- Revenue increased 3% year-over-year to
$646.2 million. CooperVision (CVI) revenue up 3% to $485.2 million, and CooperSurgical (CSI) revenue up 2% to $161.0 million.
- GAAP diluted earnings per share
$1.82, down 25 centsor 12% from last year's first quarter.
- Non-GAAP diluted earnings per share
$2.69, down 19 centsor 7% from last year's first quarter. See "Reconciliation of GAAP Results to Non-GAAP Results" below.
Commenting on the results,
First Quarter Operating Results
$646.2 million, up 3% from last year’s first quarter, up 3% in constant currency.
- Gross margin 66% compared with 67% in last year’s first quarter. On a non-GAAP basis, gross margin was 67% consistent with 67% last year.
- Operating margin 17% compared with 18% in last year’s first quarter. On a non-GAAP basis, operating margin was 25% compared with 26% last year.
- Interest expense
$11.6 millioncompared with $18.2 millionin last year's first quarter due to lower average debt balances and interest rates.
- Total debt outstanding at the end of the quarter was
$1,776.7 millionwith quarter-end cash and cash equivalents of $76.8 million. Adjusted leverage ratio (net debt over adjusted EBITDA) of 1.82x.
- Cash provided by operations
$129.7 millionoffset by capital expenditures $69.0 millionresulted in free cash flow of $60.7 million.
First Quarter CooperVision (CVI) Operating Results
$485.2 million, up 3% from last year’s first quarter, up 4% in constant currency.
- Revenue by category:
|(In millions)||% of CVI Revenue||%chg||Constant Currency
|Non single-use sphere, other||140.2||29||%||(2||)%||(1||)%|
- Revenue by geography:
|(In millions)||% of CVI Revenue||%chg||Constant Currency
- Gross margin 65% compared with 66% in last year’s first quarter. On a non-GAAP basis, gross margin was 67% compared with 66% in last year's first quarter largely due to a reduction in year-over-year expenses associated with infrastructure improvement projects.
First Quarter CooperSurgical (CSI) Operating Results
$161.0 millionup 2% from last year's first quarter, up 2% in constant currency.
- Revenue by category:
|(In millions)||% of CSI Revenue||%chg||Constant Currency
|Office and surgical products||$||98.5||61||%||3||%||3||%|
- Gross margin 68% compared with 69% in last year’s first quarter. On a non-GAAP basis, gross margin was 70% compared with 72% in last year's first quarter largely due to disruptions associated with consolidating our global manufacturing operations into
Fiscal Year 2020 Guidance
The Company updated its fiscal year 2020 guidance. Details are summarized as follows:
- Fiscal 2020 total revenue
$2,767- $2,817 million(~5% to 7% constant currency)
° CVI revenue
$2,070- $2,100 million(~5.5% to 7% constant currency)
° CSI revenue
$697- $717 million(~3% to 6% constant currency)
- Fiscal 2020 non-GAAP diluted EPS of
Non-GAAP diluted earnings per share guidance excludes amortization and impairment of intangible assets, and other exceptional or unusual income or gains and charges or expenses including acquisition, integration and manufacturing related costs which we may incur as part of our continuing operations.
With respect to the Company’s guidance expectations, the Company has not reconciled non-GAAP diluted earnings per share guidance to GAAP diluted earnings per share due to the inherent difficulty in forecasting acquisition-related, integration and restructuring charges and expenses, which are reconciling items between the non-GAAP and GAAP measure. Due to the unknown effect, timing and potential significance of such charges and expenses that impact GAAP diluted earnings per share, the Company is not able to provide such guidance.
Reconciliation of GAAP Results 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. 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 may include the following adjustments, and as appropriate, the related income tax effects and changes in income attributable to noncontrolling interests:
- We exclude the effect of amortization and impairment of intangible assets from our non-GAAP financial results. Amortization of intangible assets will recur in future periods; however, the amounts are affected by the timing and size of our acquisitions. Impairment of intangible assets is a non-recurring cost.
- We exclude the effect of acquisition and integration expenses and the effect of restructuring expenses from our non-GAAP financial results. Such expenses generally diminish over time with respect to past acquisitions; however, we generally will incur similar expenses in connection with any future acquisitions. We incurred significant expenses in connection with our acquisitions and also incurred certain other operating expenses or income, which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. Acquisition and integration expenses include direct effects of acquisition accounting, such as inventory fair value step-up and items such as personnel costs for transitional employees, other acquired employee related costs and integration related professional services. Restructuring expenses include items such as employee severance, product rationalization, facility and other exit costs.
- We exclude other exceptional or unusual charges or expenses and gains or income. These can be variable and difficult to predict, such as certain litigation expenses and product transition costs, and are not what we consider as typical of our continuing operations. Investors should consider non-GAAP financial measures in addition to, and not as replacements for, or superior to, measures of financial performance prepared in accordance with GAAP.
- We report revenue growth using the non-GAAP financial measure of constant currency 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 Statesdollar are converted into United Statesdollars at the average foreign exchange rates for the corresponding period in the prior year.
- 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 that is available to grow the business, make strategic acquisitions, repay debt, buyback common stock or to fund the dividend. 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.
Reconciliation of Selected GAAP Results to Non-GAAP Results
(In millions, except per share amounts)
|Three Months Ended
|Cost of sales||$||219.7||$||(8.4||)||A||$||211.3||$||209.6||$||(5.4||)||A||$||204.2|
|Operating expense excluding amortization||$||280.5||$||(7.4||)||B||$||273.1||$||271.0||$||(11.9||)||B||$||259.1|
|Amortization of intangibles||$||34.9||$||(34.9||)||C||$||—||$||36.6||$||(36.6||)||C||$||—|
|Provision (benefit) for income taxes||$||6.9||$||7.6||D||$||14.5||$||(9.4||)||$||13.3||D||$||3.9|
|Diluted earnings per share||$||1.82||$||0.87||$||2.69||$||2.07||$||0.81||$||2.88|
|Weighted average diluted shares used||49.7||49.7||49.9||49.9|
|A||Fiscal 2020 GAAP cost of sales includes
|B||Fiscal 2020 GAAP operating expense comprised of
|C||Amortization expense was
|D||Fiscal 2020 and 2019 amounts represent the net change in the provision (benefit) for income taxes that arise from the impact of the above adjustments.|
Conference Call and Webcast
The Company will host a conference call today at
CooperCompanies ("Cooper") is a global medical device company publicly traded on the NYSE (NYSE:COO). 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 is committed to advancing the health of women, babies and families with its diversified portfolio of products and services focusing on medical devices and fertility & genomics. Headquartered in
This earnings 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 of which are other than statements of historical fact, including our 2020 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 diluted 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," "outlook," "probable," "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 political and economic conditions, and related uncertainty caused by the United Kingdom’s election to withdraw from the
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.
Vice President, Investor Relations and Risk Management
|Consolidated Condensed Balance Sheets|
|Cash and cash equivalents||76.8||89.0|
|Trade receivables, net||408.0||435.3|
|Other current assets||138.6||132.2|
|Total current assets||1,149.9||1,163.4|
|Property, plant and equipment, net||1,168.5||1,132.1|
|Operating lease right-of-use assets||264.0||0.0|
|Other intangibles, net||1,374.4||1,405.3|
|Deferred tax assets||75.9||78.0|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Other current liabilities||525.5||546.9|
|Total current liabilities||1,068.5||1,110.6|
|Deferred tax liabilities||27.6||28.0|
|Long-term tax payable||176.2||124.8|
|Operating lease liabilities||241.2||0.0|
|Accrued pension liability and other||70.4||119.9|
|Total liabilities and stockholders' equity||$||6,548.5||$||6,274.5|
|Consolidated Statements of Income|
|(In millions, except per share amounts)|
|Three Months Ended
|Cost of sales||219.7||209.6|
|Selling, general and administrative expense||258.3||250.0|
|Research and development expense||22.2||21.0|
|Amortization of intangibles||34.9||36.6|
|Other expense (income), net||2.1||(1.1||)|
|Income before income taxes||97.4||93.8|
|Provision (benefit) for income taxes||6.9||(9.4||)|
|Earnings per share - diluted||$||1.82||$||2.07|
|Number of shares used to compute diluted earnings per share||49.7||49.9|
Source: The Cooper Companies, Inc.