Zimmer Holdings Inc. (NYSE:ZMH) saw a small drop in sales, but through a drop in expenses managed to raise its net income.
The Warsaw, Ind.-based orthopedic devices giant reported net earnings of $191.1 million, or 96 cents per diluted share, on revenue of $965.0 million during the three months ended Sept. 30. That compares with net earnings of $149.9 million, or 70 cents per diluted share, on sales of $975.6 million during the same period last year.
The revenue shortfall was due mostly to lagging European sales as U.S. sales remained about even and sales in Asia grew significantly across a majority of the company’s businesses.
The decrease in the company‘s European sales was offset by a 9 percent drop in Q3 operating expenses. Q3 2009 was marked by acquisition costs and claims related to its Durom Acetabular Component product that weighed down profits.
Zimmer CEO David Dvorak touted the company’s "solid" performance during a quarter marked by tough global economic conditions.
“We believe that our continued progress with new product introductions across our businesses will position us for an improved performance in the fourth quarter and accelerated growth beyond 2010 as the economy strengthens," he said in prepared remarks.
Zimmer also boosted its EPS with a $225.6 million buyback of 4.2 million shares, and still has $918.6 million in cash and equivalents on hand, compared to the $691.7 it had the year prior, according to the company.
The company updated its 2010 EPS to be in the range of $4.24 to $4.29, which is within the prior guidance of $4.15 to $4.35. This is in line with the average earnings prediction of $4.26 by Wall Street analysts.