CooperCompanies (NYSE: COO) today announced financial results for
its fiscal first quarter ended January 31, 2021.
- Revenue increased 5% year-over-year to $680.5 million.
CooperVision (CVI) revenue up 4% to $507.0 million, and
CooperSurgical (CSI) revenue up 8% to $173.5 million.
- GAAP diluted earnings per share $42.31, up $40.49 from last
year's first quarter.
- Non-GAAP diluted earnings per share $3.17, up $0.48 or 18% from
last year's first quarter. See "Reconciliation of Selected GAAP
Results to Non-GAAP Results" below.
Commenting on the results, Al White, Cooper's President and CEO
said, "We've started the year on a positive note, and we're excited
about our momentum. Both our businesses performed well, delivering
strong operational performance with robust earnings and cash flow.
With improved visibility, we are initiating fiscal 2021 guidance
and are enthusiastic about our prospects for the remainder of the
year, and into the future."
First Quarter Operating Results
- Revenue of $680.5 million, up 5% from last year’s first
quarter, up 3% in constant currency.
- Gross margin of 66% compared with 66% in last year’s first
quarter. On a non-GAAP basis, gross margin was 68%, up from 67%
last year driven by favorable product mix at CooperSurgical and
currency.
- Operating margin of 20% compared with 17% in last year’s first
quarter. On a non-GAAP basis, operating margin was 27%, up from 25%
last year driven by higher revenue and gross margin.
- Interest expense of $6.4 million compared with $11.6 million in
last year's first quarter driven by lower interest rates and lower
average debt.
- Net debt outstanding at quarter end was $1,695.5 million (total
debt of $1,814.6 million less quarter-end cash and cash
equivalents of $119.1 million). Adjusted leverage ratio (net debt
over adjusted EBITDA) of 2.1x.
- Cash provided by operations of $147.7 million offset by capital
expenditures of $55.9 million resulted in free cash flow of $91.8
million.
First Quarter CooperVision (CVI) Operating
Results
- Revenue of $507.0 million, up 4% from last year’s first
quarter, up 1% in constant currency.
- Revenue by category:
|
|
|
|
|
|
|
|
Constant Currency |
|
|
(In millions) |
|
% of CVI Revenue |
|
%chg |
|
%chg |
|
|
1Q21 |
|
1Q21 |
|
y/y |
|
y/y |
|
Toric |
$ |
162.3 |
|
|
32% |
|
5% |
|
2% |
|
Multifocal |
57.7 |
|
|
11% |
|
11% |
|
7% |
|
Single-use sphere |
146.0 |
|
|
29% |
|
6% |
|
2% |
|
Non single-use sphere, other |
141.0 |
|
|
28% |
|
1% |
|
(2)% |
|
Total |
$ |
507.0 |
|
|
100% |
|
4% |
|
1% |
|
|
|
|
|
|
|
|
Constant Currency |
|
|
(In millions) |
|
% of CVI Revenue |
|
%chg |
|
%chg |
|
|
1Q21 |
|
1Q21 |
|
y/y |
|
y/y |
|
Americas |
$ |
200.4 |
|
|
40% |
|
6% |
|
6% |
|
EMEA |
188.8 |
|
|
37% |
|
1% |
|
(4)% |
|
Asia Pacific |
117.8 |
|
|
23% |
|
8% |
|
3% |
|
Total |
$ |
507.0 |
|
|
100% |
|
4% |
|
1% |
First Quarter CooperSurgical (CSI) Operating
Results
- Revenue of $173.5 million, up 8% from last year's first
quarter, up 7% in constant currency.
- Revenue by category:
|
|
|
|
|
|
|
|
Constant Currency |
|
|
(In millions) |
|
% of CSI Revenue |
|
%chg |
|
%chg |
|
|
1Q21 |
|
1Q21 |
|
y/y |
|
y/y |
|
Office and surgical products |
$ |
103.5 |
|
|
60% |
|
5% |
|
5% |
|
Fertility |
70.0 |
|
|
40% |
|
12% |
|
10% |
|
Total |
$ |
173.5 |
|
|
100% |
|
8% |
|
7% |
Other
- In January 2021, the company repurchased $24.8 million of
common stock, roughly 69.6 thousand shares, under the existing
share repurchase program at an average share price of $356.61. The
program has $334.8 million of remaining availability and no
expiration date.
Fiscal Year 2021 GuidanceWe continue to monitor
and evaluate the scope, duration and impact of the ongoing COVID-19
pandemic on our operations and financial results. While we still
view resurgences as a significant risk factor to our outlook, we
are now providing fiscal year 2021 guidance. Details are
summarized as follows:
- Fiscal 2021 total revenue $2,800 - $2,845 million (12% to 14%
constant currency)
- CVI revenue $2,090 - $2,120 million (9% to 11% constant
currency)
- CSI revenue $710 - $725 million (19% to 22% constant
currency)
- Fiscal 2021 non-GAAP diluted EPS $12.90 - $13.10
Non-GAAP diluted earnings per share guidance excludes
amortization and impairment of intangible assets, and other
exceptional or unusual income or gains and charges or expenses
including acquisition, integration and manufacturing related costs
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 Selected GAAP Results to Non-GAAP
ResultsTo 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:
- We exclude the effect of amortization and impairment of
intangible assets from our non-GAAP financial results. Amortization
of intangible assets will recur in future periods; however, the
amounts are affected by the timing and size of our acquisitions.
Impairment of intangible assets is a non-recurring cost.
- We exclude the effect of acquisition and integration expenses
and the effect of restructuring expenses from our non-GAAP
financial results. Such expenses generally diminish over time with
respect to past acquisitions; however, we generally will incur
similar expenses in connection with any future acquisitions. We
incurred significant expenses in connection with our acquisitions
and also incurred certain other operating expenses or income, which
we generally would not have otherwise incurred in the periods
presented as a part of our continuing operations. Acquisition and
integration expenses include direct effects of acquisition
accounting, such as inventory fair value step-up and items such as
personnel costs for transitional employees, other acquired employee
related costs and integration related professional services.
Restructuring expenses include items such as employee severance,
product rationalization, facility and other exit costs.
- We exclude other exceptional or unusual charges or expenses and
gains or income. These can be variable and difficult to predict,
such as COVID related charges, certain litigation expenses and
product transition costs, and are not what we consider as typical
of our continuing operations. Investors should consider non-GAAP
financial measures in addition to, and not as replacements for, or
superior to, measures of financial performance prepared in
accordance with GAAP.
- We report revenue growth using the non-GAAP financial measure
of constant currency 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.
- 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 that is available
to grow the business, make strategic acquisitions, repay debt,
buyback common stock or to fund dividend payments. 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 define the non-GAAP measure of net debt as total debt less
cash and cash equivalents. We believe net debt is useful for
investors to be helpful in evaluating our financial leverage.
Management uses net debt as a measure of our financial leverage.
Net debt should not be considered as an alternative to debt
determined in accordance with GAAP and should be reviewed in
conjunction with our consolidated condensed balance sheets.
- We exclude unrealized and realized gains and losses on our
minority investments as we do not believe that these components of
income or expense have a direct correlation to our ongoing
operations.
- We exclude the effects of non-cash deferred tax assets related
to intra-group transfer of non-inventory assets.
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 January 31, |
|
|
2021 |
|
|
|
2021 |
|
2020 |
|
|
|
2020 |
|
|
GAAP |
|
Adjustment |
|
Non-GAAP |
|
GAAP |
|
Adjustment |
|
Non-GAAP |
Cost of sales |
|
$ |
229.8 |
|
|
|
$ |
(10.8 |
) |
|
A |
$ |
219.0 |
|
|
|
$ |
219.7 |
|
|
$ |
(8.4 |
) |
|
A |
$ |
211.3 |
|
Operating expense excluding amortization |
|
$ |
282.6 |
|
|
|
$ |
(3.9 |
) |
|
B |
$ |
278.7 |
|
|
|
$ |
280.5 |
|
|
$ |
(7.4 |
) |
|
B |
$ |
273.1 |
|
Amortization of intangibles |
|
$ |
34.7 |
|
|
|
$ |
(34.7 |
) |
|
C |
$ |
— |
|
|
|
$ |
34.9 |
|
|
$ |
(34.9 |
) |
|
C |
$ |
— |
|
Other (income) expense, net |
|
$ |
(12.5 |
) |
|
|
$ |
11.5 |
|
|
D |
$ |
(1.0 |
) |
|
|
$ |
2.1 |
|
|
$ |
— |
|
|
|
$ |
2.1 |
|
Provision for income taxes |
|
$ |
26.3 |
|
|
|
$ |
12.5 |
|
|
E |
$ |
38.8 |
|
|
|
$ |
6.9 |
|
|
$ |
7.6 |
|
|
E |
$ |
14.5 |
|
Income tax effects related to intra-group intangible asset
transfers |
|
$ |
(1,987.9 |
) |
|
|
$ |
1,969.1 |
|
|
F |
$ |
(18.8 |
) |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
$ |
— |
|
Diluted earnings per share |
|
$ |
42.31 |
|
|
|
$ |
(39.14 |
) |
|
|
$ |
3.17 |
|
|
|
$ |
1.82 |
|
|
$ |
0.87 |
|
|
|
$ |
2.69 |
|
Weighted average diluted shares used |
|
$ |
49.7 |
|
|
|
|
|
$ |
49.7 |
|
|
|
$ |
49.7 |
|
|
|
|
$ |
49.7 |
|
A |
Fiscal 2021 GAAP cost of sales includes $10.8 million of costs
primarily related to integration and other manufacturing related
costs, resulting in fiscal 2021 GAAP gross margin of 66% as
compared to fiscal 2021 non-GAAP gross margin of 68%. Fiscal 2020
GAAP cost of sales includes $8.4 million of costs primarily related
to integration and other manufacturing related costs, resulting in
fiscal 2020 GAAP gross margin of 66% as compared to fiscal 2020
non-GAAP gross margins of 67%. |
|
|
B |
Fiscal 2021 and 2020 GAAP
operating expense comprised of $3.9 million and $7.4 million,
respectively, primarily related to acquisition and integration
activities and European Medical Devices Regulation (MDR)
implementation costs. |
|
|
C |
Amortization expense was $34.7
million and $34.9 million for the fiscal 2021 and 2020 periods,
respectively. Items A, B, and C resulted in fiscal 2021 GAAP
operating margin of 20% as compared to fiscal 2021 non-GAAP
operating margin of 27%, and fiscal 2020 GAAP operating margin of
17% as compared to fiscal 2020 non-GAAP operating margin of
25%. |
|
|
D |
Fiscal 2021 other income, net
includes gains and losses on our minority investments, primarily an
$11.5 million gain due to CooperVision's acquisition of all of the
remaining equity interest of a privately-held medical device
company in January 2021. |
|
|
E |
Fiscal 2021 and 2020 amounts
represent the net change in the provision for income taxes that
arise primarily from the impact of the above adjustments. |
|
|
F |
An income tax benefit was
excluded related to the recognition of a deferred tax asset that
resulted from an intra-group transfer of intellectual property and
goodwill to a UK subsidiary. |
Conference Call and Webcast The Company will
host a conference call today at 5:00 PM ET to discuss its fiscal
first quarter 2021 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 CooperCompanies
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
March 4, 2021 through March 11, 2021. To hear this recording, dial
855-859-2056 (U.S.) / 404-537-3406 (International) and enter code
266737.
About
CooperCompaniesCooperCompanies ("Cooper") is a global
medical device company publicly traded on the NYSE (NYSE: COO).
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 women, babies and families with its
diversified portfolio of products and services focusing on medical
devices and fertility & genomics. Headquartered in San Ramon,
Calif., Cooper has a workforce of more than 12,000 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 of which are
other than statements of historical fact, including our Fiscal 2021
Guidance and all statements regarding the expected impact of the
ongoing COVID-19 pandemic on our business are forward looking. In
addition, all statements regarding anticipated growth in our net
sales and anticipated market conditions, planned product launches
and expected results of operations are forward-looking. To identify
these statements look for words like "believes," "outlook,"
"probable," "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: the effects of the ongoing COVID-19
pandemic and related economic disruptions and new governmental
regulations on our business, results of operations, cash flow and
financial condition, including but not limited to the potential
impact on our sales, operations and supply chain; 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 ongoing COVID-19 pandemic, and escalating global
trade barriers including additional tariffs, by countries such as
China; adverse changes in global political and economic conditions,
and related uncertainty caused by the United Kingdom's (UK)
withdrawal from the European Union (EU) and its potential impact
on, among other things, the movement of goods and materials in our
supply chain, additional regulatory approvals and requirements, and
increased tariffs and duties; 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
may affect our taxation of earnings recognized in foreign
jurisdictions and/or negatively impact our effective tax rate;
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 net sales and
earnings; our existing and future variable rate indebtedness and
associated interest expense is 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 net
sales, 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
personal information, such as HIPAA and the California Consumer
Privacy Act (CCPA) in the U.S. and the General Data Protection
Regulation requirements in Europe, 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 the ongoing COVID-19 pandemic,
integration of acquisitions, man-made or natural disasters,
cybersecurity incidents 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; market consolidation of large customers
globally through mergers or acquisitions resulting in a larger
proportion or concentration of our business being derived from
fewer customers; 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, including but not limited to the EU Medical
Devices Regulation (MDR), and the EU In Vitro Diagnostic Medical
Devices Regulation (IVDR); 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, 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, other intangible assets 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”, “Risk Factors” and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" sections in the Company’s Annual Report on Form 10-K
for the fiscal year ended October 31, 2020, 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 DuncanVice President, Investor Relations and Risk
Management925-460-3663ir@cooperco.com
THE COOPER COMPANIES, INC. AND
SUBSIDIARIESConsolidated Condensed Balance Sheets(In
millions)(Unaudited)
|
January 31, 2021 |
|
October 31, 2020 |
ASSETS |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
119.1 |
|
|
$ |
115.9 |
|
Trade receivables, net |
461.2 |
|
|
435.4 |
|
Inventories |
570.5 |
|
|
570.4 |
|
Other current assets |
146.6 |
|
|
152.5 |
|
Total current assets |
1,297.4 |
|
|
1,274.2 |
|
Property, plant and equipment,
net |
1,305.1 |
|
|
1,281.9 |
|
Operating lease right-of-use
assets |
270.3 |
|
|
260.2 |
|
Goodwill |
2,553.3 |
|
|
2,447.3 |
|
Other intangibles, net |
1,358.6 |
|
|
1,289.0 |
|
Deferred tax assets |
2,031.2 |
|
|
80.1 |
|
Other assets |
106.0 |
|
|
104.8 |
|
Total assets |
$ |
8,921.9 |
|
|
$ |
6,737.5 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
Current liabilities: |
|
|
|
Short-term debt |
$ |
400.7 |
|
|
$ |
409.3 |
|
Other current liabilities |
560.6 |
|
|
595.1 |
|
Total current liabilities |
961.3 |
|
|
1,004.4 |
|
Long-term debt |
1,413.9 |
|
|
1,383.9 |
|
Deferred tax liabilities |
21.6 |
|
|
25.8 |
|
Long-term tax payable |
164.9 |
|
|
162.0 |
|
Operating lease liabilities |
246.0 |
|
|
236.8 |
|
Accrued pension liability and
other |
124.3 |
|
|
99.8 |
|
Total liabilities |
2,932.0 |
|
|
2,912.7 |
|
Stockholders’ equity |
5,989.9 |
|
|
3,824.8 |
|
Total liabilities and stockholders' equity |
$ |
8,921.9 |
|
|
$ |
6,737.5 |
|
THE COOPER COMPANIES, INC. AND
SUBSIDIARIESConsolidated Statements of Income(In millions, except
per share amounts)(Unaudited)
|
Three Months Ended January 31, |
|
2021 |
|
2020 |
Net sales |
680.5 |
|
|
646.2 |
|
Cost of sales |
229.8 |
|
|
219.7 |
|
Gross profit |
450.7 |
|
|
426.5 |
|
Selling, general and
administrative expense |
261.2 |
|
|
258.3 |
|
Research and development
expense |
21.4 |
|
|
22.2 |
|
Amortization of
intangibles |
34.7 |
|
|
34.9 |
|
Operating income |
133.4 |
|
|
111.1 |
|
Interest expense |
6.4 |
|
|
11.6 |
|
Other (income) expense,
net |
(12.5 |
) |
|
2.1 |
|
Income before income
taxes |
139.5 |
|
|
97.4 |
|
(Benefit) provision for income
taxes |
(1,961.6 |
) |
|
6.9 |
|
Net income attributable to
Cooper stockholders |
2,101.1 |
|
|
90.5 |
|
|
|
|
|
Earnings per share -
diluted |
42.31 |
|
|
1.82 |
|
|
|
|
|
Number of shares used to
compute diluted earnings per share |
49.7 |
|
|
49.7 |
|
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