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]

The Cooper Companies, Inc.’s (COO) second-quarter fiscal 2025 results are scheduled to be released on May 9, after the closing bell.In the last reported quarter, the company’s earnings were in line with the Zacks Consensus Estimate. Its earnings beat estimates in three of the trailing four quarters and met in one, delivering an average surprise of 2.98%. (Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.)Q2 EstimatesThe Zacks Consensus Estimate for revenues is pegged at $982 million, ...