Full Press Release Details
THE COOPER COMPANIES ANNOUNCES SECOND QUARTER 2016 RESULTS
PLEASANTON, Calif., June 2, 2016 The Cooper Companies, Inc. (NYSE: COO) today announced financial results for the fiscal second quarter
ended April 30, 2016.
Commenting on the results, Robert S. Weiss, Cooper s president and chief executive officer said, This was a very solid quarter for us within both
CooperVision and CooperSurgical. We remain optimistic about the back half of the fiscal year and that our strategies will continue to drive success in the coming years.
Second Quarter GAAP Operating Highlights
Second Quarter CooperVision (CVI) GAAP Operating Highlights
| (In millions) 2Q16 | % of CVI Revenue 2Q16 | % chg y/y | Constant Currency % chg y/y | |||||||||||||
| Toric | $ | 120.5 | 31 | % | 13 | % | 13 | % | ||||||||
| Multifocal | 42.5 | 11 | % | 12 | % | 13 | % | |||||||||
| Single-use sphere | 97.6 | 25 | % | 15 | % | 14 | % | |||||||||
| Non single-use sphere, other | 130.6 | 33 | % | 1 | % | 2 | % | |||||||||
| Total | $ | 391.2 | 100 | % | 9 | % | 9 | % |
| (In millions) 2Q16 | % of CVI Revenue 2Q16 | % chg y/y | Constant Currency % chg y/y | |||||||||||||
| Americas | $ | 165.1 | 42 | % | 8 | % | 9 | % | ||||||||
| EMEA | 148.8 | 38 | % | 4 | % | 5 | % | |||||||||
| Asia Pacific | 77.3 | 20 | % | 21 | % | 18 | % | |||||||||
| Total | $ | 391.2 | 100 | % | 9 | % | 9 | % |
Second Quarter CooperSurgical (CSI) GAAP Operating Highlights
| (In millions) 2Q16 | % of CSI Revenue 2Q16 | % chg y/y | Pro forma % chg y/y | |||||||||||||
| Office and surgical products | $ | 52.3 | 56 | % | 5 | % | 5 | % | ||||||||
| Fertility | 40.3 | 44 | % | 60 | % | 8 | % | |||||||||
| Total | $ | 92.6 | 100 | % | 23 | % | 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 $59.6 million or $0.98 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:
With respect to the Company s expectations above, the
Company has not reconciled non-GAAP earnings per share guidance to GAAP 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 earnings per share, the Company is not able to provide such guidance.
Reconciliation of GAAP to Non-GAAP Results
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 acquisition 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:
incurred in the periods presented as a part of our continuing operations. Many of these costs relate to our acquisition of Sauflon Pharmaceuticals Ltd. that closed in our fiscal fourth quarter of
2014. Acquisition related and integration expenses include items such as personnel costs for transitional employees, other acquired employee related costs and integration related professional services. Restructuring expenses consist of employee
severance, product rationalization, facility and other exit costs.
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
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 with respect to past acquisitions; however, we will incur similar expenses in connection with any future acquisitions. 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 April 30, | ||||||||||||||||||||||||||||||||
| 2016 GAAP | Adjustment | 2016 Non-GAAP | 2015 GAAP | Adjustment | 2015 Non-GAAP | |||||||||||||||||||||||||||
| Cost of sales | $ | 185,295 | $ | (7,225 | ) | A | $ | 178,070 | $ | 166,960 | $ | (7,746 | ) | A | $ | 159,214 | ||||||||||||||||
| Selling, general and administrative expense | $ | 177,659 | $ | (6,103 | ) | B | $ | 171,556 | $ | 167,583 | $ | (5,434 | ) | B | $ | 162,149 | ||||||||||||||||
| Research and development expense | $ | 16,696 | $ | (95 | ) | C | $ | 16,601 | $ | 16,819 | $ | (172 | ) | C | $ | 16,647 | ||||||||||||||||
| Amortization of intangibles | $ | 14,312 | $ | (14,312 | ) | D | $ | $ | 12,316 | $ | (12,316 | ) | D | $ | ||||||||||||||||||
| Other income, net | $ | (418 | ) | $ | (401 | ) | E | $ | (819 | ) | $ | (686 | ) | $ | $ | (686 | ) | |||||||||||||||
| Provision for income taxes | $ | 8,183 | $ | 2,215 | F | $ | 10,398 | $ | 5,855 | $ | 1,913 | F | $ | 7,768 | ||||||||||||||||||
| Diluted earnings per share attributable to Cooper stockholders | $ | 1.52 | $ | 0.53 | $ | 2.05 | $ | 1.23 | $ | 0.49 | $ | 1.72 |
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Reconciliation of Selected GAAP Results to Non-GAAP Results
(In thousands, except per share amounts)
| Six Months Ended April 30, | ||||||||||||||||||||||||||||||||
| 2016 GAAP | Adjustment | 2016 Non-GAAP | 2015 GAAP | Adjustment | 2015 Non-GAAP | |||||||||||||||||||||||||||
| Cost of sales | $ | 372,971 | $ | (21,286 | ) | A | $ | 351,685 | $ | 335,780 | $ | (17,189 | ) | A | $ | 318,591 | ||||||||||||||||
| Selling, general and administrative expense | $ | 351,263 | $ | (17,886 | ) | B | $ | 333,377 | $ | 341,118 | $ | (11,794 | ) | B | $ | 329,324 | ||||||||||||||||
| Research and development expense | $ | 31,458 | $ | (23 | ) | C | $ | 31,435 | $ | 32,932 | $ | (275 | ) | C | $ | 32,657 | ||||||||||||||||
| Amortization of intangibles | $ | 30,515 | $ | (30,515 | ) | D | $ | $ | 25,911 | $ | (25,911 | ) | D | $ | ||||||||||||||||||
| Other expense, net | $ | 972 | $ | (882 | ) | E | $ | 90 | $ | 1,016 | $ | $ | 1,016 | |||||||||||||||||||
| Provision for income taxes | $ | 7,172 | $ | 6,870 | F | $ | 14,042 | $ | 11,571 | $ | 6,691 | F | $ | 18,262 | ||||||||||||||||||
| Diluted earnings per share attributable to Cooper stockholders | $ | 2.57 | $ | 1.30 | $ | 3.87 | $ | 2.48 | $ | 0.99 | $ | 3.47 |
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 April 30, 2016 | Six Months Ended April 30, 2016 | |||||||
| Cash flow from operations | $ | 97,848 | $ | 187,387 | ||||
| Capital expenditures | (41,176 | ) | (86,332 | ) | ||||
| Free cash flow | $ | 56,672 | $ | 101,055 | ||||
| Items not included in adjusted free cash flow: | ||||||||
| Integration costs and other | 9,035 | 21,362 | ||||||
| Adjusted Free cash flow | $ | 65,707 | $ | 122,417 |
Conference Call and Webcast
The Company will host a conference call today at 5:00 PM ET to discuss its fiscal second 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 June 2,
2016 through June 9, 2016. To hear this recording, dial 855-859-2056 (U.S.) / 404-537-3406 (International) and enter code 266737 (Cooper).
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 is committed to advancing the health of families with its diversified portfolio of products and
services focusing on women s health, fertility and diagnostics. 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
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
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
| April 30, 2016 | October 31, 2015 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 44,464 | $ | 16,426 | ||||
| Trade receivables, net | 298,825 | 282,918 | ||||||
| Inventories | 433,596 | 419,692 | ||||||
| Deferred tax assets | 41,256 | 41,731 | ||||||
| Other current assets | 96,974 | 80,661 | ||||||
| Total current assets | 915,115 | 841,428 | ||||||
| Property, plant and equipment, net | 964,359 | 967,097 | ||||||
| Goodwill | 2,233,251 | 2,197,077 | ||||||
| Other intangibles, net | 437,005 | 411,090 | ||||||
| Deferred tax assets | 5,969 | 4,510 | ||||||
| Other assets | 45,554 | 38,662 | ||||||
| $ | 4,601,253 | $ | 4,459,864 | |||||
| LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||
| Current liabilities: | ||||||||
| Short-term debt | $ | 30,191 | $ | 243,803 | ||||
| Other current liabilities | 292,026 | 324,979 | ||||||
| Total current liabilities | 322,217 | 568,782 | ||||||
| Long-term debt | 1,411,182 | 1,105,408 | ||||||
| Deferred tax liabilities | 37,568 | 31,016 | ||||||
| Other liabilities | 85,505 | 80,754 | ||||||
| Total liabilities | 1,856,472 | 1,785,960 | ||||||
| Total Cooper stockholders equity | 2,738,076 | 2,667,509 | ||||||
| Noncontrolling interests | 6,705 | 6,395 | ||||||
| Stockholders equity | 2,744,781 | 2,673,904 | ||||||
| $ | 4,601,253 | $ | 4,459,864 |
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except per share amounts)
| Three Months Ended April 30, | Six Months Ended April 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net sales | $ | 483,793 | $ | 434,676 | $ | 933,433 | $ | 879,847 | ||||||||
| Cost of sales | 185,295 | 166,960 | 372,971 | 335,780 | ||||||||||||
| Gross profit | 298,498 | 267,716 | 560,462 | 544,067 | ||||||||||||
| Selling, general and administrative expense | 177,659 | 167,583 | 351,263 | 341,118 | ||||||||||||
| Research and development expense | 16,696 | 16,819 | 31,458 | 32,932 | ||||||||||||
| Amortization of intangibles | 14,312 | 12,316 | 30,515 | 25,911 | ||||||||||||
| Operating income | 89,831 | 70,998 | 147,226 | 144,106 | ||||||||||||
| Interest expense | 7,611 | 4,692 | 12,886 | 8,633 | ||||||||||||
| Other (income) expense, net | (418 | ) | (686 | ) | 972 | 1,016 | ||||||||||
| Income before income taxes | 82,638 | 66,992 | 133,368 | 134,457 | ||||||||||||
| Provision for income taxes | 8,183 | 5,855 | 7,172 | 11,571 | ||||||||||||
| Net income | 74,455 | 61,137 | 126,196 | 122,886 | ||||||||||||
| Less: income attributable to noncontrolling interests | 330 | 424 | 715 | 994 | ||||||||||||
| Net income attributable to Cooper stockholders | $ | 74,125 | $ | 60,713 | $ | 125,481 | $ | 121,892 | ||||||||
| Diluted earnings per share attributable to Cooper stockholders | $ | 1.52 | $ | 1.23 | $ | 2.57 | $ | 2.48 | ||||||||
| Number of shares used to compute earnings per share attributable to Cooper stockholders | 48,853 | 49,163 | 48,838 | 49,139 |
Soft Contact Lens Revenue Update
Worldwide Manufacturers Soft Contact Lens Revenue
(U.S. dollars in millions; constant currency; unaudited)
| Calendar 1Q16 | Trailing Twelve Months 2016 | |||||||||||||||||||||||
| Market | Market Change | CVI Change | Market | Market Change | CVI Change | |||||||||||||||||||
| Sales by Modality | ||||||||||||||||||||||||
| Single-use | $ | 800 | 9 | % | 14 | % | $ | 3,220 | 12 | % | 16 | % | ||||||||||||
| Other | 975 | -1 | % | 6 | % | $ | 3,890 | (0 | %) | 5 | % | |||||||||||||
| WW Soft Contact Lenses | $ | 1,775 | 3 | % | 9 | % | $ | 7,110 | 5 | % | 8 | % | ||||||||||||
| Sales by Geography | ||||||||||||||||||||||||
| Americas | $ | 780 | 0 | % | 9 | % | $ | 3,095 | 4 | % | 6 | % | ||||||||||||
| EMEA | 490 | 6 | % | 6 | % | 1,950 | 4 | % | 8 | % | ||||||||||||||
| Asia Pacific | 505 | 5 | % | 14 | % | 2,065 | 6 | % | 14 | % | ||||||||||||||
| WW Soft Contact Lenses | $ | 1,775 | 3 | % | 9 | % | $ | 7,110 | 5 | % | 8 | % |
Note: This data is compiled using gross product sales.
Source: Management estimates and independent market research