CooperCompanies Announces Fourth Quarter and Full Year 2019 Results
SAN RAMON, Calif., Dec. 05, 2019 (GLOBE NEWSWIRE) -- CooperCompanies (NYSE: COO) today announced financial results for the fiscal fourth quarter and full year ended October 31, 2019.
- Fourth quarter revenue increased 6% year-over-year to $691.6 million. Fiscal 2019 revenue increased 5% to $2,653.4 million.
- Fourth quarter GAAP diluted earnings per share (EPS) $2.42, up 40 cents or up 20% from last year's fourth quarter. Fiscal 2019 GAAP diluted EPS $9.33, up 232% from fiscal 2018.
- Fourth quarter Non-GAAP diluted EPS $3.30, up 43 cents or 15% from last year’s fourth quarter. Fiscal 2019 non-GAAP diluted EPS $12.35, up 7% from fiscal 2018. See “Reconciliation of GAAP Results to Non-GAAP Results” below.
Commenting on the results, Albert White, Cooper’s president and chief executive officer said, "We closed this year on a high note with a strong fourth quarter driving record full-year revenues and profits. We continued to execute on our growth strategies across both businesses, delivering strength across key products and geographies. As we enter fiscal 2020, we believe we are well positioned to continue producing strong results and driving market penetration."
Fourth Quarter Operating Results
- Revenue $691.6 million up 6% from last year’s fourth quarter, up 7% pro forma.
- Gross margin 66% consistent with 66% in last year’s fourth quarter. On a non-GAAP basis, gross margin was 67% compared with 66% last year's fourth quarter primarily from currency.
- Operating margin 21% compared with 19% in last year’s fourth quarter as a result of operating expense leverage. On a non-GAAP basis, operating margin was 28% compared with 27% last year.
- Interest expense $14.6 million compared with $22.8 million in last year's fourth quarter primarily due to lower average debt balances and interest rates.
- Total debt outstanding at the end of the quarter was $1,826.3 million with quarter-end cash and cash equivalents of $89.0 million. Adjusted leverage ratio (net debt over adjusted EBITDA) of 1.85 times.
- Cash provided by operations $199.9 million offset by capital expenditures $84.8 million resulted in free cash flow of $115.1 million.
Fourth Quarter CooperVision (CVI) Operating Results
- Revenue $509.6 million, up 6% from last year’s fourth quarter, up 7% pro forma.
- Revenue by category:
| (In millions) | % of CVI Revenue | %chg | Pro forma %chg | |||||||||
| 4Q19 | 4Q19 | y/y | y/y | |||||||||
| Toric | $ | 155.7 | 31 | % | 4 | % | 6 | % | ||||
| Multifocal | 51.8 | 10 | % | 8 | % | 10 | % | |||||
| Single-use sphere | 154.5 | 30 | % | 9 | % | 10 | % | |||||
| Non single-use sphere, other | 147.6 | 29 | % | 4 | % | 4 | % | |||||
| Total | $ | 509.6 | 100 | % | 6 | % | 7 | % | ||||
- Revenue by geography:
| (In millions) | % of CVI Revenue | %chg | Pro forma %chg | |||||||||
| 4Q19 | 4Q19 | y/y | y/y | |||||||||
| Americas | $ | 199.4 | 39 | % | 7 | % | 6 | % | ||||
| EMEA | 185.1 | 36 | % | 1 | % | 5 | % | |||||
| Asia Pacific | 125.1 | 25 | % | 13 | % | 11 | % | |||||
| Total | $ | 509.6 | 100 | % | 6 | % | 7 | % | ||||
- Gross margin 64% consistent with 64% in last year’s fourth quarter. On a non-GAAP basis, gross margin was 65% compared with 64% in last year's fourth quarter due to currency and product mix.
Fourth Quarter CooperSurgical (CSI) Operating Results
- Revenue $182.1 million, up 7% from last year's fourth quarter, up 7% pro forma.
- Revenue by category:
| (In millions) | % of CSI Revenue | %chg | Pro forma %chg | |||||||||
| 4Q19 | 4Q19 | y/y | y/y | |||||||||
| Office and surgical products | $ | 114.7 | 63 | % | 4 | % | 4 | % | ||||
| Fertility | 67.4 | 37 | % | 11 | % | 12 | % | |||||
| Total | $ | 182.1 | 100 | % | 7 | % | 7 | % | ||||
- Gross margin 70% consistent with 70% in last year’s fourth quarter. On a non-GAAP basis, gross margin was 72% compared with 73% in last year's fourth quarter primarily due to inefficiencies from clearing backorders associated with our global consolidation activity.
Fiscal Year 2019 Operating Results
- Revenue $2,653.4 million, up 5% from fiscal 2018, up 7% pro forma.
- CVI revenue $1,972.9 million, up 5% from fiscal 2018, up 7% pro forma, and CSI revenue $680.5 million, up 5% from fiscal 2018, up 6% pro forma.
- Gross margin 66% compared with 64% in fiscal 2018. Non-GAAP gross margin 67% consistent with 67% in fiscal 2018.
- Operating margin 21% compared with 16% in fiscal 2018. Non-GAAP operating margin 28% consistent with 28% in fiscal 2018.
- GAAP diluted EPS $9.33, up 232% from fiscal 2018. Non-GAAP diluted EPS $12.35, up 7% from fiscal 2018.
- Cash provided by operations $713.2 million offset by capital expenditures of $292.1 million resulted in free cash flow of $421.1 million.
Other
- In October 2019, the company repurchased $150.0 million of common stock, roughly 512 thousand shares, under the existing share repurchase program at an average share price of $292.68. The program has $407.4 million of remaining availability and no expiration date.
Fiscal Year 2020 Guidance
The Company initiated its fiscal year 2020 guidance. Details are summarized as follows:
- Fiscal 2020 total revenue $2,767 - $2,817 million (5% to 7% constant currency)
° CVI revenue $2,070 - $2,100 million (5.5% to 7% constant currency)
° CSI revenue $697 - $717 million (3% to 6% constant currency) - Fiscal 2020 non-GAAP diluted EPS of $12.60 - $13.00
- Fiscal first quarter 2020 total revenue $638 - $653 million (2% to 5% constant currency)
° CVI revenue $480 - $490 million (3% to 5% constant currency)
° CSI revenue $158 - $163 million (flat to 4% constant currency) - Fiscal first quarter 2020 non-GAAP diluted EPS of $2.65 - $2.75
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 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:
- 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 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 pro forma which includes constant currency revenue and revenue from acquisitions and excludes CooperSurgical product line exits in both periods. Management also 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.
- 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 future periods.
| 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 October 31, | ||||||||||||||||||
| 2019 | 2019 | 2018 | 2018 | |||||||||||||||
| GAAP | Adjustment | Non-GAAP | GAAP | Adjustment | Non-GAAP | |||||||||||||
| Cost of sales | $ | 236.6 | $ | (8.6 | ) | A | $ | 228.0 | $ | 221.5 | $ | (3.1 | ) | A | $ | 218.4 | ||
| Operating expense excluding amortization | $ | 273.3 | $ | (6.5 | ) | B | $ | 266.8 | $ | 271.1 | $ | (12.0 | ) | B | $ | 259.1 | ||
| Amortization of intangibles | $ | 35.1 | $ | (35.1 | ) | C | $ | — | $ | 36.2 | $ | (36.2 | ) | C | $ | — | ||
| Interest expense | $ | 14.6 | $ | (0.8 | ) | D | $ | 13.8 | $ | 22.8 | $ | (2.5 | ) | D | $ | 20.3 | ||
| Other expense (income), net | $ | 3.5 | $ | — | $ | 3.5 | $ | (12.8 | ) | $ | 14.2 | E | $ | 1.4 | ||||
| Provision for income taxes | $ | 7.5 | $ | 6.8 | F | $ | 14.3 | $ | 12.1 | $ | (2.8 | ) | F | $ | 9.3 | |||
| Diluted earnings per share | $ | 2.42 | $ | 0.88 | $ | 3.30 | $ | 2.02 | $ | 0.85 | $ | 2.87 | ||||||
| Weighted average diluted shares used | 50.0 | 50.0 | 49.9 | 49.9 | ||||||||||||||
| A | Fiscal 2019 GAAP cost of sales includes $8.6 million of costs primarily related to integration and other manufacturing related costs, resulting in fiscal 2019 GAAP gross margin of 66% as compared to fiscal 2019 non-GAAP gross margins of 67%. Fiscal 2018 GAAP cost of sales includes $3.1 million of costs primarily related to acquisitions and other integration costs, resulting in fiscal 2018 GAAP and non-GAAP gross margins of 66%. |
| B | Fiscal 2019 GAAP operating expense comprised of $6.5 million primarily related to integration activities and the European Medical Devices Regulation (MDR) costs in CooperSurgical and CooperVision. Fiscal 2018 GAAP operating expense comprised of $12.0 million primarily related to integration activities and costs associated with exit of the carrier screening and non-invasive prenatal testing (NIPT) product lines in CooperSurgical. |
| C | Amortization expense was $35.1 million and $36.2 million for the fiscal 2019 and 2018 periods, respectively. Items A, B and C resulted in fiscal 2019 GAAP operating margin of 21% as compared to fiscal 2019 non-GAAP operating margin of 28%, and fiscal 2018 GAAP operating margin of 19% as compared to fiscal 2018 non-GAAP operating margin of 27%. |
| D | Fiscal 2019 and 2018 interest expense includes $0.8 million and $2.5 million, respectively, pertaining to the write off of debt issuance costs related to term loan prepayments. |
| E | Fiscal 2018 other income includes $14.2 million from monetization of Puerto Rico R&D credit. |
| F | Fiscal 2019 and 2018 amounts represent the net change 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) | ||||||||||||||||||
| Twelve Months Ended October 31, | ||||||||||||||||||
| 2019 | 2019 | 2018 | 2018 | |||||||||||||||
| GAAP | Adjustment | Non-GAAP | GAAP | Adjustment | Non-GAAP | |||||||||||||
| Cost of sales | $ | 896.6 | $ | (28.2 | ) | A | $ | 868.4 | $ | 900.5 | $ | (75.5 | ) | A | $ | 825.0 | ||
| Operating expense excluding amortization, impairment and a gain on sale of an intangible | $ | 1,083.3 | $ | (30.2 | ) | B | $ | 1,053.1 | $ | 1,058.1 | $ | (50.9 | ) | B | $ | 1,007.2 | ||
| Amortization of intangibles | $ | 145.8 | $ | (145.8 | ) | C | $ | — | $ | 146.7 | $ | (146.7 | ) | C | $ | — | ||
| Impairment of intangibles | $ | — | $ | — | $ | — | $ | 24.4 | $ | (24.4 | ) | D | $ | — | ||||
| Gain on sale of an intangible | $ | (19.0 | ) | $ | 19.0 | E | $ | — | $ | — | $ | — | $ | — | ||||
| Interest Expense | $ | 68.0 | $ | (0.8 | ) | F | $ | 67.2 | $ | 82.7 | $ | (4.2 | ) | F | $ | 78.5 | ||
| Other expense (income), net | $ | 1.3 | $ | — | $ | 1.3 | $ | (11.5 | ) | $ | 14.2 | G | $ | 2.7 | ||||
| Provision for income taxes | $ | 10.7 | $ | 35.1 | H | $ | 45.8 | $ | 192.0 | $ | (144.5 | ) | H | $ | 47.5 | |||
| Diluted earnings per share | $ | 9.33 | $ | 3.02 | $ | 12.35 | $ | 2.81 | $ | 8.69 | $ | 11.50 | ||||||
| Weighted average diluted shares used | 50.0 | 50.0 | 49.7 | 49.7 | ||||||||||||||
| A | Fiscal 2019 GAAP cost of sales includes $28.2 million of costs primarily related to product transition write off costs, integration and other manufacturing related costs, resulting in fiscal 2019 GAAP gross margin of 66%, as compared to fiscal 2019 non-GAAP gross margin of 67%. Fiscal 2018 GAAP cost of sales includes $10.1 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; $65.4 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 67%. |
| B | Fiscal 2019 GAAP operating expense comprised of $30.2 million in charges primarily related to acquisition and integration activities and European MDR costs in CooperSurgical and CooperVision. Fiscal 2018 GAAP operating expense comprised of $50.9 million in charges primarily related to acquisition and integration activities in CooperSurgical and CooperVision and compensation costs related to executives' retirements. |
| C | Amortization expense was $145.8 million and $146.7 million for the fiscal 2019 and 2018 periods, respectively. |
| D | Fiscal 2018 GAAP results includes an impairment charge of intangible assets associated with carrier screening acquired from Recombine in CooperSurgical. |
| E | Fiscal 2019 gain on sale of an intangible asset relates to a gain recognized in CooperSurgical on the sale of an exclusive distribution right of the Filshie Clip System. Items A, B, C, D and E resulted in fiscal 2019 GAAP operating margin of 21% as compared to fiscal 2019 non-GAAP operating margin of 28%, and fiscal 2018 GAAP operating margin of 16% as compared to fiscal 2018 non-GAAP operating margin of 28%. |
| F | Fiscal 2019 and 2018 interest expense includes $0.8 million and $2.5 million, respectively, pertaining to the write off of debt issuance costs related to term loan prepayments. Fiscal 2018 also includes $1.7 million of bridge loan termination fees related to CooperSurgical's PARAGARD acquisition. |
| G | Fiscal 2018 other income includes $14.2 million from monetization of Puerto Rico R&D credit. |
| H |
By: GlobeNewswire
- 05 Dec 2019
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