The Cooper Companies, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the Q4 2021 Cooper Company's earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then 0. I would now like to hand the conference over to your speaker today, Kim Duncan, Vice President, Investor Relations and Risk Management. Ma'am, please go ahead.

Good afternoon and welcome to the Cooper Company's fourth quarter and full year 2021 earnings conference call. During today's call, we will discuss the results and guidance included in the earnings release and then use the remaining time for questions. Our presenters on today's call are Al White, President and Chief Executive Officer, and Brian Andrews, Chief Financial Officer and Treasurer. Before we begin, I'd like to remind you that this conference call contains forward-looking statements, including all revenue and earnings per share guidance, and other statements regarding anticipated results of operations, market or regulatory conditions, and acquisitions, integrations of any acquisitions, or other anticipated benefits. Forward-looking statements depend on assumptions, data, or methods that may be incorrect or imprecise and are subject to risks and uncertainties. Events that could cause our actual results and future actions of the company to differ materially from those described in forward-looking statements are set forth under the caption, forward-looking statements in today's earnings release, and are described in our SEC filings, including Cooper's Form 10-K and Form 10-Q filings, all of which are available on our website at coopercos.com. Should you have any additional questions following the call, please call our investor line at 925-460-3663 or email ir at cooperco.com. And now I'll turn the call over to Al for his opening remarks.

Thank you, Kim, and welcome, everyone, to Cooper Company's Fiscal Fourth Quarter Conference Call. I'm pleased to report another strong quarter led by record revenues at Cooper Vision, where we exceeded the high end of expectations for the quarter. Our daily silicone hydrogel and myopia management portfolios posted strong results, and our key account strategy generated share gains in markets around the world. Within Cooper Surgical, our fertility business continued to perform extremely well, and we recently announced an exciting agreement to acquire Generate Life Sciences, a great strategic fit with our fertility and labor and delivery offerings. For the full fiscal year 2021, I'm proud to report record revenues at both Cooper Vision and Cooper Surgical, record non-gap earnings, and record free cash flow. As we enter fiscal 2022, we have strong momentum and expect another record-setting year. Regarding fourth quarter results and reporting all percentages on a constant currency basis, consolidated revenues were $759 million with Cooper Vision at $565 million, up 11%, and Cooper Surgical at $194 million, up 11%. Non-gap earnings per share were $3.28. For Cooper Vision, our daily silicone hydrogel portfolio led the way, growing 19%. All three regions reported strength in this product category, with our premium product, MyDay, and our mass market product, Clarity, both performing really well. BioAffinity also had a solid quarter, supported by strength in torix and multifocals. For the regions, the Americas grew 6%, led by our daily silicone hydrogel lenses, with particular strength in MyDay, where we continue seeing strong fit activity. EMEA grew a healthy 15% with improving consumer activity and strength in our key accounts driving growth and share gains. Within this region, we posted broad-based growth from our daily silicones and BioAffinity. Asia Pac grew 14%, led by a steady improvement in consumer activity and success with several new product launches. This region remains a very important growth driver for us, and we're investing accordingly as we're outperforming the market and taking share. For our FRP portfolio, BioAffinity posted solid results, driving growth in markets around the world with its broad offerings, including Atoric Multifocal and Energis, the most innovative product in the monthly space. Regarding product launches, we remain incredibly active. I've highlighted in the past the many products and range extensions we've been launching around the world for My Day, Clarity, and BioAffinity, and all that activity continued. This has driven consistent share gains, and we expect that to continue. One recent launch that I want to highlight this quarter is our new MyDay Multifocal. We've launched the product in the U.S. and several major European markets, and the feedback and results are absolutely fantastic. We're consistently hearing from eye care practitioners that the new binocular progressive fitting system is a breakthrough approach that simplifies fit and provides optimal visual acuity at all levels. And we're hearing that from patients who are touting it as the best multifocal they've ever worn for exceptional near, intermediate, and distant vision. We expect this launch to continue performing extremely well and to provide a nice halo effect, supporting the already successful MyDay brand of torques and spheres. Moving to myopia management, our portfolio grew 63% to 21 million, with my site up 165% to 7 million, and OrthoK products up 40%. We reached our goal of 65 million for the year, up 76% year-over-year, and our momentum is strong. As a global leader in the myopia management space, our portfolio is the broadest in the industry, comprised of MySight, the only FDA-approved myopia-controlled product, our broad range of market-leading ortho-K lenses, and our innovative sight-glass vision glasses. Regarding MySight, We didn't quite reach our target this quarter, but we did reach 19 million in sales for the full year, up a very impressive 149% year over year. We're making great progress with independent optometrists, buying groups, and retailers around the world, and we're seeing momentum in all these channels. We're also making great progress in China, where we signed an exclusive distribution agreement with Essilor. Essilor is now actively promoting MySight following a soft launch last month at one of the largest ophthalmic trade shows, and we're on target for a full launch in fiscal Q2. We've also assembled an advisory board of key opinion leaders whose affiliated hospitals represent over 50% of myopia management contact lens volume in China. This team of experts is providing fantastic insight into our MySite positioning and how we can grow OrthoK even faster and how SiteGlass will successfully fit in. As a reminder, childhood myopia rates in China are estimated at over 80%, and reducing myopia is a priority for the Chinese government, so the opportunity is significant. Lastly, we recently presented our industry-leading seven-year clinical study of MyCyte, confirming the product works for nearly all myopic children. It cuts myopia progression by roughly 59% on average. It works at any age a child starts treatment. It works for as long as the child wears it, and there's no rebound if treatment is stopped. These are the drivers that will continue supporting short and long-term growth. Regarding our other myopia management products, our Ortho-K portfolio performed really well, led by success in China, and in November, we commercially co-launched our SightGlass myopia management glasses in Europe with Essilor, and we'll be partnering with them on several additional launches coming soon. Overall, on myopia management, our momentum is strong, and we're still targeting constant currency growth of over 50% in fiscal 2022 to roughly $100 million in sales. To conclude on vision, we estimate the overall contact lens market grew 7% in calendar Q3, while Cooper Vision grew 8%, even as new fits remain below pre-COVID levels. According to recent U.S. data, roughly 64% of eye care practitioners stated they had capacity to serve more patients, but cannot, mostly due to staffing challenges. Having said that, trends are positive, and we expect the market to grow in the 4% to 6% range this coming year, supported by improving FIT activity in the U.S. and EMEA and reopening activity in Asia-Pac. Meanwhile, the long-term macro growth trends remain solid, with roughly one-third of the world being myopic today, and that expected to increase to 50% by 2050. For Coopervision, we closed this fiscal year on a really strong note, exceeding the high end of our expectations, and we've entered fiscal 2022 with a robust product portfolio, new product launches, a fast-growing myopia management business, and strong fit data. To ensure we're seizing the growth opportunities in front of us, we've increased our Salesforce investments and will continue with our successful myopia management investment strategy. We have strong momentum, we're growing faster than the market, and we expect that to continue. Moving to Cooper Surgical. Our fertility business performed exceptionally well, growing 24% year over year to 82 million. Strength was seen around the world and throughout our product portfolio, including from consumables, capital equipment, and genomics. One particular area of continued strength was our eye witness platform. This is our proprietary automated lab management system that clinics implement to maximize safety and security by optimizing their lab practices. A system like this is especially important in today's world to improve quality control and workflow management to enable social distancing and prevent mistakes such as embryo mismatches, which you unfortunately occasionally hear about. Regarding the broader fertility industry, our addressable market is approaching $2 billion with 5% to 10% long-term growth expected. It's estimated that one in eight couples has trouble getting pregnant due to a variety of factors, such as increasing maternal age, and that more than 100 million individuals worldwide suffer from infertility. Given the improving access to treatments, increasing patient awareness, greater comfort discussing IVF, and increasing global disposable income, this industry should grow nicely for many years to come. Within our office and surgical unit, we grew 3%. Medical devices performed well, growing 20%, led by our portfolio of uterine manipulators, several of our surgical devices, and our next generation EndoC advanced product line. Meanwhile, Paragard declined 17%, largely as forecasted due to buy-in activity from last quarter's price increase. Having said that, similar to what we've seen from the general IUD market, the performance was soft, likely due to COVID staffing challenges. Lastly, for Cooper Surgical, we recently announced an agreement to acquire Generate Life Sciences for $1.6 billion. Many of you may know this company as a core blood storage business, but they've done a phenomenal job expanding over the years, and this business is now a great strategic fit for Cooper Surgical as they're a leader in donor egg and sperm and cryopreservation services for fertility treatments, as well as being a leader in core blood and core tissue storage, which is an excellent fit with our labor and delivery group. We have an investor presentation on our website that summarizes the deal, but let me provide some additional color. Roughly one-third of the business is in fertility, which we estimate will grow 5% to 10% long-term, supported by general industry growth. Meanwhile, combining Generate's offerings with our existing portfolio allows us to leverage our infrastructure, launch new products, and go international to accelerate growth beyond this range. Two-thirds of the business is in cord blood and cord tissue storage, which we expect to grow 3% to 5% long-term. This is driven by increasing demand for cord tissue stem cells due to optimism around the significant number of clinical trials using these stem cells for regenerative medicine. Consolidated, this business offers long-term sustainable growth of 4% to 6%, and we believe there are opportunities to push that range higher with potential revenue synergies as we leverage our expertise. To finish, let me make a few comments on fiscal 2022. Introducing annual guidance in today's world is a challenge given COVID uncertainties. Regardless, our organic revenue growth is strong and we expect that to continue. We're investing in product launches and we're doing that intelligently by leveraging our operations to ensure we receive strong returns. I believe Cupervision is the most innovative company in the contact lens space today with leading products in myopia management and the broadest product offerings in the market and Cooper Surgical is in an extremely exciting position led by our fertility business. As a company, we remain on a steady upward trend, and we see that continuing for fiscal 2022 and many years beyond. And with that, I'll turn the call over to Brian.