The Cooper Companies
), a company focused on contact lens and women's health, reported
second-quarter fiscal 2012 (ended April 30) results with adjusted
earnings per share of $1.12 missing the Zacks Consensus Estimate of
$1.20 but beating the year-ago earnings per share of $1.02. Net
income (as reported) for the quarter jumped 55.3% year over year to
$54.9 million (or $1.12 a share).
Revenues for the quarter were up 6% (7% in constant currency)
year over year to $344.6 million, lower than the Zacks Consensus
Estimate of $350 million.
Revenues from the contact lens division ("CVI") were higher 5%
(6% in constant currency) year over year at $288 million. Sales
were higher for all categories of lenses, with mainstay toric
lenses up 8% in constant currency, single-use sphere lenses higher
6%, non-single-use sphere lenses up 2% and multifocal sales
shooting up 26%.
On a geographic basis, revenues from EMEA and Asia-Pacific were
up 6% and 10%, respectively, in constant currency, and increased 4%
in the Americas. On a material based analysis, sales of silicone
hydrogel were up sharply 32% to $103.8 million while Proclear sales
dropped slightly 2% to $71.4 million.
The smaller women's health segment ("CSI") did moderately well
with revenues rising 13% year over year (higher 8% without
acquisitions) to $56.6 million. Sales of this division were
bolstered by surgical procedures, which increased 32% to $22
Cooper's reported gross margin rose to 64% in the quarter from
62% a year ago, due to manufacturing synergies and a shift in
product mix as well as savings emanating from the closure of the
manufacturing unit at Norfolk. Operating margin remained at 19%, in
line with the year-ago quarter.
Cooper finished the quarter with cash and cash equivalents of
only $7.7 million, down 8.1% year over year. The company continues
to de-leverage as total debt dropped 42.3% year over year, to
$319.3 million in the quarter.
The company generated $80.6 million of operating cash flow in
the quarter and spent $23.1 million on capital expenditure, with
insurance recovery of $3.2 million, yielding free cash flow of
For fiscal 2012, Cooper expects total revenue of $1,400 million
to $1,440 million (earlier $1,385 million to $1,440 million)
comprising CVI of $1,175 million to $1,205 million and CSI of $225
million to $235 million.
Guidance for reported earnings per share for fiscal 2012 was
shifted to a slightly lower range of $4.88 to $5.13 (earlier $4.90
to $5.15) while the forecast for adjusted earnings was retained in
a band of $4.90 and $5.15. Free cash flow is projected to remain in
the range of $200 million to $230 million for fiscal
Cooper is a global medical products company specializing in a
wide range of contact lenses for the vision correction market with
a smaller strategic business unit for women's health. It reportedly
holds the number three position in the $6 billion global contact
The company 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. The company is benefiting from
strong demand for its Biofinity toric lenses.
However, Cooper faces formidable competition in each of its
major product lines. Competition comes from well established global
contact lens makers such as
Johnson & Johnson
). Depressed levels of consumer spending have heightened the
competitive pressures on the company. We currently have a Neutral
recommendation on Cooper. The stock retains a Zacks #2 Rank, which
translates into a short-term "Buy" recommendation.
COOPER COS (COO): Free Stock Analysis Report
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