The Cooper Companies Inc.
) reported second-quarter fiscal 2013 (ended Apr 30) adjusted
earnings per share of $1.50 beating the Zacks Consensus Estimate
of $1.37 and the year-ago earnings of $1.12 per share.
Profit soared 36.8% on a year-over-year basis to $75.1 million
($1.52 per share) in the fiscal second quarter.
Cooper's revenues in the fiscal second quarter increased 11%
(up 15% in constant currency) year over year to $384 million,
missing the Zacks Consensus Estimate of $390 million. Growth was
led by robust sales of fertility offerings from CooperSurgical
(CSI) and higher revenues from CooperVision (CVI).
Revenues from Cooper's mainstay contact lens division (80.5%
of company-wide revenues), CVI moved up 7% (up 11% in constant
currency) year over year at $309.3 million. Sales were higher for
all categories of lenses. Sales for the mainstay toric lenses
increased 8% (up 10% in constant currency) to $96.7 million;
multifocal lens sales surged 33% (up 34% in constant currency) to
$29.7 million. Cooper's revenues from single-use sphere lenses
improved 2% (up 11% in constant currency) to $63.7 million while
revenues from non single-use sphere lenses increased 5% (up 8% in
constant currency) on a year-over-year basis to $119.2
On a geographical basis, Cooper's revenues from EMEA and
Americas were up 8% and 12%, respectively in constant currency,
and increased 13% in the Asia Pacific. On a material based
analysis, sales of silicone hydrogel contact lenses were up
sharply 31% in constant currency to $133.5 million while Proclear
contact lens sales edged up 11% to $77.3
The smaller women's health segment (19.5% of company-wide
revenues) CSI performed well with revenues soaring 32% year over
year to $74.7 million. Cooper witnessed mixed contributions from
operating units under its CSI segment. Surgical procedures
revenues dropped 3% year over year to $21.3 million; revenues
from fertility sub-division jumped 527% to $24.7 million whereas
office sales decreased 6% to $28.7 million.
Gross margin was 66.2% in the second quarter, higher than the
64% a year ago. Gross margin for CVI was 66.6% compared
with 63.3% in the prior-year quarter. Operating margin was 21.2%
in the reported quarter, up 220 basis points year over year on
account of improved gross margin.
Selling, general and administrative expenditure increased 10%
year over year to $151 million while research and development
expenses moved up 11.2% to $14.5 million in the reported
Cooper exited fiscal second quarter with cash and cash
equivalents of $14.4 million, flat on a sequential basis.
Long-term debt decreased 22.8% sequentially to $291.5 million in
The company generated $114.9 million of operating cash flow in
the quarter. Cooper spent $38.2 million on capital expenditure
yielding free cash flow of $77.4 million, after minor
For fiscal 2013, Cooper envisages revenues in the range of
$1,575 million and $1,605 million (earlier $1,575 million to
$1,625 million), comprising CVI sales of $1,260 million to $1,280
million and CSI sales of $315 million to $325 million.
The company expects reported earnings per share in the band of
$6.42 and $6.52 (earlier $6.22 and $6.37) for fiscal 2013. Cooper
also guided to adjusted earnings per share between $6.15 and
$6.25 (earlier $5.95 and $6.10). Free cash flow is expected in
the range of $170 million to $200 million (earlier $170 million
to $200 million).
The outlook for the contact lens industry is favorable. Trade
up to value added lenses, such as silicone hydrogel or one-day
lenses, constitutes a major avenue for growth. A trade up to
1-day disposable lenses sharply increases per user sales and
profit. The company continues to grow sales at higher than market
Cooper is a leader in the high-margin toric lens market. It
offers multiple designs of toric lenses across a wide range of
parameters, unlike some of its competitors, who offer toric
lenses in a limited number of designs.
However, Cooper faces formidable competition in each of its
major product lines. Competition comes from well established
global contact lens makers. Depressed levels of consumer spending
have heightened the company's competitive pressures.
The stock currently carries a Zacks Rank #3 (Hold). We are
also positive about
Becton, Dickinson and Company
) each of which carries a Zacks Rank #2 (Buy) and are
expected to do well.
BECTON DICKINSO (BDX): Free Stock Analysis
CONMED CORP (CNMD): Free Stock Analysis
COOPER COS (COO): Free Stock Analysis Report
STERIS CORP (STE): Free Stock Analysis Report
To read this article on Zacks.com click here.