The Cooper Companies Announces Second Quarter 2012 Results

The Cooper Companies Announces Second Quarter 2012 Results

Jun 7, 2012

PLEASANTON, Calif., June 7, 2012 (GLOBE NEWSWIRE) -- The Cooper Companies, Inc. (NYSE:COO) today announced financial results for the fiscal second quarter ended April 30, 2012.

  • Revenue increased 6% year-over-year to $344.6 million. CooperVision (CVI) revenue up 5% to $288.0 million and CooperSurgical (CSI) revenue up 13% to $56.6 million.
  • GAAP earnings per share (EPS) $1.12, up 39 cents or 53% from last year's second quarter.
  • Free cash flow $60.7 million. Total debt decreased $91.0 million to $319.3 million from prior quarter.

Commenting on the results, Robert S. Weiss, Cooper's president and chief executive officer said, "I'm proud to report another strong quarter which included market share gains, improving margins, double-digit earnings growth and significant free cash flow generation. Additionally, as announced earlier this week, we have made a tender offer to acquire all of the shares of Origio, which would position CooperSurgical as a global leader in the in-vitro fertilization market. This acquisition, if completed, would continue our long history of adding shareholder value through strategic acquisitions."

Second Quarter GAAP Operating Highlights

  • Revenue $344.6 million, 6% above second quarter 2011, 7% in constant currency.
  • Gross margin 64% compared with 62% in last year's second quarter. The improvement was the result of savings related to the closure of the Norfolk manufacturing plant completed in the fiscal first quarter of 2011, increased manufacturing efficiencies and favorable product mix.
  • Operating margin 19% in line with last year's second quarter.
  • Depreciation expense $21.5 million, up 14% from last year's second quarter. Amortization $5.3 million, up 11% from last year's second quarter as a result of acquired intangible assets related to recent acquisitions.
  • Interest expense $3.1 million compared with $4.3 million in last year's second quarter.
  • Total debt decreased $91.0 million from January 31, 2012 to $319.3 million.
  • Cash provided by operations $80.6 million, capital expenditures $23.1 million, insurance recovery $3.2 million resulted in free cash flow of $60.7 million.

Second Quarter CooperVision (CVI) GAAP Operating Highlights

  • Revenue $288.0 million, up 5% from last year's second quarter, 6% in constant currency.
     
  • Revenue by category:  
        Constant Currency
  (In millions) % of CVI Revenue %chg %chg
  2Q12 2Q12 y/y y/y
Toric  $ 89.4 31% 5% 8%
Multifocal  22.3 8% 23% 26%
Single-use sphere  62.6 22% 6% 6%
Non single-use sphere, other  113.7 39% 0% 2%
Total  $ 288.0 100% 5% 6%
  • Revenue by geography:
        Constant Currency
   (In millions)  % of CVI Revenue %chg %chg
   2Q12  2Q12 y/y y/y
Americas  $ 122.0 42% 4% 4%
EMEA  98.0 34% 1% 6%
Asia Pacific  68.0 24% 12% 10%
Total  $ 288.0 100% 5% 6%
  • Selected revenue by material:
        Constant Currency
   (In millions)  % of CVI Revenue %chg %chg
   2Q12  2Q12 y/y y/y
         
Silicone hydrogel  $ 103.8 36% 29% 32%
Proclear®  $ 71.4 25% -4% -2%
  • Gross margin 63% compared with 61% in the second quarter of 2011. The improvement was the result of savings related to the closure of the Norfolk manufacturing plant completed in the fiscal first quarter of 2011, increased manufacturing efficiencies and favorable product mix, resulting primarily from a shift to higher margin silicone hydrogel products.

        Second Quarter CooperSurgical (CSI) GAAP Operating Highlights

        • Revenue $56.6 million, up 13% from last year's second quarter, up 8% excluding acquisitions.
        • Revenue by category:
          (In millions) % of CSI Revenue %chg
          2Q12 2Q12 y/y
        Office, other  $ 30.6 54% 8%
        Surgical procedures  22.0 39% 22%
        Fertility  4.0 7% 8%
        Total  $ 56.6 100% 13%
        • Gross margin 68%, up from 65% in last year's second quarter. The improvement in gross margin was largely a result of manufacturing efficiency improvements and favorable product mix resulting primarily from a shift to higher margin products used in surgical procedures.

        Other Items

        • On May 31, 2012, entered into an amendment to our senior unsecured revolving line of credit. Facility increased to $1.0 billion from $750.0 million, and the $234.4 million term loan was fully repaid using the new revolving facility. The facility offers additional availability, lower interest rates and extends maturity date to May 31, 2017 from January 12, 2016. 
        • On June 4, 2012, announced a voluntary tender offer to acquire all the issued and outstanding shares and warrants of Origio a/s, Oslo Stock Exchange (Oslo:ORO) for an aggregate price of approximately NOK 28 per share (see http://investor.coopercos.com for details).
        • No share repurchases in the quarter.

        2012 Guidance

        The Company revises its full-year 2012 revenue and EPS guidance. Guidance is summarized as follows:

          FY12 Guidance FY12 Guidance
          Old New
        Revenues (In millions)    
        Total $1,385-$1,440 $1,400-$1,440
        CVI $1,170-$1,210 $1,175-$1,205
        CSI $215-$230 $225-$235
        EPS    
        GAAP $4.90-$5.15 $4.88-$5.13
        Non-GAAP $4.90-$5.15 $4.90-$5.15
        Free Cash Flow (In millions) $200-$230 $200-$230
         
        Guidance assumes constant currency at the date of issuance and no pending acquisitions.

        Conference Call and Webcast

        The Company will host a conference call today at 5:00 PM ET to discuss its fiscal second quarter 2012 financial results. The dial in number in the United States is +1-866-713-8307 and outside the United States is +1-617-597-5307. The passcode is 53347242. There will be a replay available approximately two hours after the call ends until Thursday, June 14, 2012. The replay number in the United States is +1-888-286-8010 and outside the United States is +1-617-801-6888. The replay passcode is 64382545. This call will be broadcast live on our website at www.coopercos.com. A transcript will be available on our website following the conference call. 

        About The Cooper Companies

        The Cooper Companies, Inc. ("Cooper") is a global medical device company publicly traded on the NYSE Euronext (NYSE:COO). Cooper is dedicated to being A Quality of Life Company™ with a focus on delivering shareholder value. Cooper operates through two business units, CooperVision and CooperSurgical. CooperVision brings a refreshing perspective on vision care with a commitment to crafting a wide range of high-quality products for contact lens wearers and providing focused practitioner support. CooperSurgical focuses on supplying women's health clinicians with market leading products and treatment options to improve the delivery of healthcare to women. Headquartered in Pleasanton, CA, Cooper has over 7,000 employees with products sold in over 100 countries. For more information, please visit www.coopercos.com.

        The Cooper Companies, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=10403

        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 2012 Guidance and all statements regarding anticipated growth in our revenue, 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 due to the current global economic downturn, including the impact of continuing uncertainty and instability of certain European Union countries that could adversely affect our global markets; reduced sales, loss of customers, and costs and expenses related to the recall of certain lots of Avaira Toric and Avaira Sphere contact lenses; foreign currency exchange rate and interest rate fluctuations including the risk of further declines in the value of the Euro that would decrease our revenues and earnings; a major disruption in the operations of our manufacturing, research and development or distribution facilities due to technological problems, natural disasters or other causes; disruptions in supplies of raw materials, particularly components used to manufacture our silicone hydrogel lenses; legal costs, insurance expenses, settlement costs and the risk of an adverse decision or settlement related to product liability, patent or other litigation; limitations on sales following new product introductions due to poor market acceptance; new competitors, product innovations or technologies; the impact of acquisitions or divestitures on revenues, earnings or margins; the requirement to provide for a significant liability or to write off, or accelerate depreciation on, a significant asset, including goodwill; changes in United States and foreign government regulations of the retail optical industry and of the healthcare industry generally; changes in tax laws or their interpretation and changes in effective tax rates; dilution to earnings per share from acquisitions or issuing stock and other events described in our Securities and Exchange Commission filings, including the "Business" and "Risk Factors" sections in the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2011, as such Risk Factors may be updated in quarterly filings. 

        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.

        THE COOPER COMPANIES, INC. AND SUBSIDIARIES
        Consolidated Condensed Balance Sheets
        (In thousands)
        (Unaudited)
         
          April 30, October 31,
          2012 2011
         
        ASSETS
         
        Current assets:  
        Cash and cash equivalents $7,745 $5,175
        Trade receivables, net 202,882 214,779
        Inventories 286,069 253,584
        Deferred tax assets 33,226 33,684
        Other current assets 46,361 33,125
        Total current assets 576,283 540,347
        Property, plant and equipment, net 593,603 609,205
        Goodwill 1,275,444 1,276,567
        Other intangibles, net 118,077 128,341
        Deferred tax assets 20,237 21,828
        Other assets 44,917 48,230
          $2,628,561 $2,624,518
         
        LIABILITIES AND STOCKHOLDERS' EQUITY
             
        Current liabilities:  
        Short-term debt $44,216 $52,979
        Other current liabilities 183,909 214,227
        Total current liabilities 228,125 267,206
        Long-term debt 275,092 327,453
        Deferred tax liabilities 19,008 20,127
        Other liabilities 68,380 72,244
        Total liabilities 590,605 687,030
        Stockholders' equity 2,037,956 1,937,488
          $2,628,561 $2,624,518
         
         
        THE COOPER COMPANIES, INC. AND SUBSIDIARIES
        Consolidated Statements of Income
        (In thousands, except earnings per share amounts)
        (Unaudited)
                 
           Three Months Ended  Six Months Ended
           April 30 ,   April 30,
          2012 2011 2012 2011
        Net sales  $344,589 $325,301 $670,649 $618,530
        Cost of sales 123,893 123,539 239,500 240,162
        Gross profit 220,696 201,762 431,149 378,368
        Selling, general and administrative  
        expense 136,962 126,382 268,710 239,835
        Research and development expense 13,031 10,390 24,455 20,117
        Amortization of intangibles 5,263 4,734 10,816 9,447
        Operating income 65,440 60,256 127,168 108,969
        Interest expense 3,071 4,268 6,733 11,219
        Loss on extinguishment of debt - 16,487 - 16,487
        Other income (expense), net 310 219 992 (514)
        Income before income taxes 62,679 39,720 121,427 80,749
        Provision for income taxes 7,758 4,360 11,883 6,174
        Net income $54,921 $35,360 $109,544 $74,575
                 
        Diluted earnings per share $1.12 $0.73 $2.24 $1.56
                 
        Number of shares used to compute earnings
        per share 49,007 48,239 48,941 47,807

        Soft Contact Lens Revenue Update

        Worldwide Market vs. CooperVision (Constant Currency)

        The data below is extracted from a compilation of industry participants' revenue by the Contact Lens Institute (CLI), an independent market research firm. This data is compiled using gross product sales at foreign exchange rates set by CLI. It therefore excludes items such as discounts, rebates, currency hedges and freight reimbursements.

        Worldwide Manufacturers' Soft Contact Lens Revenue          
        (U.S. dollars in millions; constant currency; unaudited)          
                     
             
          Calendar 1Q12 Trailing Twelve Months 2012
            Market CVI   Market CVI
          Market Change Change Market Change Change
        Sales by Category            
        Spheres  $ 1,366 4% 10%  $ 5,379 3% 8%
        Torics  354 11% 13%  1,334 9% 10%
        Multifocal  87 13% 34%  335 9% 13%
        WW Soft Contact Lenses  $ 1,807 6% 12%  $ 7,048 5% 9%
                     
        Sales by Modality            
        Single-use  $ 681 9% 15%  $ 2,704 9% 11%
        Other  1,126 4% 11%  4,344 2% 8%
        WW Soft Contact Lenses  $ 1,807 6% 12%  $ 7,048 5% 9%
                     
        Sales by Geography            
        Americas   $ 719 10% 13%  $ 2,660 6% 9%
        EMEA  481 2% 9%  1,952 4% 8%
        Asia Pacific   607 4% 14%  2,436 4% 11%
        WW Soft Contact Lenses  $ 1,807 6% 12%  $ 7,048 5% 9%
                     
        United States  $ 631 11% 14%  $ 2,307 7% 9%
        International  1,176 3% 11%  4,741 3% 8%
        WW Soft Contact Lenses  $ 1,807 6% 12%  $ 7,048 5% 9%
                     

        COO-E

        CONTACT: Kim Duncan

         Senior Director, Investor Relations

         925-460-3663

         ir@cooperco.com

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        Source: The Cooper Companies, Inc.

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