The Cooper Companies, Inc. Announces Fourth Quarter And Full Year 2014 Results

PLEASANTON, Calif., Dec. 4, 2014 (GLOBE NEWSWIRE) -- The Cooper Companies, Inc. (NYSE:COO) today announced financial results for the fiscal fourth quarter and full year ended October 31, 2014.

• Fourth quarter revenue increased 14% year-over-year to $468.0 million. Fiscal 2014 revenue increased 8% to $1,717.8 million.
• Fourth quarter GAAP earnings per share (EPS) $0.63, down 52 cents or 45% from last year’s fourth quarter. Fiscal 2014 GAAP EPS $5.51, down 8% from fiscal 2013.
• Fourth quarter non-GAAP EPS $1.95, up 35 cents or 22% from last year’s fourth quarter. Fiscal 2014 non-GAAP EPS $7.29, up 14% from fiscal 2013. See “Reconciliation of Non-GAAP Results to GAAP Results” below.
• Fourth quarter free cash flow $108.0 million. Fiscal 2014 free cash flow $235.9 million.

Commenting on the results, Robert S. Weiss, Cooper’s president and chief executive officer said, “I am pleased to report record revenue this year at both our business units and record non-GAAP EPS. We accomplished this through continued market share gains across all geographies and the acquisition of Sauflon Pharmaceuticals. Our business fundamentals remain strong and we expect fiscal 2015 to be a year of strong operational performance.”

Fourth Quarter GAAP Operating Highlights

• Revenue $468.0 million, up 14% from last year’s fourth quarter, up 7% pro forma (constant currency including Sauflon in both periods and excluding Aime).
• Gross margin 60% compared with 64% in last year’s fourth quarter. Gross margin was negatively impacted primarily by integration related expenses. Excluding these expenses, gross margin was 63% vs. 64% last year.
• Operating margin 8% compared with 15% in last year’s fourth quarter. The decrease was the result of integration related expenses and the related increase in amortization. Excluding these costs, operating margin would have been 23% vs. 22% last year.
• Depreciation $28.6 million, up 19% from last year’s fourth quarter. Amortization $14.0 million, up 82% from last year’s fourth quarter due to the Sauflon acquisition.
• Total debt increased $1,034.4 million from July 31, 2014, to $1,382.4 million, due primarily to the acquisition of Sauflon, offset by operational cash flow generation. Interest expense $3.3 million compared with $1.9 million in last year’s fourth quarter.
• Cash provided by operations $152.1 million, capital expenditures $60.1 million, and excluding acquisition costs of $16.0 million resulted in free cash flow of $108.0 million.

Fourth Quarter CooperVision (CVI) GAAP Operating Highlights

• Revenue $385.4 million, up 18% from last year’s fourth quarter, up 9% pro forma.
• Revenue by category:

• Revenue by geography:

*Constant currency including Sauflon in both periods (unaudited for fiscal 4Q13) and excluding Aime.

• Gross margin 59% compared with 64% in last year’s fourth quarter. Gross margin was negatively impacted primarily by Sauflon integration related expenses. Excluding these expenses, gross margin was 63% vs. 64% last year.

Fourth Quarter CooperSurgical (CSI) GAAP Operating Highlights

• Revenue $82.6 million, down 3% from last year’s fourth quarter, down 1% in constant currency.
• Revenue by category:

• Gross margin 64% compared with 64% in last year’s fourth quarter. Excluding restructuring charges associated with the fertility business, gross margin was 65% vs. 64% last year.

Fiscal Year 2014 GAAP Operating Highlights

• Revenue $1,717.8 million, up 8% from fiscal 2013, up 8% pro forma.
• CVI revenue $1,392.6 million, up 10% from fiscal 2013, up 10% pro forma, and CSI revenue $325.1 million, up 2% from fiscal 2013, 2% in constant currency.
• Gross margin 64% compared with 65% in fiscal 2013. Non-GAAP 65% compared with 65% in fiscal 2013.
• Operating margin 18% compared with 19% in fiscal 2013. Non-GAAP 24% from 23% in fiscal 2013.
• Depreciation and amortization expense $138.2 million.
• Interest expense $8.0 million compared with $9.2 million in fiscal 2013.
• Cash provided by operations $454.8 million, capital expenditures $238.1 million and excluding acquisition costs of $17.8 million and insurance recovery of $1.4 million resulted in free cash flow of $235.9 million.

Other

• Sauflon non-GAAP historical financial information available at http://investor.coopercos.com/events.cfm.
• As previously announced on August 6, 2014, Cooper completed the acquisition of Sauflon Pharmaceuticals Ltd, a European manufacturer and distributor of soft contact lenses and solutions, for approximately $1.1 billion.
• As previously announced on August 6, 2014, Cooper closed a $700 million 3-year Senior Unsecured Term Loan which matures August 4, 2017.
• As previously announced on October 8, 2014, CooperSurgical completed the acquisition of EndoSee Corporation, a developer of an office-based disposable hysteroscopy system, for approximately $44 million.
• During October 2014, the company repurchased $25.8 million of common stock under the existing share repurchase program for an average share price of $146.64. The program has $185.7 million of remaining availability and no expiration date.

Fiscal Year 2015 Guidance

The Company updated its fiscal year 2015 guidance. Guidance assumes constant currency as of December 3, 2014, and is summarized as follows:

*Guidance reduced solely to reflect moves in currency from September 4, 2014 (date of last guidance), offset by a slight increase reflecting operational improvements.

Reconciliation of Non-GAAP Results to GAAP Results

To supplement our financial results presented on a GAAP basis, we use non-GAAP measures indicated in the tables below 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. These include costs related to acquisitions and the related integration activities, divestitures, severance and related restructuring costs, and proceeds related to a business interruption claim. 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. Our non-GAAP financial measures include the following adjustments, along with the related income tax effects and changes in income attributable to noncontrolling interests:

• Amortization of intangible assets: We have excluded the effect of amortization 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.

• Acquisition related and integration expenses; and restructuring expenses: We have excluded the effect of acquisition related 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.

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