[Operating Performance](index=2&type=section&id=Operating%20Performance) Alcon's 2023 operating performance saw significant growth in net sales and income, driven by strong segment contributions and improved operating leverage [Key Figures](index=2&type=section&id=Key%20Figures) Alcon reported substantial growth in Q4 and full-year 2023 net sales and income, with core diluted EPS increasing by 22% Full Year 2023 vs 2022 Performance Summary | ($ millions unless indicated otherwise) | 2023 | 2022 | Change % | Change % (cc) | | :--- | :--- | :--- | :--- | :--- | | **Net sales to third parties** | 9,370 | 8,654 | 8 | 10 | | **Operating income** | 1,039 | 672 | 55 | 77 | | **Net income** | 974 | 335 | 191 | 243 | | **Diluted earnings per share ($)** | 1.96 | 0.68 | 188 | 241 | | **Core operating income** | 1,849 | 1,571 | 18 | 27 | | **Core net income** | 1,360 | 1,108 | 23 | 34 | | **Core diluted earnings per share ($)** | 2.74 | 2.24 | 22 | 33 | Fourth Quarter 2023 vs 2022 Performance Summary | ($ millions unless indicated otherwise) | 2023 | 2022 | Change % | Change % (cc) | | :--- | :--- | :--- | :--- | :--- | | **Net sales to third parties** | 2,332 | 2,155 | 8 | 10 | | **Operating income** | 208 | 21 | nm | nm | | **Net income/(loss)** | 427 | (97) | nm | nm | | **Diluted earnings/(loss) per share ($)** | 0.86 | (0.20) | nm | nm | | **Core operating income** | 440 | 353 | 25 | 34 | | **Core net income** | 345 | 209 | 65 | 79 | | **Core diluted earnings per share ($)** | 0.70 | 0.42 | 67 | 78 | [Net Sales by Segment](index=3&type=section&id=Net%20Sales%20by%20Segment) Full-year 2023 net sales grew 8% to $9.4 billion, primarily driven by strong Vision Care segment performance and growth in Surgical Consumables and Equipment Net Sales by Segment - Full Year 2023 vs 2022 | ($ millions) | 2023 | 2022 | Change % | Change % (cc) | | :--- | :--- | :--- | :--- | :--- | | **Total Surgical** | **5,314** | **5,045** | **5** | **8** | | Implantables | 1,703 | 1,725 | (1) | 2 | | Consumables | 2,719 | 2,499 | 9 | 11 | | Equipment/other | 892 | 821 | 9 | 12 | | **Total Vision Care** | **4,056** | **3,609** | **12** | **14** | | Contact lenses | 2,400 | 2,192 | 9 | 11 | | Ocular health | 1,656 | 1,417 | 17 | 19 | | **Net sales to third parties** | **9,370** | **8,654** | **8** | **10** | - Full-year Vision Care sales growth of **12%** included a **4%** contribution from products acquired in 2022. Ocular health sales grew **17%**, including **10%** from acquired products[11](index=11&type=chunk)[12](index=12&type=chunk) - Full-year Surgical sales growth was driven by a **9%** increase in Consumables and a **9%** increase in Equipment/other, reflecting favorable market conditions and strong demand in international markets[10](index=10&type=chunk)[12](index=12&type=chunk) [Operating Income](index=5&type=section&id=Operating%20Income) Full-year 2023 operating income surged 55% to $1.0 billion, driven by higher sales, efficiencies, and a contingent liability release, expanding core operating margin to 19.7% Operating Income Summary - Full Year 2023 vs 2022 | ($ millions unless indicated otherwise) | 2023 | 2022 | Change % | Change % (cc) | | :--- | :--- | :--- | :--- | :--- | | **Gross profit** | 5,247 | 4,748 | 11 | 14 | | **Operating income** | 1,039 | 672 | 55 | 77 | | **Operating margin (%)** | 11.1 | 7.8 | - | - | | **Core operating income** | 1,849 | 1,571 | 18 | 27 | | **Core operating margin (%)** | 19.7 | 18.2 | - | - | - The increase in full-year operating income was attributed to improved operating leverage from higher sales and manufacturing efficiencies. The current year also benefited from a **$58 million** release of a contingent liability related to a recent acquisition[17](index=17&type=chunk)[18](index=18&type=chunk) - Fourth-quarter operating income was **$208 million**, a significant increase from **$21 million** in the prior year, largely due to improved operating leverage, lower transformation costs, and the absence of a **$70 million** legal settlement cost that impacted the prior year[14](index=14&type=chunk) [Segment Contribution](index=7&type=section&id=Segment%20Contribution) Full-year 2023 segment contribution increased to $2.2 billion, with Vision Care showing substantial 30% growth and margin expansion due to operating leverage Segment Contribution - Full Year 2023 vs 2022 | ($ millions unless indicated otherwise) | 2023 | 2022 | Change % | Change % (cc) | | :--- | :--- | :--- | :--- | :--- | | **Surgical segment contribution** | 1,454 | 1,336 | 9 | 17 | | As % of net sales | 27.4 | 26.5 | - | - | | **Vision Care segment contribution** | 777 | 600 | 30 | 37 | | As % of net sales | 19.2 | 16.6 | - | - | - Surgical segment contribution margin for the full year increased due to improved operating leverage from higher sales and manufacturing efficiencies, partially offset by a product mix shift and currency impacts[27](index=27&type=chunk) - Vision Care segment contribution margin for the full year expanded due to improved operating leverage, though partially offset by increased R&D investment following the Aerie acquisition and inflationary impacts[28](index=28&type=chunk) [Non-operating Income & Expense](index=9&type=section&id=Non-operating%20Income%20%26%20Expense) Full-year 2023 net income surged 191% to $974 million, driven by higher operating income and a significant tax benefit from a Swiss tax agreement Non-operating Results - Full Year 2023 vs 2022 | ($ millions unless indicated otherwise) | 2023 | 2022 | Change % | | :--- | :--- | :--- | :--- | | **Operating income** | 1,039 | 672 | 55 | | **Interest expense** | (189) | (134) | (41) | | **Other financial income & expense** | (18) | (75) | 76 | | **Income before taxes** | 832 | 463 | 80 | | **Taxes** | 142 | (128) | nm | | **Net income** | 974 | 335 | 191 | - A tax benefit of **$142 million** was recorded for the full year, primarily driven by a **$263 million** discrete tax benefit associated with a long-term agreement with Swiss tax authorities (the "2023 Swiss Tax Agreement")[44](index=44&type=chunk) - Full-year interest expense increased by **41%** to **$189 million**, reflecting increased financial debts following the Aerie acquisition in late 2022 and less favorable interest rates[42](index=42&type=chunk) - Core net income for the full year increased **23%** to **$1.4 billion**, resulting in core diluted EPS of **$2.74**, up from **$2.24** in the prior year[48](index=48&type=chunk) [Liquidity and Capital Resources](index=11&type=section&id=Liquidity%20and%20Capital%20Resources) Alcon's liquidity and capital resources are strong, with increased operating cash flow, stable net debt, and consideration of external economic factors [Cash Flow](index=11&type=section&id=Cash%20Flow) Net cash flows from operating activities increased to $1.4 billion in 2023, while investing activities decreased significantly due to fewer major acquisitions - Net cash flows from operating activities rose to **$1.4 billion** in 2023, up from **$1.2 billion** in 2022, due to increased collections from higher sales and lower short-term incentive payments[50](index=50&type=chunk) - Net cash flows used in investing activities decreased to **$1.1 billion** in 2023 from **$1.9 billion** in 2022. The prior year included significant cash outflows for the acquisitions of Aerie, Ivantis, and other products[53](index=53&type=chunk)[54](index=54&type=chunk) - Net cash flows used in financing activities were **$211 million** in 2023, mainly for dividends paid to shareholders, compared to a use of **$8 million** in the prior year[55](index=55&type=chunk) [Free Cash Flow (non-IFRS measure)](index=12&type=section&id=Free%20Cash%20Flow%20(non-IFRS%20measure)) Free cash flow, a non-IFRS measure, increased to $730 million in 2023, driven by higher operating cash flows despite increased capital expenditures Free Cash Flow Reconciliation | ($ millions) | 2023 | 2022 | | :--- | :--- | :--- | | Net cash flows from operating activities | 1,388 | 1,217 | | Purchase of property, plant & equipment | (658) | (636) | | **Free cash flow** | **730** | **581** | [Balance Sheet](index=12&type=section&id=Balance%20Sheet) As of December 31, 2023, total assets increased to $29.6 billion, with total equity rising to $20.6 billion, influenced by tax agreement benefits - Total assets were **$29.6 billion** as of Dec 31, 2023. Current assets increased by **$454 million**, driven by higher inventories to meet demand and increased cash and trade receivables[60](index=60&type=chunk)[79](index=79&type=chunk) - Total liabilities decreased to **$9.0 billion** from **$9.5 billion**. Non-current liabilities fell by **$240 million**, mainly due to a **$267 million** decrease in deferred tax liabilities related to the Swiss tax agreement[61](index=61&type=chunk)[79](index=79&type=chunk) - Total equity increased by **$947 million** to **$20.6 billion** compared to year-end 2022[63](index=63&type=chunk) [Net Debt/Liquidity (non-IFRS measure)](index=13&type=section&id=Net%20(debt)%2Fliquidity%20(non-IFRS%20measure)) Net debt slightly decreased to $3.6 billion as of December 31, 2023, with financial debt having a long average maturity and fixed interest rates Net Debt Calculation | ($ millions) | At Dec 31, 2023 | At Dec 31, 2022 | | :--- | :--- | :--- | | Total financial debt | (4,739) | (4,648) | | Less: Total liquidity | 1,096 | 988 | | **Net (debt)** | **(3,643)** | **(3,660)** | - The average maturity of financial debt is **10.7 years**, with **97%** at fixed interest rates[66](index=66&type=chunk) - In October 2023, the company refinanced its revolving credit facility to a new **$1.32 billion** facility maturing in five years, which remained undrawn as of year-end[67](index=67&type=chunk) [Additional Considerations](index=14&type=section&id=Additional%20Considerations) External factors such as the Israel-Hamas war, supply chain inflation, and foreign currency fluctuations pose potential impacts on the company's business - **Israel-Hamas War:** While sales and assets in Israel are not material, the company notes the risk of the conflict expanding and having further global impacts[69](index=69&type=chunk) - **Supply Chain Inflation:** The company has experienced inflationary pressures in labor, utilities, freight, and raw materials. It expects gross margin to be impacted in coming quarters as higher-cost inventory is sold[70](index=70&type=chunk) - **Foreign Currencies:** As a US Dollar reporting company, Alcon is exposed to foreign currency fluctuations, primarily in Euros, Japanese Yen, and Chinese Renminbi[71](index=71&type=chunk) [Condensed Consolidated Interim Financial Statements](index=15&type=section&id=Condensed%20Consolidated%20Interim%20Financial%20Statements) This section presents the unaudited condensed consolidated interim financial statements, detailing income, comprehensive income, balance sheet, equity changes, and cash flows [Consolidated Income Statement](index=15&type=section&id=Consolidated%20Income%20Statement) The Consolidated Income Statement presents key financial performance metrics, including revenues, costs, and profits, for the periods ended December 31, 2023 and 2022 Consolidated Income Statement (unaudited) | ($ millions except earnings/(loss) per share) | Twelve months ended Dec 31, 2023 | Twelve months ended Dec 31, 2022 | | :--- | :--- | :--- | | Net sales to third parties | 9,370 | 8,654 | | Gross profit | 5,247 | 4,748 | | Operating income | 1,039 | 672 | | Income before taxes | 832 | 463 | | Net income | 974 | 335 | | Diluted earnings per share ($) | 1.96 | 0.68 | [Consolidated Statement of Comprehensive Income/(Loss)](index=16&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income%2F(Loss)) This statement details changes in equity from non-owner sources, including net income and other comprehensive income items like currency translation effects Consolidated Statement of Comprehensive Income/(Loss) (unaudited) | ($ millions) | Twelve months ended Dec 31, 2023 | Twelve months ended Dec 31, 2022 | | :--- | :--- | :--- | | Net income | 974 | 335 | | Other comprehensive income/(loss) | (10) | 104 | | **Total comprehensive income** | **964** | **439** | [Consolidated Balance Sheet](index=17&type=section&id=Consolidated%20Balance%20Sheet) The Consolidated Balance Sheet provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of December 31, 2023 and 2022 Consolidated Balance Sheet (unaudited) | ($ millions) | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Total assets** | **29,614** | **29,165** | | Total non-current assets | 23,967 | 23,972 | | Total current assets | 5,647 | 5,193 | | **Total liabilities** | **8,990** | **9,488** | | Total non-current liabilities | 6,510 | 6,750 | | Total current liabilities | 2,480 | 2,738 | | **Total equity** | **20,624** | **19,677** | [Consolidated Statement of Changes in Equity](index=18&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) This statement reconciles beginning and ending equity balances, detailing effects of net income, other comprehensive income, dividends, and equity-based compensation Consolidated Statement of Changes in Equity (unaudited) | ($ millions) | 2023 | 2022 | | :--- | :--- | :--- | | **Balance at January 1** | **19,677** | **19,256** | | Net income | 974 | 335 | | Other comprehensive income/(loss) | (10) | 104 | | Dividends | (117) | (102) | | Equity-based compensation | 86 | 68 | | Other movements | 14 | 16 | | **Balance at December 31** | **20,624** | **19,677** | [Consolidated Statement of Cash Flows](index=19&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) The Consolidated Statement of Cash Flows details cash inflows and outflows from operating, investing, and financing activities for the periods ended December 31, 2023 and 2022 Consolidated Statement of Cash Flows (unaudited) | ($ millions) | Twelve months ended Dec 31, 2023 | Twelve months ended Dec 31, 2022 | | :--- | :--- | :--- | | Net cash flows from operating activities | 1,388 | 1,217 | | Net cash flows used in investing activities | (1,094) | (1,865) | | Net cash flows used in financing activities | (211) | (8) | | Effect of exchange rate changes | 31 | 61 | | **Net change in cash and cash equivalents** | **114** | **(595)** | | Cash and cash equivalents at January 1 | 980 | 1,575 | | **Cash and cash equivalents at December 31** | **1,094** | **980** | [Notes to Condensed Consolidated Interim Financial Statements](index=20&type=section&id=Notes%20to%20Condensed%20Consolidated%20Interim%20Financial%20Statements) This section provides detailed notes on significant transactions, income taxes, legal proceedings, acquisitions, and subsequent events impacting the financial statements [Note 2. Significant Transactions](index=22&type=section&id=Note%202.%20Significant%20transactions) This note details significant 2022 transactions, including major acquisitions of Aerie, Eysuvis/Inveltys, and Ivantis, along with senior note issuances - In November 2022, Alcon acquired Aerie Pharmaceuticals for a total purchase consideration of **$744 million**, funded by a bridge loan facility[97](index=97&type=chunk) - In July 2022, Alcon acquired Eysuvis and Inveltys ophthalmic eye drops from Kala Pharmaceuticals for **$60 million** upfront, plus potential milestone payments[99](index=99&type=chunk) - In January 2022, Alcon acquired Ivantis, Inc., manufacturer of the Hydrus Microstent, for an upfront consideration of **$479 million**, plus potential milestone payments[101](index=101&type=chunk) [Note 4. Income Taxes](index=25&type=section&id=Note%204.%20Income%20taxes) This note explains significant tax events, including a $263 million Swiss tax agreement benefit and the anticipated 1-2% effective tax rate increase from OECD Pillar Two rules - In Q4 2023, Alcon entered a long-term agreement with Swiss tax authorities, resulting in a discrete tax benefit of **$263 million**[115](index=115&type=chunk) - The OECD's Pillar Two minimum **15%** tax rate is expected to impact Alcon's financial results from January 1, 2024, onward, with an estimated **1% to 2%** increase in the effective tax rate[117](index=117&type=chunk)[118](index=118&type=chunk) [Note 10. Legal Proceedings Update](index=32&type=section&id=Note%2010.%20Legal%20proceedings%20update) This note updates on legal matters, including the JJSVI patent settlement, conclusion of the Asia/Russia investigation, and ongoing Hatch-Waxman patent litigation - The JJSVI patent dispute was resolved via a confidential settlement, which included a one-time payment of **$199 million** from Alcon to JJSVI on April 3, 2023[163](index=163&type=chunk) - The Asia/Russia investigation concluded, and the three-year Deferred Prosecution Agreement (DPA) with the DOJ expired on June 25, 2023. The related criminal charge was dismissed with prejudice[164](index=164&type=chunk) - Alcon is actively defending its patents in Hatch-Waxman litigation against generic drug companies for products including Simbrinza, Rhopressa, and Rocklatan, with trials scheduled for 2024 and 2025[167](index=167&type=chunk)[169](index=169&type=chunk) [Note 11. Acquisitions](index=34&type=section&id=Note%2011.%20Acquisitions) This note details the finalization of the Aerie acquisition's purchase price allocation, resulting in a goodwill adjustment and the release of a $58 million contingent liability Aerie Acquisition Final Purchase Price Allocation | ($ millions) | Preliminary PPA | Measurement period adjustments | Final PPA | | :--- | :--- | :--- | :--- | | Net identifiable assets acquired | 679 | 44 | 723 | | Goodwill | 65 | (44) | 21 | | **Total purchase consideration** | **744** | **—** | **744** | - A contingent liability of **$58 million** related to the Aerie acquisition was released in Q3 2023 and recognized in Other Income following the resolution of an uncertainty[174](index=174&type=chunk) [Note 13. Subsequent Events](index=35&type=section&id=Note%2013.%20Subsequent%20events) Subsequent to year-end, the Board proposed a CHF 0.24 per share dividend for fiscal year 2023, subject to shareholder approval at the upcoming Annual General Meeting - On February 27, 2024, the Board proposed a dividend of **CHF 0.24 per share**, subject to shareholder approval. If approved, the total payment would be approximately **$137 million**[176](index=176&type=chunk) [Supplementary Information - Definitions and Reconciliations of Non-IFRS Measures](index=36&type=section&id=Supplementary%20Information%20-%20Definitions%20and%20Reconciliations%20of%20Non-IFRS%20Measures) This section defines and reconciles Alcon's non-IFRS financial measures, including core results, constant currency growth, and free cash flow, to their IFRS equivalents [Non-IFRS Measures as Defined by the Company](index=36&type=section&id=Non-IFRS%20Measures%20as%20Defined%20by%20the%20Company) Alcon defines and utilizes non-IFRS measures like core results, constant currency growth, and free cash flow to provide a clearer view of underlying business performance - **Core results:** Exclude amortization of intangible assets, certain acquisition-related items, legal items, restructuring costs, and other exceptional items over a **$10 million** threshold[180](index=180&type=chunk) - **Constant currencies:** Calculates growth by translating current year foreign currency results into US dollars using the prior year's average exchange rates to eliminate currency fluctuation impacts[184](index=184&type=chunk)[185](index=185&type=chunk) - **Free cash flow:** Defined as net cash flows from operating activities less cash flow for the purchase or sale of property, plant, and equipment[187](index=187&type=chunk) [Reconciliation of IFRS Results to Core Results (non-IFRS measure)](index=38&type=section&id=Reconciliation%20of%20IFRS%20results%20to%20core%20results%20(non-IFRS%20measure)) This section provides a detailed reconciliation from reported IFRS results to the company's non-IFRS 'core' results for both the fourth quarter and full year Full Year 2023 IFRS to Core Reconciliation | ($ millions) | IFRS results | Amortization | Transformation costs | Other items | Core results | | :--- | :--- | :--- | :--- | :--- | :--- | | Gross profit | 5,247 | 663 | — | 7 | 5,917 | | Operating income | 1,039 | 675 | 139 | (4) | 1,849 | | Net income | 974 | 554 | 113 | (281) | 1,360 |

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 20-F | ☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 | | --- | --- | | | OR | | ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 | | | OR | | ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ | OR ☐ ...

Alcon Inc. (NYSE:ALC) Q3 2023 Earnings Call Transcript November 15, 2023 8:00 AM ET Company Participants Dan Cravens - Vice President and Global Head, Investor Relations David Endicott - Chief Executive Officer Tim Stonesifer - Chief Financial Officer Conference Call Participants Patrick Wood - Morgan Stanley Veronika Dubajova - Citi Larry Biegelsen - Wells Fargo Daniel Buchta - ZKB Ryan Zimmerman - BTIG Anthony Petrone - Mizuho Group Jeff Johnson - Baird Graham Doyle - UBS Operator Greetings and welcome to ...

Q3 2023 Earnings Presentation November 15, 2023 Safe harbor Forward-looking statements This document contains, and our officers and representatives may from time to time make, certain “forward-looking statements” within the meaning of the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipate,” “intend,” “commitment,” “look forward,” “maintain,” “plan,” “goal,” “seek,” “target,” “assume,” “believe,” “projec ...

Financial Data and Key Metrics Changes - Alcon reported second quarter sales of $2.4 billion, reflecting a 12% year-over-year growth, driven by strong demand and favorable pricing [20][21] - Core operating margin improved to 19.9%, up 270 basis points, while core diluted earnings per share increased by 19% to $0.69 [6][24] - Core gross margin was 63.8%, up 110 basis points, attributed to higher sales and manufacturing efficiencies [23] Business Line Data and Key Metrics Changes - Surgical revenue increased by 10% year-over-year to $1.4 billion, with implantable sales at $437 million, up 2% year-over-year, and 5% excluding the South Korean reimbursement impact [20][21] - Consumables sales rose by 13% to $714 million, driven by favorable market conditions and pricing [21] - Vision Care sales reached $1 billion, up 15%, with contact lens sales increasing by 10% to $594 million, and ocular health sales up 22% to $426 million [22] Market Data and Key Metrics Changes - Global cataract procedures were up mid-high single digits year-over-year, with global ATIOL penetration increasing by 80 basis points compared to the previous year [18][19] - The retail market value for contact lenses grew mid to high single digits, with a steady wearer trade-up and meaningful contributions from price increases [19] - The company noted strong performance in Asian markets, particularly in China, which continues to recover [21] Company Strategy and Development Direction - Alcon aims to capitalize on its competitive product portfolio and strong commercial execution to drive above-market sales growth [29] - The company is focused on accelerating innovation and enhancing its service offerings, including the rollout of SMARTCataract, a digital health solution for surgical practices [12][29] - Alcon is preparing to launch Vivity in China, which is expected to help accelerate market share in that region [8][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining growth momentum, citing improved surgeon productivity and a backlog of surgical procedures as key drivers [29][61] - The company updated its sales growth guidance for 2023 to 9% to 11%, reflecting strong performance in the first half of the year [26] - Management acknowledged potential challenges from new entrants in the IOL market but remains optimistic about maintaining market share through product performance [31][66] Other Important Information - Alcon is navigating ongoing supply chain challenges effectively, with expectations for recovery in contact lens care throughout the latter half of the year [18][21] - The company continues to invest in R&D, particularly following the acquisition of Aerie, which is expected to enhance its pharmaceutical offerings [24][58] Q&A Session Summary Question: Update on US PCIOL market share and competitive pressure - Management indicated that Alcon holds about two-thirds of the ATIOL business in the US and has maintained that share, despite new entrants [31][32] Question: Sustainability of contact lens growth momentum - Management believes that market share growth in contact lenses will be steady, with ongoing product innovations and strong manufacturing capabilities [34][35] Question: Equipment business growth and future opportunities - Management expressed excitement about the equipment business, highlighting opportunities in new product upgrades and digital integration [37] Question: Timeline for adjustable and accommodative lenses - Management refrained from providing specific timelines but indicated ongoing development efforts in this area [42] Question: Guidance for second half revenue growth - Management expects to trend towards the higher end of the guidance range, with historical growth patterns influencing expectations [44] Question: Update on Aerie's performance - Management confirmed that Aerie's revenues and total prescription growth are up year-over-year, aligning with expectations [58] Question: Factors influencing market outlook for the second half - Management cited improved productivity and staffing in surgical settings as key factors supporting a positive outlook [61]

Financial Data and Key Metrics Changes - First quarter sales reached $2.3 billion, an 11% increase year-over-year, driven by strong demand and positive pricing across the business [17][24] - Core operating margin was 20.6%, flat year-over-year, but up 130 basis points on a constant currency basis [20][24] - Core diluted earnings per share were $0.70, a 14% increase from the previous year on a constant currency basis [21][25] Business Line Data and Key Metrics Changes - Surgical revenue increased 8% year-over-year to $1.3 billion, with implantable sales down 3% to $427 million due to declines in South Korea [17][18] - Consumables sales rose 13% to $656 million, reflecting favorable market conditions and pricing [18] - Vision Care sales grew 16% to $1 billion, with contact lens sales up 14% to $615 million and ocular health sales up 19% to $414 million [19] Market Data and Key Metrics Changes - Global cataract procedures were up mid-single digits year-over-year, with global ATIOL penetration down 30 basis points but up 90 basis points when excluding Korea [14] - Retail market growth for contact lenses was up high single digits, with strong contributions from price increases [15] Company Strategy and Development Direction - The company aims to drive innovation and deliver above-market sales growth, focusing on new product launches and expanding its market share [26] - Management is cautious about the back half of the year, anticipating market growth at or slightly below historical rates due to macroeconomic conditions [15][24] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of cataract volumes and the potential for growth in ATIOL penetration, particularly in the U.S. market [51] - The company is increasing its year-over-year constant currency sales growth guidance to 7% to 9%, reflecting strong business momentum [24][25] Other Important Information - Free cash flow for the quarter was an outflow of $19 million, an improvement from an outflow of $52 million last year [22] - The company expects to generate more free cash flow in 2023 compared to 2022 [22] Q&A Session Summary Question: Comments on premium IOL share dynamics - Management noted a 90 basis point increase in global premium IOL penetration when excluding Korea, indicating strong performance despite competitive pressures [28] Question: Clarification on margins - Management confirmed that the 20.6% margin was not impacted by selling days and provided insights on expected margin trends for the remainder of the year [30][32] Question: Contact lens purchasing activity - Management highlighted steady trade-up from consumers and strong volume growth, indicating a positive outlook for contact lens sales [36] Question: Cataract demand outlook - Management expects cataract volumes to remain stable, with no significant pullback anticipated in the market [51] Question: SG&A expectations for Q2 and Q3 - Management indicated that SG&A increases will align with historical trends, with no significant deviations expected [70] Question: Impact of foreign exchange - Management acknowledged FX pressures due to currency fluctuations, particularly against the Australian dollar and Japanese yen [71] Question: Contact lens market share - Management confirmed strong performance in gaining market share, driven by a broader product range and successful launches [75]

Alcon Inc. (NYSE:ALC) Q4 2022 Earnings Conference Call February 28, 2023 8:00 AM ET Company Participants Dan Cravens - Vice President & Global Head of Investor Relations David Endicott - Chief Executive Officer Tim Stonesifer - Chief Financial Officer Conference Call Participants Graham Doyle - UBS Anthony Petrone - Mizuho Group Larry Biegelsen - Wells Fargo Daniel Buchta - ZKB Matthew Mishan - Keybanc Capital Markets Veronika Dubajova - Citi Cecilia Furlong - Morgan Stanley Ryan Zimmerman - BTIG Chris Gret ...

Debt and Financial Obligations - The company has outstanding debt of $4.6 billion as of December 31, 2022, with an increase of $712 million in Q4 2022 to finance the Aerie transaction[46]. - The company may need to raise additional funds for working capital, infrastructure development, and strategic transactions, which could dilute existing shareholders[46]. - The company may be underestimating future pension and post-employment benefit obligations, with a potential increase in defined benefit obligations by $23 million for a 0.25% decrease in interest rates[52]. - The company recognized $62 million in impairment charges in 2022 due to the fair value of intangible assets being less than their carrying value[56]. - Alcon expects to continue recommending regular cash dividends based on the prior year's core net income, but future dividends are subject to shareholder approval and various factors including financial condition and corporate strategy[65]. - Future equity issuances could dilute existing shareholders' ownership percentage, adversely affecting earnings per share and market price[64]. Regulatory and Compliance Risks - The company is subject to various legal proceedings, including a patent infringement case with Johnson & Johnson Surgical Vision, resulting in a one-time payment of $199 million to resolve disputes[48]. - The company is subject to increasing government investigations and legal proceedings, which could lead to substantial liabilities and affect its reputation[50]. - The company faces significant regulatory compliance costs and risks, particularly with the EU's new Medical Device Regulation (EU MDR) that requires certification for all new medical devices marketed in the EU[61]. - The company must comply with stringent regulatory requirements for manufacturing, which, if not met, could lead to production shutdowns and significant revenue losses[57]. - The company is exposed to potential penalties and enforcement actions for non-compliance with healthcare fraud and abuse laws, which could adversely affect its business[59]. - The company recognized that changes in healthcare regulations could significantly impact its business operations and sales growth, particularly in the surgical segment[61]. - The company operates under IFRS, which may result in significant differences in financial reporting compared to US GAAP, potentially affecting comparability with US companies[66]. - Alcon's foreign private issuer status allows it to avoid certain US securities laws, but losing this status would increase regulatory compliance costs and complicate financial reporting[67]. - Shareholders must approve certain corporate actions, including dividend payments and capital increases, which may limit the company's flexibility in managing capital needs[67]. Market and Competitive Environment - Inflation rates in the US and EU reached multi-decade highs in 2022, leading to increased manufacturing costs, particularly for labor, electronic components, resins, and freight[46]. - The company may face significant sales losses if patent protection for pharmaceutical products is lost, as lower-priced generic versions would become available[46]. - The company faces challenges from competitors developing similar products, which could adversely affect its competitive position and financial results[43]. - Changes in exchange rates can significantly impact reported sales, costs, and earnings, particularly if the US dollar strengthens against foreign currencies[46]. - The company may incur significant costs if regulations change to no longer require prescriptions for contact lenses, impacting marketing and distribution strategies[61]. Intellectual Property and Goodwill - The company relies on a combination of patents, trademarks, and trade secrets to protect its intellectual property, which may not be as effective in emerging markets[43]. - The company carries a significant amount of goodwill and intangible assets, which may lead to noncash impairment charges if their fair value declines[56]. Environmental and Safety Concerns - The company may face increased costs to comply with evolving environmental, health, and safety laws, which could adversely impact research, development, and production efforts[63]. - The company is subject to stringent environmental regulations, which may increase operational costs over time[63]. - Alcon's operations involve the use of hazardous materials, and any contamination or injury could lead to significant liabilities that may adversely affect the business[63].

ALCON INC. INTERIM FINANCIAL REPORT | INDEX | Page | | --- | --- | | Operating Performance | 2 | | Liquidity and Capital Resources | 11 | | Condensed Consolidated Interim Financial Statements (unaudited) | | | Consolidated Income Statement | 15 | | Consolidated Statement of Comprehensive (Loss)/Income | 16 | | Consolidated Balance Sheet | 17 | | Consolidated Statement of Changes in Equity | 18 | | Consolidated Statement of Cash Flows | 19 | | Notes to Condensed Consolidated Interim Financial Statements | 20 ...

Alcon Inc. (NYSE:ALC) Q3 2022 Earnings Conference Call November 16, 2022 8:00 AM ET Company Participants Dan Cravens - Vice President and Global Head, Investor Relations David Endicott - Chief Executive Officer Tim Stonesifer - Chief Financial Officer Conference Call Participants Ryan Zimmerman - BTIG Julien Dormois - BNP Paribas Daniel Buchta - ZKB Larry Biegelsen - Wells Fargo Matthew Mishan - KeyBanc Capital Markets Jeff Johnson - Baird Cecilia Furlong - Morgan Stanley Joanne Wuensch - Citi Falko Friedri ...