The Cooper Companies Announces Fourth Quarter and Full Year 2010 Results
The Cooper Companies Announces Fourth Quarter and Full Year 2010 Results
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Fourth quarter revenue increased 11% year-over-year to
$313.4 million . Fiscal 2010 revenue increased 7% to$1,158.5 million . -
Fourth quarter GAAP earnings per share (EPS)
$1.03 , up37 cents or 56% from last year's fourth quarter. Fiscal 2010 GAAP EPS$2.43 , up 10% from fiscal 2009. -
Fourth quarter non-GAAP EPS
$1.09 . Fiscal 2010 non-GAAP EPS$3.10 . See "Reconciliation of Non-GAAP EPS to GAAP EPS" shown below. -
Fourth quarter free cash flow
$31.8 million . Fiscal 2010 free cash flow$193.9 million .
"We are very pleased with our strong finish to a successful year as we continued to take market share, show strength in margins and deliver strong free cash flow," said
Fourth Quarter Operating Highlights
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Revenue
$313.4 million , 11% above fourth quarter 2009, 11% in constant currency. - Gross margin 60% compared with 56% in last year's fourth quarter. The improvement in gross margin was largely a result of manufacturing efficiency improvements within both CVI and CSI, offset by costs associated with the 2009 CVI manufacturing restructuring plan.
- Operating margin 20% compared with 15% in last year's fourth quarter.
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Amortization
$4.6 million compared with$5.4 million in last year's fourth quarter. The decrease was due to a$1.3 million write-off in last year's fourth quarter offset by new amortization from recent acquisitions. Depreciation$18.6 million . -
Interest expense
$8.0 million or 3% of sales compared with$10.8 million or 4% of sales in last year's fourth quarter. Interest expense decreased as a result of a decrease in outstanding debt. - Effective tax rate 10.5%.
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Total debt decreased
$35.5 million to$611.1 million . Total availability under the Company's$650.0 million revolver was$397.1 million . -
Cash provided by operations
$64.6 million and capital expenditures$32.8 million resulted in free cash flow of$31.8 million .
Fourth Quarter CooperVision (CVI) Operating Highlights
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Revenue
$263.2 million , up 10% from last year's fourth quarter, up 10% in constant currency. - Revenue by category:
Constant Currency | ||||
(In millions) | % of CVI Revenue | %chg | %chg | |
4Q10 | 4Q10 | y/y | y/y | |
Toric | $ 78.4 | 30% | 14% | 16% |
Multifocal | 18.2 | 7% | -2% | 1% |
Single-use sphere | 56.4 | 21% | 9% | 5% |
Non single-use sphere, other | 110.2 | 42% | 10% | 11% |
Total | $ 263.2 | 100% | 10% | 10% |
- Revenue by geography:
Constant Currency | ||||
(In millions) | % of CVI Revenue | %chg | %chg | |
4Q10 | 4Q10 | y/y | y/y | |
Americas | $ 124.0 | 47% | 20% | 20% |
EMEA | 90.8 | 35% | -- | 8% |
Asia Pacific | 48.4 | 18% | 6% | -5% |
Total | $ 263.2 | 100% | 10% | 10% |
- Selected revenue by material:
Constant Currency | ||||
(In millions) | % of CVI Revenue | %chg | %chg | |
4Q10 | 4Q10 | y/y | y/y | |
Proclear | $ 72.6 | 28% | 5% | 7% |
Silicone hydrogel | $ 72.7 | 28% | 88% | 91% |
- Gross margin 59% compared with 56% in last year's fourth quarter.
- Operating margin 22% compared with 17% in last year's fourth quarter.
Fourth Quarter CooperSurgical (CSI) Operating Highlights
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Revenue
$50.1 million , up 14% from last year's fourth quarter, organic growth 9%. - Revenue by category:
(In millions) | % of CSI Revenue | %chg | ||
4Q10 | 4Q10 | y/y | ||
Office, other | $ 29.9 | 60% | 11% | |
Surgical procedures | 16.7 | 33% | 21% | |
Fertility | 3.5 | 7% | 15% | |
Total | $ 50.1 | 100% | 14% | |
Note: Supplemental historical revenue by category may be found on our website at http://investor.coopercos.com/financials.cfm. |
- Gross margin 65%, up from 57% in last year's fourth quarter. The improvement in gross margin was largely a result of efficiency improvements and a reduction in period costs.
- Operating margin 28%, up from 19% in last year's fourth quarter.
Fiscal Year 2010 Operating Highlights
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Record revenue
$1,158.5 million , up 7% from fiscal 2009, 8% in constant currency. -
CVI revenue
$970.5 million , up 7% from fiscal 2009, and CSI revenue$188.0 million , up 10% from fiscal 2009. - Gross margin 58% compared with 55% in fiscal 2009.
- Operating margin 16% compared with 14% in fiscal 2009.
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Depreciation and amortization expense
$94.0 million . -
Interest expense
$36.7 million or 3% of sales vs.$44.1 million or 4% of sales in fiscal 2009. -
Cash provided by operations
$267.6 million and capital expenditures$73.7 million resulted in free cash flow of$193.9 million .
2011 Guidance
The Company initiated its full-year 2011 guidance. Guidance is summarized as follows:
FY11 Guidance | |
Revenues (In millions) | |
Total | $1,250 -- $1,280 |
CVI | $1,055 -- $1,075 |
CSI | $195 -- $205 |
EPS | |
GAAP | $3.25 -- $3.45 |
Non-GAAP* | $3.30 -- $3.50 |
Free Cash Flow (In millions) | $160 -- $190 |
* Excludes impact of 2009 CooperVision manufacturing restructuring plan and costs related to acquisitions. | ||
See "Reconciliation of Non-GAAP EPS to GAAP EPS" shown 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. As indicated in the table below, the non-GAAP measures exclude the securities class action and derivative litigation settlements and related charges, restructuring costs and costs related to acquisitions. We exclude these items because we do not consider them reflective of our ongoing operating performance. 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 for and forecasting future periods.
Non-GAAP operating income, net income and diluted EPS results exclude costs related to the securities class action and derivative litigation settlements and related charges, the 2009 CooperVision manufacturing restructuring plan announced in
In fiscal 2010, we recognized pre-tax litigation settlement charges of
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 October 31, | |||
2010 GAAP | Adjustments | 2010 Non-GAAP | |
Operating income | $ 62,504 | $ 4,532 | $ 67,036 |
Income before income taxes | $ 53,876 | $ 5,282 | $ 59,158 |
Provision for income taxes | $ 5,678 | $ 2,622 | $ 8,300 |
Net income | $ 48,198 | $ 2,660 | $ 50,858 |
Diluted EPS | $ 1.03 | $ 0.06 | $ 1.09 |
Twelve Months Ended October 31, | |||
2010 GAAP | Adjustments | 2010 Non-GAAP | |
Operating income | $ 189,912 | $ 18,605 | $ 208,517 |
Income before income taxes | $ 124,426 | $ 46,355 | $ 170,781 |
Provision for income taxes | $ 11,623 | $ 15,203 | $ 26,826 |
Net income | $ 112,803 | $ 31,152 | $ 143,955 |
Diluted EPS | $ 2.43 | $ 0.67 | $ 3.10 |
Fiscal 2011 EPS Guidance | |||
2011 GAAP | Adjustments | 2011 Non-GAAP | |
FY11 Diluted EPS | $ 3.25 - 3.45 | $ 0.05 | $ 3.30 - 3.50 |
Conference Call and Webcast
The Company will host a conference call today at
About
CooperVision (www.coopervision.com) develops, manufactures and markets a broad range of contact lenses for the worldwide vision correction market. Dedicated to enhancing the contact lens experience for practitioners and patients, CooperVision specializes in lenses for astigmatism, presbyopia and ocular dryness. Headquartered in
CooperSurgical (www.coopersurgical.com) develops, manufactures and markets medical devices, diagnostic products, and surgical instruments and accessories used primarily by gynecologists and obstetricians. CooperSurgical is a leader in the U.S. Ob-Gyn market, and its major manufacturing and distribution facilities are located in
Forward-Looking Statements
This news release contains "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995. Statements relating to plans, prospects, goals, strategies, future actions, events or performance and other statements which are other than statements of historical fact, including all statements regarding anticipated growth in our revenue, CooperVision's manufacturing restructuring plan 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 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
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) | ||||
October 31, 2010 |
October 31, 2009 |
|||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $3,573 | $3,932 | ||
Trade receivables, net | 197,490 | 170,941 | ||
Inventories | 227,902 | 260,846 | ||
Deferred tax assets | 28,828 | 23,360 | ||
Other current assets | 33,547 | 44,799 | ||
Total current assets | 491,340 | 503,878 | ||
Property, plant and equipment, net | 593,887 | 602,568 | ||
Goodwill | 1,261,976 | 1,257,029 | ||
Other intangibles, net | 114,177 | 114,700 | ||
Deferred tax assets | 23,072 | 27,781 | ||
Other assets | 40,566 | 45,951 | ||
$2,525,018 | $2,551,907 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Current liabilities: | ||||
Short-term debt | $19,159 | $9,844 | ||
Other current liabilities | 180,361 | 165,570 | ||
Total current liabilities | 199,520 | 175,414 | ||
Long-term debt | 591,977 | 771,630 | ||
Other liabilities | 46,543 | 48,065 | ||
Deferred tax liabilities | 20,202 | 16,456 | ||
Total liabilities | 858,242 | 1,011,565 | ||
Stockholders' equity | 1,666,776 | 1,540,342 | ||
$2,525,018 | $2,551,907 |
THE COOPER, COMPANIES, INC. AND SUBSIDIARIES | ||||
Consolidated Condensed Statements of Income | ||||
(In thousands, except per share amounts) | ||||
(Unaudited) | ||||
Three Months Ended October 31, |
Year Ended October 31, |
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2010 | 2009 | 2010 | 2009 | |
Net sales | $313,352 | $283,455 | $1,158,517 | $1,080,421 |
Cost of sales | 125,871 | 124,548 | 481,794 | 483,927 |
Gross profit | 187,481 | 158,907 | 676,723 | 596,494 |
Selling, general and administrative | ||||
expense | 109,874 | 102,858 | 433,057 | 391,593 |
Research and development expense | 10,486 | 8,265 | 35,274 | 33,298 |
Restructuring costs | -- | 470 | 424 | 3,887 |
Amortization of intangibles | 4,617 | 5,370 | 18,056 | 17,860 |
Operating income | 62,504 | 41,944 | 189,912 | 149,856 |
Interest expense | 7,984 | 10,771 | 36,668 | 44,143 |
Litigation settlement charges | 750 | -- | 27,750 | -- |
Other income (loss), net | 106 | 865 | (1,068) | 9,115 |
Income before income taxes | 53,876 | 32,038 | 124,426 | 114,828 |
Provision for income taxes | 5,678 | 1,919 | 11,623 | 14,280 |
Net income | $48,198 | $30,119 | $112,803 | $100,548 |
Diluted earnings per share | $1.03 | $0.66 | $2.43 | $2.21 |
Number of shares used to compute | ||||
earnings per share | 46,827 | 45,851 | 46,505 | 45,478 |
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 3Q10 | Calendar YTD 2010 | |||||
Market |
Market Change |
CVI Change |
Market |
Market Change |
CVI Change |
|
Sales by Category | ||||||
Spheres | $ 1,279 | 3% | 8% | $ 3,724 | 4% | 8% |
Torics | 313 | 11% | 17% | 903 | 10% | 16% |
Multifocal | 77 | 16% | 0% | 228 | 19% | 3% |
WW Soft Contact Lenses | $ 1,669 | 5% | 10% | $ 4,855 | 5% | 10% |
Sales by Modality | ||||||
Single Use | $ 597 | 10% | 8% | $ 1,706 | 9% | 11% |
Other | 1,072 | 3% | 11% | 3,149 | 3% | 9% |
WW Soft Contact Lenses | $ 1,669 | 5% | 10% | $ 4,855 | 5% | 10% |
Sales by Material | ||||||
Hydrogel | $ 982 | (3%) | (4%) | $ 2,903 | (3%) | (4%) |
Silicone Hydrogel | 687 | 20% | 91% | 1,952 | 21% | 106% |
WW Soft Contact Lenses | $ 1,669 | 5% | 10% | $ 4,855 | 5% | 10% |
Sales by Geography | ||||||
Americas | $ 652 | 6% | 13% | $ 1,907 | 6% | 12% |
EMEA | 507 | 6% | 13% | 1,479 | 6% | 12% |
Asia Pacific | 510 | 3% | (1%) | 1,469 | 3% | 2% |
WW Soft Contact Lenses | $ 1,669 | 5% | 10% | $ 4,855 | 5% | 10% |
United States | $ 561 | 6% | 13% | $ 1,649 | 6% | 11% |
International | 1,108 | 5% | 8% | 3,206 | 5% | 9% |
WW Soft Contact Lenses | $ 1,669 | 5% | 10% | $ 4,855 | 5% | 10% |
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CONTACT:Source:The Cooper Companies, Inc. Albert G. White, III , VP, Investor Relations and TreasurerKim Duncan , Director, Investor Relations 925-460-3663 ir@coopercompanies.com
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