The Cooper Companies, Inc.
Mar 3, 2016

The Cooper Companies Announces First Quarter 2016 Results

PLEASANTON, Calif., March 03, 2016 (GLOBE NEWSWIRE) -- The Cooper Companies, Inc. (NYSE:COO) today announced financial results for the fiscal first quarter ended January 31, 2016.

Commenting on the results, Robert S. Weiss, Cooper's president and chief executive officer said, "I am pleased with the strong start to our fiscal year. CooperVision continued to gain market share driven by growth in Biofinity® and its 1-Day silicone hydrogel products. CooperSurgical made a lot of progress and posted strong results. We are increasing our guidance for the year to reflect our first quarter performance and the impact of improving currency on earnings, and we remain very optimistic about the underlying fundamentals of our business."

First Quarter GAAP Operating Highlights

First Quarter CooperVision (CVI) GAAP Operating Highlights

        Constant Currency
  (In millions) % of CVI Revenue %chg %chg
  1Q16 1Q16 y/y y/y
Toric $107.5  30% -1% 4%
Multifocal  40.3  11% -5% 0%
Single-use sphere  90.8  25% 8% 13%
Non single-use sphere, other  125.7  34% -6% -1%
Total $364.3  100% -1% 4%
               
        Constant Currency
  (In millions) % of CVI Revenue %chg %chg
  1Q16 1Q16 y/y y/y
Americas $151.3  42% -5% -3%
EMEA  145.3  40% -2% 8%
Asia Pacific  67.7  18% 7% 12%
Total $364.3  100% -1% 4%
              

First Quarter CooperSurgical (CSI) GAAP Operating Highlights

        Pro forma
  (In millions) % of CSI Revenue %chg %chg
  1Q16 1Q16 y/y y/y
Office and surgical procedures $54.2  64%  7% 7%
Fertility  31.1  36% 24% 6%
Total $85.3  100% 12% 6%
              

                                                                                                                                                           
Fiscal Year 2016 Guidance
The Company updated its fiscal year 2016 guidance.  Non-GAAP earnings per share guidance for the full fiscal year excludes amortization of existing other intangible assets of approximately $56.7 million or $0.93 per share, and other costs including integration expenses which we would not have otherwise incurred as part of our continuing operations.  Details are summarized as follows:

Other

Reconciliation of GAAP to Non-GAAP Results
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 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 integration activities, severance and restructuring costs; costs associated with the start-up of new manufacturing facilities; as well as certain legal costs described below.  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.  We believe it is useful for investors to understand the effects of these items on our consolidated operating results.  Our non-GAAP financial measures include the following adjustments, along with the related income tax effects and changes in income attributable to noncontrolling interests:

Guidance for earnings per share is provided on a non-GAAP basis due to the inherent difficulty in forecasting acquisition-related, integration and restructuring charges and expenses.  We are not able to provide a reconciliation of these non-GAAP items to expected reported GAAP earnings per share due to the unknown effect, timing and potential significance of such charges and expenses.  Management does not consider the excluded items as part of our continuing operations.

We also report revenue growth using the non-GAAP financial measure of pro forma which includes 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 the United States dollar are converted into United States dollars at the average foreign exchange rates for the corresponding period in the prior year. To report pro forma revenue growth, we include revenue for the comparison period when we did not own recently acquired companies.

We define the non-GAAP measure of free cash flow as cash provided by operating activities less capital expenditures.  We believe free cash flow is useful for investors as an additional measure of liquidity because it represents cash flows that are available for repayment of debt, repurchases of our common stock or to fund our strategic initiatives.   Management uses free cash flow internally to understand, manage, make operating decisions and evaluate our business.  In addition, we use free cash flow to help plan and forecast future periods.

We also provide the metric of adjusted free cash flow that we believe represents our operations ability to generate cash by adjusting cash flow from operations for capital expenditures that are part of our ongoing operations and for acquisition related and integration costs.  We believe adjusted free cash flow is useful to investors as an additional measure of performance because it reports elements of our operating activities and excludes cash flow elements that we do not consider to be related to our ability to generate cash.  As discussed above, we incur significant acquisition related and integration costs that will diminish over time; and we believe it is useful to investors to understand the effects of these costs on our adjusted free cash flow.

 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Reconciliation of Selected GAAP Results to Non-GAAP Results 
 (In thousands, except per share amounts) 
 (Unaudited) 
 
   Three Months Ended January 31,
   2016
   2016
 2015
   2015
   GAAP Adjustment Non-GAAP  GAAP Adjustment Non-GAAP
               
Cost of sales $187,677  $(14,061)A$173,616   $168,820  $(9,443)A$159,377 
Selling, general and administrative expense  $173,604  $(11,783)B$161,821   $173,535  $(6,359)B$167,176 
Research and development expense $14,761  $73 C$14,834   $16,113  $(104)C$16,009 
Amortization of intangibles $ 16,203  $(16,203)D$-   $13,595  $(13,595)D$- 
(Benefit from) provision for income taxes $(1,011) $4,655 E$3,644   $5,716  $4,779 E$10,495 
Diluted earnings per share attributable to Cooper stockholders $1.05  $0.78  $1.83   $1.25  $ 0.50  $1.75 
  
  AOur fiscal 2016 GAAP cost of sales includes $11.3 million of charges primarily for equipment and product rationalization and related integration costs, arising from the acquisition of Sauflon, and $2.3 million of facility start-up costs in CooperVision; and $0.4 million of integration costs in our CooperSurgical fertility business. Our fiscal 2015 GAAP cost of sales included $9.2 million of charges primarily for product and equipment rationalization, arising from the acquisition of Sauflon, and $0.2 million of severance costs in our CooperSurgical fertility business.
               
  BOur fiscal 2016 GAAP selling, general and administrative expense includes $11.8 million in costs primarily for CooperVision's integration and restructuring activities related to the acquisition of Sauflon and acquisition and integration costs in our CooperSurgical fertility business.  Our fiscal 2015 GAAP selling, general and administrative expense included $5.9 million for CooperVision's integration and restructuring activities related to the acquisition of Sauflon and $0.5 million of severance costs in our CooperSurgical fertility business.
               
  COur fiscal 2016 GAAP research and development expense includes $0.1 million for a reversal of accrued restructuting costs. Our fiscal 2015 GAAP research and development expense included $0.1 million of severance costs related to integration and restructuring activities.
               
  DAmortization expense was $16.2 million and $13.6 million for the fiscal 2016 and 2015 periods, respectively.
  
  EThese amounts represent the increases in the provision for income taxes that arises from the impact of the above adjustments.
               


THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Reconciliation of Selected GAAP Results to Non-GAAP Results
Free Cash Flow and Adjusted Free Cash Flow
(In thousands)
(Unaudited)
 Three Months
Ended January 31,
 2016
 
Cash flow from operations$89,539 
Capital expenditures (45,156)
Free cash flow$44,383 
Items not included in adjusted free cash flow:   
Integration costs and other 12,327 
Adjusted Free cash flow$56,710 
 


Conference Call and Webcast

The Company will host a conference call today at 5:00 PM ET to discuss its fiscal first quarter 2016 financial results and current corporate developments. The live dial-in number for the call is 855-643-4430 (U.S.) / 707-294-1332 (International). The participant passcode for the call is "Cooper". A simultaneous webcast of the call will be available through the "Investor Relations" section of The Cooper Companies' website at http://investor.coopercos.com and a transcript of the call will be archived on this site for a minimum of 12 months.  A recording of the call will be available beginning at 8:00 PM ET on March 3, 2016 through March 10, 2016. To hear this recording, dial 855-859-2056 (U.S.) / 404-537-3406 (International) and enter code 266737 (Cooper).

About The Cooper Companies
The Cooper Companies, Inc. ("Cooper") is a global medical device company publicly traded on the NYSE (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 health care to women. Headquartered in Pleasanton, CA, Cooper has approximately 10,000 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 2016 Guidance and all statements regarding acquisitions including the acquired companies' financial position, market position, product development and business strategy, expected cost synergies, expected timing and benefits of the transaction, difficulties in integrating entities or operations, as well as estimates of our and the acquired entities' future expenses, sales and earnings per share are forward looking.  In addition, 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 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 foreign currencies 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, 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 changes to accounting controls and reporting procedures, 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); Our indebtedness could adversely affect our financial health, prevent us from fulfilling our debt obligations or limit our ability to borrow additional funds; a major disruption in the operations of our manufacturing, research and development or distribution facilities, due to technological problems, including any related to our information systems maintenance, enhancements, or new system deployments and integrations, integration of acquisitions, natural disasters or other causes; disruptions in supplies of raw materials, particularly components used to manufacture our silicone hydrogel lenses; new U.S. and foreign government laws and regulations, and changes in existing tax laws, regulations and enforcement guidance, which affect the contact lens industry, specifically, or the medical device and the healthcare industries generally; compliance costs and potential liability in connection with U.S. and foreign healthcare regulations and federal and state laws pertaining to privacy and security of health information, including product recalls, warning letters, and data security breaches; legal costs, insurance expenses, settlement costs and the risk of an adverse decision, prohibitive injunction or settlement related to product liability, patent infringement or other litigation; changes in tax laws or their interpretation and changes in statutory tax rates; 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; failure to receive, or delays in receiving, U.S. or foreign regulatory approvals for products; failure of our customers and end users to obtain adequate coverage and reimbursement from third party payors for our products and services; 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 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 the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2015, 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)
 
  January 31,
2016
  October 31,
2015
ASSETS
Current assets:       
Cash and cash equivalents $16,047  $16,426
Trade receivables, net  278,891   282,918
Inventories  430,898   419,692
Deferred tax assets  39,717   41,731
Other current assets  78,951   80,661
Total current assets  844,504   841,428
Property, plant and equipment, net  948,174   967,097
Goodwill  2,157,260   2,197,077
Other intangibles, net  406,832   411,090
Deferred tax assets  6,307   4,510
Other assets  38,725   38,662
  $4,401,802  $4,459,864
        
LIABILITIES AND STOCKHOLDERS' EQUITY
        
Current liabilities:       
Short-term debt $46,696  $243,803
Other current liabilities  301,273   324,979
Total current liabilities  347,969   568,782
Long-term debt  1,330,627   1,105,408
Deferred tax liabilities  35,597   31,016
Other liabilities  80,883   80,754
Total liabilities  1,795,076   1,785,960
Total Cooper stockholders' equity  2,599,957   2,667,509
Noncontrolling interests  6,769   6,395
Stockholders' equity  2,606,726   2,673,904
  $4,401,802  $4,459,864

                                                                             

THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
 
  Three Months Ended
January 31,
  2016  2015
Net sales $449,641  $445,171
Cost of sales  187,677   168,820
Gross profit  261,964    276,351
Selling, general and administrative expense  173,604   173,535
Research and development expense  14,761   16,113
Amortization of intangibles  16,203   13,595
Operating income  57,396   73,108
Interest expense  5,274   3,941
Other expense  1,392   1,702
Income before income taxes  50,730   67,465
(Benefit from) / Provision for income taxes  (1,011)  5,716
Net income   51,741   61,749
Less: income attributable to noncontrolling interests  385   570
Net income attributable to Cooper stockholders $51,356  $61,179
        
Diluted earnings per share attributable to Cooper stockholders $1.05  $1.25
        
Number of shares used to compute earnings per share attributable to Cooper stockholders  48,840   49,082
        

Soft Contact Lens Revenue Update

Worldwide Manufacturers' Soft Contact Lens Revenue 
(U.S. dollars in millions; constant currency; unaudited) 
             
  Calendar 4Q15 Calendar 2015
    Market CVI   Market CVI
  Market Change Change Market Change Change
Sales by Modality            
Single-use $825   12%  14% $3,265   11%  15%
Other  970    -1%  2%  4,080   (0%)  4%
WW Soft Contact Lenses $1,795   4%   6% $7,345   4%   7%
                         
             
Sales by Geography            
Americas $735   4%  1% $ 3,165   5%  6%
EMEA  530   5%  9%  2,105    4%  8%
Asia Pacific  530   5%  12%  2,075   3%  8%
WW Soft Contact Lenses $1,795   4%  6% $7,345   4%  7%
                         
Note:  This data is compiled using gross product sales.
 
Source:  Management estimates and independent market research
 

COO-E

CONTACT:

Kim Duncan

Vice President, Investor Relations

ir@cooperco.com

925-460-3663

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Source: Cooper Companies Inc

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