The Cooper Companies, Inc.

Good afternoon. My name is Krista and I'll be your conference operator today. At this time, I would like to welcome everyone to the third quarter 2023 Cooper Company's earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, please press star one on your telephone keypad. And if you would like to withdraw that question, press the pound key. I will now turn the conference over to Kim Duncan, Vice President of Investor Relations and Risk Management. You may begin your conference.

Good afternoon and welcome to the Cooper Company's third quarter of 2023 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 will contain forward-looking statements, including anticipated results of operations, revenue, EPS, operating income, tax rate, and other financial guidance, anticipated expenses, benefits of infrastructure investments, strategic and operational initiatives, market and regulatory conditions and trends, product launches and demand, and pending or possible transactions. 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. Also, as a reminder, The non-GAAP financial information we will provide on this call is provided as a supplement to our GAAP information. We encourage you to consider our results under GAAP as well as non-GAAP and refer to the reconciliations provided in our earnings release, which is available on the investor relations section of our website under quarterly materials. Should you have any additional questions following the call, please email ir at cooperco.com. And now I'll turn the call over to Al for his opening remarks.

Thank you, Ken, and welcome, everyone, to Cooper Company's third quarter fiscal 2023 conference call. Demand for our products and services remains very healthy, and we solidly exceeded revenue expectations, posting record quarterly revenues of $930 million, driven by strong, sustainable, organic growth. Cooper Vision reported record quarterly revenues in its 10th consecutive quarter of double-digit organic revenue growth, and Cooper Surgical reported record quarterly revenues with its fertility business posting its 11th consecutive quarter of double-digit organic revenue growth. Our teams are delivering impressive results, our momentum is strong, and we're executing well on our strategic growth initiatives. Moving to the numbers, consolidated revenues were 930 million, up 12% organically. Cooper Vision posted revenues of 630 million, up 13% organically. and Cooper Surgical posted revenues of $300 million, up 9% organically. Exceeding $600 million in quarterly revenues was a first for Cooper Vision, and exceeding $300 million was a first for Cooper Surgical. Cooper Vision's growth was driven by our daily silicone hydrogel portfolios, and Cooper Surgical's growth was led by our fertility business. Non-GAAP earnings per share were $3.35. For the quarter, and reporting all percentages on an organic basis, Cooper Vision's revenue growth was strong and diversified. By geography, the Americas grew 12%, EMEA grew 13%, and Asia-Pac grew 16%. Throughout the world, we're leading with innovation, tied to new products, expanded product ranges, market-leading flexibility, and growth in key accounts. Within categories, spheres grew 9%, torques grew 16%, and multifocals grew 19%. Within modalities, daily silicone hydrogel lenses accelerated and grew 23% with MyDay leading the way. Daily silicone hydrogel lenses continue to be the main driver of growth for the contact lens industry, and we offer the broadest portfolio with MyDay and Clarity, available in a wide range of spheres, torques, and multifocals. And lastly, our silicone hydrogel monthly and two-week lenses, BioAffinity and Avera Vitality, grew a healthy 8%. Turning to products and starting with our high-growth daily silicone hydrogel portfolio, we're six months into the U.S. launch of our highly innovative MyDay Energist lens, and the ramp is progressing exceptionally well. This premium lens taps into a fundamental wearer need catering to the demands of today's lifestyles by incorporating digital boost technology to alleviate the impacts of digital eye strain. It's a big success with eye care practitioners and wearers alike, and our sales momentum is very strong. We're also seeing high demand for MyDay Toric as we continue rolling out our parameter expansion across North America and Europe. This demand is being driven by its market-leading Toric design, which mirrors BioAffinity's design, and our industry-leading SKU range, which is by far the widest Toric range in the daily market. With this broad range, eye care practitioners are capitalizing on the opportunity to offer their two-week and monthly Toric wearers the option to enjoy the freedom of wearing a daily Toric lens. And last but not least, MyDay Multifocal continues to take considerable share around the world, reestablishing Cooper Vision's position in the premium multifocal market segment. We continue to hear from eye care practitioners how easy the lens is to fit and how fantastic the visual acuity is. And I can speak to this personally, because I was recently fit in contact lenses for the very first time and went with MyDay Multifocals. The process was remarkably fast and easy, and these lenses are truly amazing. To conclude on my day, this technologically superior family of products continues to deliver high growth, and our momentum is fantastic. And lastly, within the daily segment, our Clarity family of lenses continues to perform well by offering a high-quality product at a mass market price point. It was especially nice to see strength with Clarity in several international markets, including an acceleration of sales in Asia-Pac. Outside of dailies, demand for Biofinity remained strong, led by Torex, Multifocals, and our custom offerings, and Avera Vitality had a solid quarter led by Torex. Moving to Myopia Management, we posted revenues of $30 million, up 30%, with MySite up 53%. MySite accelerated this quarter, posting its best growth of the year, even with China declining year-over-year due to tough comps against the stocking order last year. Meanwhile, Our Ortho-K franchise had a difficult quarter tied to portfolio realignment and weakness in China. Cisco Q4 has started off well, though, and we remain comfortable with our full-year guidance of $120 to $130 million, albeit probably at the lower end, as strength in my site likely won't offset Ortho-K's softness. Regarding my site, we're seeing improving fitting trends around the world driven by key accounts, higher-volume pediatric optometry practices, and from the successful integration of the sales process from our specialty lens unit into our regular sales channel. We're also continuing to see very high retention rates, including roughly 90% in the U.S., along with an ongoing positive halo effect with my site practitioners accelerating their use of other Cooper Vision lenses. We also recently confirmed that Aetna is now covering my site under medical plans that opt in to lens coverage, which represents 70% to 80% of Aetna plans. This follows Kaiser, who started covering MySight through vision care plans roughly a year ago. This type of coverage is exciting, but it's still very early in the process, and we have a lot of work to do to ensure eye care practitioners and families understand what it means. To conclude on MySight, as a reminder, it's the first and only FDA-approved contact lens for myopia control, and the product is backed by extensive clinical data. This is a critical differentiator as the proactive management of myopia becomes standard of care within the eye care community, to help reduce the progression of myopia in children, along with reducing the risk of long-term eye health problems associated with myopia, such as cataracts, retinal detachment, and macular degeneration. To finish on CooperVision, the contact lens market grew roughly 8% in calendar Q2, with CooperVision taking share at 11%. We expect the market to remain healthy, supported by the long-term macro growth trend and more people needing vision correction. It's estimated that 50% of the global population will have myopia or nearsightedness by the year 2050, up from roughly 34% today. This is driven by kids spending less time outdoors and the related greater use of digital screen indoors, among other factors. When you combine this with the ongoing shift to silicone hydrogel dailies, the increasing focus on higher value products such as torques and multifocals and higher pricing, we expect many years of solid growth for the industry. Within this, we expect Cooper Vision to remain a leader with its market-leading innovation, robust product portfolio, ongoing product launches, fast-growing myopia management business, and leading new fit data. Moving to Cooper Surgical, we posted 9% organic revenue growth, including fertility sales of $122 million, up 11% organically, for its 11th consecutive quarter of double-digit organic growth. Our fertility business continues to perform at a very high level, and the future is bright with strong macro trends supporting the industry's growth. For the quarter, we once again realized success from our diverse offerings within consumables, capital equipment, reproductive genetic testing, and donor activity. And regionally, we posted solid growth in the Americas, EMEA, and Asia-Pac. This was accomplished while investing in multiple areas, including geographic expansion, key accounts, infrastructure build-out, and R&D. We continue to launch new products and roll out existing products in new geographies, and we're clearly leading the way as one of the most innovative fertility companies in the world. In summary, we're in a fantastic place, and we're well-positioned to continue delivering success, given our great team, diverse portfolio, and global momentum. Regarding the broader fertility market, the macro trends that are driving global growth remain strong, and we're continuing to see a lot of exciting activity in the space. The industry has multiple growth drivers, starting with women delaying childbirth. Age is a key factor in contributing to the need for fertility assistance, and the median age of a woman's first birth in the U.S. within several other developed countries is roughly 30 years old and continuing to move higher. Other growth drivers include improving access to treatment, increasing patient awareness, increasing fertility benefits coverage, and technology improvements for both male and female infertility challenges. The World Health Organization recently released updated data showing that one in six people globally are affected by infertility at some point in their lives. And given that one-third of the underlying cause of infertility is women, one-third is men, and one-third is a combination of the two or unknown, this is an issue that impacts a lot of people and will continue to do so in the future. Moving to offices and surgical, which includes medical devices, ParaGuard, and stem cell storage, we posted sales of $178 million, up 8% organically. Within this, medical devices reported strong growth of 11%, driven by positive procedure volume, and strengthened several core products. In particular, our surgical and labor and delivery products performed well. Meanwhile, ParaGuard grew 7%, as we saw some bounce back from last quarter's softness, And our stem cell storage business grew 4% in line with expectations. To conclude on Cooper Surgical, it's with great pride that we say that every minute, somewhere around the world, a baby is born using Cooper Surgical products. Our business makes a difference in people's lives, and we love that. We're also operating in several markets that have excellent long-term growth characteristics, such as fertility, so we feel good about where we're positioned and what the future holds. Before turning the call over to Brian, let me make some high level comments on our strategic growth initiatives. The last couple of years has shown the strength of our business with revenue growth accelerating as we exited the COVID pandemic. This is a result of a multi-year effort concentrated on investing to drive sustainable organic growth. And we've done this while completing several successful strategic acquisitions. We intend to continue with this growth strategy moving forward. And embedded within this is investing in our people, improving our infrastructure, expanding areas such as sales and marketing, and investing in R&D. With that, let me conclude by saying how proud I am of our teams. None of this is possible without the dedication and incredible hard work of our employees. Now, let me turn the call over to Brian.