The Cooper Companies
) first-quarter fiscal 2013 (ended Jan 31) adjusted earnings per
share of $1.23 beat the Zacks Consensus Estimate of $1.20 and the
year-ago earnings of $1.12 per share.
Profit soared almost 36.7% on a year-over-year basis to $74.7
million ($1.50 per share) in the fiscal first quarter. Reported
net income includes insurance receipt of $14.1 million on account
of damage to the manufacturing unit in UK in Oct 2011.
Cooper's revenues in the fiscal first quarter increased 16%
(up 11% in constant currency, barring acquisitions) year over
year to $379.8 million, beating the Zacks Consensus Estimate of
$365 million. Growth was led by robust sales of fertility
offerings from CooperSurgical (CSI) and higher revenues from
CooperVision (CVI) Biofinity.
Revenues from Cooper's mainstay contact lens division (79.4%
of company-wide revenues), CVI moved up 12% (up 14% in constant
currency) year over year at $301.4 million. Sales were higher for
all categories of lenses. Sales for the mainstay toric lenses
increased 12% (up 13% in constant currency) to $91.6 million;
multifocal lens sales surged 31% (up 31% in constant currency) to
$27.2 million. Cooper's revenues from single-use sphere lenses
improved 8% (up 13% in constant currency) to $65.5 million while
revenues from non single-use sphere lenses increased 11% (up 12%
in constant currency) on a year-over-year basis to $117.1
On a geographical basis, Cooper's revenues from EMEA and
Americas were up 7% and 18%, respectively in constant currency,
and increased 17% in the Asia-Pacific. On a material-based
analysis, sales of silicone hydrogel contact lenses were up
sharply 38% in constant currency to $119.6 million, while
Proclear contact lens sales edged up 8% to $75.5
The smaller women's health segment (20.6% of company-wide
revenues) CSI performed well with revenues soaring 37% year over
year (up 1% barring acquisitions) to $78.4 million. Cooper
witnessed mixed contributions from operating units under its CSI
segment. Surgical procedures revenues increased 9% year over year
to $24.9 million; revenues from fertility sub-division jumped
535% to $24 million, whereas office sales decreased 3% to $29.5
Adjusted gross margin was 63.3% in the fourth quarter, lower
than the 64.5% a year ago. Gross margin was adversely impacted by
currency fluctuation and the re-launch of the Avaira lens.
Adjusted gross margin for CVI was 63.1% compared with 64% in the
Selling, general and administrative expenditure increased
14.3% year over year to $150.7 million while research and
development expenses shot up 19.5% to $13.7 million in the
reported quarter. This led to contraction of adjusted operating
margin from 18.9% in the year-ago quarter to 18.3% in the
Cooper exited fiscal first quarter with cash and cash
equivalents of $14.4 million, up 12.5% on a sequential basis.
Long-term debt increased 8.3% sequentially to $377.5 million in
The company generated $47.6 million of operating cash flow in
the quarter. Cooper spent $29.3 million on capital expenditure
yielding free cash flow of $19.2 million, upon exclusion of
acquisition costs of $0.3 million and minor adjustments.
For fiscal 2013, Cooper envisages revenues in the range of $1,575
million and $1,625 million (earlier $1,565 million to $1,625
million), comprising CVI sales of $1,260 million to $1,290
million and CSI sales of $315 million to $335 million.
The company expects reported earnings per share in the band of
$6.22 and $6.37 (earlier $5.90 and $6.10) for fiscal 2013. Cooper
also guided to adjusted earnings per share between $5.95 and
$6.10 (earlier $5.90 and $6.10). Free cash flow is expected in
the range of $170 million to $200 million (earlier $210 million
to $230 million).
The stock carries a Zacks Rank #2 (Buy). We are positive on
Cooper as it reported a good performance in the reported quarter.
Moreover, this contact lens and women health focused company
continues to expand margins, synergize acquisitions and expand
However, the company faces formidable competition in each of
its major product lines. Its peer in the contact lenses market
Johnson & Johnson
) carries a Zacks Rank #3 (Hold). We are more positive about
Novo Nordisk A/S
Becton, Dickinson and Company
) both of which carry a Zacks Rank #2 (Buy) and are expected to
BECTON DICKINSO (BDX): Free Stock Analysis
COOPER COS (COO): Free Stock Analysis Report
JOHNSON & JOHNS (JNJ): Free Stock Analysis
NOVO-NORDISK AS (NVO): Free Stock Analysis
To read this article on Zacks.com click here.