Get Cash Back and $0 Commissions
+ The Power of TradeStation
Globe Newswire 30-Aug-2018 4:15 PM
PLEASANTON, Calif., Aug. 30, 2018 (GLOBE NEWSWIRE) -- The Cooper Companies, Inc. (NYSE:COO) today announced financial results for the fiscal third quarter ended July 31, 2018.
Commenting on the results, Albert White, Cooper's president and chief executive officer said, "I'm very pleased with the progress we made this quarter. We had record revenue at CooperVision and CooperSurgical, and believe we are in a unique position to capitalize on current market dynamics to maintain our revenue momentum through operational investments which we believe will lead to continuing strong performance."
Third Quarter Operating Results
Third Quarter CooperVision (CVI) Operating Results
Pro forma | |||||||||||||
(In millions) | % of CVI Revenue | %chg | %chg | ||||||||||
3Q18 | 3Q18 | y/y | y/y | ||||||||||
Toric | $ | 153.6 | 31 | % | 11 | % | 9 | % | |||||
Multifocal | 52.7 | 11 | % | 13 | % | 10 | % | ||||||
Single-use sphere | 137.6 | 28 | % | 19 | % | 17 | % | ||||||
Non single-use sphere, other | 145.2 | 30 | % | 7 | % | 1 | % | ||||||
Total | $ | 489.1 | 100 | % | 12 | % | 9 | % |
Pro forma | |||||||||||||
(In millions) | % of CVI Revenue | %chg | %chg | ||||||||||
3Q18 | 3Q18 | y/y | y/y | ||||||||||
Americas | $ | 184.4 | 38 | % | 9 | % | 8 | % | |||||
EMEA | 199.2 | 41 | % | 11 | % | 6 | % | ||||||
Asia Pacific | 105.5 | 21 | % | 19 | % | 14 | % | ||||||
Total | $ | 489.1 | 100 | % | 12 | % | 9 | % |
Third Quarter CooperSurgical (CSI) Operating Results
Pro forma | |||||||||||||
(In millions) | % of CSI Revenue | %chg | %chg | ||||||||||
3Q18 | 3Q18 | y/y | y/y | ||||||||||
Office and surgical products | $ | 104.4 | 61 | % | 96 | % | 8 | % | |||||
Fertility | 66.5 | 39 | % | 2 | % | 4 | % | ||||||
Total | $ | 170.9 | 100 | % | 44 | % | 6 | % |
Fiscal Year 2018 Guidance
The Company updated its fiscal year 2018 guidance. Details are summarized as follows:
Non-GAAP diluted earnings per share guidance excludes impact of U.S. tax reform, amortization and impairment of intangible assets and other costs including integration expenses which we may incur as part of our continuing operations.
With respect to the Company's guidance expectations, the Company has not reconciled non-GAAP diluted earnings per share guidance to GAAP diluted 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 diluted earnings per share, the Company is not able to provide such guidance.
Reconciliation of GAAP Results 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. 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 may include the following adjustments, and as appropriate, the related income tax effects and changes in income attributable to noncontrolling interests:
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 July 31, | ||||||||||||||||||||||||
2018 | 2018 | 2017 | 2017 | |||||||||||||||||||||
GAAP | Adjustment | Non-GAAP | GAAP | Adjustment | Non-GAAP | |||||||||||||||||||
Cost of sales | $ | 233.2 | $ | (18.2 | ) | A | $ | 215.0 | $ | 199.8 | $ | (4.1 | ) | A | $ | 195.7 | ||||||||
Operating expense excluding amortization | $ | 273.5 | $ | (12.3 | ) | B | $ | 261.2 | $ | 226.2 | $ | (10.0 | ) | B | $ | 216.2 | ||||||||
Amortization of intangibles | $ | 37.7 | $ | (37.7 | ) | C | $ | — | $ | 17.2 | $ | (17.2 | ) | C | $ | — | ||||||||
(Benefit) provision for income taxes | $ | (10.4 | ) | $ | 20.2 | D | $ | 9.8 | $ | 4.1 | $ | 4.3 | D | $ | 8.4 | |||||||||
Diluted earnings per share | $ | 2.03 | $ | 0.97 | $ | 3.00 | $ | 2.09 | $ | 0.55 | $ | 2.64 | ||||||||||||
Weighted average diluted shares used | 49.7 | 49.7 | 49.6 | 49.6 |
A | Fiscal 2018 GAAP cost of sales includes $18.2 million of costs primarily related to the inventory step-up release of PARAGARD and other integration costs, resulting in fiscal 2018 GAAP gross margin of 65% as compared to fiscal 2018 non-GAAP gross margins of 67%. Our fiscal 2017 GAAP cost of sales includes $1.3 million of integration costs in CooperSurgical and $2.8 million of product write off costs due to new product transition in CooperVision, resulting in fiscal 2017 GAAP gross margin of 64% as compared to fiscal 2017 non-GAAP gross margin of 65%. | |
B | Fiscal 2018 GAAP operating expense comprised of $12.3 million primarily related to integration activities and costs associated with exiting carrier screening and NIPT in CooperSurgical. Our fiscal 2017 GAAP operating expense includes $4.2 million in charges primarily related to acquisition and integration activities in CooperSurgical and $5.8 million of legal costs related to Unilateral Pricing Policy. | |
C | Amortization expense was $37.7 million and $17.2 million for the fiscal 2018 and 2017 periods, respectively. Items A, B and C resulted in fiscal 2018 GAAP operating margin of 18% as compared to fiscal 2018 non-GAAP operating margin of 28%, and fiscal 2017 GAAP operating margin of 20% as compared to fiscal 2017 non-GAAP operating margin of 26%. | |
D | Primarily represents increases 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) |
||||||||||||||||||||||||
Nine Months Ended July 31, | ||||||||||||||||||||||||
2018 | 2018 | 2017 | 2017 | |||||||||||||||||||||
GAAP | Adjustment | Non-GAAP | GAAP | Adjustment | Non-GAAP | |||||||||||||||||||
Cost of sales | $ | 679.1 | $ | (72.6 | ) | A | $ | 606.5 | $ | 565.1 | $ | (6.2 | ) | A | $ | 558.9 | ||||||||
Operating expense excluding amortization and impairment | $ | 786.9 | $ | (38.8 | ) | B | $ | 748.1 | $ | 641.2 | $ | (20.4 | ) | B | $ | 620.8 | ||||||||
Amortization of intangibles | $ | 110.5 | $ | (110.5 | ) | C | $ | — | $ | 50.6 | $ | (50.6 | ) | C | $ | — | ||||||||
Impairment of intangibles | $ | 24.4 | $ | (24.4 | ) | D | $ | — | $ | — | $ | — | $ | — | ||||||||||
Interest Expense | $ | 59.9 | $ | (1.7 | ) | E | $ | 58.2 | $ | 23.3 | $ | — | $ | 23.3 | ||||||||||
Other expense (income), net | $ | 1.3 | $ | — | $ | 1.3 | $ | (0.1 | ) | $ | (0.1 | ) | F | $ | (0.2 | ) | ||||||||
Provision for income taxes | $ | 180.0 | $ | (141.8 | ) | G | $ | 38.2 | $ | 13.1 | $ | 12.1 | G | $ | 25.2 | |||||||||
Diluted earnings per share | $ | 0.79 | $ | 7.85 | $ | 8.64 | $ | 5.74 | $ | 1.32 | $ | 7.06 | ||||||||||||
Weighted average diluted shares used | 49.6 | 49.6 | 49.5 | 49.5 |
A | Fiscal 2018 GAAP cost of sales includes $11.8 million of costs in CooperVision primarily related to product transition write off costs, incremental costs associated with the impact of Hurricane Maria and other related manufacturing integration costs; $60.8 million in CooperSurgical, primarily related to PARAGARD inventory step-up release and other integration costs, resulting in fiscal 2018 GAAP gross margin of 64%, as compared to fiscal 2018 non-GAAP gross margin of 68%. Our fiscal 2017 GAAP cost of sales includes $2.8 million of integration costs in CooperSurgical; $2.8 million of product write off costs due to new product transition and $0.6 million of facility start-up costs in CooperVision; resulting in fiscal 2017 GAAP gross margin of 64%, as compared to fiscal 2017 non-GAAP gross margin of 65%. | |
B | Fiscal 2018 GAAP operating expense comprised of $32.6 million in charges primarily related to acquisition and integration activities in CooperSurgical and CooperVision and $6.2 million of compensation costs related to executives retirement. Our fiscal 2017 GAAP operating expense includes $11.6 million in charges primarily related to acquisition and integration activities in CooperSurgical and $8.8 million of legal costs related to Unilateral Pricing Policy. | |
C | Amortization expense was $110.5 million and $50.6 million for the fiscal 2018 and 2017 periods, respectively. | |
D | Relates to an impairment charge of certain acquired intangible assets in CooperSurgical. Items A, B, C and D resulted in fiscal 2018 GAAP operating margin of 15% as compared to fiscal 2018 non-GAAP operating margin of 28%, and fiscal 2017 GAAP operating margin of 20% as compared to fiscal 2017 non-GAAP operating margin of 25%. | |
E | Fiscal 2018 interest expense includes $1.7 million of bridge loan termination fees related to CooperSurgical's PARAGARD acquisition. | |
F | These amounts represent costs related foreign exchange loss on forward contracts related to acquisitions. | |
G | Includes a $196.7 million of U.S. tax reform impact in fiscal 2018 and the increases in the provision for income taxes that arise from the impact of the above adjustments. |
Conference Call and Webcast
The Company will host a conference call today at 5:00 PM ET to discuss its fiscal third quarter 2018 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 August 30, 2018 through September 7, 2018. To hear this recording, dial 855-859-2056 (U.S.) / 404-537-3406 (International) and enter code 266737.
About 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 more than 12,000 employees with products sold in over 100 countries. For more information, please visit www.coopercos.com.
Forward-Looking Statements
This earnings 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 2018 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 diluted 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, and the potential adverse economic impact and related uncertainty caused by these items, including but not limited to, the United Kingdom's election to withdraw from the European Union and escalating global trade barriers including additional tariff costs; foreign currency exchange rate and interest rate fluctuations including the risk of fluctuations in the value of foreign currencies or interest rates that would decrease our revenues and earnings; changes in tax laws or their interpretation and changes in statutory tax rates, including but not limited to, the U.S., the United Kingdom and other countries with proposed changes to tax laws, some of which may affect our taxation of earnings recognized in foreign jurisdictions and/or negatively impact our effective tax rate; our existing indebtedness and associated interest expense, most of which is variable and impacted by rate increases, which could adversely affect our financial health or limit our ability to borrow additional funds; 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); compliance costs and potential liability in connection with U.S. and foreign laws and health care regulations pertaining to privacy and security of third party information, such as HIPAA in the U.S. and the General Data Protection Regulation requirements which took effect in Europe on May 25, 2018, including but not limited to those resulting from data security breaches; a major disruption in the operations of our manufacturing, accounting and financial reporting, research and development, distribution facilities or raw material supply chain due to integration of acquisitions, natural disasters or other causes; a major disruption in the operations of our manufacturing, accounting and financial reporting, research and development or distribution facilities due to technological problems, including any related to our information systems maintenance, enhancements or new system deployments, integrations or upgrades; 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 laws, regulations and enforcement guidance, which affect areas of our operations including, but not limited to, those affecting the health care industry including the contact lens industry specifically and the medical device or pharmaceutical industries generally; 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; limitations on sales following product introductions due to poor market acceptance; new competitors, product innovations or technologies, including but not limited to, technological advances by competitors, new products and patents attained by competitors, and competitors' expansion through acquisitions; reduced sales, loss of customers and costs and expenses related to product recalls and warning letters; 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, and idle manufacturing facilities and equipment; the success of our research and development activities and other start-up projects; dilution to earnings per share from acquisitions or issuing stock; impact and costs incurred from changes in accounting standards and policies; environmental risks, including increasing environmental legislation and the broader impacts of climate change; 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, 2017, 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.
Contact:
Kim Duncan
Vice President, Investor Relations and Administration
925-460-3663
ir@cooperco.com
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(In millions)
(Unaudited)
July 31, 2018 | October 31, 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 155.6 | $ | 88.8 | |||
Trade receivables, net | 375.6 | 316.6 | |||||
Inventories | 479.6 | 454.1 | |||||
Other current assets | 178.0 | 93.7 | |||||
Total current assets | 1,188.8 | 953.2 | |||||
Property, plant and equipment, net | 967.4 | 910.1 | |||||
Goodwill | 2,421.3 | 2,354.8 | |||||
Other intangibles, net | 1,558.8 | 504.7 | |||||
Deferred tax assets | 45.7 | 60.3 | |||||
Other assets | 74.9 | 75.6 | |||||
$ | 6,256.9 | $ | 4,858.7 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Short-term debt | $ | 45.3 | $ | 23.4 | |||
Other current liabilities | 416.1 | 372.7 | |||||
Total current liabilities | 461.4 | 396.1 | |||||
Long-term debt | 2,248.9 | 1,149.3 | |||||
Deferred tax liabilities | 37.2 | 38.8 | |||||
Long-term tax payable | 171.0 | — | |||||
Accrued pension liability and other | 111.8 | 98.7 | |||||
Total liabilities | 3,030.3 | 1,682.9 | |||||
Stockholders' equity | 3,226.6 | 3,175.8 | |||||
$ | 6,256.9 | $ | 4,858.7 | ||||
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(In millions, except per share amounts)
(Unaudited)
Three Months Ended July 31, |
Nine Months Ended July 31, |
||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net sales | $ | 660.0 | $ | 556.0 | $ | 1,881.3 | $ | 1,577.5 | |||||||
Cost of sales | 233.2 | 199.8 | 679.1 | 565.1 | |||||||||||
Gross profit | 426.8 | 356.2 | 1,202.2 | 1,012.4 | |||||||||||
Selling, general and administrative expense | 251.0 | 208.7 | 724.7 | 590.6 | |||||||||||
Research and development expense | 22.5 | 17.5 | 62.2 | 50.6 | |||||||||||
Amortization of intangibles | 37.7 | 17.2 | 110.5 | 50.6 | |||||||||||
Impairment of intangibles | — | — | 24.4 | — | |||||||||||
Operating income | 115.6 | 112.8 | 280.4 | 320.6 | |||||||||||
Interest expense | 22.8 | 8.3 | 59.9 | 23.3 | |||||||||||
Other expense (income), net | 2.4 | (3.2 | ) | 1.3 | (0.1 | ) | |||||||||
Income before income taxes | 90.4 | 107.7 | 219.2 | 297.4 | |||||||||||
(Benefit) provision for income taxes | (10.4 | ) | 4.1 | 180.0 | 13.1 | ||||||||||
Net income | $ | 100.8 | $ | 103.6 | $ | 39.2 | $ | 284.3 | |||||||
Diluted earnings per share | $ | 2.03 | $ | 2.09 | $ | 0.79 | $ | 5.74 | |||||||
Number of shares used to compute diluted earnings per share | 49.7 | 49.6 | 49.6 | 49.5 |