The Cooper Companies Announces Third Quarter 2012 Results
The Cooper Companies Announces Third Quarter 2012 Results
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Revenue increased 8% year-over-year to
$378.2 million . CooperVision (CVI) revenue up 5% to$314.2 million andCooperSurgical (CSI) revenue up 20% to$64.0 million . -
GAAP earnings per share (EPS)
$1.36 , up46 cents or 51% from last year's third quarter. -
Non-GAAP EPS
$1.45 , up30 cents from last year's third quarter. See "Reconciliation of Non-GAAP EPS to GAAP EPS" below. -
Free cash flow
$62.9 million .
Commenting on the results,
Third Quarter GAAP Operating Highlights
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Revenue
$378.2 million , 8% above third quarter 2011, 9% excluding currency and acquisitions. -
Gross margin 63% compared with 58% in last year's third quarter. The improvement was the result of improved margins at both CooperVision and
CooperSurgical , and the$14.2 million Avaira® recall reserve for inventory and return provisions in last year's third quarter. - Operating margin 20% compared with 15% in last year's third quarter. The improvement was primarily the result of gross margin improvements.
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Depreciation
$21.9 million , up 10% from last year's third quarter. Amortization$5.9 million , up 7% from last year's third quarter primarily related to additional amortization from the acquisition of Origio. -
Total debt increased
$160.8 million fromApril 30, 2012 , to$480.1 million due mainly to the Origio acquisition. Interest expense was$2.3 million compared with$3.2 million in last year's third quarter. Excluding a$0.4 million gain associated with the Origio acquisition, interest expense would have been$2.7 million . -
Cash provided by operations
$78.1 million , capital expenditures$24.1 million , insurance recovery$1.9 million and excluding Origio related costs of$7.0 million , free cash flow$62.9 million .
Third Quarter CooperVision GAAP Operating Highlights
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Revenue
$314.2 million , up 5% from last year's third quarter, 10% in constant currency.
- Revenue by category:
Constant Currency (In millions) % of CVI Revenue %chg %chg 3Q12 3Q12 y/y y/y Toric $ 94.7 30% 7% 12% Multifocal 24.8 8% 26% 33% Single-use sphere 71.7 23% 11% 13% Non single-use sphere, other 123.0 39% -2% 3% Total $ 314.2 100% 5% 10%
- Revenue by geography:
Constant Currency (In millions) % of CVI Revenue %chg %chg 3Q12 3Q12 y/y y/y Americas $ 131.3 42% 10% 11% EMEA 106.5 34% -5% 6% Asia Pacific 76.4 24% 16% 16% Total $ 314.2 100% 5% 10%
- Selected revenue by material:
Constant Currency (In millions) % of CVI Revenue %chg %chg 3Q12 3Q12 y/y y/y Silicone hydrogel $ 117.9 38% 28% 35% Proclear® $ 79.0 25% -2% 3%
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Gross margin 63% compared with 56% in the third quarter of 2011. The improvement was the result of the
$14.2 million Avaira® recall reserve for inventory and return provisions in last year's third quarter as well as increased manufacturing efficiencies and favorable product mix, primarily from a shift to higher margin silicone hydrogel products.
Third Quarter CooperSurgical GAAP Operating Highlights
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Revenue
$64.0 million , up 20% from last year's third quarter. Revenue includes$5.6 million from the Origio acquisition and was up 6% excluding acquisitions.
- Revenue by category:
(In millions) % of CSI Revenue %chg 3Q12 3Q12 y/y Office, other $ 30.8 48% 7% Surgical procedures 23.7 37% 16% Fertility 9.5 15% 149% Total $ 64.0 100% 20%
- Gross margin 67%, up from 65% in last year's third 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. This was slightly offset by lower gross margins from Origio.
Other Items
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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 the maturity date toMay 31, 2017 , fromJanuary 12 , 2016. -
On
July 11, 2012 , completed the voluntary tender offer for Origio, a leading global in-vitro fertilization (IVF) medical device company based in Denmark. -
During the quarter, repurchased approximately 321,000 shares for
$25.0 million . Fiscal year-to-date repurchases now total approximately 984,000 shares for$71.1 million .
2012 Guidance
The Company revises its full-year fiscal 2012 revenue and EPS guidance. Guidance is summarized as follows:
2012 Guidance | 2012 Guidance | 4Q12 Guidance | |
Old | New | New | |
Revenues (In millions) | |||
Total |
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CooperVision |
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EPS | |||
GAAP |
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Non-GAAP |
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Free |
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Guidance assumes constant currency at the date of issuance and no pending acquisitions. See "Reconciliation of Non-GAAP EPS to GAAP EPS" below.
Reconciliation of Non-GAAP EPS to GAAP EPS
To supplement our financial results and guidance presented on a GAAP basis, we use non-GAAP measures that we believe are helpful in understanding our results. The non-GAAP measures exclude debt extinguishment costs related to the amendment to our Credit Agreement and costs related to acquisitions. 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 and guidance 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.
In the fiscal third quarter of 2012, our non-GAAP results, and our fiscal 2012 guidance, excludes a
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
Three Months Ended |
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2012 GAAP | Adjustments | 2012 Non-GAAP | |
Operating income | $ 77,250 | $ 4,042 | $ 81,292 |
Income before income taxes | $ 71,308 | $ 5,046 | $ 76,354 |
Provision for income taxes | $ 4,433 | $ 206 | $ 4,639 |
Net income | $ 66,875 | $ 4,840 | $ 71,715 |
Diluted EPS | $ 1.36 | $ 0.09 | $ 1.45 |
Fiscal 2012 EPS Guidance | |||
2012 GAAP | Adjustments | 2012 Non-GAAP | |
Diluted EPS |
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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 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
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) | ||
July 31, | October 31, | |
2012 | 2011 | |
ASSETS | ||
Current assets: | ||
Cash and cash equivalents |
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Trade receivables, net | 228,593 | 214,779 |
Inventories | 301,686 | 253,584 |
Deferred tax assets | 37,140 | 33,684 |
Other current assets | 47,955 | 33,125 |
Total current assets | 628,106 | 540,347 |
Property, plant and equipment, net | 617,615 | 609,205 |
Goodwill | 1,360,504 | 1,276,567 |
Other intangibles, net | 220,347 | 128,341 |
Deferred tax assets | 12,443 | 21,828 |
Other assets | 44,903 | 48,230 |
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LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Current liabilities: | ||
Short-term debt |
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Other current liabilities | 206,217 | 214,227 |
Total current liabilities | 232,075 | 267,206 |
Long-term debt | 454,225 | 327,453 |
Deferred tax liabilities | 30,748 | 20,127 |
Other liabilities | 70,224 | 72,244 |
Total liabilities | 787,272 | 687,030 |
Stockholders' equity | 2,096,646 | 1,937,488 |
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Consolidated Statements of Income | ||||
(In thousands, except earnings per share amounts) | ||||
(Unaudited) | ||||
Three Months Ended | Nine Months Ended | |||
July 31 , | July 31, | |||
2012 | 2011 | 2012 | 2011 | |
Net sales |
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Cost of sales | 138,089 | 148,594 | 377,589 | 388,755 |
Gross profit | 240,097 | 202,802 | 671,246 | 581,171 |
Selling, general and administrative expense | 143,830 | 133,617 | 412,540 | 373,453 |
Research and development expense | 13,156 | 11,725 | 37,611 | 31,843 |
Amortization of intangibles | 5,861 | 5,493 | 16,677 | 14,940 |
Operating income | 77,250 | 51,967 | 204,418 | 160,935 |
Interest expense | 2,315 | 3,217 | 9,049 | 14,436 |
Loss on extinguishment of debt | 1,404 | - | 1,404 | 16,487 |
Other (expense) income, net | (2,223) | 386 | (1,230) | (128) |
Income before income taxes | 71,308 | 49,136 | 192,735 | 129,884 |
Provision for income taxes | 4,433 | 4,919 | 16,316 | 11,092 |
Net income |
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Diluted earnings per share |
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Number of shares used to compute earnings | ||||
per share | 49,302 | 49,009 | 49,069 | 48,362 |
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 2Q12 | Trailing Twelve Months 2012 | ||||||
Market | CVI | Market | CVI | ||||
Market | Change | Change | Market | Change | Change | ||
Sales by Category | |||||||
Spheres | $ 1,397 | 4% | 7% | $ 5,430 | 3% | 7% | |
Torics | 348 | 8% | 10% | 1,358 | 9% | 10% | |
Multifocal | 91 | 11% | 31% | 344 | 10% | 21% | |
WW Soft Contact Lenses | $ 1,836 | 5% | 9% | $ 7,132 | 5% | 9% | |
Sales by Modality | |||||||
Single-use | $ 733 | 10% | 14% | $ 2,771 | 9% | 12% | |
Other | 1,103 | 2% | 8% | 4,361 | 2% | 8% | |
WW Soft Contact Lenses | $ 1,836 | 5% | 9% | $ 7,132 | 5% | 9% | |
Sales by Geography | |||||||
Americas | $ 711 | 8% | 10% | $ 2,711 | 7% | 9% | |
EMEA | 508 | 3% | 5% | 1,965 | 3% | 6% | |
Asia Pacific | 617 | 3% | 16% | 2,456 | 4% | 12% | |
WW Soft Contact Lenses | $ 1,836 | 5% | 9% | $ 7,132 | 5% | 9% | |
United States | $ 617 | 8% | 9% | $ 2,351 | 7% | 10% | |
International | 1,219 | 3% | 9% | 4,781 | 4% | 8% | |
WW Soft Contact Lenses | $ 1,836 | 5% | 9% | $ 7,132 | 5% | 9% |
COO-E
CONTACT:Source:Kim Duncan Senior Director, Investor Relations 925-460-3663 ir@cooperco.com
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