PLEASANTON, Calif., Sept. 2, 2010 (GLOBE NEWSWIRE) -- The Cooper Companies, Inc. (NYSE:COO) today announced financial results for the fiscal third quarter ended July 31, 2010.
- Revenue increased 4% year-over-year to $295.6 million. CooperVision (CVI) revenue up 3% to $249.0 million, and CooperSurgical (CSI) revenue up 5% to $46.6 million.
- GAAP earnings per share (EPS) 86 cents, up from 48 cents or 79% from last year's third quarter. Non-GAAP EPS 91 cents. See "Reconciliation of Non-GAAP EPS to GAAP EPS" shown below.
- Third quarter free cash flow $58.4 million.
Commenting on the results, Robert S. Weiss, Cooper's president and chief executive officer said, "We are very pleased with our performance this quarter. We gained market share within CVI, posted strong margins in CVI and CSI, generated solid EPS growth, and once again delivered significant free cash flow. We are raising our EPS and free cash flow guidance for the remainder of the year and believe we are well positioned to continue delivering strong operating results."
Third Quarter GAAP Operating Highlights
- Revenue $295.6 million, 4% above third quarter 2009, 6% in constant currency.
- Gross margin 60% compared with 51% in last year's third quarter. The improvement was driven primarily by manufacturing efficiency gains within CVI, offset by costs associated with the 2009 CVI manufacturing restructuring plan.
- Operating margin 17% compared with 12% in last year's third quarter. The higher operating margin was driven by gross margin improvements partially offset by higher operating expenses.
- Depreciation and amortization expense $23.9 million.
- Interest expense $8.7 million or 3% of sales vs. $11.1 million or 4% of sales in last year's third quarter. Interest expense decreased primarily as a result of lower debt.
- Total debt decreased $66.3 million from last quarter to $646.7 million. Total availability under the Company's $650.0 million revolver was $365.0 million.
- Cash provided by operations $75.3 million and capital expenditures $16.9 million resulted in free cash flow of $58.4 million. Trailing twelve month cash provided by operations $281.5 million and capital expenditures $60.9 million resulted in free cash flow of $220.6 million.
Third Quarter CooperVision (CVI) GAAP Operating Highlights
- Revenue $249.0 million, up 3% from last year's third quarter, up 6% in constant currency.
- Revenue by category:
- Gross margin 58% compared with 49% in the third quarter of 2009.
- Operating margin 19% compared with 12% in last year's third quarter.
Third Quarter CooperSurgical (CSI) GAAP Operating Highlights
- Revenue $46.6 million, up 5% from last year's third quarter, organic growth 1%.
- Revenue by category:
- Gross margin 66%, up from 62% in the third quarter of 2009. The higher gross margin included the receipt of a one-time settlement of $1.5 million resolving a vendor dispute. Without this gain, the gross margin would have been comparable to last year.
- Operating margin 25%, up from 24% in last year's third quarter. The improvement was driven by the one-time settlement gain offset by higher sales and marketing costs.
The Company amends its full-year 2010 guidance. Guidance is summarized as follows:
* Excludes the impact of the litigation settlement and related charges, the 2009 CooperVision manufacturing restructuring plan and CooperSurgical acquisition costs. See "Reconciliation of Non-GAAP EPS to GAAP EPS" shown below.
** Reflects the fiscal fourth quarter payment of $27.0 million for the litigation settlement.
Reconciliation of Non-GAAP EPS to GAAP EPS
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. As indicated in the table below, the non-GAAP measures exclude the securities class action litigation settlement and related charges, restructuring costs and costs related to acquisitions. We exclude these items because we do not consider them reflective of our ongoing operating performance. 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. Our 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 for and forecasting future periods.
Non-GAAP operating income, net income and diluted EPS results and guidance exclude costs related to the securities class action litigation settlement, the 2009 CooperVision manufacturing restructuring plan announced in August 2009, and costs related to CooperSurgical acquisitions. Non-GAAP diluted EPS for the fiscal third quarter of 2010 excluded related costs of 5 cents per share. We incurred costs in the fiscal third quarter of 2009 related to the 2009 CooperVision manufacturing restructuring plan of 6 cents per share.
The settlement costs associated with the securities class action litigation are recognized as a pre-tax litigation settlement charge of $27.0 million along with related $0.4 million in YTD pre-tax unreimbursed legal fees. The restructuring costs, primarily severance and costs associated with assets, related to the pending closure of the Norfolk manufacturing plant are recorded primarily in cost of sales. We expect to recognize total pre-tax restructuring charges under this plan of approximately $24.0 million. We recognized $5.1 million in fiscal 2009, $12.6M in the first three fiscal quarters of 2010 ($2.3 million in fiscal Q1, $3.6 million in fiscal Q2, and $6.7 million in fiscal Q3), and anticipate approximately $3.4 million in the fourth fiscal quarter of 2010 and approximately $2.9 million in the first fiscal quarter of 2011. The acquisition costs, principally legal and other due diligence costs, are primarily recorded in selling, general and administrative expense. We believe it is useful for investors to understand the effects of these litigation, restructuring and acquisition costs on our total operating results.
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.
Conference Call and Webcast
The Company will host a conference call today at 5:00 PM ET to discuss its fiscal third quarter 2010 financial results. The dial in number in the United States is +1-800-638-4817 and outside the United States is +1-617-614-3943. The passcode is 41313567. There will be a replay available approximately two hours after the call ends until Thursday, September 9, 2010. The dial in number for the replay in the United States is +1-888-286-8010 and outside the United States is +1-617-801-6888. The replay passcode is 65426351. This call will be broadcast live on our website at www.coopercos.com and at . A transcript will be available on our website within 24 hours after the conference call.
About The Cooper Companies
The Cooper Companies, Inc. () is a global medical products company that serves the specialty healthcare market through its subsidiaries CooperVision and CooperSurgical. Corporate offices are in Pleasanton, CA.
CooperVision () develops, manufactures and markets a broad range of contact lenses for the worldwide vision correction market. Dedicated to enhancing the contact lens experience for practitioners and patients, CooperVision specializes in lenses for astigmatism, presbyopia and ocular dryness. Headquartered in Pleasanton, CA, it manufactures in: Juana Diaz, Puerto Rico; Norfolk, VA; Rochester, NY; Adelaide, Australia; and Hamble and Hampshire, UK.
CooperSurgical () develops, manufactures and markets medical devices, diagnostic products, and surgical instruments and accessories used primarily by gynecologists and obstetricians. CooperSurgical is a leader in the U.S. Ob-Gyn market, and its major manufacturing and distribution facilities are located in Trumbull, CT; Pasadena, CA; and Stafford, TX.
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 all statements regarding anticipated growth in our revenue, CooperVision's manufacturing restructuring plan and expected results of operations, integration of any acquisition, and litigation 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 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 U.S. and international credit markets that may adversely affect the Company's or its customers' ability to meet future liquidity needs; limitations on sales following new product introductions due to poor market acceptance; new competitors, product innovations or technologies; the Company's failure to realize anticipated savings, or its incurrence of unexpected costs, from CooperVision's manufacturing restructuring plan; a major disruption in the operations of our manufacturing, research and development or distribution facilities due to technological problems, natural disasters, CooperVision's manufacturing restructuring plan or other causes; disruptions in supplies of raw materials, particularly components used to manufacture our silicone hydrogel and other hydrogel lenses; the impact of acquisitions or divestitures on revenues, earnings or margins; losses arising from pending or future litigation or product recalls; interest rate and foreign currency exchange rate fluctuations; the requirement to provide for a significant liability or to write off, or accelerate depreciation on, a significant asset, including goodwill; changes in U.S. and foreign government regulation 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, 2009, 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.
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.
CONTACT: The Cooper Companies, Inc. Albert G. White, III, VP, Investor Relations and Treasurer Kim Duncan, Director, Investor Relations 925-460-3663 firstname.lastname@example.org