Full Press Release Details
THE COOPER COMPANIES ANNOUNCES FOURTH QUARTER AND FULL YEAR 2015 RESULTS
PLEASANTON, Calif., December 3, 2015 The Cooper Companies, Inc. (NYSE: COO) today announced financial results for the fiscal fourth quarter
and full year ended October 31, 2015.
Commenting on the results, Robert S. Weiss, Cooper s president and chief executive officer said, I am pleased to report record revenue and record
non-GAAP EPS for the year. We accomplished this through market share gains across our geographies, success with the Biofinity family of products and a continued push into 1 Day silicone
hydrogel with clariti and MyDay . As we enter fiscal 2016, we remain encouraged by our business trends and believe we are well
positioned for sustained growth going forward.
Fourth Quarter GAAP Operating Highlights
Fourth Quarter CooperVision (CVI) GAAP Operating Highlights
| (In millions) 4Q15 | % of CVI Revenue 4Q15 | %chg y/y | Constant Currency %chg y/y | |||||||||
| Toric | $ | 110.4 | 30 | % | 0% | 8% | ||||||
| Multifocal | 39.1 | 10 | % | -1% | 7% | |||||||
| Single-use sphere | 94.1 | 25 | % | 2% | 12% | |||||||
| Non single-use sphere, other | 129.8 | 35 | % | -9% | -2% | |||||||
| Total | $ | 373.4 | 100 | % | -3% | 5% |
| (In millions) 4Q15 | % of CVI Revenue 4Q15 | %chg y/y | Constant Currency %chg y/y | |||||||||
| Americas | $ | 155.9 | 42 | % | 2% | 4% | ||||||
| EMEA | 148.2 | 40 | % | -9% | 3% | |||||||
| Asia Pacific | 69.3 | 18 | % | 0% | 13% | |||||||
| Total | $ | 373.4 | 100 | % | -3% | 5% |
Fourth Quarter CooperSurgical (CSI) GAAP Operating Highlights
| (In millions) 4Q15 | % of CSI Revenue 4Q15 | %chg y/y | Pro forma %chg y/y | |||||||||
| Office and surgical procedures | $ | 52.2 | 63 | % | -5% | -5% | ||||||
| Fertility | 30.0 | 37 | % | 9% | 3% | |||||||
| Total | $ | 82.2 | 100 | % | -1% | -2% |
Fiscal Year 2015 GAAP Operating Highlights
Fiscal Year 2016 Guidance
The Company initiated its fiscal year 2016 guidance. Guidance for reported results is based on recent foreign exchange rates.
Non-GAAP earnings per share excludes amortization of existing other intangible assets of approximately $50.6 million or $0.78 per share for the full fiscal year and $12.9 million or $0.20 per share for the
first fiscal quarter of 2016, and other costs including integration expenses which we would not have otherwise incurred as part of our continuing operations. Details are summarized as follows:
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 including Sauflon and Reprogenetics, we include revenue for the comparison period when we did not own them of $4.8 million in our fiscal fourth quarter of 2014 for Reprogenetics, and $140.4 million in the fiscal
nine month period ended July 31, 2014 for Sauflon.
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 and the legal settlement discussed above that are not part of our ongoing operations. 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 primarily related to the acquisition of Sauflon that will diminish over time; and the JJVC legal settlement is not part of our ongoing operations; 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)
| Three Months Ended October 31, | ||||||||||||||||||||||||
| 2015 | 2015 | 2014 | 2014 | |||||||||||||||||||||
| GAAP | Adjustment | Non-GAAP | GAAP | Adjustment | Non-GAAP | |||||||||||||||||||
| Cost of sales | $ | 202,227 | $ | (37,866 | )A | $ | 164,361 | $ | 188,445 | $ | (16,097 | )A | $ | 172,348 | ||||||||||
| Selling, general and administrative expense | $ | 179,643 | $ | (13,621 | )B | $ | 166,022 | $ | 208,021 | $ | (38,828 | )B | $ | 169,193 | ||||||||||
| Research and development expense | $ | 18,360 | $ | (2,383 | )C | $ | 15,977 | $ | 18,181 | $ | (648 | )C | $ | 17,533 | ||||||||||
| Amortization of intangibles | $ | 13,053 | $ | (13,053 | )D | $ | $ | 13,976 | $ | (13,976 | )D | $ | ||||||||||||
| (Benefit from) provision for income taxes | $ | (588 | ) | $ | 5,063 | E | $ | 4,475 | $ | 3,618 | $ | 5,533 | E | $ | 9,151 | |||||||||
| Diluted earnings per share attributable to Cooper stockholders | $ | 0.75 | $ | 1.25 | $ | 2.00 | $ | 0.63 | $ | 1.32 | $ | 1.95 |
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Reconciliation of Selected GAAP Results to Non-GAAP Results
(In thousands, except per share amounts)
| Twelve Months Ended October 31, | ||||||||||||||||||||||||
| 2015 | 2015 | 2014 | 2014 | |||||||||||||||||||||
| GAAP | Adjustment | Non-GAAP | GAAP | Adjustment | Non-GAAP | |||||||||||||||||||
| Cost of sales | $ | 726,798 | $ | (70,330 | )A | $ | 656,468 | $ | 626,206 | $ | (16,524 | )A | $ | 609,682 | ||||||||||
| Selling, general and administrative expense | $ | 712,543 | $ | (51,489 | )B | $ | 661,054 | $ | 683,115 | $ | (44,524 | )B | $ | 638,591 | ||||||||||
| Research and development expense | $ | 69,589 | $ | (4,600 | )C | $ | 64,989 | $ | 66,259 | $ | (649 | )C | $ | 65,610 | ||||||||||
| Amortization of intangibles | $ | 51,459 | $ | (51,459 | )D | $ | $ | 35,710 | $ | (35,710 | )D | $ | ||||||||||||
| Provision for income taxes | $ | 10,341 | $ | 15,505 | E | $ | 25,846 | $ | 24,705 | $ | 11,043 | E | $ | 35,748 | ||||||||||
| Diluted earnings per share attributable to Cooper stockholders | $ | 4.14 | $ | 3.30 | $ | 7.44 | $ | 5.51 | $ | 1.78 | $ | 7.29 |
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Reconciliation of Selected GAAP Results to Non-GAAP Results
Free Cash Flow and Adjusted Free Cash Flow
| Three Months Ended October 31, | Twelve Months Ended October 31, | |||||||
| 2015 | 2015 | |||||||
| Cash flow from operations | $ | 104,521 | $ | 390,970 | ||||
| Capital expenditures | (58,310 | ) | (243,023 | ) | ||||
| Free cash flow | $ | 46,211 | $ | 147,947 | ||||
| Items not included in adjusted free cash flow: | ||||||||
| Integration costs and other | 14,719 | 51,459 | ||||||
| Litigation settlement | 17,000 | |||||||
| Adjusted Free cash flow | $ | 60,930 | $ | 216,406 |
Conference Call and Webcast
The Company will host a conference call today at 5:00 PM ET to discuss its fiscal fourth quarter and full year 2015 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 recording of the call will be available beginning at 8:00 PM ET on
December 3, 2015 through December 10, 2015. To hear this recording, dial 855-859-2056 (U.S.) / 404-537-3406 (International) and enter code 266737 (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.
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 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, 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 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); 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, 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, 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 to obtain adequate coverage and
reimbursement from third party payors for our products; 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 the Company s Annual Report on Form 10-K for the fiscal year ended October 31, 2014 as well as in our forthcoming
Annual Report on Form 10-K for the fiscal year ended October 31, 2015, as such Risk Factors may be updated in quarterly filings.
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
| October 31, 2015 | October 31, 2014 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 16,426 | $ | 25,222 | ||||
| Trade receivables, net | 282,918 | 276,280 | ||||||
| Inventories | 419,692 | 381,474 | ||||||
| Deferred tax assets | 41,731 | 40,224 | ||||||
| Other current assets | 81,051 | 68,417 | ||||||
| Total current assets | 841,818 | 791,617 | ||||||
| Property, plant and equipment, net | 967,097 | 937,325 | ||||||
| Goodwill | 2,197,077 | 2,220,921 | ||||||
| Other intangibles, net | 411,090 | 453,605 | ||||||
| Deferred tax assets | 9,127 | 15,732 | ||||||
| Other assets | 34,401 | 39,140 | ||||||
| $ | 4,460,610 | $ | 4,458,340 | |||||
| LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||
| Current liabilities: | ||||||||
| Short-term debt | $ | 240,443 | $ | 101,518 | ||||
| Other current liabilities | 324,979 | 340,664 | ||||||
| Total current liabilities | 565,422 | 442,182 | ||||||
| Long-term debt | 1,109,514 | 1,280,833 | ||||||
| Deferred tax liabilities | 31,016 | 69,525 | ||||||
| Other liabilities | 80,754 | 77,360 | ||||||
| Total liabilities | 1,786,706 | 1,869,900 | ||||||
| Total Cooper stockholders equity | 2,667,509 | 2,569,878 | ||||||
| Noncontrolling interests | 6,395 | 18,562 | ||||||
| Stockholders equity | 2,673,904 | 2,588,440 | ||||||
| $ | 4,460,610 | $ | 4,458,340 |
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except per share amounts)
| Three Months Ended October 31, | Year Ended October 31, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net sales | $ | 455,536 | $ | 467,997 | $ | 1,797,060 | $ | 1,717,776 | ||||||||
| Cost of sales | 202,227 | 188,445 | 726,798 | 626,206 | ||||||||||||
| Gross profit | 253,309 | 279,552 | 1,070,262 | 1,091,570 | ||||||||||||
| Selling, general and administrative expense | 179,643 | 208,021 | 712,543 | 683,115 | ||||||||||||
| Research and development expense | 18,360 | 18,181 | 69,589 | 66,259 | ||||||||||||
| Amortization of intangibles | 13,053 | 13,976 | 51,459 | 35,710 | ||||||||||||
| Operating income | 42,253 | 39,374 | 236,671 | 306,486 | ||||||||||||
| Interest expense | 4,780 | 3,251 | 18,103 | 7,965 | ||||||||||||
| Other expense, net | 1,046 | 1,248 | 3,083 | 1,987 | ||||||||||||
| Income before income taxes | 36,427 | 34,875 | 215,485 | 296,534 | ||||||||||||
| (Benefit from)/Provision for income taxes | (588 | ) | 3,618 | 10,341 | 24,705 | |||||||||||
| Net income | 37,015 | 31,257 | 205,144 | 271,829 | ||||||||||||
| Less: Income attributable to noncontrolling interests | 336 | 470 | 1,621 | 1,973 | ||||||||||||
| Net income attributable to Cooper stockholders | $ | 36,679 | $ | 30,787 | $ | 203,523 | $ | 269,856 | ||||||||
| Diluted earnings per share attributable to Cooper stockholders | $ | 0.75 | $ | 0.63 | $ | 4.14 | $ | 5.51 | ||||||||
| Number of shares used to compute earnings per share attributable to Cooper stockholders | 49,177 | 49,126 | 49,179 | 48,960 |
Soft Contact Lens Revenue Update
Worldwide Manufacturers Soft Contact Lens Revenue
(U.S. dollars in millions; constant currency; unaudited)