CooperCompanies Announces Second Quarter 2023 Results
SAN RAMON, Calif., June 01, 2023 (GLOBE NEWSWIRE) -- CooperCompanies (NYSE: COO) today announced financial results for its fiscal second quarter ended April 30, 2023.
- Revenue increased 6% year-over-year to $877.4 million. CooperVision (CVI) revenue up 6% to $589.3 million, and CooperSurgical (CSI) revenue up 4% to $288.1 million.
- GAAP diluted earnings per share (EPS) of $0.80, down $1.75 or 69% from last year's second quarter.
- Non-GAAP diluted EPS of $3.08, down $0.16 or 5% from last year's second quarter. See "Reconciliation of Selected GAAP Results to Non-GAAP Results" below.
Commenting on the results, Al White, Cooper's President and CEO said, "This was another strong quarter with CooperVision posting its ninth consecutive quarter of double-digit organic revenue growth and CooperSurgical's fertility business posting its tenth consecutive quarter of double-digit organic revenue growth. This consistency is a testament to the strength of our businesses and the hard work of our employees around the world."
Second Quarter Operating Results
- Revenue of $877.4 million, up 6% from last year’s second quarter, up 9% in constant currency, up 8% organically.
- Gross margin of 66% compared with 64% in last year’s second quarter. On a non-GAAP basis, gross margin was similar to last year at 67%.
- Operating margin of 11% compared with 16% in last year’s second quarter. On a non-GAAP basis, operating margin was similar to last year at 24%.
- Interest expense of $26.1 million up from $10.8 million in last year's second quarter driven by higher interest rates.
- Net debt outstanding at quarter end was $2.5 billion (total debt excluding unamortized debt issuance costs less cash and cash equivalents) down $48.5 million from last quarter.
- Cash provided by operations of $124.2 million offset by capital expenditures of $73.6 million resulted in free cash flow of $50.6 million.
Second Quarter CooperVision (CVI) Revenue
- Revenue of $589.3 million, up 6% from last year’s second quarter, up 10% in constant currency, up 10% organically.
- Revenue by category:
| Constant Currency | Organic | |||||||||
| (In millions) | % chg | % chg | % chg | |||||||
| 2Q23 | y/y | y/y | y/y | |||||||
| Toric | $ | 206.3 | 11% | 15% | 15% | |||||
| Multifocal | 74.1 | 12% | 15% | 15% | ||||||
| Single-use sphere | 165.4 | 3% | 8% | 8% | ||||||
| Non single-use sphere, other | 143.5 | 2% | 5% | 2% | ||||||
| Total | $ | 589.3 | 6% | 10% | 10% | |||||
- Revenue by geography:
| Constant Currency | Organic | |||||||||
| (In millions) | % chg | % chg | % chg | |||||||
| 2Q23 | y/y | y/y | y/y | |||||||
| Americas | $ | 243.3 | 9% | 9% | 6% | |||||
| EMEA | 210.0 | 2% | 6% | 7% | ||||||
| Asia Pacific | 136.0 | 9% | 19% | 19% | ||||||
| Total | $ | 589.3 | 6% | 10% | 10% | |||||
Second Quarter CooperSurgical (CSI) Revenue
- Revenue of $288.1 million, up 4% from last year's second quarter, up 6% in constant currency, up 5% organically.
- Revenue by category:
| Constant Currency | Organic | |||||||||
| (In millions) | % chg | % chg | % chg | |||||||
| 2Q23 | y/y | y/y | y/y | |||||||
| Office and surgical | $ | 163.0 | 1% | 1% | 1% | |||||
| Fertility | 125.1 | 9% | 12% | 11% | ||||||
| Total | $ | 288.1 | 4% | 6% | 5% | |||||
Fiscal Year 2023 Financial Guidance
The Company updated its fiscal year 2023 financial guidance. Details are summarized as follows:
- Fiscal 2023 total revenue of $3,512 - $3,569 million (organic growth of 7% to 9%)
- CVI revenue of $2,365 - $2,400 million (organic growth of 8% to 10%)
- CSI revenue of $1,147 - $1,169 million (organic growth of 5% to 7%)
- Fiscal 2023 non-GAAP diluted earnings per share of $12.66 - $12.96
Fiscal year 2023 guidance does not include the Cook Medical Reproductive Health acquisition announced on February 7, 2022.
Non-GAAP diluted earnings per share guidance excludes amortization and impairment of intangible assets, and other exceptional or unusual income or gains and charges or expenses including acquisition and integration costs which we may incur as part of our continuing operations.
With respect to the Company’s guidance expectations, the Company has not reconciled non-GAAP diluted earnings per share guidance to GAAP diluted earnings per share due to the inherent difficulty in forecasting acquisition-related, integration and restructuring charges and expenses, which are reconciling items between the non-GAAP and GAAP measure. Due to the unknown effect, timing and potential significance of such charges and expenses that impact GAAP diluted earnings per share, the Company is not able to provide such guidance.
Reconciliation of Selected GAAP Results to Non-GAAP Results
To supplement our financial results and guidance presented on a GAAP basis, we use non-GAAP measures that we believe are helpful in understanding our results. The non-GAAP measures exclude costs which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. Our non-GAAP financial results and guidance are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Management uses supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the factors management uses in planning and forecasting for future periods. We believe it is useful for investors to understand the effects of these items on our consolidated operating results. Our non-GAAP financial results may include the following adjustments, and as appropriate, the related income tax effects and changes in income attributable to noncontrolling interests:
- We exclude the effect of amortization and impairment of intangible assets from our non-GAAP financial results. Amortization of intangible assets will recur in future periods; however, the amounts are affected by the timing and size of our acquisitions. Impairment of intangible assets is a non-recurring cost.
- We exclude the effect of acquisition and integration expenses and restructuring expenses from our non-GAAP financial results. We incurred significant expenses in connection with our acquisitions and also incurred certain other operating expenses or income, which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. Such expenses generally diminish over time with respect to past acquisitions; however, we generally will incur similar expenses in connection with any future acquisitions. Acquisition and integration expenses include direct effects of acquisition accounting, such as inventory fair value step-up and items such as personnel costs for transitional employees, other acquired employee related costs, integration related professional services and other costs. In addition, our acquisition expenses for the second quarter of 2023 included an accrual for probable payment of a termination fee in connection with an asset purchase agreement. Restructuring expenses include items such as employee severance, product rationalization, facility and other exit costs.
- We exclude other exceptional or unusual charges or expenses and gains or income. These can be variable and difficult to predict, such as COVID related charges, certain litigation expenses, the gain or loss on deconsolidation of our subsidiaries, changes in fair value of contingent considerations and product transition costs, and are not what we consider as typical of our continuing operations.
- We exclude unrealized and realized gains and losses on our minority investments as we do not believe that these components of income or expense have a direct correlation to our ongoing operations.
- We exclude the effects of non-cash deferred tax assets related to intra-group transfer of non-inventory assets.
We also report revenue growth using the non-GAAP financial measure of constant currency so that revenue results may be evaluated excluding the effect of foreign currency rate fluctuations. To present this information, current period revenue for entities reporting in currencies other than the United States dollar are converted into United States dollars at the average foreign exchange rates for the corresponding period in the prior year. We also report revenue growth using the non-GAAP financial measure of organic so that revenue results may be evaluated over a comparable period by excluding the effect of foreign currency fluctuations, and excluding the impact of any acquisitions, divestitures, discontinuations that occurred in the comparable period.
We define the non-GAAP measure of free cash flow as cash provided by operating activities less capital expenditures. We believe free cash flow is useful for investors as an additional measure of liquidity because it represents cash that is available to grow the business, make strategic acquisitions, repay debt, buyback common stock or to fund dividend payments. Management uses free cash flow internally to understand, manage, make operating decisions and evaluate our business. In addition, we use free cash flow to help plan and forecast future periods.
We define the non-GAAP measure of net debt as total debt less cash and cash equivalents. We believe net debt is useful for investors to be helpful in evaluating our financial leverage. Management uses net debt as a measure of our financial leverage. Net debt should not be considered as an alternative to debt determined in accordance with GAAP and should be reviewed in conjunction with our consolidated condensed balance sheets.
Investors should consider non-GAAP financial measures in addition to, and not as replacements for, or superior to, measures of financial performance prepared in accordance with GAAP.
| THE COOPER COMPANIES, INC. AND SUBSIDIARIES Reconciliation of Selected GAAP Results to Non-GAAP Results (In millions, except per share amounts) (Unaudited) | ||||||||||||||||||||||||
| Three Months Ended April 30, | ||||||||||||||||||||||||
| 2023 | 2023 | 2022 | 2022 | |||||||||||||||||||||
| GAAP | Adjustment | Non-GAAP | GAAP | Adjustment | Non-GAAP | |||||||||||||||||||
| Cost of sales | $ | 294.5 | $ | (5.9 | ) | A | $ | 288.6 | $ | 297.3 | $ | (20.7 | ) | A | $ | 276.6 | ||||||||
| Operating expense excluding amortization | $ | 440.1 | $ | (58.8 | ) | B | $ | 381.3 | $ | 348.7 | $ | 1.3 | B | $ | 350.0 | |||||||||
| Amortization of intangibles | $ | 46.5 | $ | (46.5 | ) | C | $ | — | $ | 51.1 | $ | (51.1 | ) | C | $ | — | ||||||||
| Other expense (income), net | $ | 4.6 | $ | (1.4 | ) | D | $ | 3.2 | $ | (41.8 | ) | $ | 47.5 | D | $ | 5.7 | ||||||||
| Provision for income taxes | $ | 25.8 | $ | (1.1 | ) | E | $ | 24.7 | $ | 37.1 | $ | (11.5 | ) | E | $ | 25.6 | ||||||||
| Diluted earnings per share | $ | 0.80 | $ | 2.28 | $ | 3.08 | $ | 2.55 | $ | 0.69 | $ | 3.24 | ||||||||||||
| Weighted average diluted shares used | 49.8 | 49.8 | 49.7 | 49.7 | ||||||||||||||||||||
| A | Fiscal 2023 GAAP cost of sales included $5.9 million of costs primarily related to exit costs of the contact lens care business and integration activities, resulting in fiscal 2023 GAAP gross margin of 66% as compared to fiscal 2023 non-GAAP gross margin of 67%. Fiscal 2022 GAAP cost of sales included $20.7 million of costs primarily related to exit costs of the contact lens care business, resulting in fiscal 2022 GAAP gross margin of 64% as compared to fiscal 2022 non-GAAP gross margin of 67%. |
| B | Fiscal 2023 GAAP operating expense included $58.8 million of costs, consisting primarily of an accrual of $45.0 million associated with the probable payment in August 2023 of a termination fee under an asset purchase agreement related to Cook Medical’s reproductive health business. Fiscal 2022 GAAP operating expense included a $1.3 million gain consisting of $15.7 million of net decrease in fair value of contingent consideration, offset primarily by acquisition and integration costs. |
| C | Amortization expense was $46.5 million and $51.1 million for the fiscal 2023 and 2022 periods, respectively. Items A, B, and C resulted in fiscal 2023 GAAP operating margin of 11% as compared to fiscal 2023 non-GAAP operating margin of 24%, and fiscal 2022 GAAP operating margin of 16% as compared to fiscal 2022 non-GAAP operating margin of 24%. |
| D | Fiscal 2023 other expense (income) were primarily related to loss on minority investments. Fiscal 2022 other expense (income) primarily consists of a gain on deconsolidation of SightGlass Vision (SGV). |
| E | Adjustments to provision for income taxes were primarily from the above items and intra-entity asset transfers. |
| THE COOPER COMPANIES, INC. AND SUBSIDIARIES Reconciliation of Selected GAAP Results to Non-GAAP Results (In millions, except per share amounts) (Unaudited) | ||||||||||||||||||||||||
| Six Months Ended April 30, | ||||||||||||||||||||||||
| 2023 | 2023 | 2022 | 2022 | |||||||||||||||||||||
| GAAP | Adjustment | Non-GAAP | GAAP | Adjustment | Non-GAAP | |||||||||||||||||||
| Cost of sales | $ |
By: GlobeNewswire
- 01 Jun 2023
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