Summary of The Cooper Companies (COO) FY Conference Call - June 05, 2025 Company Overview - The Cooper Companies is a global medical device company with approximately two-thirds of its business in contact lenses and one-third in women's health, primarily focusing on fertility [3][4] - The company operates in over 30 countries with a revenue mix of more than half generated outside the U.S. [5] Core Business Insights - Cooper is a leader in the fertility market, with 40% of its surgical business related to fertility [4] - The company is experiencing secular growth trends in both vision and surgical segments, with a commitment to growing faster than the market [7][8] - CooperVision is projected to grow by 6-7% this year, while the market is expected to grow by 4-6% [8] Financial Performance and Guidance - The company aims for gross margin and operating margin expansion, despite facing foreign exchange (FX) headwinds since 2019 [9] - Free cash flow is projected to be between $350 million and $400 million, with a goal to improve free cash flow margin over the coming years [10][11] - The company has a history of consistent growth, with the exception of 2020 during COVID-19 [7] Market Dynamics - The contact lens market grew by 7% last year, with a fourth-quarter growth of 9%, but the company believes the actual growth is closer to 6% due to inventory dynamics [12][13] - Competitors like J&J and Alcon reported mid-single-digit growth, leading Cooper to adjust its market growth expectations to 4-6% [14] - Fitting activity remains strong, with consumers preferring premium products, particularly in the MyDay portfolio [17][20] Product Innovations - Cooper offers a differentiated portfolio, including myopia control products that are unique in the market [6] - The MyDay product line includes a wide range of toric and multifocal lenses, with the recent launch of Energous, which provides a digital boost for myopic users [23][24] - The company plans to launch MiSight, a myopia control lens, in Europe next year, which is expected to drive significant growth [25][30] Strategic Initiatives - Cooper is focusing on expanding its production capacity and improving operational efficiencies to leverage past investments [48][50] - The company is prioritizing free cash flow towards debt reduction and has engaged in stock buybacks due to perceived undervaluation [51][52] - The surgical segment is expected to see mid-single-digit growth as the fertility market rebounds [58][59] Future Outlook - The company anticipates that the contact lens market will continue to grow at 4-6% next year, with CooperVision expected to outperform this growth [57] - The surgical business is also projected to recover, contributing to overall revenue growth [59] - Cooper is optimistic about the potential for increased free cash flow due to reduced capital expenditures and improved operational performance [61][62] Additional Insights - The company is actively working on integrating its surgical and vision businesses to drive better margin expansion [49] - There is a focus on educating healthcare professionals and consumers about myopia control products, particularly in new markets like Japan [39][40] This summary encapsulates the key points discussed during the conference call, highlighting the company's strategic direction, market dynamics, and financial outlook.

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]

Financial Data and Key Metrics Changes - Consolidated revenues were $1,002 million, up 6% year over year or up 7% organically [6][21] - Non-GAAP earnings were $0.96, up 14% year over year [6][23] - Consolidated gross margin improved to 68%, up from 67.3% [21] - Operating expenses increased by 6%, but declined as a percentage of revenue to 43.1% [21] Business Line Data and Key Metrics Changes - CooperVision reported revenues of $670 million, up 5% or up 7% organically [6][21] - CooperSurgical posted revenues of $333 million, up 8% or up 7% organically [6][21] - Daily silicone hydrogel lenses grew 10%, with MyDay and Clarity leading the growth [7][9] - Myopia management portfolio grew 19%, with MiSight up 35% [7][11] Market Data and Key Metrics Changes - The Americas grew 8%, EMEA grew 6%, and Asia Pacific grew 5% [7] - Fertility revenues were $127 million, up 3% and up 2% organically, but lower than expected due to market softness in Asia Pacific [14][15] - Office and Surgical sales were $206 million, up 13% or up 10% organically [15][16] Company Strategy and Development Direction - The company is focusing on expanding its product availability in new markets and channels, particularly for MyDay and MiSight [8][9] - There is a strong emphasis on operational improvements and leveraging existing investments to drive growth [21][22] - The company is optimistic about long-term growth in fertility despite current market softness [15] 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 [5][6] - The company is adjusting its revenue guidance to reflect solid Q2 performance and updated market assumptions [17][24] - Management expects organic growth in Q4 to be stronger than Q3, driven by product rollouts and improved fitting activity [24] Other Important Information - The company repurchased approximately 537,000 shares for roughly $40.6 million, leaving $215.8 million available under its repurchase plan [23] - Tariffs are expected to have a negative impact of roughly $4 million on the cost of goods this year [25] - Currency fluctuations are anticipated to have a 0.5% headwind to revenues and a 1% headwind to earnings [25] 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 [29][30] 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 [33][36] Question: Changes in market behavior and consumer purchasing - Management confirmed that consumers are buying shorter supply durations, impacting revenue despite strong fitting activity [45][46] Question: Fertility market softness in Asia - The decline in fertility cycles in Asia Pacific is partly attributed to cultural factors, but management remains optimistic about long-term growth [39][42] Question: Future pricing opportunities - Management believes there are opportunities for inflationary price increases, but overall pricing remains solid [100][101] Question: Impact of tariffs on guidance - Tariffs are expected to impact costs, with potential adjustments in manufacturing and pricing strategies to mitigate effects [77][104]