The Cooper Companies
' (
COO
) fourth-quarter fiscal 2012 (ended October 31) adjusted earnings
per share improved 0.7% year over year to a record high of $1.47.
However, it missed the Zacks Consensus Estimate of $1.53. Profit
soared almost 27% on a year-over-year basis to $71.9 million
($1.46 per share) in the fourth quarter.
Cooper's adjusted earnings per share in fiscal 2012 surged 14.7%
year over year to $5.16, trailing the corresponding Zacks
Consensus Estimate of $5.22. Profit came in at $248.3 million
($5.05 per share) in fiscal 2012, depicting an annual rise of
41.6%.
Revenues
Revenues in the fourth quarter increased 10% (up 7% in constant
currency, barring acquisitions) year over year to $396.3 million,
falling short of the Zacks Consensus Estimate of $398 million.
Growth was led by robust sales of offerings from CooperSurgical
(CSI), higher revenues from CooperVision (CVI), acquisition
synergies and newer products.
Fiscal 2012 revenues also came in 9% higher (up 8% in constant
currency, barring acquisitions) at $1,445.1 million, trailing the
corresponding Zacks Consensus Estimate of $1,447 million. Solid
performance across both operating platforms contributed to sales
growth.
Segment Analysis
Revenues from Cooper's mainstay contact lens division (80.3% of
company-wide revenues), CVI edged up 5% (up 7% in constant
currency) year over year at $318.1 million. Sales were higher for
all categories of lenses. Sales for the mainstay toric lenses
increased 2% (up 5% in constant currency) to $91.4 million and
multifocal lens sales surged 31% (up 34% in constant currency) to
$26.6 million. Revenues from single-use sphere lenses improved 8%
(up 10% in constant currency) to $72.4 million while revenues
from non single-use sphere lenses increased 1% (up 4% in constant
currency) on a year-over-year basis to $127.7 million.
On a geographical basis, revenues from EMEA and Americas were up
11% and 3%, respectively, in constant currency, and increased 12%
in the Asia Pacific. On a material based analysis, sales of
silicone hydrogel contact lenses were up sharply 24% in constant
currency to $124 million while Proclear contact lens sales edged
up 4% to $80.4 million.
The smaller women's health segment (19.7% of company-wide
revenues) CSI performed well with revenues soaring 37% year over
year (up 2% barring acquisitions) to $78.2 million. Cooper
witnessed mixed contributions from operating units under its CSI
segment. Surgical procedures revenues increased 15% year over
year to $23.8 million, revenues from fertility sub-division
jumped 489% to $22.9 million whereas office sales decreased 3% to
$31.5 million.
Margin Trends
Adjusted gross margin was 63.8% in the fourth quarter, higher
than the 63.4% a year ago. The gross margin improved due to
increased operational efficiencies for both CVI and CSI divisions
as well as favorable mix.
Adjusted gross margin for CVI was 63.7% compared with 63.1% in
the prior-year quarter. Production efficiency coupled with
favorable product mix towards higher margin offerings was
responsible for margin expansion. Adjusted gross margin for CSI
was 64.1% versus 66.3% in the year-ago quarter owing to Origio
buyout.
Selling, general and administrative expenditure increased 9.1%
year over year to $152.4 million while research and development
expenses shot up 20.3% to $14.1 million in the reported quarter.
This led to contraction of adjusted operating margin from 22.9%
in the year-ago quarter to 20.1% in the reported quarter.
Financial Health
Cooper exited fiscal 2012 with cash and cash equivalents of $12.8
million, up 148.1% year over year. Long-term debt increased 6.4%
year over year, to $348.4 million in the quarter.
The company generated $114.8 million of operating cash flow in
the quarter and spent $32.6 million on capital expenditure,
yielding free cash flow of $83.5 million, upon exclusion of
acquisition costs of $1.3 million.
Outlook
For fiscal 2013, Cooper envisages revenues in the range of $1,565
million to $1,625 million (implying a mid-point growth of about
10%), comprising CVI sales of $1,250 million to $1,290 million
and CSI sales of $315 million to $335 million.
The company expects reported as well as adjusted earnings per
share in the band of $5.70 and $6.00 for fiscal 2013. The current
Zacks Consensus Estimate of $5.83 for fiscal 2013 lies within
Cooper's guidance range. Free cash flow is expected in the range
of $200 million to $230 million.
Our Take
We currently have a long-term 'Outperform' recommendation on
Cooper. The stock carries a short-term Zacks #2 Rank (Buy).
We are positive on Cooper as it reported a record performance in
the reported quarter. Moreover, this contact lens and women
health focused company continues to expand margins, synergize
acquisitions and expand geographical reach.
However, the company faces formidable competition in each of its
major product lines. Its peer in the contact lenses market
Johnson & Johnson
(
JNJ
) also carries a short-term Zacks #2 Rank (Buy).
COOPER COS (COO): Free Stock Analysis Report
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