(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||
Exhibit | Description |
99.1 | |
104.1 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
PRESS RELEASE |
• | Fourth quarter revenue decreased 1% year-over-year to $681.6 million. CooperVision (CVI) revenue down 1% to $506.3 million, and CooperSurgical (CSI) revenue down 4% to $175.3 million. |
• | Fourth quarter GAAP diluted earnings per share (EPS) $1.64, down 78 cents or 32% from last year's fourth quarter. |
• | Fourth quarter Non-GAAP diluted EPS $3.16, down 14 cents or 4% from last year's fourth quarter. See "Reconciliation of Selected GAAP Results to Non-GAAP Results" below. |
• | Revenue $681.6 million, down 1% from last year’s fourth quarter, down 3% in constant currency. |
• | Gross margin 62% down from 66% in last year’s fourth quarter. On a non-GAAP basis, gross margin was 68%, up from 67% last year driven by improvements at both CooperVision and CooperSurgical. |
• | Operating margin 15% compared with 21% in last year’s fourth quarter. On a non-GAAP basis, operating margin was 27%, down from 28% last year driven primarily by planned MiSight® investments. |
• | Interest expense $6.7 million compared with $14.6 million in last year's fourth quarter driven by lower interest rates and lower average debt. |
• | Total debt outstanding at the end of the quarter was $1,793.2 million with quarter-end cash and cash equivalents of $115.9 million. Adjusted leverage ratio (net debt over adjusted EBITDA) of 2.15x. |
• | Cash provided by operations $218.3 million offset by capital expenditures $107.0 million resulted in free cash flow of $111.3 million. |
• | Revenue $506.3 million, down 1% from last year’s fourth quarter, down 3% in constant currency. |
• | Revenue by category: |
Constant Currency | ||||||||||
(In millions) | % of CVI Revenue | %chg | %chg | |||||||
4Q20 | 4Q20 | y/y | y/y | |||||||
Toric | $ | 161.9 | 32% | 4% | 2% | |||||
Multifocal | 53.2 | 11% | 3% | —% | ||||||
Single-use sphere | 148.3 | 29% | (4)% | (6)% | ||||||
Non single-use sphere, other | 142.9 | 28% | (3)% | (4)% | ||||||
Total | $ | 506.3 | 100% | (1)% | (3)% |
Constant Currency | ||||||||||
(In millions) | % of CVI Revenue | %chg | %chg | |||||||
4Q20 | 4Q20 | y/y | y/y | |||||||
Americas | $ | 204.8 | 41% | 3% | 3% | |||||
EMEA | 183.3 | 36% | (1)% | (6)% | ||||||
Asia Pacific | 118.2 | 23% | (5)% | (8)% | ||||||
Total | $ | 506.3 | 100% | (1)% | (3)% |
• | Revenue $175.3 million, down 4% from last year's fourth quarter, down 4% in constant currency. |
• | Revenue by category: |
Constant Currency | ||||||||||
(In millions) | % of CSI Revenue | %chg | %chg | |||||||
4Q20 | 4Q20 | y/y | y/y | |||||||
Office and surgical products | $ | 109.1 | 62% | (5)% | (5)% | |||||
Fertility | 66.2 | 38% | (2)% | (2)% | ||||||
Total | $ | 175.3 | 100% | (4)% | (4)% |
• | Revenue $2,430.9 million, down 8% from fiscal 2019, down 8% constant currency. |
• | CVI revenue $1,843.0 million, down 7% from fiscal 2019, down 6% constant currency, and CSI revenue $587.9 million, down 14% from fiscal 2019, down 13% constant currency. |
• | Gross margin 63% compared with 66% in fiscal 2019. Non-GAAP gross margin 67% consistent with 67% in fiscal 2019. |
• | Operating margin 13% compared with 21% in fiscal 2019. Non-GAAP operating margin 23% down from 28% in fiscal 2019. |
• | GAAP diluted EPS $4.81, down 48% from fiscal 2019. Non-GAAP diluted EPS $9.64, down 22% from fiscal 2019. |
• | Cash provided by operations $486.6 million offset by capital expenditures of $310.4 million resulted in free cash flow of $176.2 million. |
• | Fiscal first quarter 2021 total revenue $642 - $670 million (down 3% to up 2% constant currency) |
• | CVI revenue $482 - $502 million (down 3% to up 1% constant currency) |
• | CSI revenue $160 - $168 million (down 1% to up 4% constant currency) |
• | Fiscal first quarter 2021 non-GAAP diluted earnings per share $2.66 - $2.86 |
• | 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 |
• | We exclude other exceptional or unusual charges or expenses and gains or income. These can be variable and difficult to predict, such as COVID related charges, 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 States dollar are converted into United States dollars 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 dividend payments. 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 exclude unrealized and realized gains and losses on our minority investments as we do not believe that these components of income or expense have a direct correlation to our ongoing operations. |
THE COOPER COMPANIES, INC. AND SUBSIDIARIES Reconciliation of Selected GAAP Results to Non-GAAP Results (In millions, except per share amounts) (Unaudited) | ||||||||||||||||||||||||
Three Months Ended October 31, | ||||||||||||||||||||||||
2020 | 2020 | 2019 | 2019 | |||||||||||||||||||||
GAAP | Adjustment | Non-GAAP | GAAP | Adjustment | Non-GAAP | |||||||||||||||||||
Cost of sales | $ | 257.6 | $ | (37.2 | ) | A | $ | 220.4 | $ | 236.6 | $ | (8.6 | ) | A | $ | 228.0 | ||||||||
Operating expense excluding amortization | $ | 289.7 | $ | (11.4 | ) | B | $ | 278.3 | $ | 273.3 | $ | (6.5 | ) | B | $ | 266.8 | ||||||||
Amortization of intangibles | $ | 34.2 | $ | (34.2 | ) | C | $ | — | $ | 35.1 | $ | (35.1 | ) | C | $ | — | ||||||||
Interest expense | $ | 6.7 | $ | — | $ | 6.7 | $ | 14.6 | $ | (0.8 | ) | D | $ | 13.8 | ||||||||||
Provision for income taxes | $ | 12.5 | $ | 7.1 | E | $ | 19.6 | $ | 7.5 | $ | 6.8 | E | $ | 14.3 | ||||||||||
Diluted earnings per share | $ | 1.64 | $ | 1.52 | $ | 3.16 | $ | 2.42 | $ | 0.88 | $ | 3.30 | ||||||||||||
Weighted average diluted shares used | $ | 49.6 | $ | 49.6 | $ | 50.0 | $ | 50.0 |
A | Fiscal 2020 GAAP cost of sales includes $37.2 million of costs primarily related to COVID-19 and other manufacturing related costs resulting in fiscal 2020 GAAP gross margin of 62% as compared to fiscal 2020 non-GAAP gross margin of 68%. Fiscal 2019 GAAP cost of sales includes $8.6 million of costs primarily related to integration and other manufacturing related costs, resulting in fiscal 2019 GAAP gross margin of 66% as compared to fiscal 2019 non-GAAP gross margins of 67%. | ||||||||||||
B | Fiscal 2020 and 2019 GAAP operating expense comprised of $11.4 million and $6.5 million, respectively, primarily related to integration activities and European Medical Devices Regulation (MDR) implementation costs. | ||||||||||||
C | Amortization expense was $34.2 million and $35.1 million for the fiscal 2020 and 2019 periods, respectively. Items A, B, and C resulted in fiscal 2020 GAAP operating margin of 15% as compared to fiscal 2020 non-GAAP operating margin of 27%, and fiscal 2019 GAAP operating margin of 21% as compared to fiscal 2019 non-GAAP operating margin of 28%. | ||||||||||||
D | Fiscal 2019 interest expense includes $0.8 million pertaining to the write off of debt issuance costs related to term loan prepayments. | ||||||||||||
E | Fiscal 2020 and 2019 amounts represent the net change in the provision for income taxes that arise from the impact of the above adjustments. |
THE COOPER COMPANIES, INC. AND SUBSIDIARIES Reconciliation of Selected GAAP Results to Non-GAAP Results (In millions, except per share amounts) (Unaudited) | ||||||||||||||||||||||||
Twelve Months Ended October 31, | ||||||||||||||||||||||||
2020 | 2020 | 2019 | 2019 | |||||||||||||||||||||
GAAP | Adjustment | Non-GAAP | GAAP | Adjustment | Non-GAAP | |||||||||||||||||||
Cost of sales | $ | 896.1 | $ | (90.1 | ) | A | $ | 806.0 | $ | 896.6 | $ | (28.2 | ) | A | $ | 868.4 | ||||||||
Operating expense excluding amortization and gain on sale of an intangible | $ | 1,085.8 | $ | (30.9 | ) | B | $ | 1,054.9 | $ | 1,083.3 | $ | (30.2 | ) | B | $ | 1,053.1 | ||||||||
Amortization of intangibles | $ | 137.2 | $ | (137.2 | ) | C | $ | — | $ | 145.8 | $ | (145.8 | ) | C | $ | — | ||||||||
Gain on sale of an intangible | $ | — | $ | — | $ | — | $ | (19.0 | ) | $ | 19.0 | D | $ | — | ||||||||||
Interest expense | $ | 36.8 | $ | (4.0 | ) | E | $ | 32.8 | $ | 68.0 | $ | (0.8 | ) | E | $ | 67.2 | ||||||||
Other expense (income), net | $ | 8.5 | $ | (7.0 | ) | F | $ | 1.5 | $ | 1.3 | $ | — | $ | 1.3 | ||||||||||
Provision for income taxes | $ | 28.1 | $ | 29.4 | G | $ | 57.5 | $ | 10.7 | $ | 35.1 | G | $ | 45.8 | ||||||||||
Diluted earnings per share | $ | 4.81 | $ | 4.83 | $ | 9.64 | $ | 9.33 | $ | 3.02 | $ | 12.35 | ||||||||||||
Weighted average diluted shares used | $ | 49.6 | $ | 49.6 | $ | 50.0 | $ | 50.0 |
A | Fiscal 2020 GAAP cost of sales includes $90.1 million of costs primarily related to COVID-19 and other manufacturing related costs, resulting in fiscal 2020 GAAP gross margin of 63% as compared to fiscal 2020 non-GAAP gross margin of 67%. Fiscal 2019 GAAP cost of sales includes $28.2 million of costs primarily related to product transition write off costs, integration and other manufacturing related costs, resulting in fiscal 2019 GAAP gross margin of 66%, as compared to fiscal 2019 non-GAAP gross margin of 67%. | ||||||||||||
B | Fiscal 2020 and 2019 GAAP operating expense comprised of $30.9 million and $30.2 million respectively, primarily related to acquisition, integration activities and European MDR implementation costs. | ||||||||||||
C | Amortization expense was $137.2 million and $145.8 million for the fiscal 2020 and 2019 periods, respectively. | ||||||||||||
D | Fiscal 2019 gain on sale of an intangible asset relates to a gain recognized in CooperSurgical on the sale of an exclusive distribution right of the Filshie Clip System. Items A, B, C and D resulted in fiscal 2020 GAAP operating margin of 13% as compared to fiscal 2020 non-GAAP operating margin of 23%, and fiscal 2019 GAAP operating margin of 21% as compared to fiscal 2019 non-GAAP operating margin of 28%. | ||||||||||||
E | Fiscal 2020 and 2019 interest expense includes $4.0 million and $0.8 million, respectively, pertaining to the write off of debt issuance costs related to the repayment and refinancing of credit facility and term loan. | ||||||||||||
F | Fiscal 2020 other expense (income), net includes $7.0 million of losses and advances on our minority investments. | ||||||||||||
G | Fiscal 2020 and 2019 amounts represent the net change in the provision for income taxes that arise from the impact of the above adjustments. |
October 31, 2020 | October 31, 2019 | ||||||
ASSETS | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 115.9 | $ | 89.0 | |||
Trade receivables, net | 435.4 | 435.3 | |||||
Inventories | 570.4 | 506.9 | |||||
Other current assets | 152.5 | 132.2 | |||||
Total current assets | 1,274.2 | 1,163.4 | |||||
Property, plant and equipment, net | 1,281.9 | 1,132.1 | |||||
Operating lease right-of-use assets | 260.2 | — | |||||
Goodwill | 2,447.3 | 2,428.9 | |||||
Other intangibles, net | 1,289.0 | 1,405.3 | |||||
Deferred tax assets | 80.1 | 78.0 | |||||
Other assets | 104.8 | 66.8 | |||||
Total assets | $ | 6,737.5 | $ | 6,274.5 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Short-term debt | $ | 409.3 | $ | 563.7 | |||
Other current liabilities | 595.1 | 546.9 | |||||
Total current liabilities | 1,004.4 | 1,110.6 | |||||
Long-term debt | 1,383.9 | 1,262.6 | |||||
Deferred tax liabilities | 25.8 | 28.0 | |||||
Long-term tax payable | 162.0 | 124.8 | |||||
Operating lease liabilities | 236.8 | — | |||||
Accrued pension liability and other | 99.8 | 119.9 | |||||
Total liabilities | 2,912.7 | 2,645.9 | |||||
Stockholders’ equity | 3,824.8 | 3,628.6 | |||||
Total liabilities and stockholders' equity | $ | 6,737.5 | $ | 6,274.5 |
Three Months Ended October 31, | Year Ended October 31, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net sales | $ | 681.6 | $ | 691.6 | $ | 2,430.9 | $ | 2,653.4 | |||||||
Cost of sales | 257.6 | 236.6 | 896.1 | 896.6 | |||||||||||
Gross profit | 424.0 | 455.0 | 1,534.8 | 1,756.8 | |||||||||||
Selling, general and administrative expense | 264.2 | 250.0 | 992.5 | 996.6 | |||||||||||
Research and development expense | 25.5 | 23.3 | 93.3 | 86.7 | |||||||||||
Amortization of intangibles | 34.2 | 35.1 | 137.2 | 145.8 | |||||||||||
Gain on sale of an intangible | — | — | — | (19.0 | ) | ||||||||||
Operating income | 100.1 | 146.6 | 311.8 | 546.7 | |||||||||||
Interest expense | 6.7 | 14.6 | 36.8 | 68.0 | |||||||||||
Other (Income) expense, net | (0.3 | ) | 3.5 | 8.5 | 1.3 | ||||||||||
Income before income taxes | 93.7 | 128.5 | 266.5 | 477.4 | |||||||||||
Provision for income taxes | 12.5 | 7.5 | 28.1 | 10.7 | |||||||||||
Net income attributable to Cooper stockholders | $ | 81.2 | $ | 121.0 | $ | 238.4 | $ | 466.7 | |||||||
Earnings per share - diluted | $ | 1.64 | $ | 2.42 | $ | 4.81 | $ | 9.33 | |||||||
Number of shares used to compute diluted earnings per share | 49.6 | 50.0 | 49.6 | 50.0 |