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8-K - FORM 8-K - COOPER COMPANIES, INC.d449414d8k.htm

Exhibit 99.1

 

LOGO                         

 

LOGO

  

6140 Stoneridge Mall Road

Suite 590

Pleasanton, CA 94588

925-460-3663

www.coopercos.com

NEWS RELEASE   

CONTACT:

Kim Duncan

Senior Director, Investor Relations

ir@cooperco.com

  

THE COOPER COMPANIES ANNOUNCES FOURTH QUARTER AND FULL YEAR 2012 RESULTS

PLEASANTON, Calif., December 6, 2012 — The Cooper Companies, Inc. (NYSE: COO) today announced financial results for the fiscal fourth quarter and full year ended October 31, 2012.

 

   

Fourth quarter revenue increased 10% year-over-year to $396.3 million. Fiscal 2012 revenue increased 9% to $1,445.1 million.

 

   

Fourth quarter GAAP earnings per share (EPS) $1.46, up 31 cents or 27% from last year’s fourth quarter. Fiscal 2012 GAAP EPS $5.05, up 39% from fiscal 2011.

 

   

Fourth quarter non-GAAP EPS $1.47. Fiscal 2012 non-GAAP EPS $5.16. See “Reconciliation of Non-GAAP EPS to GAAP EPS” below.

 

   

Fourth quarter free cash flow $83.5 million. Fiscal 2012 free cash flow $230.4 million.

Commenting on the results, Robert S. Weiss, Cooper’s president and chief executive officer said, “I am pleased to report record financial results for fiscal 2012 including record revenues at both our business units and record EPS for the Company. We are proud of our many accomplishments throughout the year including CooperVision’s success with its Biofinity® family of products, the re-launch of Avaira® Toric and the launch of a single-use silicone lens along with CooperSurgical’s success within the surgical space and its acquisition of Origio. We continued to gain market share, post solid margins and maintain a strong balance sheet. As we enter fiscal 2013, we remain encouraged by our business trends and believe we are well positioned to deliver strong operating results.”

Fourth Quarter GAAP Operating Highlights

 

   

Revenue $396.3 million, up 10% from last year’s fourth quarter, 7% excluding currency and acquisitions.

 

   

Gross margin 64% compared with 62% in last year’s fourth quarter. The improvement was primarily the result of increased manufacturing efficiencies, favorable product mix and the $6.0 million Avaira recall reserve for inventory and return provisions in last year’s fourth quarter.

 

   

Operating margin 20% compared with 18% in last year’s fourth quarter. The improvement was the result of a higher gross margin and a $10.0 million one-time charge related to the settlement of the Rembrandt patent litigation that was included in last year’s fourth quarter.


   

Depreciation $23.5 million, up 13% from last year’s fourth quarter. Amortization $7.3 million, up 31% from last year’s fourth quarter primarily related to additional amortization from the acquisition of Origio.

 

   

Total debt decreased $106.4 million from July 31, 2012, to $373.7 million. Interest expense $2.7 million compared with $2.9 million in last year’s fourth quarter.

 

   

Cash provided by operations $114.8 million, capital expenditures $32.6 million, and excluding acquisition costs of $1.3 million resulted in free cash flow of $83.5 million.

Fourth Quarter CooperVision (CVI) GAAP Operating Highlights

 

   

Revenue $318.1 million, up 5% from last year’s fourth quarter, 7% in constant currency.

 

   

Revenue by category:

 

      (In millions)
4Q12
     % of CVI Revenue
4Q12
    % chg
y/y
    Constant Currency
%chg

y/y
 

Toric

   $ 91.4         29     2     5

Multifocal

     26.6         8     31     34

Single-use sphere

     72.4         23     8     10

Non single-use sphere, other

     127.7         40     1     4
  

 

 

    

 

 

     

Total

   $ 318.1         100     5     7
  

 

 

    

 

 

     

 

   

Revenue by geography:

 

     (In millions)
4Q12
     % of CVI Revenue
4Q12
    % chg
y/y
    Constant Currency
%chg

y/y
 

Americas

   $ 139.5         44     2     3

EMEA

     102.4         32     4     11

Asia Pacific

     76.2         24     10     12
  

 

 

    

 

 

     

Total

   $ 318.1         100     5     7
  

 

 

    

 

 

     

 

   

Selected revenue by material:

 

      (In millions)
4Q12
     % of CVI Revenue
4Q12
    % chg
y/y
    Constant Currency
%chg

y/y
 

Silicone hydrogel

   $ 124.0         39     21     24

Proclear®

   $ 80.4         25     1     4

 

   

Gross margin 64% compared with 61% in last year’s fourth quarter. The improvement was the result of increased manufacturing efficiencies and favorable product mix and the $6.0 million Avaira recall reserve for inventory and return provisions in last year’s fourth quarter.


Fourth Quarter CooperSurgical (CSI) GAAP Operating Highlights

 

   

Revenue $78.2 million, up 37% from last year’s fourth quarter, 2% excluding acquisitions.

 

   

Revenue by category:

 

      (In millions)
4Q12
     % of CSI Revenue
4Q12
    %chg
y/y
 

Office, other

   $ 31.5         40     -3

Surgical procedures

     23.8         31     15

Fertility

     22.9         29     489
  

 

 

    

 

 

   

Total

   $ 78.2         100     37
  

 

 

    

 

 

   

 

   

Gross margin 64%, down from 65% in last year’s fourth quarter. The decrease was largely the result of lower margins associated with Origio.

Fiscal Year 2012 Operating Highlights

 

   

Revenue $1,445.1 million, up 9% from fiscal 2011, 8% excluding currency and acquisitions.

 

   

CVI revenue $1,189.2 million, up 6% from fiscal 2011, 8% in constant currency, and CSI revenue $255.9 million, up 22% from fiscal 2011, 6% excluding acquisitions.

 

   

Gross margin 64% compared with 60% in fiscal 2011.

 

   

Operating margin 20% compared with 17% in fiscal 2011.

 

   

Depreciation and amortization expense $111.2 million.

 

   

Interest expense $11.8 million compared with $17.3 million in fiscal 2011.

 

   

Cash provided by operations $315.1 million, capital expenditures $99.8 million, insurance recovery $6.6 million and acquisition costs $8.5 million resulted in free cash flow of $230.4 million.

Other

 

   

On December 5, 2012, the Board of Directors authorized the repurchase of up to an additional $150.0 million of common stock under the existing share repurchase program. With this approval the Company is now authorized to purchase up to $300.0 million of its common stock. The program has $228.9 million of remaining availability and no expiration date.

2013 Guidance

The Company initiated its full year 2013 guidance. Guidance is summarized as follows:

 

     2013 Guidance

Revenues (In millions)

  

Total

   $1,565-$1,625

CooperVision

   $1,250-$1,290

CooperSurgical

   $315-$335

EPS

  

GAAP

   $5.70-$6.00

Non-GAAP

   $5.70-$6.00

Free Cash Flow (In millions)

   $200-$230

Guidance assumes constant currency at the date of issuance.


Reconciliation of Non-GAAP EPS to GAAP EPS

To supplement our financial results presented on a GAAP basis, we use non-GAAP measures that we believe are helpful in understanding our results. The non-GAAP measures exclude debt extinguishment costs related to the amendment to our Credit Agreement and costs related to acquisitions. 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 and forecasting for future periods.

In the fiscal fourth quarter of 2012, our non-GAAP results exclude $0.8 million of direct acquisition costs related to the acquisition of Origio recorded in selling, general and administrative expense. In the fiscal third quarter of 2012, our non-GAAP results excluded a $1.4 million loss related to the May 31, 2012, amendment to our Credit Agreement and costs related to the acquisition of Origio consisting of $4.0 million in direct acquisition costs recorded in selling, general and administrative expense and $0.4 million net gain related to the repayment of debt acquired recorded in interest expense.

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 United States dollars are converted into United States dollars at the average foreign exchange rates for the corresponding period in the prior year.

 

     Three Months Ended October 31,      Twelve Months Ended October 31,  
     2012 GAAP      Adjustments      2012 Non-GAAP      2012 GAAP      Adjustments      2012 Non-GAAP  

Operating income

   $ 78,980       $ 822       $ 79,802       $ 283,398       $ 4,863       $ 288,261   

Income before income taxes

   $ 82,639       $ 822       $ 83,461       $ 275,452       $ 5,869       $ 281,321   

Provision for income taxes

   $ 10,492       $ 319       $ 10,811       $ 26,808       $ 525       $ 27,333   

Net income attributable to Cooper stockholders

   $ 71,920       $ 504       $ 72,424       $ 248,339       $ 5,344       $ 253,683   

Diluted EPS attributable to Cooper stockholders

   $ 1.46       $ 0.01       $ 1.47       $ 5.05       $ 0.11       $ 5.16   

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 2012 financial results. The dial in number in the United States is +1-866-314-5050 and outside the United States is +1-617-213-8051. The passcode is 24769265. There will be a replay available approximately two hours after the call ends until Thursday, December 13, 2012. The replay number in the United States is +1-888-286-8010 and outside the United States is +1-617-801-6888. The replay passcode is 78922342. This call will also be broadcast live at http://investor.coopercos.com, and a transcript will be available following the conference call.

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 crafting 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 over 7,500 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 2013 Guidance and all statements regarding anticipated growth in our revenue, 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 due to the current global economic downturn, including the impact of continuing uncertainty and instability of certain European Union countries that could adversely affect our global markets; foreign currency exchange rate and interest rate fluctuations including the risk of further declines in the value of the Euro that would decrease our revenues and earnings; acquisition integration delays or costs or the requirement to record significant adjustments to the preliminary fair value of assets acquired and liabilities assumed within the measurement period; reduced sales, loss of customers and costs and expenses related to the recall of certain lots of Avaira Toric and Avaira Sphere contact lenses; a major disruption in the operations of our manufacturing, research and development or distribution facilities due to technological problems, natural disasters or other causes; disruptions in supplies of raw materials, particularly components used to manufacture our silicone hydrogel lenses; legal costs, insurance expenses, settlement costs and the risk of an adverse decision or settlement related to product liability, patent or other litigation; limitations on sales following new product introductions due to poor market acceptance; new competitors, product innovations or technologies; the impact of acquisitions or divestitures on revenues, earnings or margins; the requirement to provide for a significant liability or to write off, or accelerate depreciation on, a significant asset, including goodwill; changes in United States and foreign government regulations of the retail optical industry and of the healthcare industry generally; changes in tax laws or their interpretation and changes in effective tax rates; dilution to earnings per share from acquisitions or issuing stock 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, 2011, 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

(In thousands)

(Unaudited)

 

     October 31,      October 31,  
     2012      2011  
ASSETS   

Current assets:

     

Cash and cash equivalents

   $ 12,840       $ 5,175   

Trade receivables, net

     234,297         214,779   

Inventories

     320,199         253,584   

Deferred tax assets

     39,417         33,684   

Other current assets

     51,107         33,125   
  

 

 

    

 

 

 

Total current assets

     657,860         540,347   
  

 

 

    

 

 

 

Property, plant and equipment, net

     640,255         609,205   

Goodwill

     1,370,247         1,276,567   

Other intangibles, net

     214,783         128,341   

Deferred tax assets

     14,434         21,828   

Other assets

     43,805         48,230   
  

 

 

    

 

 

 
   $ 2,941,384       $ 2,624,518   
  

 

 

    

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY   

Current liabilities:

     

Short-term debt

   $ 25,284       $ 52,979   

Other current liabilities

     237,268         214,227   
  

 

 

    

 

 

 

Total current liabilities

     262,552         267,206   
  

 

 

    

 

 

 

Long-term debt

     348,422         327,453   

Deferred tax liabilities

     30,971         20,127   

Other liabilities

     86,281         72,244   
  

 

 

    

 

 

 

Total liabilities

     728,226         687,030   
  

 

 

    

 

 

 

Total Cooper stockholders’ equity

     2,192,751         1,937,488   

Noncontrolling interests

     20,407         —     
  

 

 

    

 

 

 

Stockholders’ equity

     2,213,158         1,937,488   
  

 

 

    

 

 

 
   $ 2,941,384       $ 2,624,518   
  

 

 

    

 

 

 


THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(In thousands, except earnings per share amounts)

(Unaudited)

 

     Three Months Ended     Year Ended  
     October 31,     October 31,  
     2012      2011     2012      2011  

Net sales

   $ 396,301       $ 360,908      $ 1,445,136       $ 1,330,835   

Cost of sales

     143,537         137,275        521,126         526,031   
  

 

 

    

 

 

   

 

 

    

 

 

 

Gross profit

     252,764         223,633        924,010         804,804   

Selling, general and administrative expense

     152,363         139,685        564,903         513,138   

Research and development expense

     14,118         11,738        51,730         43,581   

Amortization of intangibles

     7,303         5,589        23,979         20,529   
  

 

 

    

 

 

   

 

 

    

 

 

 

Operating income

     78,980         66,621        283,398         227,556   

Interest expense

     2,723         2,906        11,771         17,342   

Gain on insurance proceeds

     5,000         —          5,000         —     

Loss on extinguishment of debt

     —           —          1,404         16,487   

Other income (expense), net

     1,382         (835     229         (963
  

 

 

    

 

 

   

 

 

    

 

 

 

Income before income taxes

     82,639         62,880        275,452         192,764   

Provision for income taxes

     10,492         6,242        26,808         17,334   
  

 

 

    

 

 

   

 

 

    

 

 

 

Net income

     72,147         56,638        248,644         175,430   

Less: Income attributable to noncontrolling interests

     227         —          305         —     
  

 

 

    

 

 

   

 

 

    

 

 

 

Net income attributable to Cooper stockholders

   $ 71,920       $ 56,638      $ 248,339       $ 175,430   
  

 

 

    

 

 

   

 

 

    

 

 

 

Diluted earnings per share attributable to Cooper stockholders

   $ 1.46       $ 1.15      $ 5.05       $ 3.63   
  

 

 

    

 

 

   

 

 

    

 

 

 

Number of shares used to compute earnings per share attributable to Cooper stockholders

     49,386         49,184        49,152         48,309   
  

 

 

    

 

 

   

 

 

    

 

 

 


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 3Q12     Trailing Twelve Months 2012  
     Market      Market
Change
    CVI
Change
    Market      Market
Change
    CVI
Change
 

Sales by Category

              

Spheres

   $ 1,416         4     10   $ 5,478         4     8

Torics

     364         7     11     1,381         8     11

Multifocal

     89         10     38     352         11     30
  

 

 

        

 

 

      

WW Soft Contact Lenses

   $ 1,869         4 %      12 %    $ 7,211         5 %      10 % 
  

 

 

        

 

 

      

Sales by Modality

              

Single-use

   $ 762         10     15   $ 2,839         10     13

Other

     1,107         1     11     4,372         2     9
  

 

 

        

 

 

      

WW Soft Contact Lenses

   $ 1,869         4 %      12 %    $ 7,211         5 %      10 % 
  

 

 

        

 

 

      

Sales by Geography

              

Americas

   $ 718         7     13   $ 2,760         8     12

EMEA

     508         3     9     1,977         3     7

Asia Pacific

     643         3     13     2,474         4     13
  

 

 

        

 

 

      

WW Soft Contact Lenses

   $ 1,869         4 %      12 %    $ 7,211         5 %      10 % 
  

 

 

        

 

 

      

United States

   $ 621         7     13   $ 2,392         8     12

International

     1,248         3     11     4,819         4     9
  

 

 

        

 

 

      

WW Soft Contact Lenses

   $ 1,869         4 %      12 %    $ 7,211         5 %      10 % 
  

 

 

        

 

 

      

COO-E

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