The Cooper Companies Announces First Quarter 2015 Results
The Cooper Companies Announces First Quarter 2015 Results
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Revenue increased 10% year-over-year to
$445.2 million . CooperVision (CVI) revenue up 13% to$369.3 million .CooperSurgical (CSI) revenue down 4% to$75.8 million . -
GAAP earnings per share (EPS)
$1.25 , down22 cents or 15% from last year's first quarter. -
Non-GAAP EPS
$1.75 , up17 cents or 11% from last year's first quarter. See "Reconciliation of Non-GAAP Results to GAAP Results" below.
Commenting on the results,
First Quarter GAAP Operating Highlights
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Revenue
$445.2 million , up 10% from last year's first quarter, up 5% pro forma (defined as constant currency and including Sauflon revenue in both periods). - Gross margin 62% compared with 65% in last year's first quarter. Gross margin was negatively impacted primarily by currency and integration related expenses in part offset by favorable product mix. Excluding integration related expenses, gross margin was 64% vs. 65% last year.
- Operating margin 16% compared with 20% in last year's first quarter. The decrease was primarily due to integration related expenses and increased amortization arising from the Sauflon acquisition. Excluding these costs, operating margin would have been 23% vs. 22% last year.
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Depreciation
$29.3 million , up 23% from last year's first quarter. Amortization$13.6 million , up 81% from last year's first quarter primarily due to the Sauflon acquisition. -
Total debt increased
$13.0 million fromOctober 31, 2014 , to$1,395.3 million , primarily due to the repurchase of shares. -
Interest expense increased to
$3.9 million compared with$1.7 million in last year's first quarter primarily due to higher debt associated with the acquisition of Sauflon. -
Cash provided by operations
$79.8 million , capital expenditures$65.0 million , and excluding acquisition costs of$13.3 million resulted in free cash flow of$28.1 million .
First Quarter CooperVision (CVI) GAAP Operating Highlights
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Revenue
$369.3 million , up 13% from last year's first quarter, up 6% pro forma, up 7% pro forma excluding solutions which are included in the "non single-use sphere, other" category below. - Revenue by category:
Pro forma | ||||
(In millions) | % of CVI Revenue | %chg | %chg | |
1Q15 | 1Q15 | y/y | y/y | |
Toric | $ 108.5 | 29% | 7% | 9% |
Multifocal | 42.5 | 12% | 26% | 23% |
Single-use sphere | 84.2 | 23% | 22% | 7% |
Non single-use sphere, other | 134.1 | 36% | 9% | 0% |
Total | $ 369.3 | 100% | 13% | 6% |
- Revenue by geography:
Pro forma | ||||
(In millions) | % of CVI Revenue | %chg | %chg | |
1Q15 | 1Q15 | y/y | y/y | |
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$ 158.5 | 43% | 13% | 11% |
EMEA | 147.6 | 40% | 25% | 4% |
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63.2 | 17% | -7% | 1% |
Total | $ 369.3 | 100% | 13% | 6% |
- Gross margin 62% compared with 65% in last year's first quarter. Gross margin was negatively impacted primarily by currency and integration related expenses offset in part by favorable product mix. Excluding integration related expenses, gross margin was 64% vs. 65% last year.
First Quarter CooperSurgical (CSI) GAAP Operating Highlights
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Revenue
$75.8 million , down 4% from last year's first quarter, flat in constant currency. - Revenue by category:
Constant Currency | ||||
(In millions) | % of CSI Revenue | %chg | %chg | |
1Q15 | 1Q15 | y/y | y/y | |
Office and surgical procedures | $ 50.8 | 67% | 0% | 0% |
Fertility | 25.0 | 33% | -10% | 1% |
Total | $ 75.8 | 100% | -4% | 0% |
- Gross margin 64% compared with 63% in last year's first quarter.
Other
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In
January 2015 , the company repurchased$16.0 million of common stock under the existing share repurchase program for an average share price of $159.96. The program has$169.7 million of remaining availability and no expiration date.
Fiscal Year 2015 Guidance
The Company updated its fiscal year 2015 guidance. Guidance assumes constant currency as of
FY15 Guidance | FY15 Guidance | |
Old | New | |
Revenues (In millions) | ||
Total |
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CVI |
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CSI |
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EPS | ||
Non-GAAP |
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Reconciliation of Non-GAAP Results to GAAP Results
To supplement our financial results presented on a GAAP basis, we use non-GAAP measures indicated in the table below that we believe are helpful in understanding our results. The non-GAAP measures exclude costs which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. These include costs related to acquisitions and the related integration activities, severance and related restructuring costs. Our non-GAAP financial results and guidance are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Management uses supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the factors management uses in planning and forecasting for future periods. Our non-GAAP financial measures include the following adjustments, along with the related income tax effects and changes in income attributable to noncontrolling interests:
- Amortization of intangible assets: We excluded the effect of amortization of intangible assets from our non-GAAP financial results. Amortization of intangible assets will recur in future periods however, the amounts are affected by the timing and size of our acquisitions.
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Acquisition related and integration expenses; and restructuring expenses: We excluded the effect of acquisition related and integration expenses and the effect of restructuring expenses from our non-GAAP financial results. We also excluded the effect of expanding and realigning our manufacturing footprint as these costs will be eliminated when the specific build out activities have been completed. Such expenses generally diminish over time with respect to past acquisitions; however, we generally will incur similar expenses in connection with any future acquisitions. We incurred significant expenses in connection with our acquisitions and also incurred certain other operating expenses or income, which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. Many of these costs relate to our acquisition of
Sauflon Pharmaceuticals Ltd. in our fiscal fourth quarter of 2014. Acquisition related and integration expenses include items such as personnel related costs for transitional employees, other acquired employee related costs and integration related professional services. Restructuring expenses consist of employee severance, product rationalization, facility and other exit costs. We believe it is useful for investors to understand the effects of these items on our consolidated operating results.
We also report revenue growth using the non-GAAP financial measure of constant currency revenue. Management presents and refers to constant currency information so that revenue results may be evaluated excluding the effect of foreign currency rate fluctuations. To present this information, current period revenue for entities reporting in currencies other than
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Consolidated Statements of Income | ||||||||
Reconciliation of Selected GAAP Results to Non-GAAP Results | ||||||||
(In thousands, except per share amounts) | ||||||||
(Unaudited) | ||||||||
Three Months Ended |
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2015 | 2015 | 2014 | 2014 | |||||
GAAP | Adjustment | Non-GAAP | GAAP | Adjustment | Non-GAAP | |||
Net sales | $ 445,171 | $ -- | $ 445,171 | $ 404,980 | $ -- | $ 404,980 | ||
Cost of sales | 168,820 | (9,443) | A | 159,377 | 142,051 | -- | 142,051 | |
Gross profit | 276,351 | 285,794 | 262,929 | 262,929 | ||||
Selling, general and administrative expense | 173,535 | (6,359) | B | 167,176 | 158,088 | -- | 158,088 | |
Research and development expense | 16,113 | (104) | C | 16,009 | 15,712 | -- | 15,712 | |
Amortization of intangibles | 13,595 | (13,595) | D | -- | 7,507 | (7,507) | D | -- |
Operating income | 73,108 | 102,609 | 81,622 | 89,129 | ||||
Interest expense | 3,941 | -- | 3,941 | 1,656 | -- | 1,656 | ||
Other expense, net | 1,702 | -- | 1,702 | 510 | -- | 510 | ||
Income before income taxes | 67,465 | 96,966 | 79,456 | 86,963 | ||||
Provision for income taxes | 5,716 | 4,779 | E | 10,495 | 7,191 | 1,705 | E | 8,896 |
Net income | 61,749 | 86,471 | 72,265 | 78,067 | ||||
Less: Income attributable to noncontrolling interests | 570 | 61 | D | 631 | 422 | 69 | D | 491 |
Net income attributable to Cooper stockholders | $ 61,179 | $ 85,840 | $ 71,843 | $ 77,576 | ||||
Diluted earnings per share attributable to Cooper stockholders | $ 1.25 | $ 0.50 | $ 1.75 | $ 1.47 | $ 0.11 | $ 1.58 | ||
Number of shares used to compute earnings per share attributable to Cooper stockholders | 49,082 | 49,082 | 49,006 | 49,006 | ||||
A Our GAAP cost of sales includes |
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B Our GAAP selling, general and administrative expense includes |
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(In thousands) | CooperVision |
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Total | |||||
Restructuring and related costs | $ -- | $ 128 | $ 128 | |||||
Acquisition and integration costs | 5,894 | 337 | 6,231 | |||||
$ 5,894 | $ 465 | $ 6,359 | ||||||
C Our GAAP research and development expense includes |
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D Amortization expense for our fiscal first quarter of 2015 was |
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E These amounts represent the increases in the provision for income taxes that arises from the impact of the above adjustments. | ||||||||
Conference Call and Webcast
The Company will host a conference call today at
About
Forward-Looking Statements
This news release contains "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995. Statements relating to guidance, plans, prospects, goals, strategies, future actions, events or performance and other statements which are other than statements of historical fact, including our 2015 Guidance and all statements regarding anticipated growth in our revenue, anticipated effects of any product recalls, anticipated market conditions, planned product launches and expected results of operations and integration of any acquisition are forward-looking. To identify these statements look for words like "believes," "expects," "may," "will," "should," "could," "seeks," "intends," "plans," "estimates" or "anticipates" and similar words or phrases. Forward-looking statements necessarily depend on assumptions, data or methods that may be incorrect or imprecise and are subject to risks and uncertainties.
Among the factors that could cause our actual results and future actions to differ materially from those described in forward-looking statements are: adverse changes in the global or regional general business, political and economic conditions, including the impact of continuing uncertainty and instability of certain
We caution investors that forward-looking statements reflect our analysis only on their stated date. We disclaim any intent to update them except as required by law.
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Consolidated Condensed Balance Sheets | ||
(In thousands) | ||
(Unaudited) | ||
January 31, | October 31, | |
2015 | 2014 | |
ASSETS | ||
Current assets: | ||
Cash and cash equivalents |
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Trade receivables, net | 275,899 | 276,280 |
Inventories | 390,101 | 381,474 |
Deferred tax assets | 36,329 | 40,224 |
Other current assets | 68,352 | 68,417 |
Total current assets | 787,109 | 791,617 |
Property, plant and equipment, net | 928,627 | 937,325 |
Goodwill | 2,157,577 | 2,220,921 |
Other intangibles, net | 418,043 | 453,605 |
Deferred tax assets | 8,230 | 15,732 |
Other assets | 36,158 | 39,140 |
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LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Current liabilities: | ||
Short-term debt |
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Other current liabilities | 289,784 | 340,664 |
Total current liabilities | 382,579 | 442,182 |
Long-term debt | 1,302,542 | 1,280,833 |
Deferred tax liabilities | 69,377 | 69,525 |
Other liabilities | 64,261 | 77,360 |
Total liabilities | 1,818,759 | 1,869,900 |
Total Cooper stockholders' equity | 2,500,874 | 2,569,878 |
Noncontrolling interests | 16,111 | 18,562 |
Stockholders' equity | 2,516,985 | 2,588,440 |
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Consolidated Statements of Income | ||
(In thousands, except per share amounts) | ||
(Unaudited) | ||
Three Months Ended | ||
January 31, | ||
2015 | 2014 | |
Net sales |
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Cost of sales | 168,820 | 142,051 |
Gross profit | 276,351 | 262,929 |
Selling, general and administrative expense | 173,535 | 158,088 |
Research and development expense | 16,113 | 15,712 |
Amortization of intangibles | 13,595 | 7,507 |
Operating income | 73,108 | 81,622 |
Interest expense | 3,941 | 1,656 |
Other expense | 1,702 | 510 |
Income before income taxes | 67,465 | 79,456 |
Provision for income taxes | 5,716 | 7,191 |
Net income | 61,749 | 72,265 |
Less: income attributable to noncontrolling interests | 570 | 422 |
Net income attributable to Cooper stockholders |
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Diluted earnings per share attributable to Cooper stockholders |
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Number of shares used to compute earnings per share attributable to Cooper stockholders | 49,082 | 49,006 |
Soft Contact Lens Revenue Update
Worldwide Manufacturers' Soft Contact Lens Revenue | ||||||
(U.S. dollars in millions; constant currency; unaudited) | ||||||
Calendar 4Q14 | Calendar 2014 | |||||
Market | CVI | Market | CVI | |||
Market | Change | Change | Market | Change | Change | |
Sales by Modality | ||||||
Single-use | $ 790 | 5% | 10% | $ 3,165 | 7% | 13% |
Other | $ 1,045 | 2% | 7% | $ 4,355 | 2% | 6% |
WW Soft Contact Lenses | $ 1,835 | 4% | 8% | $ 7,520 | 4% | 8% |
Sales by Geography | ||||||
Americas | $ 710 | 5% | 7% | $ 3,040 | 5% | 4% |
EMEA | $ 560 | 5% | 7% | $ 2,230 | 4% | 9% |
Asia Pacific | $ 565 | 1% | 11% | $ 2,250 | 4% | 13% |
WW Soft Contact Lenses | $ 1,835 | 4% | 8% | $ 7,520 | 4% | 8% |
Source: Management estimates and independent market research |
COO-E
CONTACT:Source:Kim Duncan Vice President, Investor Relations ir@cooperco.com 925-460-3663
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