Alcon(US:ALC)2023-05-10 17:30Financial 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]