The Cooper Companies (COO) FY Conference June 05, 2025 12:20 PM ET Speaker0 Alright. Good afternoon, everyone. Thank you for coming out and surviving and making it to the last meeting of the William Blair gross dot conference. Really appreciate you guys all being here. My name is Margaret Kayser Andrew. I am the analyst here at William Blair, that covers Cooper Companies. I am required to inform you that you can find a complete list of research disclosures and conflicts of interest at williamblair.com. With ...

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Have you evaluated the performance of The Cooper Companies' (COO) international operations during the quarter that concluded in April 2025? Considering the extensive worldwide presence of this surgical and contact lens products maker, analyzing the patterns in international revenues is crucial for understanding its financial resilience and potential for growth.The global economy today is deeply interlinked, making a company's engagement with international markets a critical factor in determining its financi ...

Key Takeaways COO beat Q2 estimates and raised full-year guidance amid steady product demand. COO's Growth is driven by MyDay lenses, MySight adoption, and surgical portfolio strength. Cooper Companies is navigating market softness via promotions, capacity gains, and cost efficiency.Cooper Companies (COO) delivered a solid fiscal second quarter performance in 2025, surpassing analyst expectations with $1 billion in revenue (up 6.3% YoY) and adjusted earnings per share (EPS) of 96 cents (up 14% YoY). Despi ...

Financial Performance - For the three months ended April 30, 2025, CooperVision reported net sales of $669.6 million, a 5% increase compared to $635.9 million in the same period of 2024[92]. - For the six months ended April 30, 2025, total net sales reached $1,315.7 million, reflecting a 5% growth from $1,257.4 million in the same period of 2024[96]. - For the three months ended April 30, 2025, total net sales increased by 8% to $332.7 million compared to $306.7 million in the same period of 2024[103]. - Consolidated gross margin improved to 68% in the three months ended April 30, 2025, up from 67% in the same period of 2024, due to efficiency gains and a favorable product mix[110]. - Operating income for the company increased by 14% to $184.8 million in the three months ended April 30, 2025, compared to $161.7 million in the same period of 2024[121]. Sales by Product Type - Toric and multifocal lenses generated $328.4 million in sales, up 6% from $310.3 million in the prior year, while spherical and other lenses increased by 5% to $341.2 million from $325.6 million[92]. - CooperSurgical's net sales are supported by a diversified portfolio in the fertility and women's health care market, with significant contributions from products like MiSight and Biofinity[99]. - Office and surgical net sales rose by 13% to $205.8 million, driven by increased sales of Paragard contraceptive intrauterine devices and the acquisition of obp Surgical[107]. - Fertility net sales increased by 3% to $126.9 million, attributed to higher revenue from gamete services[107]. Regional Sales Performance - In the Americas region, net sales increased by 7% to $282.4 million for the three months and $553.3 million for the six months, compared to $264.4 million and $517.0 million, respectively, in 2024[98]. - EMEA region sales grew by 5% to $248.6 million for the three months and 4% to $495.1 million for the six months, compared to $237.0 million and $475.2 million in 2024[98]. - Asia Pacific region sales saw a 3% increase to $138.6 million for the three months and a 1% increase to $267.3 million for the six months, compared to $134.5 million and $265.2 million in 2024[98]. Expenses and Costs - Selling, General and Administrative (SGA) expenses for CooperVision increased by 5% to $236.9 million, while CooperSurgical's SGA expenses rose by 2% to $136.8 million[113]. - Research and Development (R&D) expenses increased by 17% to $45.5 million in the three months ended April 30, 2025, primarily due to myopia management programs[116]. Cash Flow and Capital Management - Operating cash flow for the first six months of fiscal 2025 increased to $286.8 million, up from $233.7 million in the same period of fiscal 2024, reflecting improved net income and changes in operating capital[133][134]. - Cash used in investing activities decreased to $(176.0) million in the first half of fiscal 2025, compared to $(398.9) million in the first half of fiscal 2024, primarily due to a $200 million payment for the Cook Medical acquisition in 2024[135]. - Cash used in financing activities was $(105.2) million in the first six months of fiscal 2025, mainly for repayments on revolving credit and the first installment related to the Cook Medical acquisition[136]. - Working capital increased to $1,113.2 million as of April 30, 2025, from $928.7 million as of October 31, 2024, mainly due to higher inventories and accounts receivable[132]. Debt and Compliance - As of April 30, 2025, the company had outstanding debt of $2.6 billion and may use interest rate swaps to manage interest rate risk[148][149]. - As of April 30, 2025, the company had total credit facilities of $3.8 billion, with $2.5 billion outstanding and $1.27 billion available[137]. - The company remains in compliance with all debt covenants and anticipates sufficient cash flow to meet its needs for at least the next 12 months[138]. Tax and Interest - Interest expense decreased by 16% to $24.2 million in the three months ended April 30, 2025, due to lower interest rates and average debt balances[126]. - The effective tax rate for the three months ended April 30, 2025, was 39.3%, up from 31.6% in the same period of 2024, primarily due to changes in valuation allowance[129]. Market Outlook - CooperVision is focused on expanding its market presence through new product introductions and acquisitions, particularly in the silicone hydrogel contact lens segment[81]. - The company anticipates continued growth in the contact lens market driven by technological advancements and improved product offerings[80]. Currency Impact - A hypothetical 10% change in foreign currency exchange rates could result in a $31.8 million impact on operating income for the fiscal quarter ended April 30, 2025[147]. - CooperVision's sales growth was partially offset by unfavorable foreign exchange rate fluctuations of approximately $7.7 million for the three months and $22.4 million for the six months ended April 30, 2025[96]. Share Repurchase - As of April 30, 2025, the company had $215.8 million remaining for share repurchase under the 2012 program, having repurchased 0.5 million shares for $40.6 million at an average price of $75.60 per share during the first half of fiscal 2025[141].

CooperCompanies Fiscal 2025 financial guidance | | | FY25 Guidance | | Organic Growth vs. FY24 | | | --- | --- | --- | --- | --- | --- | | e | Total | $4,107 - | $4,146 | 5% - 6% | | | u n e v e | CooperVision | $2,759 - | $2,786 | 6% - | 7% | | R | CooperSurgical | $1,347 - | $1,359 | 3.5% - | 4.5% | | S P E | Non-GAAP | $4.05 - | $4.11 | | | Notes: Sales $ in millions 1. Guidance updated 5/29/25. 2. Revenue growth is organic and non-GAAP EPS growth excludes FX. Organic growth is defined as constant curren ...

Core Viewpoint - The Cooper Companies, Inc. reported strong second-quarter fiscal 2025 results, with adjusted earnings per share (EPS) of 96 cents, reflecting an 11.5% year-over-year increase, surpassing estimates. Revenue growth was driven by operational improvements and strong performance in its product segments [1][2][16]. Revenue Performance - Total revenues reached $1 billion, marking a 6.3% year-over-year increase on a reported basis, and a 7% increase at constant exchange rates (CER) and organically [1][2]. - The CooperVision (CVI) segment generated revenues of $669.6 million, up 5% year-over-year on a reported basis and 7% at CER and organically [4]. - The CooperSurgical (CSI) segment reported revenues of $332.7 million, an 8% increase on a reported basis, 9% at CER, and 7% organically [8]. Segment Analysis - In the CVI segment, Toric and multifocal revenues totaled $328.4 million, up 6% year-over-year on a reported basis, and up 7% organically and at CER [5]. - Sphere and other revenues reached $341.2 million, reflecting a 5% year-over-year increase on a reported basis and a 6% increase at CER and organically [6]. - Geographically, revenues from the Americas totaled $282.4 million, up 7% year-over-year on a reported basis, while EMEA revenues were $248.6 million, up 5% year-over-year [6][7]. Margin and Cost Trends - Adjusted gross profit increased by 2.4% to $681.9 million, with an adjusted gross margin expanding by 100 basis points to 68% [10]. - Selling, general, and administrative expenses rose by 4.9% to $399 million, while research and development expenses increased by 17% to $45.5 million [10]. Financial Position - The company ended the second quarter with cash and cash equivalents of $116.2 million, up from $100.9 million at the end of the previous quarter. Total debt increased to $2.77 billion from $2.59 billion [12]. Guidance and Outlook - The Cooper Companies updated its fiscal 2025 revenue guidance to a range of $4,107-$4,146 million, indicating an organic improvement of 5-6% from the prior year [13]. - The CVI segment's revenue is expected to be between $2,759-$2,786 million, suggesting a 6-7% organic improvement [13]. - The CSI segment's revenue is projected to be in the range of $1,347-$1,359 million, indicating a 3.5-4.5% organic improvement [14]. - Adjusted EPS for the fiscal year is anticipated to be in the range of $4.05-$4.11 [15]. Product Performance - CooperVision's growth was driven by strong demand for MyDay and Clarity daily silicone hydrogel lenses, as well as Biofinity and Avaira in the frequent replacement category [16]. - MySight, a myopia management solution, grew by 35%, supported by a new pricing strategy and a major private label deal [17]. - CooperSurgical's performance was bolstered by the office and surgical segment, with significant sales growth in specific products [18]. Market Context - Despite beating estimates, the company's shares fell by 4.9% in after-hours trading, reflecting a 13% decline year-to-date compared to a 0.8% decline in the industry [2]. - Tariffs are expected to impact earnings, with a potential 3% drag anticipated in fiscal 2026 if unmitigated [19].

Core Insights - The Cooper Companies reported $1 billion in revenue for the quarter ended April 2025, marking a year-over-year increase of 6.3% and an EPS of $0.96 compared to $0.85 a year ago, exceeding the Zacks Consensus Estimate of $995.61 million by 0.67% [1] - The company delivered an EPS surprise of 3.23%, with the consensus EPS estimate being $0.93 [1] Revenue Performance - Revenue by Geography: - Americas: $282.40 million, a year-over-year change of +6.8%, below the average estimate of $288.77 million [4] - Asia Pacific: $138.60 million, a year-over-year change of +3.1%, slightly above the average estimate of $136.60 million [4] - EMEA: $248.60 million, a year-over-year change of +4.9%, exceeding the average estimate of $243.81 million [4] - Revenue by Category: - CVI: $669.60 million, a +5.3% change year-over-year, slightly above the average estimate of $669.02 million [4] - CSI: $332.70 million, an +8.5% change year-over-year, above the average estimate of $329.54 million [4] - CSI- Office and surgical: $205.80 million, a +12.5% change year-over-year, exceeding the average estimate of $195.05 million [4] - CSI- Fertility: $126.90 million, a +2.5% change year-over-year, below the average estimate of $135.30 million [4] - CVI- Sphere, other: $341.20 million, a +4.8% change year-over-year, above the average estimate of $337.28 million [4] - CVI- Toric and multifocal: $328.40 million, a +5.8% change year-over-year, slightly below the average estimate of $331.93 million [4] Stock Performance - Shares of The Cooper Companies have returned -1.9% over the past month, while the Zacks S&P 500 composite has changed by +6.7% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Viewpoint - The Cooper Companies reported quarterly earnings of $0.96 per share, exceeding the Zacks Consensus Estimate of $0.93 per share, and showing an increase from $0.85 per share a year ago, indicating a positive earnings surprise of 3.23% [1][2] Financial Performance - The Cooper Companies achieved revenues of $1 billion for the quarter ended April 2025, surpassing the Zacks Consensus Estimate by 0.67%, and up from $942.6 million in the same quarter last year [2] - Over the last four quarters, the company has exceeded consensus EPS estimates three times and topped consensus revenue estimates two times [2] Stock Performance and Outlook - The Cooper Companies' shares have declined approximately 12.9% since the beginning of the year, contrasting with the S&P 500's slight gain of 0.1% [3] - The current consensus EPS estimate for the upcoming quarter is $1.05 on revenues of $1.07 billion, and for the current fiscal year, it is $3.98 on revenues of $4.12 billion [7] Industry Context - The Medical - Dental Supplies industry, to which The Cooper Companies belongs, is currently ranked in the top 34% of over 250 Zacks industries, suggesting a favorable industry outlook [8]

Financial Data and Key Metrics Changes - Consolidated revenues were $1,002 million, up 6% year over year or up 7% organically [7] - Non-GAAP earnings were $0.96, up 14% year over year [24] - Consolidated gross margin was 68%, up from 67.3% [21] - Operating expenses increased 6% but declined as a percentage of revenue to 43.1% [22] Business Line Data and Key Metrics Changes - CooperVision reported revenues of $670 million, up 5% or up 7% organically [7] - CooperSurgical posted revenues of $333 million, up 8% or up 7% organically [14] - Daily silicone hydrogel lenses grew 10%, with Myopia management portfolio growing 19% [8][11] - Fertility revenues were $127 million, up 3% and up 2% organically, but lower than expected due to market softness [15] Market Data and Key Metrics Changes - The Americas grew 8%, EMEA grew 6%, and Asia Pac grew 5% for CooperVision [8] - The contact lens industry grew 4% in calendar Q1, leading to a reduction in growth expectations to 4% to 6% for the year [18][19] - Fertility market growth expectations were reduced to low single digits due to market softness, particularly in Asia Pac [19][41] Company Strategy and Development Direction - The company is focusing on operational improvements and product launches to drive growth [6] - There is a strong emphasis on increasing availability of MyDay and MiSight products in new markets [9][14] - The company is adjusting its revenue guidance to reflect solid Q2 performance and updated market assumptions [24][25] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a more complex global operating environment but emphasized strong execution and market share gains [6][20] - There is optimism about long-term growth fundamentals in fertility despite current market softness [16][41] - Management expects organic growth in Q4 to be stronger than Q3, supported by product rollouts and improved fitting activity [25][52] Other Important Information - The company repurchased approximately 537,000 shares for roughly $40.6 million, leaving $215.8 million available under the repurchase plan [24] - Tariffs are expected to have a negative impact of roughly $4 million on the cost of goods this year [26] - Currency fluctuations are anticipated to have a 0.5% headwind to revenues and a 1% headwind to earnings [26] Q&A Session Summary Question: Contact lens end market performance - Management noted that channel inventory pressures are affecting growth rates, but fitting activity remains strong [30][31] Question: Lower market growth assumption for Vision Care - The reduction in guidance is attributed to general market softness rather than specific pricing or volume issues [34][36] Question: Fertility market softness in Asia - Management indicated that the decline in fertility cycles in Asia is partly due to cultural factors and economic pressures [41][42] Question: Changes in consumer behavior regarding contact lens purchases - Management confirmed that consumers are buying shorter supply durations, impacting revenue despite strong fitting activity [46][47] Question: Guidance for Q3 and Q4 - Management expects Q3 results to be below the lower end of guidance, with Q4 anticipated to be at or above the top end [52] Question: Inventory expectations for the rest of the year - Management anticipates continued pressure on inventory levels throughout the year, affecting overall market growth [55][56] Question: Margin expectations moving forward - Management expects continued improvement in margins due to operational efficiencies and prior investment returns [70]