The Cooper Companies(COO) - 2026 Q1 - Quarterly Report

Financial Performance - For the first quarter of fiscal 2026, Cooper Companies reported net sales of $695.1 million, an 8% increase compared to $646.1 million in the same period of fiscal 2025[97]. - For the three months ended January 31, 2026, total net sales increased by 3% to $329.0 million compared to $318.6 million in the same period of 2025, driven by a 6% increase in Fertility sales and a 2% increase in Office and surgical sales[109]. - Operating income rose by 17% to $212.8 million, representing 21% of net sales, compared to $182.0 million or 19% of net sales in 2025[118]. - Cash provided by operating activities increased to $260.9 million from $190.6 million in the prior year, driven by higher net income and improved operating capital[127]. Sales Growth - Toric and multifocal lenses generated $351.2 million in sales, reflecting a 10% growth from $319.4 million in the prior year, while spherical and other lenses saw a 5% increase to $343.9 million from $326.7 million[97]. - The Americas region contributed $289.0 million in sales, a 7% increase, while EMEA sales rose 15% to $282.3 million, driven by market gains in silicone hydrogel contact lenses[102]. Expenses and Margins - Consolidated gross margin remained flat at 68% for both the three months ended January 31, 2026, and January 31, 2025[110]. - Selling, General and Administrative (SGA) expenses increased by 1% to $390.2 million, representing 38% of net sales, compared to $387.9 million or 40% of net sales in 2025[111]. - Research and Development (R&D) expenses increased by 9% to $44.3 million, accounting for 4% of net sales, compared to $40.7 million in 2025[114]. Shareholder Actions - The company repurchased 1.1 million shares for $92.5 million at an average price of $82.04 per share during the three months ended January 31, 2026, with $873.9 million remaining authorized for repurchase[133]. Tax and Debt - The effective tax rate slightly decreased to 31.9% for the three months ended January 31, 2026, compared to 32.0% in the same period of 2025[124]. - Interest expense decreased by 14% to $22.4 million, primarily due to lower average debt balances[121]. - Working capital decreased to $538.1 million as of January 31, 2026, from $993.6 million as of October 31, 2025, primarily due to an increase in short-term debt[126]. Market and Product Development - CooperVision's MiSight 1 day lens received regulatory approvals in both China and Japan, enhancing its market presence in Asia[86]. - CooperSurgical's diversified portfolio includes products for fertility and women's health care, with a focus on in vitro fertilization and related services[88]. - The company anticipates long-term growth in the contact lens and health care markets, despite facing significant risks from global economic conditions and regulatory changes[85]. - CooperVision's single-use silicone hydrogel products, including MyDay and Biofinity, are expected to see increasing demand as the market shifts towards this modality[87]. - The company is focused on expanding its market presence through new product introductions and acquisitions in both existing and emerging markets[86]. - Cooper Companies emphasizes the importance of technological innovation and patent protection to maintain its competitive position in the market[90]. Foreign Exchange and Interest Rate Risks - Favorable foreign exchange rate fluctuations positively impacted sales by approximately $28.1 million during the quarter[100]. - A hypothetical 10% increase or decrease in foreign currency exchange rates would result in a corresponding increase or decrease of approximately $34.9 million in operating income for the fiscal quarter ended January 31, 2026[141]. - The majority of the company's total indebtedness remains subject to US-based variable interest rate risk tied to changes in the federal funds rate and SOFR[142]. - Interest rate fluctuations will impact the company's realized gain or loss, with a 1% change in interest rates not having a material impact on quarterly interest expense after considering interest rate swap contracts[143].