Cooper Companies Conference Call Highlights

Shares of Cooper Companies COO traded up two percent following its second quarter earnings release last Thursday.

Below are some highlights and key takeaways from its conference call:

Financials:
• A solid quarter with continued momentum, top line growth was seven percent with revenues of $412 million
• This was nine percent in constant currency and excluding Aime from prior year results
• Free cash flow was $65 million bringing our 12-month trailing free cash flow to $217 million.
• Within CooperVision, we continued making progress with MyDay, our single-use silicone hydrogel lens.
• We ramped up production, and continued to grow sales, and I'm happy to say everything progressing well.
• Regarding CooperSurgical, our fertility business was strong again, up 17 percent.
• This drove nine percent overall growth in Surgical, which was very nice.
• From a gross margin perspective, we were at 65.1%, which met expectations especially given the strength of our 1-Day portfolio, including ramp-up cost from MyDay.
• From an operating margin perspective, we leveraged our operating expenses to grow our non-GAAP operating margin to a very nice 21.8 percent, up from 21.2 percent.
• Operationally, we continue to outperform the market, being almost two times on a trailing 12-month basis.
• Inventories increased approximately $6 million to $345.8 million from last quarter.

Branding:
• In the first quarter, the market grew eight percent and we grew nine percent.
• Our silicone hydrogel family continued to drive our top line. With revenues of $161 million, our silicone hydrogels were up 20 percent in constant currency.
• By lens type, we also kept our momentum with torics accounting for 32 percent of CooperVision and revenues up 8% in constant currency
• Our multifocals now 11 percent of CooperVision revenues, up 19 percent above the prior year.
• Looking at contact lens market, the worldwide market in the calendar first quarter was up 8% in constant currency while CooperVision was up nine percent.
• The market grew six percent on a constant currency basis in the past 12 months.
• CooperVision was up 11 percent during the same period in constant currency.
• Today's 1-Day market is over $3 billion and growing more than five times that of the rest of the soft contact lens market.

Global:
• It's important to note that torics and multifocals have a long way to go in capturing the market opportunity, especially outside the United States.
• CooperVision is the number one player worldwide.
• Geographically, Asia Pac has done best, up 18 percent.
• CooperVision had offsetting events, the value-added tax in calendar period being flushed out in Asia Pac, which did bring up the revenue on a calendar basis up 29 percent.

Guidance:
• This all led us to solid earnings per share and to us again raising the low end of our earnings per share guidance.
• We maintained our revenue and continue to be comfortable with the drivers of our growth, 1-Day lenses driven by MyDay and Proclear and our Biofinity and Avaira product families.
• We will continue to aggressively invest in global expansion opportunities with over 95 percent of the people on the planet outside the United States.
• We believe we will find opportunities to invest in other countries for decades to come, thereby sustaining a low effective tax rate indefinitely.
• We again this year demonstrated we are opportunistically willing to buy in some of our stock to maximize total shareholder returns.