The Cooper Companies, Inc. · NASDAQ:COO
The Cooper Companies — Cooper Companies — Investor Day (September 2008)
72 slides from The Cooper Companies's investor day presentation, Sep 18, 2008
Slide 1: Analyst Meeting 2008
Exhibit 99.1 Analyst Meeting 2008 September 18, 2008
Slide 2: Opening Remarks and Management Introductions
Opening Remarks and Management Introductions Al White Vice President, Investor Relations and Treasurer
Slide 3: Agenda
Agenda 7:30 am Registration 8:30 am Welcome and Introductions Al White 8:35 am Strategic Overview Bob Weiss 9:15 am CVI Business Unit John Weber CVI Commercial Update Jeff McLean CVI Manufacturing Fernando Torre CVI R&D Arthur Back 10:15 am Break 10:30 am CSI Business Unit Nick Pichotta 11:00 am Fin
Slide 4: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995, including projections of Cooper’s results. To identify these statements look for words like "targets,” "expects," “seeks," "intends," "plans," "estimat
Slide 5: Strategic Overview
Strategic Overview Bob Weiss President & Chief Executive Officer
Slide 6: One Year in the Saddle
One Year in the Saddle Year 1 Accomplishments: Concluded integration and restructuring Addressed new product capacity constraints Launched key new product -- Avaira Strengthened management team Completed capital expansion program
Slide 7: 3-5 Year Plan: Driving Revenue
3-5 Year Plan Driving Revenue Recession resistant Market share gains • Geographic expansion • Rollout of best in class products in each modality • PC 1 Day – Single use 34% WW market • Avaira – 2 week 39% WW market • Biofinity – Monthly and beyond 27% of WW market • Materials • Third generation SiH
Slide 8: 3-5 Year Plan: Driving Gross Margin
3-5 Year Plan Driving Gross Margin Leverage manufacturing platform • Conversion onto GenII completed • Leverage Biofinity production lines into Specialty Lenses and Avaira • Improve GenII footprint and efficiency Leverage material platform • SiH materials to Specialty Lenses • Significant cost reduc
Slide 9: 3-5 Year Plan: Leveraging Operating Expense
3-5 Year Plan Leveraging Operating Expense SG&A • Sales & Marketing growing with revenues to support product launches • Distribution consolidation completed • General & Administrative leverage R&D • Grow with revenues 3-5 Year Target - • Grow OpEx at 70-90% of Revenue growth rate • Leverage OpEx fro
Slide 10: 3-5 Year Plan: Driving Earnings Growth
3-5 Year Plan Driving Earnings Growth Maintain low effective tax rate Reduce interest expense 3-5 Year Target – Exceed 15% EPS growth
Slide 11: 3-5 Year Plan: Generating Solid Cash Flow
3-5 Year Plan Generating Solid Cash Flow Lower CapEx requirements • FY2009: $125-140M • FY2010 onward: sub-$125M Improve inventory months-on-hand (MOH) • Distribution consolidation completed • New systems (Logility) 3-5 Year Target - • $1B+ of Operating Cash Flow ’09-12 • Over 50% will be Free Cash
Slide 12: 3-5 Year Plan: Deleveraging Balance Sheet
3-5 Year Plan Deleveraging Balance Sheet Lower MoH Lower CapEx Strong FCF 3-5 Year Target – • Debt/Cap under 30% • FD/EBITDA under 3x
Slide 13: Key Takeaways for Today
5 Key Takeaways for Today Depth of management team Well positioned to leverage growth Market leading product lines Integration completed Driving efficiencies
Slide 14: CooperVision Business Unit
CooperVision Business Unit John Weber President
Slide 15: CooperVision Overview
CooperVision – Overview Global manufacturer of contact lenses Approx. 7,000 employees in more than 54 countries YTD 2008 growth has outpaced the market Since 2005: Reduced and strategically focused distribution centers Expanded product portfolio and introduced two world class silicone spheres Levera
Slide 16: CooperVision's Global Segments
CooperVision’s Global Segments EMEA Asia-Pac Americas % of CVI Sales: 44% Market Position: #2 Led By: J. McLean Strategic Focus: Share Growth % of CVI Sales: 17% Market Position: #4 Led By: Dr. J.C. Aragon Strategic Focus: Investment % of CVI Sales: 39% Market Position: #2 Led By: A. Sedgwick Strate
Slide 17: CooperVision's Goals
CooperVision’s Goals CooperVision targets growing revenue 1.5X the contact lens market and leveraging our expenses to drive bottom line profitability and free cash flow Targeted Strategy Components: Best in class products competing in all major modalities and materials Flexible market strategy offer
Slide 18: The CooperVision Management Team
The CooperVision Management Team CooperVision has assembled a strong management team, capable of delivering improved bottom line financial results through revenue growth and leveraging expenses The team has the skills, experience, and expertise in all key functions required to successfully lead and
Slide 19: Jeff McLean
Jeff McLean Executive Vice-President, Commercial Strategy Promoted in April 2008 from CooperVision’s President of the Americas Responsibilities include: Developing and coordinating commercial strategy Company positioning Product positioning Interacting with R&D to determine and monitor product devel
Slide 20: Fernando Torre
Fernando Torre Vice-President, Manufacturing Responsibilities include Improving and maintaining high standard of lens quality Manufacturing scale up of silicone hydrogel capacity Continuously driving down COGS Background includes progressive engineering and manufacturing management positions Over se
Slide 21: Dr. Arthur Back
Dr. Arthur Back Vice-President, Research and Development Responsibilities include Developing CVI’s family of silicone hydrogel products, including currently transferring silicone hydrogel torics to manufacturing plants Continuously improving product performance Developing and executing product pipel
Slide 22: CooperVision Commercial Update
CooperVision Commercial Update Jeff McLean Executive Vice President, Commercial Strategy
Slide 23: Our Vision
To Enhance Each and Every Contact Lens Experience Our Vision
Slide 24: Our Mission
We market contact lenses that enhance the experience of eye care providers and wearers alike through the application of technology, expertise and service. We listen to our customers and respond to their diverse needs. Our Mission
Slide 25: CooperVision
GoperVision=a
Slide 26: U.S. Silicone as a % of Total Market Since Intro
U.S. Silicone as a % of Total Market Since Intro on TP Basis 43.5% 46.3% 0.1% 2.1% 0.7% 0.5% 40.7% 38.2% 37.0% 35.6% 30.2% 27.3% 25.9% 23.1% 18.0% 14.4% 11.3% 11.6% 9.1% 3.8% 3.4% 3.2% 2.5% 44.1% 41.6% 46.9% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Continuous Wear Two Week Intro Source: Independent
Slide 27: U.S. % of Total Worldwide Silicone Patients
U.S. % of Total Worldwide Silicone Patients 0% 10% 20% 30% 40% 50% 60% 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 Total Spheres Torics Multifocals Source: Independent Market Research Data/Management Estimates
Slide 28: Competitive Shares of Total Silicone Lenses
Competitive Shares of Total Silicone Lenses on a TP Basis 15.5% 13.3% 18.0% 13.4% 17.4% 13.8% 12.8% 10.6% 8.0% 6.7% 4.8% 12.7% 21.3% 21.1% 23.9% 22.0% 20.7% 22.2% 29.7% 30.9% 29.3% 34.6% 39.0% 39.2% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 4.4% 3.2% 2.0% 0.2% 58.8% 62.5% 56.0% 64.5% 61.9% 64.0% 57.5%
Slide 29: Competitive Shares of Silicone Spheres
Competitive Shares of Silicone Spheres On a TP Basis 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 8.0% 11.7% 7.8% 11.6% 8.3% 7.4% 7.4% 5.6% 7.5% 5.5% 8.5% 6.3% 26.2% 26.9% 30.4% 27.8% 25.8% 27.8% 36.4% 37.8% 35.1% 40.4% 44.0% 44.3% 2.7% 0.2% 5.9% 4.1% 60.0% 62.7% 55.3% 64.3% 62.6% 63.9% 56.1% 53.7% 57.4%
Slide 30: Soft Patient Visits - Last Period Trend
Soft Patient Visits - Last 8 Period Trend 7,082 7,239 6,582 6,826 7,029 8,340 6,748 7,060 4,461 4,186 5,359 4,349 4,114 3,918 4,464 4,425 3,000 4,000 5,000 6,000 7,000 8,000 9,000 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Total NF/RF Source: Independent Market Research Data/Management Estimates
Slide 31: Total Patient Share Total Soft Lenses - HPR
Total Patient Share Total Soft Lenses – HPR 42.5 42.3 1.6 1.5 13.8 13.8 20.0 19.2 22.9 22.4 Current Quarter Last 12 Months Bausch & Lomb CIBA CooperVision Vistakon Other Source: Health Product Research (HPR)
Slide 32: NF/RF Patient Share Total Soft Lenses - HPR
NF/RF Patient Share Total Soft Lenses – HPR 41.6 41.7 1.6 1.4 15.0 14.1 18.8 19.5 22.4 23.9 Current Quarter Last 12 Months Bausch & Lomb CIBA CooperVision Vistakon Other Source: Health Product Research (HPR)
Slide 33: Easy To Do Business With
2 2 1 1 1 Easy To Do Business With Ciba 8.14 8.34 8.09 8.22 8.20 Johnson & Johnson 7.82 7.88 7.97 8.32 8.25 CooperVision 8.04 8.26 8.32 8.40 8.32 Bausch & Lomb 7.89 7.97 7.59 7.57 7.59 mean importance 8.83 8.83 8.83 8.83 8.83 Wave Wave Wave Wave Wave [Wave 5 N = 323] Source: Independent Market Resea
Slide 34: Global Market Statistics
Global Market Statistics EMEA Asia-Pac 15% Monthly: 28% 2-Week: 57% Daily: 50% Monthly: 12% 2-Week: 38% Daily: Global 27% Monthly: 39% 2-Week: 34% Daily: Source: Management estimates Modality Breakdown Americas 25% Monthly: 65% 2-Week: 10% Daily: CooperVision’s Opportunity is Tremendous – We Compete
Slide 35: CVI - Keys To Success
CVI - Keys To Success We win: On intangibles Culture Flexibility Approachability Team On focus – we market contact lenses On flexibility – private label And we continually challenge ourselves to be different We tie: On product portfolio R&D Pipeline Manufacturing Technology We lose: Consumer awarene
Slide 36: CooperVision Manufacturing
CooperVision Manufacturing Fernando Torre Vice President, Manufacturing
Slide 37: Global Manufacturing Organization
Global Manufacturing Organization Southampton, UK Rochester, NY Norfolk, Virginia Juana Diaz, Puerto Rico Adelaide, Australia Madrid, Spain
Slide 38: Global Manufacturing Organization
Global Manufacturing Organization Hamble Frequency Spheres & Torics Proclear Spheres Biofinity Spheres Biofinity Torics Avaira Spheres Warrior Close One Day Spheres Proclear One Day Juana Díaz One Day Spheres One Day Torics Proclear One Day Biomedics Spheres & Torics Avaira Spheres Norfolk Proclear
Slide 39: Manufacturing Volume by Plant
Manufacturing Volume by Plant 52% 40% 6% 2% Puerto Rico UK Norfolk Other
Slide 40: Manufacturing Capacity Trend
Manufacturing Capacity Trend 728.3 900.9 1001.7 1149.5 2007 Actual 2008 Actual/Fcst 2009 Budget 2009E Capacity 2010E Capacity
Slide 41: Manufacturing Productivity Trend
Manufacturing Productivity Trend 2008E 2009E Volume (Million Lenses) Total Headcount
Slide 42: Manufacturing Ramp up for Avaira vs. Biofinity
Manufacturing Ramp up for Avaira vs. Biofinity Year 1 Year 2 Year 3 Avaira Spheres Biofinity Spheres Note: Volume estimates are based on actual and forecasted production.
Slide 43: Research & Development
CooperVision R esearch & Development Arthur Back BOptom PhD FAAO Vice President, R&D
Slide 44: R&D Investment: Expanded Capability
CooperVision R&D Investment: Expanded Capability Pre-2005 Sites Southampton, UK Southampton, UK Pleasanton,CA Square Footage 10,000 44,000 Employees PhD Level Scientists Prototype Manufacturing Lines Material Competency 80% external 20% external Annual Investment (CVI) sub-$10M Approx. $32.5M
Slide 45: R&D Investment: Products Developed Since 2005
Proclear 1 Day Biomedics EP in Omafilcon A Evolution 1 Day (Japan ) Single use Ocufilcon D toric Biofinity monthly silicone hydrogel Avaira 2 week silicone hydrogel R&D Investment: Products Developed Since 2005 CooperVision
Slide 46: R&D Investment: Product Development Focus
R&D Investment: Product Development Focus Advanced Contact Lens Materials Advanced Hydrogels Advanced Silicones Value-Added Materials Advanced Designs in Specialty Category Vision Correction CooperVision
Slide 47: R&D Investment: The Future
R&D Investment: The Future Multiple new products anticipated through to 2010 Key specialty products into silicone materials New materials Other design/chemistry Continue focus on developing internal R&D function CooperVision
Slide 48: CooperSurgical Business Unit Update
Nick Pichotta CEO CooperSurgical Business Unit Update
Slide 49: CooperSurgical - Overview
Fertility Clinic 6% Office 63% Hospital 31% CooperSurgical - Overview CooperSurgical (CSI) develops, manufactures, and markets medical devices, diagnostic products and surgical instruments for gynecologists and obstetricians Leader of the fragmented US medical device segment of women’s healthcare Ho
Slide 50: History of CooperSurgical
17.2 25.4 28.7 30.1 46.4 58.5 71.4 82.0 101.5 108.7 124.8 151.1 165 - 170 2008E History of CooperSurgical CSI was founded as a start up subsidiary within COO in 1990 Top line growth every year since 1996 Proven track record of successful M&A execution and integration Completed 23 acquisitions in the
Slide 51: Women's Healthcare Market
Women’s Healthcare Market Demographic trends through 2025: Number of women of reproductive age will grow by 10% Women between the ages of 45 and 64 will grow by 30% Impact on visit activity: Birth-related visits stable Fertility visits increase Hysterectomy rates stable Incontinence visits and surgi
Slide 52: Key U.S. Hospital Procedures
Diagnostic dilation and curettage 475 Procedure Type # of Procedures (000) Childbirth 4,100 Pelvic floor surgery Operations on female genital organs 4,058 Oophorectomy and salpingo-oophrectomy Bilateral destruction or occlusion of fallopian tube Hysteroscopy Excision or destruction of lesion or tiss
Slide 53: Women's Healthcare Points of Care
Women’s Healthcare Points of Care OB/GYN Offices 13,665 Hospitals 4,290 Fertility Clinics Group Practice Profiles: 32,333 13,665 Total 5,738 2,488 Multi-specialty 26,595 11,177 Single Specialty Number of OB/GYNS Number of Practices Type of Group Provider breakdown Source: Independent Market Research
Slide 54: CooperSurgical Sales and Distribution
CooperSurgical } Office Sales 59 reps Surgical Sales 83 reps Alternate Distribution IVF Group 1 Canada 6 reps ObGyn Offices & Hospital Clinics Surgery Centers Operating Room & | Labor & Delivery 4C reps e >
Slide 55: CSI Product Lines by Point of Care
Hospital 31% Office 63% IVF Competitors Market Share Office Competitors Market Share Hospital/OR Competitors Market Share Fertility Clinic 6% CSI Product Lines by Point of Care IVF Product 30% Incontinence 60% Colposcopy 70% Gyn Office Instruments 10% Pap Brush 90% Fetal Dopplers & Monitors 5% LEEP
Slide 56: Current Product Portfolio: Office
Current Product Portfolio: Office HPV Management Uterine Conditions Management Osteoporosis Gynecologic Instruments and Disposables Incontinence Obstetrics
Slide 57: Current Product Portfolio: Hospital
Current Product Portfolio: Hospital Uterine Conditions Management Surgical Site Management Obstetrics Port Site Closure Sterilization Green Surgical Trocars
Slide 58: Current Product Portfolio: Assisted Reproductive Technologies
Current Product Portfolio: Assisted Reproductive Technologies
Slide 59: CSI Performance
109 125 155 165-170 42.7 39.9 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 16% 17% 18% 19% 20% 21% 22% CSI Performance Revenue details: 15% CAGR from 2005 through 2008E 15% of revenues are international 19 core product categories with over 600 products Margin Details Consistent GPM and OM improve
Slide 60: Strategies for Growth
Strategies for Growth Focus on women’s health Continue to consolidate the market Advance technologies Grow hospital and fertility segments Capitalize on demographic trends
Slide 61: Key Takeaways
Key Takeaways Well established/recognized manufacturer of OB/GYN devices Dedicated to provide the highest quality of products and service to the OB/GYN Highly skilled direct sales force to cover the US office and outpatient hospital markets Strong sales presence in GYN OR, L&D and Fertility Clinics
Slide 62: Financial Review & Outlook
Financial Review & Outlook Gene Midlock Chief Financial Officer
Slide 63: Six Months Areas of Focus
Six Months – Areas of Focus Six Months Areas of Focus: Free Cash Flow Debt Reduction Enhanced Forecasting Reduction and Leveraging of G&A
Slide 64: Q4 and 2009 Guidance
Q4 and 2009 Guidance Fiscal 4Q08 Guidance* EPS: $0.58-$0.64 Revenue: $285M - $295M Gross Margin: Approx. 60% FCF: Positive ETR: 26.5% Share Count: 45.3M No Callouts anticipated Fiscal 2009* CapEx: $125-$140M ETR: 15-17% No Callouts anticipated Additional Guidance on 4Q Earnings Call (Dec. 9) * As is
Slide 65: Effective Tax Rate
Effective Tax Rate Annual rate Fairly consistent – 2008 15 – 17% Geographic mix Risk reserve – favorable audit history is decreasing reserves Quarterly rate volatility – Risk reserve for uncertainties GAAP requirement as “discrete items” release of reserves in quarter in which statute of limitations
Slide 66: Gross Margin Drivers
Gross Margin Drivers Product mix driven by single-use, SiH and specialty lenses Leveraging manufacturing capability Gen II conversion FX Off-shore sales and manufacturing Hedging Off-shore inventory
Slide 67: Foreign Exchange
Foreign Exchange Currency Hedges impacted Gross Margins 290 bps in Q3 (non-GAAP) All contacts designated against COGS Non-GAAP (USD) Scenarios Comparison Q3 (No Hedges) Q3 (COGS) Revenue 285,884,000 285,884,000 COGS 113,520,753 121,899,000 Total Q3 172,363,247 163,985,000 Gross Margin 60.3% 57.4% GM
Slide 68: Operating Margin Drivers
Operating Margin Drivers Sales & Marketing Support new product launches Distribution Distribution center consolidation R&D Growing with sales G&A
Slide 69: In Summary
In Summary
Slide 70: Key Takeaways
5 Key Takeaways Depth of management team Well positioned to leverage growth Market leading product lines Integration completed Driving efficiencies
Slide 71: Questions?
QUESTIONS?
Slide 72: Contacts
Contacts: Robert S. Weiss President and Chief Executive Officer Eugene J. Midlock Senior Vice President and Chief Financial Officer Albert G. White III Vice President, Investor Relations & Treasurer Phone: 925-460-3663 Fax: 925-460-3648 Email: awhite@cooperco.com Kim Duncan Director, Investor Relati