The Cooper Companies(COO) - 2025 Q3 - Quarterly Results

Press Release Overview This section provides an executive summary of CooperCompanies' fiscal year 2025 third-quarter performance and updated financial outlook CEO Commentary CooperCompanies CEO Al White highlighted strong margins, double-digit earnings growth, and robust free cash flow in Q3 FY2025, despite lower-than-expected revenue, while raising earnings guidance - The company achieved strong margins, double-digit earnings growth, and robust free cash flow, reflecting operational excellence as a core growth strategy[2] - Despite lower-than-expected revenue, the company raised its earnings guidance based on operational performance and anticipates MyDay® products will drive revenue improvement in Q4 and FY2026[2] Fiscal Year 2025 Third Quarter Operating Results This section details CooperCompanies' consolidated financial performance, including revenue, earnings, and segment-specific results for CooperVision and CooperSurgical Consolidated Operating Highlights CooperCompanies reported $1,060.3 million in total revenue, a 6% increase, with GAAP diluted EPS decreasing by 6% and non-GAAP diluted EPS increasing by 15% Fiscal Year 2025 Third Quarter Key Financial Metrics | Metric | Q3 FY2025 (Millions USD) | Q3 FY2024 (Millions USD) | YoY Change | | :----- | :--- | :--- | :--------- | | Revenue | $1,060.3 | $1,002.8 | +6% | | GAAP Diluted EPS | $0.49 | $0.52 | -6% | | Non-GAAP Diluted EPS | $1.10 | $0.96 | +15% | | GAAP Gross Margin | 65% | 66% | -100 bps | | Non-GAAP Gross Margin | 67% | 66% | +70 bps | | GAAP Operating Margin | 17% | 19% | -200 bps | | Non-GAAP Operating Margin | 26% | 26% | +60 bps | - GAAP gross margin decreased primarily due to the CooperSurgical product line exit, while non-GAAP gross margin increased from ongoing efficiency gains, a favorable product mix, and positive foreign exchange impacts[5] - The increase in non-GAAP operating margin resulted from stronger gross margins and targeted expense leverage, partially offset by higher research and development expenses[6] CooperVision (CVI) Fiscal Year 2025 Third Quarter Revenue CooperVision reported $718.4 million in revenue, a 6% increase, with strong performance in toric and multifocal lenses and significant growth in the EMEA region CVI Total Revenue Overview (Q3 FY2025) | Metric | Q3 FY2025 Revenue (Millions USD) | Reported YoY Change | Constant Currency YoY Change | Organic YoY Change | | :----- | :----------- | :------------------ | :--------------------------- | :----------------- | | CVI Total Revenue | $718.4 | +6% | +2% | +2% | CVI Revenue by Product Category CVI's revenue by product category shows strong reported and organic growth in toric and multifocal lenses, while spherical lenses and other categories saw modest growth CVI Revenue by Product Category (Q3 FY2025) | Category | Q3 FY2025 Revenue (Millions USD) | Reported YoY Change | Organic YoY Change | | :------- | :----------- | :------------------ | :----------------- | | Toric and Multifocal | $358.8 | +10% | +6% | | Spherical and Other | $359.6 | +3% | -1% | CVI Revenue by Geography CVI's revenue by geography indicates strong reported growth in EMEA, with modest growth in the Americas and a slight decline in Asia Pacific on an organic basis CVI Revenue by Geography (Q3 FY2025) | Region | Q3 FY2025 Revenue (Millions USD) | Reported YoY Change | Organic YoY Change | | :-------- | :----------- | :------------------ | :----------------- | | Americas | $286.0 | +2% | +3% | | Europe, Middle East, and Africa (EMEA) | $292.1 | +14% | +6% | | Asia Pacific | $140.3 | +1% | -5% | CooperSurgical (CSI) Fiscal Year 2025 Third Quarter Revenue CooperSurgical achieved $341.9 million in revenue, a 4% increase, driven by strong performance in the fertility business category CSI Total Revenue Overview (Q3 FY2025) | Metric | Q3 FY2025 Revenue (Millions USD) | Reported YoY Change | Constant Currency YoY Change | Organic YoY Change | | :----- | :----------- | :------------------ | :--------------------------- | :----------------- | | CSI Total Revenue | $341.9 | +4% | +4% | +2% | CSI Revenue by Product Category CSI's revenue by product category shows stronger reported and organic growth in the fertility business compared to clinic and surgical categories CSI Revenue by Product Category (Q3 FY2025) | Category | Q3 FY2025 Revenue (Millions USD) | Reported YoY Change | Organic YoY Change | | :------- | :----------- | :------------------ | :----------------- | | Clinic and Surgical | $204.8 | +3% | +1% | | Fertility | $137.1 | +6% | +3% | Other Financial Information Interest expense decreased due to lower average rates and debt, while the company generated $164.6 million in free cash flow and repurchased $52.1 million of common stock Interest Expense and Free Cash Flow (Q3 FY2025) | Metric | Q3 FY2025 (Millions USD) | Q3 FY2024 (Millions USD) | YoY Change (Millions USD) | | :----- | :--- | :--- | :--------- | | GAAP Interest Expense | $25.4 | $28.5 | -$3.1 | | Non-GAAP Interest Expense | $24.7 | $27.1 | -$2.4 | | Cash Flow from Operations | $261.5 | N/A | N/A | | Capital Expenditures | $96.9 | N/A | N/A | | Free Cash Flow | $164.6 | N/A | N/A | - The company repurchased $52.1 million of common stock, approximately 724,300 shares at an average price of $71.97 per share, with $163.6 million remaining under the existing share repurchase program[11] Fiscal Year 2025 Financial Guidance Update This section presents the updated non-GAAP financial guidance for CooperCompanies for both the fourth quarter and the full fiscal year 2025 Fiscal Fourth Quarter 2025 Guidance The company updated its non-GAAP financial guidance for Q4 FY2025, projecting total revenue between $1,049 million and $1,069 million and non-GAAP diluted EPS between $1.10 and $1.14 Fiscal Fourth Quarter 2025 Financial Guidance | Metric | Q4 FY2025 Guidance (Millions USD) | Organic Growth | | :----- | :------------ | :------------- | | Total Revenue | $1,049 - $1,069 | 2% to 4% | | CVI Revenue | $700 - $713 | 2% to 4% | | CSI Revenue | $350 - $356 | 2% to 4% | | Non-GAAP Diluted EPS | $1.10 - $1.14 | N/A | Fiscal Year 2025 Full Year Guidance The company updated its non-GAAP financial guidance for full-year FY2025, forecasting total revenue between $4,076 million and $4,096 million and non-GAAP diluted EPS between $4.08 and $4.12 Fiscal Year 2025 Full Year Financial Guidance | Metric | FY2025 Full Year Guidance (Millions USD) | Organic Growth | | :----- | :------------ | :------------- | | Total Revenue | $4,076 - $4,096 | 4% to 4.5% | | CVI Revenue | $2,734 - $2,747 | 4% to 5% | | CSI Revenue | $1,343 - $1,349 | 3% to 3.5% | | Non-GAAP Diluted EPS | $4.08 - $4.12 | N/A | Reconciliation of Selected GAAP Results to Non-GAAP Results This section explains the company's non-GAAP financial measures and provides detailed reconciliation tables from GAAP to non-GAAP results Non-GAAP Measures Explanation The company provides non-GAAP measures to offer investors a clearer understanding of consolidated operating performance, excluding costs not typically part of ongoing operations - Non-GAAP measures exclude costs not typically part of ongoing operations, such as intangible asset amortization, acquisition and integration costs, and business exit expenses[15] - Constant currency revenue growth adjusts for foreign exchange fluctuations, while organic revenue growth further excludes the impact of acquisitions, divestitures, and discontinued operations[16] - Free cash flow, defined as cash provided by operating activities less capital expenditures, is considered a useful metric for assessing liquidity and capital allocation[17] GAAP to Non-GAAP Reconciliation Tables Detailed reconciliation tables are provided for gross profit, operating profit, and earnings per share, outlining adjustments for the three and nine months ended July 31, 2025 and 2024 GAAP to Non-GAAP Gross Profit Reconciliation | Metric (Three Months Ended July 31) | 2025 (Millions USD) | 2025 Margin % | 2024 (Millions USD) | 2024 Margin % | | :------------------------------ | :-------------- | :------------ | :-------------- | :------------ | | GAAP Gross Profit | $692.0 | 65% | $663.0 | 66% | | Total Adjustments | $21.4 | 2% | $4.7 | 0% | | Non-GAAP Gross Profit | $713.4 | 67% | $667.7 | 66% | GAAP to Non-GAAP Operating Profit Reconciliation | Metric (Three Months Ended July 31) | 2025 (Millions USD) | 2025 Margin % | 2024 (Millions USD) | 2024 Margin % | | :------------------------------ | :-------------- | :------------ | :-------------- | :------------ | | GAAP Operating Profit | $175.7 | 17% | $192.5 | 19% | | Total Adjustments | $100.7 | 9% | $63.6 | 7% | | Non-GAAP Operating Profit | $276.4 | 26% | $256.1 | 26% | GAAP to Non-GAAP Net Income and EPS Reconciliation | Metric (Three Months Ended July 31) | 2025 (Millions USD) | 2025 EPS | 2024 (Millions USD) | 2024 EPS | | :------------------------------ | :-------------- | :------- | :-------------- | :------- | | GAAP Net Income | $98.3 | $0.49 | $104.7 | $0.52 | | Total Adjustments | $122.0 | $0.61 | $87.2 | $0.44 | | Non-GAAP Net Income | $220.3 | $1.10 | $191.9 | $0.96 | Notes to Non-GAAP Adjustments This section details various expenses included in non-GAAP adjustments, such as acquisition and integration costs, business exit costs, EU MDR compliance, and business optimization expenses - Acquisition and integration-related expenses in FY2025 primarily relate to the obp Surgical and Cook Medical acquisitions and integration expenditures, including long-lived asset write-offs, facility rationalization, and redundant personnel costs[21] - Business exit costs in FY2025 include $12.7 million in inventory write-offs and $14.3 million in write-offs of certain long-lived assets[23] - Business optimization expenses in FY2025 include $2.7 million in employee severance costs aimed at improving organizational efficiency and optimizing the overall cost structure[25] Constant Currency and Organic Revenue Growth Reconciliation This reconciliation table illustrates the impact of foreign exchange fluctuations and acquisitions/divestitures on reported revenue growth for CooperVision, CooperSurgical, and total revenue in Q3 FY2025 Total Net Sales Reconciliation (Q3 FY2025) | Metric | Q3 FY2025 (Millions USD) | Reported Change % | FX Impact | Constant Currency Change % | Acquisitions and Divestitures | Organic Change % | | :----- | :-------------- | :---------------- | :-------------- | :------------------------- | :---------------------------- | :--------------- | | CooperVision | $718.4 | 6% | (4)% | 2% | —% | 2% | | CooperSurgical | $341.9 | 4% | —% | 4% | (2)% | 2% | | Total | $1,060.3 | 6% | (3)% | 3% | (1)% | 2% | Corporate Information & Disclosures This section includes details on investor communications, company background, forward-looking statements, and investor contact information Audio Webcast and Conference Call CooperCompanies held an audio webcast and conference call on August 27, 2025, at 5:00 PM ET to discuss its Q3 results, with a replay available on the investor relations website - An audio webcast and conference call was held on August 27, 2025, at 5:00 PM ET to discuss third-quarter results, with live and replay access available at **www.investor.coopercos.com**[29](index=29&type=chunk)[30] About CooperCompanies CooperCompanies (Nasdaq: COO) is a leading global medical device company with two business units, CooperVision and CooperSurgical, operating in over 130 countries - CooperCompanies is a leading global medical device company with two business units: CooperVision (contact lenses) and CooperSurgical (fertility and women's healthcare)[31] - The company has over 16,000 employees, sells products in more than 130 countries, and positively impacts the lives of over 50 million people annually[31] Forward-Looking Statements and Risk Factors This press release contains forward-looking statements regarding guidance, plans, and future performance, subject to various risks including economic conditions, international conflicts, and regulatory changes - Forward-looking statements are subject to various risks, including adverse changes in global or regional business, political, and economic conditions, the impact of international conflicts, and fluctuations in foreign currency exchange and interest rates[33][34] - Other significant risks include adverse impacts related to acquisitions, costs and potential liabilities for compliance with U.S. and foreign laws and healthcare regulations (e.g., HIPAA, CCPA, GDPR, EU MDR), disruptions in manufacturing or distribution facility operations, cybersecurity attacks, and new governmental laws and regulations[34][35] Investor Contact Information This section provides contact details for the investor relations department for inquiries - Investors may contact Kim Duncan, Vice President, Investor Relations & Risk Management, at 925-460-3663 or ir@cooperco.com[37] Consolidated Financial Statements This section presents the company's consolidated condensed balance sheets and statements of income for the specified periods Consolidated Condensed Balance Sheets As of July 31, 2025, total assets were $12,376.7 million and total liabilities were $4,023.7 million, with increased cash and decreased long-term debt compared to October 31, 2024 Consolidated Condensed Balance Sheet Highlights | Metric | July 31, 2025 (Millions USD) | October 31, 2024 (Millions USD) | | :----- | :----------------------- | :-------------------------- | | Total Current Assets | $2,137.8 | $1,951.5 | | Total Assets | $12,376.7 | $12,315.2 | | Total Current Liabilities | $1,010.1 | $1,022.8 | | Total Liabilities | $4,023.7 | $4,231.6 | | Shareholders' Equity | $8,353.0 | $8,083.6 | - Cash and cash equivalents increased from $107.6 million to $124.9 million, with increases also noted in trade receivables and inventories[39] - Long-term debt decreased from $2,550.4 million to $2,431.4 million, contributing to a reduction in total liabilities[39] Consolidated Statements of Income For the three months ended July 31, 2025, net sales rose to $1,060.3 million, with net income of $98.3 million and diluted EPS of $0.49 Consolidated Statements of Income Highlights (Three Months Ended July 31) | Metric | 2025 (Millions USD) | 2024 (Millions USD) | YoY Change (Millions USD) | | :----- | :-------------- | :-------------- | :--------- | | Net Sales | $1,060.3 | $1,002.8 | +$57.5 | | Gross Profit | $692.0 | $663.0 | +$29.0 | | Operating Profit | $175.7 | $192.5 | -$16.8 | | Net Income | $98.3 | $104.7 | -$6.4 | | Diluted EPS | $0.49 | $0.52 | -$0.03 | Consolidated Statements of Income Highlights (Nine Months Ended July 31) | Metric | 2025 (Millions USD) | 2024 (Millions USD) | YoY Change (Millions USD) | | :----- | :-------------- | :-------------- | :--------- | | Net Sales | $3,027.3 | $2,877.0 | +$150.3 | | Gross Profit | $2,031.3 | $1,918.0 | +$113.3 | | Operating Profit | $542.5 | $507.3 | +$35.2 | | Net Income | $290.3 | $274.8 | +$15.5 | | Diluted EPS | $1.45 | $1.37 | +$0.08 |