The Cooper Companies' CEO Discusses Q4 2012 Results - Earnings Call Transcript

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The Cooper Companies Inc. (COO)

Q4 2012 Earnings Conference Call

December 6, 2012 05:00 PM ET

Executives

Robert S. Weiss - President and CEO

Gregory W. Matz - VP and CFO

Albert G. White, III - VP, Investor Relations, Treasurer and Chief Strategic Officer

Kim Duncan - Senior Director, Investor Relation

Analysts

Kimberly Gailun - JP Morgan

Larry Biegelsen - Wells Fargo

Lawrence Keusch - Raymond James

Jason Bednar - Robert W. Baird & Co.

Matthew O'Brien - William Blair & Company, L.L.C

Joanne Wuensch - BMO Capital Markets

Amit Bhalla - Citigroup

Anthony Petrone - Jefferies & Company, Inc.

Presentation

Operator

Good day ladies and gentlemen and welcome to the Fourth Quarter and Full-Year 2012 The Cooper Companies, Incorporated Earnings Conference Call. My name is Caris, and I will be your conference operator for today. At this time, all participants are in a listen-only mode. Later, we will be conducting a question-and-answer session. (Operator Instructions) Today’s event is being recorded for replay purposes.

I’d now like to turn the conference over to your host for today, Ms. Kim Duncan, Senior Director of Investor Relations. Please go ahead.

Kim Duncan

Good afternoon, and welcome to The Cooper Companies’ fourth quarter and full-year 2012 earnings conference call. I’m Kim Duncan, Senior Director of Investor Relations. And joining me on today’s call are Bob Weiss, President and Chief Executive Officer; Greg Matz, Vice President and Chief Financial Officer; and Al White, VP, Investor Relations, Treasurer and Chief Strategic Officer.

Before we get started, I’d like to remind you that this conference call contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995, including all revenue and earnings per share guidance, and other statements regarding anticipated results of operations, market conditions and integration of any acquisitions.

Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and are subject to risks and uncertainties. Events that could cause our actual results and future actions of the Company to differ materially from those described in the forward-looking statements are set forth under the caption, forward-looking statements in today’s earnings release, and are described in our SEC filings, including the business section of Cooper’s annual report on Form 10-K. These are publicly available and on request from the Company’s Investor Relations department.

Now before I turn the call over to Bob, let me comment on the agenda for the call. Bob will begin by providing some highlights on the quarter followed by Greg, who will then discuss the quarter and full-year financial results. We will keep the formal presentation to roughly 30 minutes and then open-up the call for questions. We expect the call to last approximately one hour.

We request that anyone asking questions please limit yourself to one question. Should you have any additional questions, please call our Investor line at 925-460-3663, or e-mail ir@cooperco.com. As a reminder, this call is being webcast and a copy of the earnings release is available through the Investor Relations section of the Cooper Companies’ website.

And with that, I’ll turn the call over to Bob for his opening remarks.

Robert S. Weiss

Thank you, Kim, and good afternoon and evening to everyone. I’m very pleased to report a record – to report record results for fiscal 2012, including record revenues at CooperVision and CooperSurgical and record earnings per share for the Company. There were a number of positives this year, including operational successes such as Biofinity, the re-launch of Avaira Toric, the launch of single-use silicone and the success within CooperSurgical of its surgical business. In addition, there were the acquisition or there was the acquisition of Origio, our $1 billion credit facility and our purchase of 984,000 shares of our stock. These were great accomplishments and I couldn’t be more proud of the efforts of our people.

Now on to fourth quarter and three items, I’d like to discuss before getting into the details. We experienced channel inventory contraction in the United States with our distributors. This is something we have carefully been managing in order to improve manufacturing distribution of efficiencies and we’re happy with the progress we’re making.

Having said that, on a year-over-year basis, we would have generated roughly $7 million in additional sales or about $0.07 without this contraction. Our effective tax rate came in several points higher than we had anticipated, hurting us by roughly $0.05. This was nothing out of the ordinary, just increased income and higher tax jurisdictions primarily with the United States and Denmark tied in to Origio and a less than expected release of reserves.

I should point out our guidance for 2013 continues to be in the 10% to 12% range and we remain confident with the regulations in place that are structured as sustainable. Hurricane Sandy unfortunately has impacted us and you can see a dip in the Americas for CooperVision and CooperSurgical revenue numbers. Although we were able to operate through the storm, our revenues were negatively impacted by roughly $2 million or about $0.02. There was slightly larger impact CooperSurgical given it is headquartered in Connecticut, but CooperVision also was impacted as its distribution center is located in Rochester, New York. Although negative in the fourth quarter, this has generally resulted in a good start to our fiscal 2013.

A few last items to mention before digging into the details. You will note we had $5 million insurance proceeds in the fourth quarter. This was from business interruption insurance for operational losses tied to ruptured pipe in our fire suppression sprinkling system in the U.K. plant last October of 2011.

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