The Cooper Companies, Inc. · NASDAQ:COO
The Cooper Companies — Cooper Companies — Investor Presentation (February 2005)
69 slides from The Cooper Companies's investor presentation, Feb 1, 2005
Slide 1: The Cooper Companies, Inc.
Goer THE COOPER COMPANIES, INC
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This presentation contains forward-looking projections of Cooper’s results. Actual results could differ materially from these projections. Additional information concerning factors that could cause material differences can be found in Cooper’s periodic filings with the Sec
Slide 3: Agenda
AGENDA Introductions – Tom Bender Soft Contact Lens Market Overview – Tom Bender Integration of COO and OCLR – Greg Fryling R&D Portfolio – Chris Marmo Financial Overview and Guidance – Bob Weiss
Slide 4: Tom Bender
Tom Bender Chairman of the Board, President and Chief Executive Officer
Slide 5: World Soft Contact Lens Market
WORLD SOFT CONTACT LENS MARKET 2003 2004 2008 CGR (millions of U.S. dollars) Total Market $3,541.0 $4,040.0 $5,475.0 8% Specialty1 $1,001.0 $1,175.0 $2,190.0 16% % Specialty 28% 29% 40% 1Includes 2 week disposable and daily disposable Source: company reported data; independent market research THE CO
Slide 6: Geographic Market Segments
GEOGRAPHIC MARKET SEGMENTS 2003 2004 2008 CGR (millions of U.S. dollars) United States $1,400.0 $1,525.0 $2,085.0 8% Europe $875.0 $1,025.0 $1,200.0 4% Asia/Pacific $926.0 $1,130.0 $1,755.0 12% Other1 $340.0 $390.0 $435.0 3% TOTAL $3,541.0 $4,040.0 $5,475.0` 8% 1 Includes Canada, Latin America, Mid-
Slide 7: World Soft Contact Lens Specialty Segments
WORLD SOFT CONTACT LENS SPECIALTY SEGMENTS 2003 2004 2008 CGR (millions of U.S. dollars) Toric $460.0 $535.0 $935.0 14% Bifocal $91.0 $115.0 $285.0 25% Cosmetic $300.0 $285.0 $285.0 FLAT Dry Eye $150.0 $1,175.0 $685.0 30% Specialty $1,001.0 $3,865.0 $2,190.0 16% Nonspecialty $2,540.0 $4,040.0 $3,285
Slide 8: World Soft Contact Lens Competition
WORLD SOFT CONTACT LENS COMPETITION 2003 2004 2008 CGR millions of U.S. dollars Vistakon $1,300.0 $1,470.0 $1,950.0 8% CIBA Vision $950.0 $1,120.0 $1,310.0 4% CooperVision $651.0 $730.0 $1,190.0 13% Bausch & Lomb $560.0 $635.0 $925.0 10% Other $80.00 $85.0 $100.0 4% $3,541.0 $4,040.0 $5,475.0 8% Sou
Slide 9: Market Drivers
MARKET DRIVERS Demographics - favorable Myopia - growing Specialty Lenses - transition Technology - slower dropout Geography - expanding
Slide 10: CVI Sources of Growth 2004-2008
CVI SOURCES OF GROWTH 2004-2008 Specialty Contact Lenses – $ 320M to $700M – 44% CVI revenue to 59% – 26% of worldwide market to 32% Toric Lenses – $ 220M to $375M – Match market growth of 14% – Hold 41% worldwide market share – 32% of CVI revenue
Slide 11: CVI Sources of Growth 2004-2008
CVI SOURCES OF GROWTH 2004-2008 Daily Disposable Lenses – Market doubles: $1.1B to $2.2B – CVI: $80M to $230M; 30% CGR Specialty + Daily Disposable – 55% revenue in 2004; 78% in 2008
Slide 12: Greg Fryling
Greg Fryling President and Chief Operating Officer CooperVision, Inc.
Slide 13: CooperVision: See Beyond the Ordinary
@operVisiona | SEE BEYOND THE ORDINARY™ THE COOPER COMPANIES, INC
Slide 14: Why We Did the Deal
Why We Did the Deal Grow revenue faster than the two companies could achieve on a stand-alone basis $ 50 Million Operating Income Synergies After 3 Years
Slide 15: Synergistic Revenue Opportunities
Synergistic Revenue Opportunities
Slide 16: Revenue Opportunities: Complimentary Product Lines
Revenue Opportunities Complimentary Product Lines Product Category CVI OSI Market Size (Billion) Daily Disposable No Yes $1.2 2 Week & Monthly Sphere Yes Yes $1.7 Color Yes Yes $0.3 Toric Yes Yes $0.5 Multifocal (Disposable) Yes No $ 0.1 Silicon Hydrogel * (Continuous Wear) No No $ 0.2 Total $ 4.0 *
Slide 17: Revenue Opportunities: Ability to Go Direct
Revenue Opportunities Ability to Go Direct Location CVI OSI Japan Distributor Direct Germany Distributor Direct Korea Distributor Direct Sweden/Norway Direct Distributor Spain Direct Distributor Brazil Direct Distributor Portugal Direct Distributor Combined Market Size (excluding Japan): $400MM Curr
Slide 18: Revenue Opportunities: Stronger Sales Force
Revenue Opportunities Provide a Stronger Sales Force in Overlapping Markets United States Canada Australia United Kingdom Italy France Benelux
Slide 19: Revenue Opportunities: Stronger R&D Organization
Revenue Opportunities Stronger R&D Organization to Provide New Products to the Market over a Quicker Timeline
Slide 20: Synergy Opportunities: Manufacturing
Synergy Opportunities Manufacturing $24MM synergies after 3 years Two Major Manufacturing Processes Lathing Platforms ($6MM) Cast Molding Platforms ($18MM)
Slide 21: Lathing MFG Synergies
Lathing MFG Synergies (Three Years Out) $6.0M Annual Savings $ 1.4 from Facilities Consolidation $ 4.6 from Manufacturing Platform Conversions (including labor) Consolidate Lathing locations (currently 7) Total Value of Production: $45MM FY05 Budget Unit Production: 21MM Revenue from Lathing Operati
Slide 22: Molding MFG Synergies
Molding MFG Synergies (Three Years Out) $18.0M Annual Savings Total Value of Production: $275MM (including packaging) FY05 Budget Unit Production: 624MM Dailies Production: 250MM Revenue from Molding Operations: ~$600MM
Slide 23: Molding MFG Synergies
Molding MFG Synergies (Three Years Out) Gen 2 Platform for high volume ProClear and Frequency products Target 130 million units annual production after 3 years Proclear Material: 60% of total volume Methafilcon Material: 70% of total volume Targeted Savings: $0.14 per lens cost reduction
Slide 24: Synergy Opportunities: Operating Costs
Synergy Opportunities Operating Costs $26MM synergies after 3 years Reduce operating expenditures after three years by 3 percentage points of sales Continue to make significant investments in R&D and regions where we have significant growth opportunities
Slide 25: Sales Per Employee Targets
Sales Per Employee Targets Sales per Employee Headcount (000’s) * Pre-Merger 1,978 $ 334.0 Year One $ 410.0 Year Three $ 500.0 Note: Excludes Employees in Manufacturing and R&D
Slide 26: Sales Force Headcount
Sales Force Headcount Overlapping Countries Before After Change % Change 309 241 -68 -22% Overlapping Countries: United States United Kingdom Italy France Benelux Canada Australia
Slide 27: CLEAR – Contact Lens ECP Audit Report
CLEAR – Contact Lens ECP Audit Report US Distribution 95.7% 79.8% 84.9% 69.0% 100.0% 90.0% 80.0% 70.0% 60.0% Percent of Distribution 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% CooperVision OSI Cooper/OSI Overlapping Customers Cooper or OSI Accounts Per Rep (Pre-Merger): 550 Accounts Per Rep (Post Merger): 3
Slide 28: Corporate Synergies
Corporate Synergies ~$ 7-8 Million CEO & Board Members Corporate Staff & Facilities SEC Filing Fees Audit Fees Tax Fees Legal Fees
Slide 29: IT Synergies
IT Synergies At Close 3 Years Platforms 12 2 Headcount 113 113 Total Costs $23MM Will grow slower than industry avg.
Slide 30: Distribution Synergies
Distribution Synergies (Three Years Out) Lower Distribution Cost as a Percentage of Sales from 9% to 8% (approximately $7MM from Facilities and Labor Efficiencies) Consolidate Distribution Centers (currently 19) Current Spend of ~$70M Freight Spend: 45% Facility Spend: 20% Labor Spend: 35%
Slide 31: Ultimate Goal
Ultimate Goal Grow the business at a double digit rate over the next 5 years Achieve cost synergies of $50MM in Production and Operating costs
Slide 32: CVI Philosophy
CVI Philosophy Best of the Best Best Practices Maintain a Passionate Spirit
Slide 33: CVI Organization
CVI Organization Greg Fryling President & COO *** Claire Dickerson Exec. Administrator John Calcagno Chief Financial Officer Global Finance Global IT Greg Zimmerman Vice President HR Jeff McLean President US Jack Gibson President Canada Jim Welch President International Northern Europe-Andrew Sedgwi
Slide 34: Chris Marmo
Chris Marmo Vice President Research & Development CooperVision, Inc.
Slide 35: R&D Pipeline
R&D Pipeline Gen II Continuous Wear Daily Wear SiH Multifocal Daily Wear SiH Toric ‘07 Daily Wear Silicone Hydrogel (SiH) Q1 ‘07 CW Toric Silicone Hydrogel Q4 ‘06 Proclear Daily Disposable Daily Disposable Multifocal Next Gen. Cosmetic Lens Proclear Toric Multifocal Q2 ‘06 Microchannel for Japan Q1
Slide 36: Continuous Wear Silicone Hydrogel
Continuous Wear Silicone Hydrogel Launch Q4 ‘05 Lens Attribute Patient Benefit No Surface treatment Softer Lens Round Edge Superior Comfort Asphere optics Better Vision Highest oxygen Permeability Ocular Health Global Market - $200 Million
Slide 37: CW Family of Products
CW Family of Products Continuous Wear (CW) Material Horizontal ISO Thickness Comfort Enhancement CW Toric Q4’06 Balanced Progressive Technology Next Generation CW CW Multifocal
Slide 38: 52% Asphere Daily Disposable
52% Asphere Daily Disposable Launch Q1 ‘06 Lens Attribute Patient Benefit Asphere Improved Optics Round Edge Improved Comfort New strip blister Improved Handling Gen II MFG Process Lower COGS Global Market – $1.2 Billion
Slide 39: Microchannel
Microchannel Japanese Launch Q1 ‘06 Japanese Ophthalmologists desire increased tear film exchange Increased tear exchange better ocular health Microchannel Japanese 2-week Market – $500 Million
Slide 40: Proclear Toric Multifocal
Proclear Toric Multifocal Launch Q2 ‘06 Lens Attribute Patient Benefit Proclear Material Increased end of day comfort Toric Expertise Consistent Visual Outcome Balanced Progressive Multifocal Technology
Slide 41: Next Generation Cosmetic Lens
Next Generation Cosmetic Lens Launch Q2 ‘06 Lens Attribute Patient Benefit Iris replication High resolution manufacturing process Natural appearance Strong Intellectual Property Position Global Market - $300 Million
Slide 42: Proclear Daily Disposable
Proclear Daily Disposable Launch Q4 ‘06 Lens Attribute Patient Benefit Proclear Material Better end of day comfort Gen II MFG Process Lower COGS Premium Daily Disposable Global Market – $1.2 Billion
Slide 43: Daily Disposable Multifocal
Daily Disposable Multifocal Launch Q4 ‘06 Lens Attribute Patient Benefit Ease of fit High Satisfaction Gen II Lower COGS Manufacturing Product targeted to emerging presbyope Global Market – $100 Million
Slide 44: CW Toric Silicone Hydrogel
CW Toric Silicone Hydrogel Launch Q4 ‘06 Patented Toric Design CW Toric Innovative CW material Next Generation of Toric Lenses Global Market - $500 Million
Slide 45: Daily Wear SiH
Daily Wear SiH Launch Q1 ‘07 Lens Attribute Patient Benefit Water retention End of day comfort No surface treatment Improved Comfort Round edge Asphere optics Better Vision Gen II MFG Process Lower COGS Global Market - $ 1.7 Billion
Slide 46: Daily Wear SiH Family of Products
Daily Wear SiH Family of Products Daily Wear SiH Material Asphere, Round Edge Balanced Progressive Technology Sphere Horizontal ISO Thickness Multifocal Toric
Slide 47: Proclear Daily Wear SiH Family of Products
Proclear Daily Wear SiH Family of Products Proclear Daily Wear SiH Asphere Round Edge Balanced Progressive Technology Sphere Horizontal ISO Thickness Multifocal Toric
Slide 48: Bob Weiss
Bob Weiss Executive Vice President and Chief Financial Officer
Slide 49: Financial Highlights
Goer Financial Highlights THE COOPER COMPANIES, INC
Slide 50: Consistent Performance
CONSISTENT PERFORMANCE Growth Rates 1999-2004 5-Year* 24% 25% 28% 20% Fiscal 2004 19% 23% 24% 13% Revenue Operating Income EPS - Continuing Operations** Cash Flow Per Share** * Compounded annual growth rate ** Restated to include the dilutive effect of our contingently convertible senior debentures
Slide 51: Historic Key Ratios
HISTORIC KEY RATIOS 2000 2001 2002 2003 2004 Revenue Growth 20% 17% 34% 31% 19% Gross Profit 66.2% 65.4% 63.3% 64.4% 64.4% Operating Expense 42.9% 42.0% 42.1% 41.3% 40.6% Operating Income 23.3% 23.4% 21.2% 23.1% 23.8% ETR 30.2% 28.8% 25.0% 24.0% 17.5% Shares Outstanding 29.0M 30.5M 31.2M 33.2M 36.6M
Slide 52: Assumptions
ASSUMPTIONS 2005 2006 2007 Organic Revenue Growth 12% 12% 12% Gross Profit 63% 64% 64.5% Operating Expense 38.5% 37% 36.5% Operating Income 24.5% 27% 28% ETR 21% 20% 20% Shares Outstanding 47M 49M 50M
Slide 53: Guidance
GUIDANCE (Revenue $’s in Millions) 2005 2006 2007 COO $870-$883 $1042-$1050 $1165-$1180 CVI $755-$765 $915-$920 $1025-$1035 CSI $115-$118 $127-$130 $140-$145 EPS* $3.05-$3.15 $4.00-$4.10 $4.75-$4.85 ETR 21% 20% 20% * Excludes non-recurring items
Slide 54: COO Consolidated Revenue
COO CONSOLIDATED REVENUE ($ in millions) $1,250 $1,000 $750 $500 $250 $0 $1,173 $1,046 $143 $877 $490 $412 $315 $129 $235 $201 $117 $1,030 $101 $917 $82 $760 $71 $59 $389 $46 $330 $244 $155 $176 2000 2001 2002 2003 2004 2005 2006 2007 CVI CSI
Slide 55: COO Pooled with OCLR Consolidated Revenue
COO POOLED WITH OCLR CONSOLIDATED REVENUE ($ in millions) $1,250 $1,173 $1,046 $143 $1,000 $937 $129 $820 $117 $723 $750 $101 $582 $82 $460 $71 $500 $1,030 $917 $358 $59 $820 $719 $46 $641 $250 $511 $401 $312 $0 2000 2001 2002 2003 2004 2005 2006 2007 CVI CSI
Slide 56: Consolidated Operating Income
CONSOLIDATED OPERATING INCOME ($ in millions) $350 $328.4 30% $300 $282.4 $250 $215.0 20% $200 $150 $116.8 $95.2 10% $100 $67.0 $46.9 $54.8 $50 $0 0% 2000 2001 2002 2003 2004 2005 2006 2007 Operating Income Operating Margin
Slide 57: CVI Consolidated Operating Income
CVI CONSOLIDATED OPERATING INCOME ($ in millions) $350 30% 310.0 $300 269.0 $250 212.0 20% $200 $150 106.6 88.8 10% $100 51.4 60.4 47.3 $50 $0 0% 2000 2001 2002 2003 2004 2005 2006 2007 Operating Income Operating Margin
Slide 58: CSI Consolidated Operating Income
CSI CONSOLIDATED OPERATING INCOME ($ in millions) $40 25% 35.8 29.7 20% $30 23.4 $20.9 15% $20 18.2 14.1 10% 10.1 $10 6.3 5% $0 0% 2000 2001 2002 2003 2004 2005 2006 2007 Operating Income - Operating Margin
Slide 59: EPS from Continuing Operations
EPS FROM CONTINUING OPERATIONS $5.00 $4.80 $4.05 $4.00 $3.10 $3.00 $2.59 $2.09 $2.00 $1.57 $1.22 $1.01 $1.00 $0.00 2000 2001 2002 2003* 2004** 2005** 2006** 2007** *Restated to include the dilutive effect of our contingently convertible senior debentures due to the adoption of EITF 04-8. **Excludes
Slide 60: Cash Flow Per Share
CASH FLOW PER SHARE $8.00 $7.25 $7.00 $6.25 $6.00 $5.00 $5.00 $4.00 $3.50 $3.10 $3.00 $2.45 $2.07 $1.76 $2.00 $1.00 $0.00 2000 2001 2002 2003* 2004 2005 2006 2007 Pretax income from continuing operations plus depreciation and amortization * Restated to include the dilutive effect of our contingently
Slide 61: Liquidity
LIQUIDITY Cash Flow from Operations NOL’s Free Cash Flow
Slide 62: Taxes
TAXES Net Operating Loss Carryforwards $91 Million Deferred Tax Assets $31 Million Global Tax Arrangement Effective Tax Rates
Slide 63: Capital Structure
CAPITAL STRUCTURE ($ in millions) October 31, 2002 2003 2004 2005 2006 2007 Total Debt $164 $186 $166 $708 $557 $395 Stockholders’ Equity $311 $422 $544 $1,288 $1,484 $1,722 Total Capitalization $475 $608 $710 $1,996 $2,041 $2,117 Total Debt/Capitalization 34% 31% 23% 35% 27% 19%
Slide 64: Cash Flow from Operating Activities
CASH FLOW FROM OPERATING ACTIVITIES ($ in millions) $300 $270 $250 $237 $200 $155 $150 $101 $100 $80 $56 $41 $50 $26 $0 2000 2001 2002 2003 2004 2005 2006 2007 THE COOPER COMPANIES, INC.
Slide 65: Debt % of Total Capitalization
DEBT % OF TOTAL CAPITALIZATION 40% 34% 35% 31% 30% 27% 23% 20% 21% 19% 20% 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007
Slide 66: Consistent Performance: Forecasted Growth Rates
CONSISTENT PERFORMANCE Forecasted Growth Rates 1999–2004 2004–2007 5-Year* 3-Year* Revenue 24% 34% Operating Income 25% 41% EPS - Continuing 28% 23% Operations** Cash Flow Per Share** 20% 27% * Compounded Annual Growth Rate ** Restated to include the dilutive effect of our contingently convertible s
Slide 67: Quarterly Guidance
QUARTERLY GUIDANCE Revenue Millions Q1 Q2 Q3 Q4 FY ‘05 Range Low – High Range Low – High Range Low – High Range Low – High Range Low – High Revenue CVI $122-$125 $195-$198 $215-$219 $219-$223 $755-$765 CSI $26-$27 $27-$28 $29-$30 $31-$33 $115-$118 Total $149-$153 $222-$226 $244-$249 $250-$256 $870-$
Slide 68: Quarterly Guidance
QUARTERLY GUIDANCE Revenue Millions Q1 Q2 Q3 Q4 Range Range Range Range Low – High Low – High Low – High Low – High Revenue CVI $122-$125 $195-$198 $215-$219 $219-$223 CSI $26-$27 $27-$28 $29-$30 $31-$33 Total $149-$153 $222-$226 $244-$249 $250-$256 EPS* $0.52-$0.55 $0.72-$0.75 $0.83-$0.86 $0.96-$0.
Slide 69: The Cooper Companies, Inc.
Goer THE COOPER COMPANIES, INC
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