Core Insights - The Cooper Companies, Inc. (COO) reported first-quarter fiscal 2026 adjusted earnings per share (EPS) of $1.10, a 19.6% increase year over year, surpassing the Zacks Consensus Estimate of $1.03 by 6.8% [2] - Revenues reached $1.02 billion, reflecting a 6% year-over-year increase on a reported basis and a 3% organic growth, aligning with the Zacks Consensus Estimate [3] - Despite strong earnings, COO's shares fell 3.6% in after-hours trading on March 5, with a 16.6% increase in the past six months compared to the industry's 21.2% rise [4] Revenue Breakdown - COO operates through two segments: CooperVision (CVI) and CooperSurgical (CSI) [5] - CVI segment revenues were $695.1 million, an 8% increase year over year on a reported basis and 3% at constant exchange rates (CER) [5] - Strong sales of MyDay and MiSight lenses contributed to CVI's growth, with MyDay lenses maintaining a double-digit growth rate [6][8] - CSI segment revenues totaled $329 million, up 3% on a reported basis, driven by strong global genomics performance [13] Geographic Performance - Americas' revenues were $289 million, up 7% year over year, driven by demand for daily silicone hydrogel lenses [11] - EMEA revenues reached $282.3 million, a 15% increase year over year, maintaining the company's leadership in the region [11] - Asia Pacific revenues fell 4% year over year to $123.8 million, primarily due to declining sales of older hydrogel lenses in Japan [12] Margin and Cost Analysis - Adjusted gross profit rose 5.3% to $697.7 million, but the adjusted gross margin contracted by nearly 100 basis points to 68% [16] - Selling, general and administrative expenses increased by 0.6% to $390.2 million, while research and development expenses rose 8.8% to $44.3 million [17] - Adjusted operating profit increased by 13.8% to $275.4 million, with the adjusted operating margin expanding by 200 basis points to 27% [17] Financial Position and Guidance - COO ended the first quarter with cash and cash equivalents of $124.9 million, up from $110.6 million at the end of the previous quarter [18] - The company raised its fiscal 2026 revenue outlook to a range of $4,306-$4,346 million, indicating an organic improvement of 4.5-5.5% from the prior year [19] - Adjusted EPS guidance for the fiscal year is now expected in the range of $4.58-$4.66, up from the previous guidance of $4.45-$4.60 [21] Future Growth Drivers - Continued expansion of premium lenses, particularly MyDay and MiSight, is expected to drive growth in the CVI segment [23] - The company is benefiting from new private-label contracts and improved commercial momentum in the Americas and EMEA [23] - Operational efficiencies from last year's reorganization and broader use of AI-driven automation are anticipated to sustain margin expansion [23]

Financial Data and Key Metrics Changes - Consolidated revenues were $1.024 billion, up 6.2% year-over-year and up 2.9% organically [11][22] - Non-GAAP earnings grew 20% to $1.10 per share, with free cash flow at $159 million [11][23] - Operating margins improved significantly, with a gross margin of 68.1% [22] Business Line Data and Key Metrics Changes - CooperVision reported revenue of $695 million, up 7.6% or 3.3% organically, with strong growth in daily silicone hydrogel lenses [11][12] - CooperSurgical delivered revenue of $329 million, up 3.3% or 2.2% organically, driven by strong performance in the fertility segment [11][18] - Daily silicone hydrogel lenses grew 7%, led by double-digit growth in MyDay [11][14] Market Data and Key Metrics Changes - The Americas grew 6%, while EMEA grew 4%, strengthening market positions [12] - Asia Pac declined 4%, primarily due to softness in Japan related to older hydrogel products [12][13] - The company is optimistic about returning to growth in Asia Pac by fiscal Q3 due to new product launches [13][36] Company Strategy and Development Direction - The company is focused on consistent market share gains, operational excellence, and disciplined capital allocation [7][9] - There is a commitment to investing in sales and marketing initiatives to support product launches and strategic initiatives [9][10] - The strategic review process is ongoing, with a focus on maximizing long-term shareholder value [10][88] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong start to the fiscal year, with expectations for continued growth in earnings and free cash flow [7][9] - The company anticipates challenges in Asia Pac but expects to overcome them with new product launches and improved execution [36][80] - The fertility market is showing signs of recovery, with improving IVF cycles in the U.S. and Europe [19][104] Other Important Information - The company repurchased $92 million in stock during the quarter and reduced net debt to $2.4 billion [24] - Guidance for fiscal 2026 has been raised, with expected consolidated revenues of $4.3 billion to $4.35 billion [25][26] Q&A Session Summary Question: Can you reconcile the 10% calendar Q4 number versus the last few quarters? - The difference is attributed to shipment timing, with a weak November and December followed by a strong January [31] Question: How is the plan to return to above-market growth progressing? - The Americas and EMEA are performing well, but Asia Pac needs improvement, particularly in Japan [34][36] Question: What is the exposure to the Middle East and potential impacts from the war? - The Middle East accounts for about 2% of sales, and while it could impact fertility business, overall momentum remains positive [40][41] Question: How should we think about operating margins and tariffs? - Durable savings from synergies and disciplined expense management are expected to continue, with tariffs factored into guidance [42][44] Question: What is the status of supply dynamics and new contracts? - Supply constraints have been resolved, allowing for the winning of new contracts across all regions [68][70] Question: What are the dynamics in the fertility market? - The fertility market is stabilizing with improving IVF cycles and renewed interest in new technologies [104]

Financial Data and Key Metrics Changes - Consolidated revenues were $1.024 billion, up 6.2% year-over-year and up 2.9% organically [11][22] - Non-GAAP earnings grew 20% to $1.10 per share, with free cash flow at $159 million [11][23] - Operating margins improved significantly, with operating income increasing 13.9% to a 26.9% margin [22] Business Line Data and Key Metrics Changes - CooperVision reported revenue of $695 million, up 7.6% or 3.3% organically, with strong growth in daily silicone hydrogel lenses [11][12] - CooperSurgical delivered revenue of $329 million, up 3.3% or 2.2% organically, driven by strong performance in the fertility segment [11][18] - Daily silicone hydrogel lenses grew 7%, with MyDay leading the growth at double digits [11][14] Market Data and Key Metrics Changes - The Americas grew 6%, while EMEA strengthened with a 4% increase; Asia Pac declined 4% due to softness in Japan [12][18] - The company gained market share for the 18th consecutive year, with CooperVision growing 10% in calendar Q4 compared to a market growth of 6% [17][18] Company Strategy and Development Direction - The company is focused on consistent market share gains, operational excellence, and disciplined capital allocation [7][9] - There is an ongoing strategic review to maximize long-term shareholder value, with updates to be provided when available [10][88] - Investments in sales and marketing initiatives are prioritized to support product launches and strategic initiatives [9][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to growth in Asia Pac by Q3, despite current challenges [36][80] - The fertility market is showing signs of recovery, with improving IVF cycles in the U.S. and Europe [19][104] - The company anticipates steady improvement in free cash flow and operational performance for fiscal 2026 [26][27] Other Important Information - The company repurchased $92 million in stock during the quarter and reduced net debt to $2.4 billion [24][26] - The effective tax rate was reported at 15.1%, with interest expense at $22.4 million [23][24] Q&A Session Summary Question: Can you reconcile the 10% calendar Q4 number versus the last few quarters? - Management explained that the strong Q4 was due to a weak November and December followed by a strong January [31] Question: How is the plan to return to above-market growth progressing? - Management noted good momentum in the Americas and EMEA, but challenges remain in Asia Pac, particularly in Japan [34][36] Question: What is the exposure to the Middle East and potential impacts from the war? - The Middle East accounts for about 2% of sales, with potential impacts on fertility business but overall momentum remains positive [40][41] Question: How should we think about operating margins and tariffs? - Management indicated durable savings from synergies and a disciplined approach to expenses, with tariffs expected to remain at $24 million for the year [42][44] Question: Can you discuss the competitive landscape and new fit activity? - Management reported stable new fit activity, with positive indicators for future growth [50][51] Question: What are the dynamics of the private label contracts? - Private label revenues are slightly above a third of total revenues, with expectations for continued success in winning contracts [94] Question: What is the outlook for MiSight in Japan? - Management expressed optimism about MiSight's reception in Japan, with significant opportunities due to high myopia rates among children [96][97]

Financial Data and Key Metrics Changes - Consolidated revenues were $1.024 billion, up 6.2% year-over-year and up 2.9% organically [9][19] - Non-GAAP earnings grew 20% to $1.10 per share, with free cash flow at $159 million [9][20] - Operating margins improved significantly, with gross margin at 68.1% [19] Business Line Data and Key Metrics Changes - CooperVision reported revenue of $695 million, up 7.6% or 3.3% organically, with strong growth in daily silicone hydrogel lenses [9][10] - CooperSurgical delivered revenue of $329 million, up 3.3% or 2.2% organically, driven by strong performance in fertility and consumables [9][16] Market Data and Key Metrics Changes - Regionally, the Americas grew 6%, while Asia Pac declined 4% due to softness in Japan [10][19] - EMEA showed excellent commercial momentum, contributing to overall growth [4][10] Company Strategy and Development Direction - The company is focused on consistent market share gains, operational excellence, and disciplined capital allocation [4][6] - There is an emphasis on product launches, particularly the MyDay daily silicone hydrogel portfolio, and increasing sales and marketing investments [5][6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to growth in Asia Pac by Q3, despite current challenges [10][33] - The fertility market is showing signs of recovery, with improving IVF cycles in the U.S. and Europe [17][98] Other Important Information - The company is raising guidance for both earnings and free cash flow for the fiscal year 2026 [6][22] - A strategic review is ongoing, with active engagement from the board and advisors [8][84] Q&A Session Summary Question: Reconciliation of calendar Q4 number versus previous quarters - Management explained that the strong calendar Q4 was due to a weak November and December followed by a strong January [26][27] Question: Update on MyDay and Clarity transition - Management noted good traction in the Americas and EMEA, but challenges remain in Asia Pac, particularly Japan [30][31] Question: Impact of the Middle East on business - The Middle East accounts for about 2% of sales, with potential impacts on fertility business due to current conditions [35][36] Question: Future pricing dynamics and list price increases - Management is optimistic about pricing stability and believes the market can absorb more than one price increase per year [48][50] Question: Update on supply dynamics and new contracts - Management confirmed that supply constraints have been resolved, allowing for new contract wins across all regions [62][66] Question: Insights on MiSight and competitive landscape - Management sees increased interest in myopia control, which is beneficial for MiSight, and expects continued growth in the fertility market [96][98]

Financial Data and Key Metrics Changes - Consolidated revenues increased by 4.6% year over year, reaching a record of $1.065 billion, with organic growth of 3.4% [9][19] - Non-GAAP earnings per share (EPS) grew by 11% to $1.15, marking the eighth consecutive quarter of beating consensus earnings expectations [7][19] - Free cash flow for Q4 was reported at $150 million, exceeding expectations, with a target of over $2.2 billion in free cash flow from fiscal 2026 to 2028 [7][23] Business Line Data and Key Metrics Changes - CooperVision reported revenue of $710 million, up 4.9% year over year, with organic growth of 3.2% [10][19] - CooperSurgical achieved quarterly revenue of $356 million, up 4% or 3.9% organically, driven by solid execution [14][19] - MyDay lenses showed strong growth, particularly in toric and multifocal categories, while clariti lenses experienced a decline of approximately 2% [10][28] Market Data and Key Metrics Changes - The Americas region grew by 5%, driven by daily silicone hydrogel lenses, while EMEA grew by 3% [11] - Asia-Pacific remained flat, with a significant 28% decline in China attributed to weakness in low-margin e-commerce channels [11][50] - The overall contact lens market is trending towards premium offerings, benefiting the MyDay portfolio [10][11] Company Strategy and Development Direction - The company is focused on consistent market share gains for CooperVision, with an emphasis on the MyDay Premium Daily Silicone Hydrogel Lens portfolio [6][9] - A strategic review has been initiated to explore opportunities for unlocking long-term shareholder value, including potential separation of business units [9][38][79] - The board has authorized an increase in the share repurchase plan to $2 billion, reinforcing the commitment to returning capital to shareholders [8][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about fiscal 2026, expecting strong revenue growth driven by MyDay sales and new private label contracts [17][53] - The company anticipates a conservative approach to guidance, particularly in the fertility segment, while remaining optimistic about long-term growth in that market [15][56] - Management highlighted the importance of maintaining fiscal responsibility and not chasing revenues at all costs, particularly in challenging markets like China [50][51] Other Important Information - The company has successfully remediated material weaknesses related to IT controls from fiscal 2024 [24] - Significant cost savings from recent reorganization efforts are expected to enhance profitability and cash flow [20][23] Q&A Session Summary Question: Clariti product line performance - Clariti was down a couple of percent this quarter, approaching $400 million in annualized revenue, with ongoing efforts to reposition the product [27][28] Question: Strategic review timeline and thoughts on separation - A strategic review is underway, with updates expected in the next earnings call, and management's position on potential separation remains unchanged [37][38][41] Question: Market growth assumptions for 2026 - The market is expected to grow at 4%-5%, with pricing power anticipated to remain stable [43][45] Question: Asia-Pacific market dynamics - Asia-Pacific faced challenges due to low-margin e-commerce channels, but management expects less detriment in fiscal 2026 [49][50] Question: Free cash flow outlook - The increase in free cash flow is driven by consistent performance and reduced capital expenditures, with expectations of over $2.2 billion in free cash flow from fiscal 2026 to 2028 [56][59] Question: Product pipeline and innovation - The company is excited about upcoming product launches, including MyDay and MiSight, which are expected to drive growth [90][91]