This summary is based on the fourth quarter fiscal 2008 earnings call conducted by The Cooper Companies, Inc. (COO) on December 9, 2008.
Management:
VP IR: Albert White
CEO: Robert Weiss
SVP & CFO: Eugene Midlock
Key Investors Issues
- EPS were 65 cents per share compared to a loss of 54 cents per share last year.
- Net income was $29.5 million compared to a loss of $24.2 million for the same quarter last year.
- Revenue increased 6% to $268.8 million.
Fourth Quarter Highlights
The company reported $269 million in revenue up 6% in actual and in constant currency.
- CooperVision reported $224 million, up 6% also actual and constant currency. CooperSurgical with revenue of $44.7 million was up 7%.
- Earnings per share GAAP and non-GAAP were both 65 cents. The company did have a lower effective tax rate of only 11% which reflects a weak US market and strength outside the US in terms of profitability.
- Biofinity revenue achieved $15 million and remains at an annualized rate of $60 million.
- Proclear family remains strong, up 21% in constant currency worldwide and it now accounts for 27% of CooperVision’s revenues.
- Proclear 1 Day, Avaira, and Biofinity had aggregate sales of $28 million and now accounts for 12% of CooperVision’s revenue.
- The Asia Pac market was up 19% in constant currency.
- Europe was up 7% in constant currency.
- The Americas is impacted by an October decline, softened to only 2%. Importantly the US market reflected a dead October, down 10% for the month of October.
- Silk and hydra gel represents 8% of revenue compared to 2% in the fourth quarter last year and 1 Day modality represents 20% of revenue compared to only 16% in the prior year.
- The company achieved 60% gross margin and CooperVision actually had a 61% gross margin.
- Operating income was 18%, GAAP operating profit was $47.5 million compared to a loss in the prior year. The shift to the 1 Day reflects a profit per patient upgrade. The shift to silicone hydrogel reflects a trading up to a higher revenue per patient.
Operating cash flow was $41 million, free cash flow was $18 million.
- Debt was reduced to $905 million and at the end of April it was $941 million.
- The company has $178 million of credit available.
- CooperSurgical came in with a solid 7% growth, all organic. CSI continues to contribute solidly to operating ratios with gross margin of 59% compared to 58% last year and an operating margin of 22% compared to the prior year.
- Hospital product sales remain up a strong 18% and hospital product sales now account for 30% of CooperSurgical.
- CVI gained share and was 1.4x the growth of the market for the 12 months ended September 30, the last reported data point where the company grew 10% compared to the market of 7% in constant currency.
- CapEx was reduced in 2008 by $65 million and it will defer a portion of which into 2009.
- CooperSurgical’s gross margin was 59% up from 58% in the fourth quarter of 2007.
- Consolidated SG&A decreased by 4% to $101.3 million from Q4 of 2007 and decreased as a percentage of sales to 38% from 41%.
- Selling expenses decreased by 1.3% from the fourth quarter of 2007 and are 28% of sales versus 30% in 2007.
- G&A expenses decreased by 9% to $25.9 million from $28.6 million in the fourth quarter of 2007. This is attributable to reduced litigation costs and a better levering of administrative services.
- Consolidated R&D decreased by 1% from 2007 and was 3% of sales versus 4% in 2007. Year-over-year R&D decreased by 11% and was 3% of revenue versus 4% in 2007.
- The effective rate was 11.4%.
Fiscal 2008 Highlights
- Revenue was $1.063 billion in revenue, up 12%, 8% in constant currency.
- GAAP net income was $65.5 million compared to $11 million loss in 2007.
- GAAP earnings per share was $1.43 compared to 27 cents loss last year.
- On non-GAAP basis earnings per share was $2.26 this year compared to $2.12 last year.
- CooperSurgical’s EBITDA was $40 million and its free cash flow $20 million.
- CVI’s full year GAAP gross margin was 57% versus 54% in 2007, 60% versus 63% on non-GAAP.
- CooperSurgical’s gross margin was 59% unchanged from the prior year.
- SG&A increased by 5% on a GAAP basis but decreased to 40% of sales from 43%, non-GAAP SG&A decreased from 405 to 39%.
- Selling expenses increased by 9% over 2007 but decreased as a percentage of sales to 30% from 31%. G&A expenses decreased by 5%, $208.5 million. This is attributable to reduced litigation costs and a better levering of administrative services.
- The effective rate was 14.1%.
