The paragraph is an introduction to the Cooper Companies Fourth Quarter 2024 Earnings Conference Call. The conference operator, Abby, introduces the call and hands it over to Kim Duncan, the Vice President of Investor Relations and Risk Management. Kim Duncan welcomes participants and outlines the agenda, which includes discussing earnings results, guidance, and a question-and-answer session. Presenters Al White (CEO) and Brian Andrews (CFO) will provide insights. The call will include forward-looking statements and non-GAAP financial information, with a reminder about the risks and uncertainties associated with such statements, as detailed in the company's SEC filings and earnings release.

The paragraph discusses Cooper Company's earnings call, led by Albert White, highlighting a successful fiscal year 2024 with record revenues of $3.9 billion from CooperVision and CooperSurgical. It emphasizes their strategic focus for fiscal 2025 on growth, profitability, and product innovation. In Q4, CooperVision experienced strong performance in silicone hydrogel dailies, torics, and multifocals, despite unexpected softness. CooperSurgical saw growth in fertility but a decline in PARAGARD. Looking ahead, they anticipate the contact lens market to grow 5% to 7% while aiming to increase their market share by 6.5% to 8.5%.

The paragraph discusses CooperCompanies' financial performance and growth drivers in Q4. CooperVision reported revenue growth of 9% overall, led by their market-leading contact lens portfolio, particularly in daily silicone hydrogel lenses, torics, and multifocals. The MyDay lens showed strong performance, especially in the U.S., with its innovative digital boost technology. Meanwhile, CooperSurgical experienced mid-single-digit organic growth, with fertility services growing significantly. Overall, non-GAAP earnings per share increased by 19%, and the company strengthened its position in several markets and product categories.

The paragraph highlights the successful performance and expansion of various contact lens products. MyDay toric and multifocal lenses are performing well in North America and Europe due to their advanced design and high satisfaction rates. Clariti lenses are gaining traction with their comfort and affordability, especially with the launch of an upgraded multifocal design. Personal endorsement of multifocal lenses is given for their convenience. Biofinity and Avaira lenses also had a strong quarter, benefiting from innovative manufacturing and designs, continuing to drive growth.

The paragraph highlights the strong performance of MiSight, with fitting activities bolstered by back-to-school momentum, despite some U.S. inventory challenges in October. Global campaigns successfully educated parents about myopia, boosting MiSight fittings, and the brand was prominently featured at international conferences in China and Korea. In the U.S., MiSight's partnership with the American Optometric Association is increasing visibility through various media activities. The paragraph also reports on CooperSurgical's revenue growth, particularly in fertility, driven by innovative products and services, and showcases advancements at the American Society of Reproductive Medicine Conference.

The paragraph discusses updates from a leading fertility company that uses genetic testing, machine learning, and AI to enhance embryo-level DNA analysis, aiming to increase the chances of having a healthy baby. The company has launched a new collaboration with ASRM and other organizations to establish a national training program for fertility professionals. The global fertility market is growing due to factors like delayed childbirth, improved access to treatment, and technological advancements, with the WHO noting that one in six people experience infertility. The company is dedicated to innovation and expanding its reach into 2025 with new products and services. Additionally, it reports a 11% year-over-year sales increase in its office and surgical segment, largely due to strategic acquisitions.

The paragraph discusses Cooper's solid growth in its medical devices, particularly minimally invasive gynecological surgical devices, despite a decline in PARAGARD sales. Challenges were faced with a U.S. IT system upgrade, but stability has been achieved, positioning the company for future growth. Cooper reported record revenues and significant organizational advancements, focusing on capacity expansion and operational improvements. Entering fiscal 2025, Cooper aims to execute long-term strategic goals. Brian Andrews notes the company's consolidated revenues for the fourth fiscal quarter were $1.018 billion, with increased gross margin and well-managed operating expenses, as both CooperVision and CooperSurgical benefit from prior investments.

The paragraph reports on the financial performance of a company, highlighting a 16.2% increase in consolidated operating income, leading to a 25.9% margin due to strong SG&A leverage. Interest expenses were $25.6 million, with a lower-than-expected effective tax rate of 11.8% due to stock option exercises. Non-GAAP EPS was $1.04 with about 201 million shares outstanding, and FX had a $0.02 negative impact as anticipated. The company reported $128 million free cash flow and $140 million CapEx, with net debt decreasing to $2.48 billion and a leverage ratio of 1.94x. The full year saw record revenues of $3.9 billion, an 8% increase, with strong performances in CooperVision and CooperSurgical segments. Operating margins improved, with operating income growing 19% in constant currency and EPS increasing by 15%. For fiscal 2025, the revenue guidance for CooperVision is $2.733 billion to $2.786 billion and for CooperSurgical, it's $1.347 billion to $1.372 billion, translating to consolidated revenues of $4.08 billion to $4.158 billion, up 6% to 8% organically.

The company finished the fiscal year strong in production, expecting this to enhance gross margins and drive a 10% to 12% growth in operating income, consistent with previous guidance. With no expected Fed interest rate changes, interest expenses are projected at around $90 million, prioritizing free cash flow to reduce debt. The anticipated full-year effective tax rate is slightly over 15%, and non-GAAP EPS is expected between $3.92 and $4.02. A currency headwind of about 1.5% to revenues and 4% to earnings is anticipated. They met or exceeded their fiscal 2024 expectations and aim to repeat this in 2025, leveraging improved production capacity and product pricing for operational performance. Investments will continue in new product launches, especially in myopia management and fertility. The operator then opens the floor for questions, starting with Craig Bijou from Bank of America, who inquires about unexpected softness at the fiscal quarter's end, to which Albert White responds noting the softness occurred from mid-October.

The paragraph discusses recent market softness observed in the U.S. and China, possibly due to hurricanes or other factors, which briefly extended into November but then normalized. Craig Bijou inquires about the slightly lower growth guidance for CVI this year, set at 6.5% to 8.5%, compared to previous years' 7% to 9%. Albert White responds that despite the lower guidance, they expect to continue growing faster than the market, which grew 5% to 7% in the past year. He mentions ongoing high demand for MyDay products exceeding manufacturing capacity, as they work on increasing production.

The discussion centers around the company's efforts to meet demand and future advancements, particularly with regard to the product PARAGARD. Albert White mentions that although PARAGARD grew by 2% for the year, it saw a 10% decline in the fourth quarter, indicating pressure from competitive products. The company's expectation for fiscal '25 is that PARAGARD's performance will vary slightly, ranging from a slight decline to a slight increase, depending on market conditions and potential new competition. Larry Biegelsen asks for further insights on sales and margins for fiscal '25 and the first quarter, with Brian Andrews responding.

In this paragraph, Albert White discusses the market softness observed in October and early November, clarifying that it was separate from the MiSight inventory reduction. He explains that MiSight's growth would have been normal without the inventory adjustments, which led to some leveling out between fiscal Q3 and Q4. White notes that the overall market was slightly softer than expected, but attributes this to a temporary blip rather than an ongoing trend. He reassures that conditions have since returned to normal and there is no indication of continued market softness.

The paragraph discusses the competitive landscape of the U.S. market for a company, comparing its performance to that of its competitors like J&J and Bausch. Despite the market becoming more competitive with new products, the company expresses confidence in maintaining growth above the market average, aiming to outperform by a few percentage points. In the third calendar quarter, the company grew by 9%, slightly ahead of the market's 7% growth. It indicates that October's performance could highlight differences, though competitor data for that month isn't available yet. It attributes some of its growth to its myopia management and MiSight franchise, as well as its MyDay product in the dailies space.

In the paragraph, a discussion is held about market growth expectations and supply challenges. The speaker believes their company will grow faster than the market and feels their guidance might be conservative when projecting 5% to 7% growth. A question from Jon Block about supply issues with "MyDay" and their impact on the Asia Pacific (APAC) market is raised. Albert White responds by stating that APAC's performance is affected by insufficient "MyDay" supply, and as they improve capacity, they anticipate strengthening in the region. Additionally, there are ongoing challenges with new fit data, but strong new fit activity in MyDay is being observed, prompting continued efforts to increase capacity.

The paragraph involves a discussion between Jon Block and Albert White regarding their company's current investment status and production capacity expansion. Jon Block remarks on the growth metrics of torics and multifocals, noting a narrow spread between them and overall CVI growth. Albert White responds that multifocal products are performing well and explains that the tight spread might be due to internal efforts around inventory and product distribution, rather than market changes. The conversation then transitions to Robbie Marcus, who asks about projected financial performance for 2025, particularly focusing on margins and operating income growth, seeking clarity on how these expectations can translate into concrete financial figures.

In the paragraph, Brian Andrews discusses the company's strong performance, attributing it to leveraging past investments, raising prices, reducing freight costs, and improving manufacturing productivity. He expresses confidence in achieving gross margin expansion and balancing investment activities with the goal of operating margin expansion, targeting 10% to 12% constant currency operating income growth. Despite unfavorable currency exchange trends, reported operating margins are expected to improve year-over-year. He also addresses the potential impact of tariffs on the company's operations, given their manufacturing presence outside the U.S., and how this might affect products sold in the U.S.

The paragraph includes a discussion about the uncertainty surrounding the potential impact of an upcoming administration change on manufacturing, noting that their company doesn't manufacture in countries like China, Mexico, or Canada. It then transitions to a dialogue between Chris Pasquale and Albert White about the pricing environment for contact lenses. Despite inflation not being at pre-pandemic levels, pricing appears stable and is expected to continue offsetting inflationary impacts. White expresses confidence that the industry can pass on inflationary pressures and suggests that pricing will likely remain favorable into the following fiscal year. Additionally, they mention that the contribution from acquired revenue, particularly from a past acquisition, Cook, should now be fully integrated.

The paragraph features a discussion between Albert White and Jason Bednar regarding the company's recent financial performance and future prospects. White confirms that their annualized revenue from recent deals is around $25 million, with specific acquisitions like obp and ZyMot performing well. He notes that the M&A environment is currently quiet but remains open to future opportunities. Bednar inquires about the impact of recent price increases on contact lens sales, suggesting the timing of communication might have affected pre-buying activity. White acknowledges the question, indicating that price adjustments are implemented globally throughout the first quarter.

The paragraph discusses the challenges in attributing specific impacts to various factors like geographic differences and product timing, especially concerning price increases. Albert White talks about the company's strategy to expand the availability of their MyDay products globally, including energy, toric, multifocal, and sphere lenses. The focus is on launching these products in additional markets over the next 12 to 18 months, in response to increased competition.

The paragraph discusses a company's strategy for distributing its successful products globally and addresses a question from Issie Kirby about a competitor's upcoming seven-day wear contact lens, which is likely targeting the two-week market rather than the daily and monthly markets where the company primarily operates. Albert White expresses uncertainty about how the new lens will impact the market but believes it will mainly appeal to existing two-week lens users. Additionally, the conversation shifts to the fertility market, where Albert White comments on the positive effects and potential support from the incoming administration, notably Trump's administration, regarding IVF and related reimbursements, countering concerns about potential negative impacts.

The paragraph discusses a strong quarter for the fertility industry, highlighting successes in areas like consumables, genomics, new tests, donor activity, and capital equipment. It also addresses a financial question from Steve Lichtman about free cash flow and capital expenditures (CapEx) for FY'25. Brian Andrews responds, noting that CapEx was slightly higher than anticipated, advising people to consider CapEx as about 11% of revenue for 2025. Overall, the fertility team had a productive quarter, and CapEx will likely remain steady based on supply considerations.

In the paragraph, Brian Andrews and Steve Lichtman discuss financial projections, with an emphasis on the free cash flow, which is expected to rise to between $350 million and $400 million. This increase is attributed to revenue growth, operational improvements, and working capital enhancement. Despite some headwinds from foreign exchange (FX) and taxes, interest expenses are expected to improve slightly. Capital expenditures are projected to rise to around $450 million. FX is expected to present a consistent headwind across all quarters, impacting revenue and EPS, particularly in the gross margin. Brett Fishbin then asks about the anticipated 40% growth for FY'25, seeking clarity on the contribution from U.S. and international markets, particularly in the U.K. and Korea for MiSight.

Albert White discusses the successful expansion of MiSight in markets like Korea and the U.K., emphasizing significant growth and potential future increases in market penetration globally, particularly driven by key accounts and larger retailers. He is optimistic about the product achieving over 40% growth, predicting strong performance in Europe and Asia-Pacific regions. Meanwhile, Brett Fishbin inquires about the impact of MyDay Energys and Biofinity Energys on growth, to which Albert White responds that these product lines are performing well, particularly highlighting MyDay Energys as an innovative and unique growth driver for CVI.

The paragraph discusses innovation in the market, mentioning products like MiSight and Energys, and notes their increasing significance. It addresses concerns about greater erosion in PARAGARD, questioning if it's due to a new competitor or losing market share. The 2025 guidance for low double-digit operating income growth accounts for a new low copper IUD. On fertility, the market, especially in the medical device segment, is expected to see mid to upper single-digit growth due to positive trends like increased insurance reimbursement and government focus on fertility support. The industry is projected to maintain steady growth for several years.

The paragraph discusses the current status and market dynamics of PARAGARD, the only non-hormonal IUD available in the U.S., which holds the full market share in its category. The lack of approval for a competitive product has not impacted PARAGARD's performance, although other hormonal products are gaining traction and potentially affecting the overall IUD market. The discussion also touches on consumer behavior in different regions worldwide, with no significant changes in price sensitivity or private label growth. Both branded and store brand products are experiencing steady growth, especially in the monthly and multifocal product spaces. Overall, consumer behaviors and fitting activities remain consistent.

In the paragraph, Albert White discusses the supply-demand dynamics in the contact lens industry, particularly regarding the shift towards daily lenses. He notes that significant investment and capital expenditure are necessary due to increased demand, requiring more machinery and time, and posing logistical challenges. White suggests that the industry, including CooperVision, is expanding capacity to meet this growing demand, with new manufacturing facilities and lines set to improve flexibility. He anticipates ongoing capacity additions will be necessary to keep up with market shifts, emphasizing that setting up new manufacturing lines is a lengthy process. Despite risks of overcapacity, White believes the industry will continue to adjust for several years as it catches up with demand for daily lenses.

In the paragraph, Anthony Petrone from Mizuho asks about the growth and margin potential of silicone hydrogel (SiHy) daily toric lenses at CooperVision (CVI). Albert White responds by explaining the complexity and growth potential of toric lenses, which are used to correct astigmatism. He highlights that toric lenses are a significant product for the company due to their good margins and increasing demand. White notes the complexity of producing and distributing toric lenses compared to spherical lenses but emphasizes that the market for toric lenses is expanding faster than the overall market due to their higher price point.

In the paragraph, Albert White discusses the impact of inventory management on contact lens sales, particularly for MiSight. He notes that there's been an inventory contraction due to distributors tightening inventories, which he attributes to seasonal patterns and financial considerations like cash flow and interest expenses. White anticipates fluctuations in MiSight sales due to this inventory management but emphasizes transparency in reporting these effects on growth. He concludes by expressing confidence in achieving strong results for fiscal year 2025 despite these challenges.

The operator ends the call by thanking the participants and indicating that they can now disconnect.

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