The Cooper Companies
), a company focused on contact lens and women's health, reported
third-quarter fiscal 2012 (ended July 31) adjusted earnings per
share of $1.45, beating the Zacks Consensus Estimate of $1.29 and
surpassing the year-ago earnings per share of $1.15.
Reported net income for the quarter jumped 51.2% year over year
to $66.9 million (or $1.36 a share).
Revenues for the quarter increased 8% (up 9% in constant
currency, barring acquisitions) year over year to $378.2 million,
surpassing the Zacks Consensus Estimate of $368 million.
Growth was led by higher revenues from CooperSurgical (CSI),
contributions from the Origio acquisition and market share gains in
the contact lens division.
Revenues from the contact lens division, CooperVision (CVI),
were up 5% (up 10% in constant currency) year over year at $314.2
million. Sales were higher for all categories of lenses, except non
single-use sphere lenses which declined 2% on a year-over-year
basis to $123 million. Sales for the mainstay toric lenses
increased 7% to $94.7 million, multifocal lens sales surged 26% to
$24.8 million while revenues from single-use sphere lenses improved
11% to $71.7 million.
On a geographical basis, revenues from EMEA and Americas were up
6% and 11%, respectively, in constant currency, and increased 16%
in the Asia Pacific. On a material based analysis, sales of
silicone hydrogel contact lenses were up sharply 35% in constant
currency to $117.9 million while Proclear contact lens sales edged
up 3% to $79 million.
The smaller women's health segment (CSI) performed well with
revenues soaring 20% year over year (up 6% barring acquisitions) to
$64 million. Revenues for CSI were helped by growth across all
operating platforms. Surgical procedures revenues increased 16%
year over year to $23.7 million, office sales increased 7% to $30.8
million and revenues from fertility sub-division jumped 149% to
Gross margin was 63% in the quarter, higher than the 58% a year
ago. The gross margin improved due to increased operational
efficiencies for both CVI and CSI divisions. Operating margin came
in at 20%, up from 15% in the year-ago quarter.
Cooper exited the third quarter with cash and cash equivalents
of $12.7 million, up 61.7% year over year. Long-term debt declined
11.7% year over year, to $454.2 million in the quarter.
The company generated $78.1 million of operating cash flow in
the quarter and spent $24.1 million on capital expenditure, with
insurance recovery of $1.9 million, yielding free cash flow of
For fourth-quarter fiscal 2012, Cooper expects revenues in the
range of $390 million to $400 million, comprising CVI sales of $315
million to $320 million and CSI sales of $75 million to $80
The company envisages reported as well as adjusted earnings per
share in the band of $1.50 and $1.55 for the fourth quarter. Free
cash flow is expected in the range of $63 million to $83
For fiscal 2012, Cooper expects revenues of $1,439 million to
$1,449 million compared with the earlier range of $1,400 million to
$1,440 million. The estimates for revenues comprise CVI sales of
$1,186 million to $1,191 million and CSI sales of $253 million to
Guidance for reported earnings per share for fiscal 2012 was
increased to a range of $5.10 to $5.15 compared to the prior
guidance of $4.88 to $5.13 while the forecast for adjusted earnings
increased to a band of $5.19 to $5.24 from the earlier forecast of
$4.90 and $5.15. Free cash flow is projected in the range of $210
million to $230 million for fiscal 2012.
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
holds a Zacks #2 Rank, which translates into a short-term Buy
COOPER COS (COO): Free Stock Analysis Report
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