The Cooper Companies(COO) - 2020 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported consolidated revenues of $525 million for Q2 2020, a decrease of 19.8% year-over-year [10][34] - Non-GAAP earnings per share were $1.51, with an average of 49.6 million shares outstanding [36] - Consolidated gross margin decreased to 65.8% from 67.3% year-over-year, primarily impacted by April's performance [34] - Free cash flow was negative $63.5 million, driven by lower customer collections and a buildup of inventory [37] Business Line Data and Key Metrics Changes - CooperVision revenues were $402 million, down 15%, while CooperSurgical revenues were $123 million, down 27% [10] - CooperVision's regional revenue declined: Americas down 22%, EMEA down 11%, and Asia-Pac down 10% [11] - MiSight revenue grew 52% to $1.4 million, indicating strong interest from optometrists [21] Market Data and Key Metrics Changes - The Americas market saw a significant decline in new fits, which typically account for about 15% of revenues [14][50] - In April, sales were down roughly 45%, with a gradual recovery noted in May and June [13][16] - The company expects CooperVision's fiscal Q3 sales to decline by 15% to 20% year-over-year [17] Company Strategy and Development Direction - The company is focused on long-term objectives, including product development, increasing manufacturing output, and enhancing distribution capabilities [8] - New product launches, such as Biofinity toric multifocal and extended toric range for Clariti, are part of the strategy to capture market share [18] - The company is committed to maintaining employee compensation and support during the pandemic [7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about recovery trends as economies reopen, particularly in regions like China [16][17] - The company anticipates a focus on daily silicone hydrogels due to hygiene concerns post-COVID [44][52] - Management is cautious about forecasting but expects gradual improvement in sales as optometry offices reopen [17][40] Other Important Information - The company repurchased approximately 161,000 shares for $47.8 million during the quarter [38] - Net debt increased by $118.6 million to $1.8 billion, with an adjusted leverage ratio of 2.18 times [37] - The company has not curtailed investments in key products, maintaining a focus on R&D despite the pandemic [35] Q&A Session Summary Question: Impact of COVID-19 on CooperVision's product mix - Management noted that daily silicone hydrogel products performed better during the downturn, while legacy products faced significant declines [43][44] Question: Geographic recovery trends - Management indicated that Asia-Pac is showing signs of growth, while the Americas are lagging behind [56][58] Question: Future sales expectations for fiscal Q4 - Management is optimistic about returning to flat or slight growth in CooperVision for Q4, depending on the reopening of stores and channel inventory recovery [63][64]