The Cooper Companies(COO) - 2025 FY - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported organic growth of 2% in Q3, which was below the expected 5% and the street's expectations [8][31] - MyDay product line experienced double-digit growth, with MyDay multifocal growing by 20% [11] - The company anticipates a similar performance in Q4 as in Q3, with expectations of channel inventory adjustments [17][18] Business Line Data and Key Metrics Changes - MyDay's growth was attributed to successful fitting sets and trial lenses provided to optometrists, leading to increased sales [10][11] - Clarity, a private label product, faced inventory drawdowns due to new private label contracts, impacting sales negatively in Q3 [12][14] - The company expects to start replenishing private label inventory in Q4, which should help stabilize sales [17] Market Data and Key Metrics Changes - The e-commerce channel in China saw a significant reduction in inventory from six months to two months, impacting sales negatively [19][20] - The company noted a 25% reduction in sales in Q1, with similar declines in Q3, indicating challenges in the Chinese market [20][30] - The overall market growth is projected to be 4% to 6%, with the company expecting to align its growth with market trends [53][55] Company Strategy and Development Direction - The company is focusing on increasing MyDay capacity to meet demand and improve market share in the daily silicone hydrogel segment [49][56] - There is an ongoing effort to improve operational efficiency and leverage revenue growth through restructuring initiatives [78][81] - The company is considering separating its CooperVision and CooperSurgical businesses if market valuations do not improve [73][74] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the market's recovery and the company's ability to capitalize on MyDay's growth potential [94] - There are indications of a positive shift in the fertility market, with expectations of mid-single-digit growth in the long term [62][66] - Management acknowledged recent challenges but believes they will be resolved, leading to improved organic growth in the future [94] Other Important Information - The company is focusing on stock buybacks and debt reduction as part of its capital allocation strategy [91] - Free cash flow is expected to improve as capital expenditures decrease and operational cash flow increases [88][89] Q&A Session Summary Question: What were the issues highlighted in CVI? - Management explained that organic growth was impacted by inventory adjustments and the transition to private label products, which caused confusion in the market [8][15] Question: What is the status of e-commerce in China? - Management confirmed that inventory levels have decreased significantly, and they do not plan to chase back lost sales aggressively [20][30] Question: How is the company addressing pricing competition? - Management noted that while there is positive pricing in the U.S., aggressive pricing competition exists in Asia Pacific, particularly in low-margin e-commerce channels [25][27] Question: What is the company's market share in silicone hydrogel dailies? - Management stated that the company holds approximately 25% market share in daily silicone hydrogels and is working to regain share lost in recent years [49][50] Question: What are the expectations for future growth? - Management expects the market to grow 4% to 6% and believes the company can achieve better growth rates by leveraging MyDay capacity [53][55]