Cooper Companies Earnings Call Nuggets: Gross Margin Details and MyDay Pricing
Cooper Companies (NYSE:COO) recently reported its third quarter earnings and discussed the following topics in its earnings conference call.
Gross Margin Details
Kimberly Gailun – JPMorgan: So just two quick ones. The first is on gross margin. And as we look at it sequentially in the quarter, you were down just over 100 basis points, and gave a lot of detail on the call, so thanks for that. And I think essentially what you are saying was, FX sequentially was about 30 bps worse. And most of the rest of that was manufacturing variances. So just hoping you could clarify that. Was there any mix impact sequentially? And then the follow-up is just with the lower tax that we’re seeing this year and how we should be thinking about earnings growth for next year? You had a bunch of different moving parts in the tax rate this year, and how we should think about that number as we get into ’14?
Gregory W. Matz – VP and CFO: Yeah, on the gross margin, I think you nailed it. We basically had the yen go against us a little bit from our last guidance. So, from a sequential standpoint, we did see about 30 basis point impact. If we do have – if you look back and I just have data for the last five or six years in front of me and you can see that Q3 is always kind of our lowest gross margin quarter, we see that dip, it’s normal. We have a number of manufacturing variances that come through including — we have traditionally shutdown our plants in December in order to do some maintenance and get it prepared for the year and that flows through naturally in the Q3 timeframe. On the tax side, we have had a lot of kind of one-time items pop up this year. We’re not in a position where we want to give guidance for next year. I did want to highlight that there are some things that are one-time in nature and that’s kind of why I brought that out. On the other side, that I did mention but you have a certain number of discrete items that reverse occasionally each year and the size of those items are really – we don’t know those in advance, and so that has an impact that can actually raise the rate. So at this point, we’re not going to go through and give yearly guidance for 2014 on the tax-rate.
Larry Biegelsen – Wells Fargo: I wanted to focus on MyDay if I could. So obviously you just launched the product. Bob, you mentioned that demand is strong. Could you give us an update on pricing relative to DAILIES TOTAL1 and TruEye? Will you be able to meet demand? Do you have enough capacity to meet demand going forward in fiscal 2014? Any more color on the U.S. approval timing and the production plan. And just lastly, Bob, on MyDay, could you just give us some reassurance that as you ramp up, we won’t have production issues that we did with Biofinity?
Robert S. Weiss – President and CEO: As far as the pricing of MyDay, I’m not going to get into all the details rather than to say, well obviously, we’re not going to price at the high point at both TruEye and TOTAL1 are, which is the reason that the market remains a niche market. So, expect our pricing is not – is going to clearly be below that sphere of – than that tier of pricing. As far as demand, demand is going to be certainly exceeding our capacity throughout 2013, throughout 2014, and once again, that is purely a function of our ability to ramp-up in long lead times on equipment that are 12 to 18 months, which really will push us out to 2015 and beyond. As far as the timing in U.S. and what we expect in the U.S., the approval to sell in the U.S., we expect within the next 12 months. Whether or not we immediately go-to-market once we get that approval will be a function of not overextending our reach. So, if the demand is robust in Europe and we’ve committed to customers, we’re going to honor those commitments first in Europe, and then we’ll take it from there as we ramp up. As far as the risk of not being able to ramp up, it’s more about getting the equipment, plugging it in it, validating it. It is not novel equipment. Its equipment we have been using in the production about Avaira as well as the production of MyDay. So, I think it’s more execution, unlike Biofinity, when that really got started way back when in 2006, ’07, and ’08, it was a material that was challenging to us and a huge learning curve, not only the equipment; the production equipment came into play, but also the material came into play. So, I think we’re beyond that.