CooperCompanies Cites ‘Unprecedented Challenges’ of COVID-19 in Second-Quarter Results Announcement

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SAN RAMON, Calif.—CooperCompanies (NYSE: COO) said Thursday that the coronavirus pandemic “created unprecedented challenges” in the second quarter for the company, which saw sales decline in the double-digit range during the period ended April 30. Revenue decreased 20 percent year-over-year to $524.9 million, the announcement noted. The decrease was 18 percent at constant currency exchange. In its earnings announcement, Cooper said cash provided by operations totaled $25.8 million in the quarter, which was offset by capital expenditures of $89.3 million. This resulted in negative free cash flow of $63.5 million during the period.

In a breakdown of revenue by business segment, CooperVision (CVI) revenue declined 17 percent to $402.2 million, and CooperSurgical (CSI) revenue dropped 28 percent to $122.7 million in the second quarter.

"The COVID-19 pandemic created unprecedented challenges and I’m extremely proud of our more than 12,000 employees and their level of commitment and dedication to our business, their communities and their families during this time,” Cooper president and chief executive officer Albert White said in the announcement. “They’ve enabled us to keep our businesses running strong so we can continue supporting our customers and partners around the world. Because of them, we are well positioned to come out of this a stronger and more dynamic company."

In addition, given the uncertainty on near-term financial results caused by the COVID-19 pandemic, Cooper said it is no longer providing fiscal year 2020 guidance.

In the contact lens business, sales of toric lenses declined 14 percent to $133.6 million in the recent quarter, which represented about one-third of the overall category sales in the period. Sales of single-use sphere lenses totaled $116.1 million, which was a 14 percent decline from the year-ago period.

Sales of non single-use sphere lenses declined 25 percent to $107.4 million, and sales of multifocal lenses declined 9 percent to $45.1 million.

The company said its gross-margin rate was 62 percent in the quarter, which compared with 66 percent in the year-ago period. On a non-GAAP basis, gross margin was 66 percent, which compared with 67 percent last year, and this was “driven by sales and product mix,” Cooper said.

The company’s operating margin was 5 percent in Q2, compared with 22 percent in last year’s second quarter. The decline in gross margins combined with heightened operating expenses as a percent of sales led to the lower operating margins, the announcement noted.