OREANDA-NEWS. The Cooper Companies, Inc. (NYSE:COO) today announced financial results for the fiscal third quarter ended July 31, 2016.

  • Revenue increased 11% year-over-year to $514.7 million.  CooperVision (CVI) revenue up 6% to $409.9 million.  CooperSurgical (CSI) revenue up 38% to $104.8 million.
  • GAAP earnings per share (EPS) $1.79, up 88 cents or 97% from last year's third quarter. 
  • Non-GAAP EPS $2.30, up 33 cents or 17% from last year's third quarter.  See "Reconciliation of GAAP to Non-GAAP Results" below.

Commenting on the results, Robert S. Weiss, Cooper's president and chief executive officer said, "I am pleased to report another solid quarter for the company, including record revenues at both our business units.  We are very encouraged by our business trends and believe we are well positioned to continue producing strong results."

Third Quarter GAAP Operating Highlights

  • Revenue $514.7 million, up 11% from last year's third quarter, up 6% pro forma (defined as constant currency and including acquisitions in both periods).
  • Gross margin 62% compared with 59% in last year's third quarter.  On a non-GAAP basis, gross margin was 64% vs. 62% last year.  Gross margin was positively impacted primarily by product mix and favorable currency which was partially offset by lower margin acquisitions at CooperSurgical. 
  • Operating margin 20% compared with 11% in last year's third quarter.  On a non-GAAP basis, operating margin was 26% vs. 23% last year.  The increase was the result of improved gross margins and leveraging operating expenses. 
  • Depreciation $33.9 million, down 18% from last year's third quarter.  Amortization $15.6 million, up 24% from last year's third quarter due to acquisitions.
  • Total debt increased $2.7 million from April 30, 2016, to $1,444.1 million, primarily due to higher cash balances and acquisitions, partially offset by operational cash flow generation. 
  • Interest expense increased to $8.0 million compared with $4.7 million in last year's third quarter primarily due to higher debt and interest rates.
  • Cash provided by operations $128.9 million and capital expenditures $31.1 million resulted in free cash flow of $97.8 million.  Excluding integration costs of $6.5 million, adjusted free cash flow was $104.3 million.

Third Quarter CooperVision (CVI) GAAP Operating Highlights

  • Revenue $409.9 million, up 6% from last year's third quarter, up 6% in constant currency.
  • Gross margin 62% compared with 58% in last year's third quarter.  On a non-GAAP basis, gross margin was 64% vs. 62% last year.  Gross margin was positively impacted primarily by product mix and currency. 
Fiscal Year 2016 Guidance

The Company updated its fiscal year 2016 guidance.  Details are summarized as follows:

  • Fiscal 2016 total revenue raised to$1,944 -$1,957 million
    • CVI revenue raised to $1,555 - $1,565 million
    • CSI revenue raised to $389 - $392 million
  • Fiscal fourth quarter 2016 total revenue of$496 -$509 million
    • CVI revenue $390 - $400 million
    • CSI revenue $106 - $109 million
  • Fiscal 2016 non-GAAP earnings per share raised to $8.32 - $8.47 and fiscal fourth quarter 2016 non-GAAP earnings per share of $2.15 - $2.30.   Non-GAAP earnings per share guidance for the full fiscal year excludes amortization of existing other intangible assets of approximately $60.8 million or $1.01 per share, and other costs including integration expenses which we would not have otherwise incurred as part of our continuing operations. 

With respect to the Company's expectations above, the Company has not reconciled non-GAAP earnings per share guidance to GAAP 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 earnings per share, the Company is not able to provide such guidance.