

Q3 2005

Change*

Gross Margin

77.65%

77.11%

0.54

Operating Margin

31.04%

31.55%

(0.51)

Net Margin

22.36%

22.11%

0.25

*Expressed in percentage points

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q3 2006

Q3 2005

Change

Cash + ST Invest.

$276.9

$91.8

201.6%

Accounts Rec.

$589.4

$541.1

8.9%

|

Liabilities

Q3 2006

Q3 2005

Change

Accounts Payable

No Data

$109.2

N/A

Long-Term Debt

$100.9

$85.8

17.6%



Learn the ways of the balance sheet.

Cash Flow Highlights

YTD 2006

YTD 2005

Change

Cash From Ops.

$793.6

$627.7

26.4%

Capital Expenditures

$177.4

$195.1

(9.1%)

Free Cash Flow

$616.2

$432.6

42.4%



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Related companies:

  • Varian Medical Systems (NYSE:VAR)
  • Intuitive Surgical (NASDAQ:ISRG)
  • Smith & Nephew (NYSE:SNN)

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