Investors added about 1% to shares of Stryker (NYSE:SYK) today after the orthopedic device maker’s 1st-quarter sales beat Wall Street’s expectations and its earnings meet consensus forecasts.
Kalamazoo, Mich.-based Stryker posted profits of $350 million, or 91¢ per diluted share, on sales of $2.16 billion for the 3 months ended March 31, for a bottom-line gain of 14.0% and top-line growth of 7.2%.
Excluding 1-time items such as expenses from the acquisitions of Boston Scientific‘s (NYSE:BSX) neurovascular division, Orthovita, Memometal and Concentric, EPS reached 99¢. That’s in line with The Street and up 10.0% compared with Q1 2011.
"Our dedicated employees continue to execute on the strategy we have been pursuing. The 7% revenue and 10% adjusted per share earnings growth reflect the momentum we are seeing on both a product and geographic level and have us on track to deliver on our financial commitments," interim CEO & CFO Curt Hartman, who’s been leading the company since Stephen MacMillan’s abrupt departure in February, said in prepared remarks. "We are committed to growing our diverse mix of businesses and global market presence. Our focus remains on internally driven innovation, strategic acquisitions and our ongoing commitment to both quality and operating efficiencies while optimizing capital allocation through share buybacks and dividends."
Stryker said sales of reconstructive joint implants rose 5.2% to $958 million, compared with the same period last year, and by 3.4% excluding the impact of acquisitions. But the boost wasn’t enough for company officials to predict an imminent rebound for the ailing reconstruction market.
"It’s probably closer to flat and stable," said VP of strategy and investor relations Katherine Owen during a conference call with investors. "It feels like the environment may be getting a little bit better, but with just 1 quarter and some of the seasonality, seasonal anomalies, that happen between Q4 and Q1, it’s probably too soon to say we’ve seen a real change in the trend. But it certainly feels very stable at the moment."
Restructuring charges pared $12 million from the bottom line. Added to $17 million worth of acquisition-related expenses, that makes for a 60-basis point reduction to gross profit margins, which in turn reduced operating income margin by 170 BPS.
Stryker predicted sales growth of between 3.5% and 6.5% on a constant currency basis and of 2% to 5% excluding 1-time items. Adjusted EPS are expected to grow at double-digit levels compared with last year, excluding a 22¢ charge on restructuring, acquisition and integration charges –exactly in line with its predictions at last quarter’s end.
The company said it spent $50 million buying back about 1 million shares of its own stock during the quarter.
