Cooper Companies Closes Term Loan

Zacks

The Cooper Companies Inc. (COO) revealed that it has closed a 5-year Senior Unsecured Term Loan of $300 million that will give financial flexibility to the company in the way of extended maturity, additional capacity and reduced interest rates. It will mature on Sep 12, 2018 and result in annual interest savings of $370,000 (net of fees) in fiscal 2014.

Cooper plans to use the proceeds from the term loan to repay its $1 billion Senior Unsecured Revolving Line of Credit, which will mature on May 31, 2017. The revolving credit facility is the result of an amendment made to its credit agreement on May 31, 2012.

Cooper Companies reported earnings and revenues for the fiscal third quarter ended Jul 31, 2013, both of which surpassed the Zacks Consensus Estimate. The company’s adjusted earnings of $1.74 per share exceeded the year-ago level of $1.45 by 20% as well as the Zacks Consensus Estimate by 3 cents. On a reported basis, earnings per share improved 31.6% to $1.79 from $1.36 a year ago.

Revenues in the quarter grew 8.9% to $412.0 million, ahead of the Zacks Consensus Estimate of $410 million. Thanks to the solid CooperVision (CVI) and CooperSurgical (CSI) sales during the quarter and their continued market share gains.

Gross margin improved 160 basis points to 65.1% from 63.5% in the last year’s fiscal third quarter. The increase was attributable to lower royalty payment on silicone hydrogel lens sales, product mix and increased manufacturing efficiencies, partially offset by negative impact of currency, particularly the Japanese yen.

Cooper exited fiscal second quarter with higher cash and cash equivalents of $25.5 million as of Jul 31, 2013 compared with $12.8 million as of Oct 31, 2012. Total debt decreased 34.8% to $243.6 million as of Jul 31, 2013 from $373.7 million as of Oct 31, 2012. Consequently, debt-to-capitalization ratio decreased 540 basis points to 9.2% from 14.6% as of Oct 31, 2012.

For the fourth fiscal quarter, Cooper Companies expects total revenues between $410 million and $425 million, including CVI and CSI revenues of $330 million–$340 million and $80 million–$85 million, respectively. Both reported and adjusted earnings are expected in the range of $1.76–$1.81 for the quarter.

For fiscal 2013, COO upgraded the lower range of its revenue guidance to the range of $1,586 million–$1,601 million compared with the earlier guidance of $1,575 million–$1,605 million, comprising CVI revenues between $1,271 million and $1,281 million (previously $1,260 million to $1,280 million) and CSI revenues between $315 million and $320 million (previously $315 million to $325 million).

Cooper Companies also upgraded its reported and adjusted earnings per share guidance for the fiscal year. The company now expects reported earnings in the band of $6.57 to $6.62 compared with the earlier range of $6.42 to $6.52 and adjusted earnings in the range of $6.23 to $6.28 compared with the earlier range of $6.15 to $6.25.

Currently, COO carries a Zacks Rank #2 (Buy). Other Medical Supplies stocks that also worth a look include STRAUMANN HLD N AKT (SAUHF) with a Zacks Rank #1 (Strong Buy), and Alphatec Holdings, Inc. (ATEC) and Align Technology Inc. (ALGN), both with a Zacks Rank #2 (Buy).

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