The Cooper Companies, Inc.
Sep 4, 2014

The Cooper Companies Announces Third Quarter 2014 Results

PLEASANTON, Calif., Sept. 4, 2014 (GLOBE NEWSWIRE) -- The Cooper Companies, Inc. (NYSE:COO) today announced financial results for the fiscal third quarter ended July 31, 2014.

Commenting on the results, Robert S. Weiss, Cooper's president and chief executive officer said, "We are very proud of our achievements since last quarter. We continued executing on our long-term strategic objectives including announcing and closing the acquisition of Sauflon Pharmaceuticals, a European manufacturer and distributor of soft contact lenses and solutions. We believe this acquisition positions us at the forefront of the single-use market, the fastest growing segment of the soft contact lens industry.  Our businesses continue to perform well and we remain excited about the future."

Third Quarter GAAP Operating Highlights

Third Quarter CooperVision GAAP Operating Highlights

 

(In millions)
3Q14


% of CVI Revenue
3Q14


%chg
y/y*
Constant Currency
Excluding Aime
%chg
y/y
Toric  $ 112.3 32% 11% 9%
Multifocal  38.4 11% 16% 15%
Single-use sphere  73.8 21% 4% 4%
Non single-use sphere, other  125.4 36%  -% 3%
Total  $ 349.9 100% 6% 6%

* Excluding the impact of the divestiture of Aime, "Non single-use sphere, other" would have grown 5% year over year and total revenue would have grown 8% year over year.

 

 (In millions)
3Q14 


% of CVI Revenue
3Q14


%chg
y/y*
Constant Currency
Excluding Aime
%chg
y/y
Americas  $ 149.5 43% 5% 5%
EMEA  133.9 38% 13% 8%
Asia Pacific                                  66.5 19% -4% 7%
Total  $ 349.9 100% 6% 6%

* Excluding the impact of the divestiture of Aime, Asia Pacific would have grown 5% year over year and total revenue would have grown 8% year over year.

 

(In millions)
3Q14 


% of CVI Revenue
3Q14


%chg
y/y*
Constant Currency
Excluding Aime
%chg
y/y
         
Silicone hydrogel                          $ 173.7 50% 21% 20%
Proclear®  $ 88.6 25% 3% 2%

Third Quarter CooperSurgical GAAP Operating Highlights

  (In millions)
3Q14
% of CSI Revenue
3Q14
%chg
y/y
Office and surgical procedures  $ 54.5 66% 1%
Fertility  28.1 34% 3%
Total  $ 82.6 100% 1%

Other

2014 Guidance

The Company revises its full year fiscal 2014 guidance. Guidance assumes constant currency as of September 4, 2014, and is summarized as follows:

  FY14 Guidance
Old
FY14 Guidance
New
4Q14 Guidance
New
Revenues (In millions)                
Total $1,685 - $1,725 $1,725 - $1,740 $477 - $490
CVI $1,365 - $1,395 $1,400 - $1,412 $395 - $405
CSI $320 - $330 $325 - $328 $82 - $85
EPS      
Non-GAAP $6.80 - $7.00 $7.34 - $7.44* $2.00 - $2.10*

* Fiscal 2014 non-GAAP EPS guidance excludes actual amortization of intangibles of $0.12 in Q1, $0.12 in Q2, $0.10 in Q3 and forecasted $0.10 in Q4. No amount of amortization of intangibles has been reflected for the yet to be determined intangible assets from the acquisition of Sauflon Pharmaceuticals. For comparability, fiscal 2013 amortization included in non-GAAP EPS was $0.11 in Q1, $0.11 in Q2, $0.12 in Q3 and $0.12 in Q4.

Reconciliation of Non-GAAP Results to GAAP Results

To supplement our financial results presented on a GAAP basis, we use non-GAAP measures that we believe are helpful in understanding our results. The non-GAAP measures exclude costs related to acquisitions and severance costs which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. The severance costs in CooperSurgical are not reflective of our ongoing business and operating results. 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 2014, our non-GAAP results exclude $4.5 million of acquisition related costs recorded in selling, general and administrative expense and $0.6 million of severance costs recorded in cost of sales and selling, general and administrative expense.

Our fiscal third quarter of 2014 non-GAAP EPS excluding amortization is $2.00. This reflects an adjustment to non-GAAP net income of 10 cents per share or $5.1 million consisting of amortization expense of $6.8 million reduced by $1.7 million for the related tax effect.

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 United States dollars are converted into United States dollars at the average foreign exchange rates for the corresponding period in the prior year. To report revenue growth excluding the October 31, 2013 divestiture of Aime, we excluded fiscal third quarter of 2013 revenue of $6.0 million.

     
  Three Months Ended July 31, Nine Months Ended July 31,
  2014 GAAP  Adjustments  2014 Non-GAAP 2014 GAAP  Adjustments  2014 Non-GAAP
             
Operating income  $ 96,565  $ 5,138  $ 101,703  $ 267,111  $ 6,124  $ 273,235
Income before income taxes  $ 94,383  $ 5,138  $ 99,521  $ 261,659  $ 6,124  $ 267,783
Provision for income taxes  $ 5,711  $ 347  $ 6,058  $ 21,087  $ 420  $ 21,507
Net income attributable to Cooper Stockholders  $ 88,067  $ 4,792  $ 92,859  $ 239,070  $ 5,703  $ 244,773
Diluted EPS attributable to Cooper stockholders  $ 1.80  $ 0.10  $ 1.90  $ 4.89  $ 0.12  $ 5.01

Conference Call and Webcast

The Company will host a conference call today at 5:00 PM ET to discuss its fiscal third quarter 2014 financial results and current corporate developments.  The dial-in number in the United States is 1-866-515-2913 and outside the United States is +1-617-399-5127. The passcode is 47976288. There will be a replay available approximately two hours after the call ends until Thursday, September 11, 2014.  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 87221172. This call will also be broadcast live at http://investor.coopercos.com and a transcript will be available 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 developing 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 approximately 9,000 employees with products sold in over 100 countries. For more information, please visit www.coopercos.com.

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 2014 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 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; foreign currency exchange rate and interest rate fluctuations including the risk of fluctuations in the value of the yen, British pound and euro that would decrease our revenues and earnings; acquisition- related adverse effects including the failure to successfully obtain the anticipated revenues, margins and earnings benefits of acquisitions, including the Sauflon acquisition, integration delays or costs and the requirement to record significant adjustments to the preliminary fair value of assets acquired and liabilities assumed within the measurement period, required regulatory approvals for an acquisition not being obtained or being delayed or subject to conditions that are not anticipated, adverse impacts of contingent liabilities or indemnification obligations, increased leverage and lack of access to available financing (including financing for the acquisition or refinancing of debt owed by us on a timely basis and on reasonable terms); 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; limitations on sales following product introductions due to poor market acceptance; new competitors, product innovations or technologies; reduced sales, loss of customers, and costs and expenses related to recalls; new U.S. and foreign government laws and regulations, and changes in existing laws, regulations and enforcement guidance, which affect the medical device industry and the healthcare industry generally; failure to receive, or delays in receiving, U.S. or foreign regulatory approvals for products; failure to obtain adequate coverage and reimbursement from third party payors for our products; compliance costs and potential liability in connection with U.S. and foreign healthcare regulations, including product recalls, warning letters, and potential losses resulting from sales of counterfeit and other infringing products; legal costs, insurance expenses, settlement costs and the risk of an adverse decision or settlement related to product liability, patent protection or other litigation; changes in tax laws or their interpretation and changes in statutory tax rates; the requirement to provide for a significant liability or to write off, or accelerate depreciation on, a significant asset, including goodwill; the success of our research and development activities and other start-up projects; dilution to earnings per share from the Sauflon acquisition or other acquisitions or issuing stock; changes in accounting principles or estimates; environmental risks and other events described in our Securities and Exchange Commission filings, including the "Business" and "Risk Factors" sections in our Annual Report on Form 10-K for the fiscal year ended October 31, 2013, 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)
     
  July 31,
2014
October 31,
2013
ASSETS
     
Current assets:    
Cash and cash equivalents $173,786 $77,393
Trade receivables, net 261,964 229,537
Inventories 353,384 338,917
Deferred tax assets 39,445 41,179
Other current assets 67,234 60,215
Total current assets 895,813 747,241
Property, plant and equipment, net                    843,413 739,867
Goodwill 1,390,911 1,387,611
Other intangibles, net 176,292 198,769
Deferred tax assets 18,633 16,279
Other assets 42,312 47,494
  $3,367,374 $3,137,261
     
LIABILITIES AND STOCKHOLDERS' EQUITY
     
Current liabilities:    
Short-term debt $46,492 $42,987
Other current liabilities 251,195 278,266
Total current liabilities 297,687 321,253
Long-term debt 301,449 301,670
Deferred tax liabilities 26,152 24,883
Other liabilities 65,809 65,961
Total liabilities 691,097 713,767
Total Cooper stockholders' equity 2,657,073 2,404,535
Noncontrolling interests 19,204 18,959
Stockholders' equity 2,676,277 2,423,494
  $3,367,374 $3,137,261
 
 
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except earnings per share amounts)
(Unaudited)
         
  Three Months Ended
July 31,
Nine Months Ended
July 31,
  2014 2013 2014 2013
Net sales $432,482 $411,993 $1,249,779 $1,175,873
Cost of sales 151,892 143,719 437,761 412,923
Gross profit 280,590 268,274 812,018 762,950
Selling, general and administrative expense 161,203 152,141 475,095 453,487
Research and development expense 16,070 14,865 48,077 43,008
Amortization of intangibles 6,752 7,660 21,735 22,553
Operating income 96,565 93,608 267,111 243,902
Interest expense 1,499 2,258 4,713 7,268
Gain on insurance proceeds -- --  -- 14,084
Other expense (income), net 683 86 739  (461)
Income before income taxes 94,383 91,264 261,659 251,179
Provision for income taxes 5,711 2,072 21,087 11,585
Net income 88,672 89,192 240,572 239,594
Less: income attributable to noncontrolling interests 605 241 1,502 840
Net income attributable to Cooper stockholders $88,067 $88,951 $239,070 $238,754
         
Diluted earnings per share attributable to Cooper stockholders $1.80 $1.79 $4.89 $4.81
         
Number of shares used to compute earnings per share attributable to Cooper stockholders 48,922 49,754 48,901 49,623
 
 
Soft Contact Lens Revenue Update
 
Worldwide Manufacturers' Soft Contact Lens Revenue
(U.S. dollars in millions; constant currency; unaudited)
             
     
  Calendar 2Q14 Trailing Twelve Months 2014
 
Market
Market
Change
CVI
Change

Market
Market
Change
CVI
Change
Sales by Modality            
Single-use  $ 760 3% 8%  $ 3,075 10% 17%
Other  1,100 3% 4%  4,330 3% 7%
WW Soft Contact Lenses  $ 1,860 3% 5%  $ 7,405 6% 10%
             
             
Sales by Geography            
Americas  $ 775 7% 3%  $ 2,990 6% 7%
EMEA  570 3% 9%  2,180 4% 11%
Asia Pacific  515 (3%) 1%  2,235 7% 14%
WW Soft Contact Lenses  $ 1,860 3% 5%  $ 7,405 6% 10%

COO-E

CONTACT: Kim Duncan

         Senior Director, Investor Relations

         ir@cooperco.com

         925-460-3663

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Source: The Cooper Companies, Inc.

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