The conference call for the Q4 2023 earnings of Cooper Companies is about to begin. The call will discuss the results and guidance included in the earnings release and will feature presenters Al White, President and CEO, and Brian Andrews, CFO and Treasurer. The call will include forward-looking statements and non-GAAP financial information, and listeners are encouraged to refer to the company's SEC filings for more information.

Cooper Company's fiscal fourth quarter and year-end conference call was held with a record-breaking year in revenues. The call began with an opening statement from Albert White, followed by the announcement of all-time record revenues of almost $3.6 billion. The call then moved on to the company's long-range strategic objectives, including gaining market share, driving profitability, launching innovative products and services, and maintaining their company culture. The quarterly numbers showed a 9% organic growth in consolidated revenues, with CooperVision and CooperSurgical both posting strong organic growth. CooperVision's growth was led by their daily silicone hydrogel portfolio, while CooperSurgical's growth was driven by their fertility business. The company also reported strong growth in all three regions and across various product categories.

In the third paragraph, the speaker discusses the growth of Daily Silicone Hydrogel lenses by 19%, as well as the success of the MyDay Multifocal and MyDay Toric lenses. They also mention the recent launch of MyDay Energous, which has received positive feedback from eye care practitioners and was voted the most innovative product of 2023. The speaker personally wears MyDay Multifocals and believes they are the best multifocal lenses on the market.

The company has had success with their MyDay and Clarity daily silicone contact lenses, and plans to expand their availability to more markets. The Biofinity family of products, including Torics and multifocals, also continue to perform well. The company is also seeing strong growth in their myopia management sector, with MiSight being the only FDA approved contact lens for myopia control. The Americas and EMEA are driving growth, while Asia Pac is expected to return to growth in the coming year. The company has high retention rates and is seeing a positive effect on their other products. Overall, over 250,000 children worldwide are wearing MiSight and momentum is strong.

The proactive management of myopia is becoming standard in eye care to reduce its progression and associated risks. CooperVision's Ortho-K franchise had a strong quarter, and the contact lens market is expected to grow in the coming year due to the increasing need for vision correction. CooperSurgical also saw record revenues, with double-digit growth in fertility sales driven by market-leading products and expansion efforts.

In fiscal 2024, the fertility company is experiencing rapid growth and innovation. They are expanding their products, locations, and training programs, and are well-positioned for success. The overall fertility market is also growing due to factors such as delayed childbirth, increased access to treatment, and improving technology. In the office and surgical sector, sales were up 3%, with the recent acquisition of strategic products from Cook Medical expected to contribute to future growth. Stem cell storage saw a 6% increase in sales, while PARAGARD remained flat due to higher pricing offsetting declining unit sales.

CooperSurgical takes pride in the fact that their products help bring babies into the world. They expect strong results for fiscal year 2024, with 7-9% organic revenue growth for CooperVision and 4-6% for CooperSurgical. The company credits their success to their hard-working employees and their strong momentum going into the next fiscal year. In the fourth quarter, consolidated revenues were up 9% and gross margin increased to 66.7% due to improved operational performance and favorable currency.

In the fourth quarter, operating expenses increased by 8%, but operating margin improved due to strong gross margins and leverage from expenses. Interest expense was $26.4 million and the effective tax rate was 12.8%. Non-GAAP EPS was $3.47 and free cash flow was $29 million. For the full year, revenues were $3.6 billion and non-GAAP EPS was $12.81. The company focused on delivering stronger gross margins and leveraging expenses, completed infrastructure and integration projects, and integrated their specialty lens care unit into their core business. They also closed the acquisition of select Cook medical assets.

The purchase price for the acquired assets was $300 million, with $200 million paid at closing and the remaining $100 million to be paid in two installments. The assets generated $56 million in revenue and are expected to grow by 5-7% this year. The transaction is expected to be beneficial to the company's margins and earnings. The company has provided guidance for fiscal 2024, with expected organic revenue growth and non-GAAP EPS. The board has approved a stock split and the company has stopped paying dividends.

The speaker concludes by saying that fiscal 2023 was a record year for Cooper and they are well positioned for growth in fiscal 2024. They will now take questions from the operator. The first question is about CVI revenue growth guidance and the discussion on pricing. The speaker confirms that they have implemented a price increase at the beginning of the month that is at or above peers. They anticipate volume growth to moderate due to capacity challenges, but they are still expecting good growth in the first quarter. They have new lines coming in throughout the year to increase capacity and continue reporting strong growth. The guidance of 7 to 9% growth is also influenced by price.

The speaker discusses the company's pricing strategy in relation to the market, stating that they will be at the higher end of the 2-3% range. They also address the question of operating margin expansion and state that they have seen 11% growth in operating income, faster than revenue growth. They are focused on improving operating margins and expect to do so in the coming year.

Albert White, CEO of Cooper Companies, believes that the company will continue to see success in the coming years. He explains that the capacity constraints are tied to their product MyDay, which has been growing at a faster rate than anticipated due to increased demand for toric lenses. This has put some pressure on the company, but they have been investing in additional manufacturing capacity to address the issue. The guidance for fiscal 2024 is the same as for fiscal 2023, but this is due to the capacity constraints, and if they had more capacity, the guidance range would be higher. The assumptions for gross and operating margin for the full year and the cadence were not mentioned, but the myopia management number for fiscal 2024 was not provided.

Brian Andrews and Albert White discuss the impact of currency on gross and operating margins for the upcoming year. They also mention that they will not be providing a guidance range for myopia management and that their usual guidance for market performance has increased. Jeff Johnson asks about supply constraints and Al mentions a letter that went out in Japan, possibly affecting the Asia-Pacific region.

The speaker addresses two main concerns about the company's recent performance: the increase in demand for daily contact lenses and any potential issues that may arise in the supply chain. They assure that the team has done a good job handling the increased volume and that the majority of the expansion work is completed. They also mention potential supply constraints, but do not want to reveal any specific details for competitive reasons.

The speaker discusses their expectations for the upcoming quarter and clarifies that they are still expecting a good performance despite facing double-digit comparisons. They also address concerns about currency rates and explain that they exercise prudence in their guidance. The next question asks about the recent changes in their capacity constraints, to which they respond by acknowledging their previous transparency and mentioning that they have been able to stay ahead of the demand curve unlike their competitors.

The speaker explains that the demand for their products has been consistently strong, rather than a sudden spike. They also mention that it takes about 18 months to order and produce new lines, so catching up to increased demand can take some time. However, the team is confident in their ability to manage and plan for this increase in demand.

The speaker, Jonathan Block, asks about the company's EPS cadence for fiscal year 2024, and Brian Andrews responds that there is nothing in particular to point out except for currency impacts in Q2. Joanne Wuensch asks if the company is losing potential customers due to capacity challenges, and CEO Albert White responds that they are not losing any customers and are gaining new wearers, but they could potentially gain even more if not for the short-term revenue impact.

The company is confident in their ability to win more customers in the first quarter and throughout the year. They are hoping for a continued weakening of the dollar to benefit their bottom line. There are no updates on the progress of Cyclas, but the company remains positive about its potential. A question was also asked about potential reinvestment of currency benefits.

Brian Andrews, the speaker, discusses the company's free cash flow for the year, which came in at $215 million, lower than the previous year's $300 million. This was due to a large CapEx year, the Cook termination fee, and headwinds from interest, FX, and taxes. However, Andrews expects free cash flow to improve in 2024, with a projected increase of over $100 million. The company has seen double-digit organic top-line growth, but this has not translated to the bottom line due to factors such as operating margin and currency. The company is committed to double-digit EPS growth on a reported basis and may consider strategies such as hedging to help with consistency.

The speaker discusses the positive impact of currency movements on their business and mentions their plans to continue managing the business in a way that drives constant currency leverage and growth. They also mention their focus on generating cash flow, paying down debt, and reducing interest expenses. In addition, the speaker mentions expected price increases for the industry and their confidence in sustaining these increases despite moderating inflation levels. They also mention constraints in capacity and competition in the industry.

The contact lens industry is experiencing strong demand due to various factors such as trade-ups, growth in different types of lenses, and expansion into new markets. The top three companies in the industry control a large portion of global revenues and are facing challenges in keeping up with this demand. As a result, pricing is expected to increase in the near future, and the company's projected tax rate for FY24 includes the impact of Pillar 2.

The CooperVision CEO discusses the early stages of MiSight coverage and reimbursement by payers such as Aetna and Kaiser. He also mentions the potential for significant upside but cautions that it is still very early in the process. On the topic of PARAGARD, he acknowledges that volumes have been flat to down and that growth may be driven primarily by pricing. He also notes the challenges of competing with other birth control options.

The speaker believes that the IUD market will continue to face challenges in terms of volume, but price offsets may help. They anticipate flat to declining volume in the near future. The company's capital allocation priority is to pay down debt. They expect to gain share in the contact lens and CooperSurgical markets through innovation. They have confidence in their fertility team and will continue to invest in them.

Albert White, the operator, answers a question from Anthony Petrone about CooperVision's MiSight product and potential acquisitions for CooperSurgical. White mentions that CooperSurgical is looking to pay down debt but may consider smaller acquisitions. He also states that MiSight has a high retention rate and is seeing increasing fitting activity and good trends. He anticipates a good first quarter for the business.

The speaker is discussing the success of the company in the past year, particularly in the areas of vision and surgery. They are also giving guidance for the upcoming year and expressing excitement for what is to come. The speaker thanks employees and concludes the call.

This summary was generated with AI and may contain some inaccuracies.