The Cooper Companies, Inc.

Hello, thank you for standing by. At this time, we would like to welcome you to the Q2 2025 Cooper Companies 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 this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I would now like to turn the conference over to Kim Duncan, VP of Investor Relations and Risk Management. Please go ahead.

Good afternoon and welcome to Cooper Company's second quarter 2025 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 statements relating to revenues, EPS, cash flows, FX and tax rates, tariffs, and other financial guidance and expectations, strategic and operational initiatives, market conditions and trends, and product launches and demand. 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 cooperpost.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, Kim, and welcome everyone to today's fiscal Q2 earnings call. This was another solid quarter with consolidated organic revenue growth of 7%, led by double-digit growth in both our daily silicone hydrogel lenses at Cooper Vision and our office and surgical portfolio at Cooper Surgical. We also continued executing at a high level, delivering operational improvements and OpEx leverage that drove double-digit non-GAAP earnings growth. Similar to other companies, we're dealing with a more complex global operating environment, but we're controlling what we can by executing well. including taking share, delivering leverage, launching products, and completing capacity expansion projects. We'll cover all of that on today's call. Moving to the numbers, consolidated revenues were $1.002 billion, up 6% year-over-year or up 7% organically. Cooper Vision reported quarterly revenues of $670 million, up 5% or up 7% organically. Cooper Surgical posted quarterly revenues of $333 million. up 8%, or up 7% organically. Margins improved nicely, and non-GAAP earnings were 96 cents, up 14% year-over-year. For Coopervision and reporting growth rates organically, the Americas grew 8%, EMEA 6%, and Asia-Pac 5%. Within categories, Torx and multifocals grew 7%, and spheres were up 6%. Within modalities, our daily silicone hydrogel lenses, MyDay and Clarity, grew 10%, and our silicone hydrogel FRP lenses, BioAffinity and Avera, were up 6%. Our myopia management portfolio grew 19%, with MySight up 35%. Turning to products, and starting with daily silicone hydrogel lenses, MyDay continued growing double digits with particular strength in Torex multifocals and our innovative Energist offerings. We remain very bullish on this product family as we increase availability in new markets and in new channels to capitalize on opportunities from greater penetration in existing accounts and with new customers. With improved capacity, we're back to being aggressive, and that can be seen in a number of areas, including increasing availability of our multifocal and extended torque ranges, new launch activities such as MyDay Energist in Canada, and our upgraded clarity one-day sphere with wet lock technology in Japan, and expanded private label discussions. A lot of this activity is tied to increasing fitting sets and trial lenses, so we expect this to accelerate revenue growth starting in fiscal Q4, which is supported by the strong fitting activity we're seeing today. To add a little more color, we just launched My Day Energist with its innovative digital boost technology in Canada, through a series of well-covered events, and early feedback is extremely positive. We're receiving significant requests for fitting sets, and initial orders are rolling in. Meanwhile, our MiDay toric parameter expansion, which provides eye care practitioners with the widest skew range by far for a daily toric lens, continues progressing well across North America and Europe, and we'll be launching the range expansion in targeted Asia-Pac markets soon. And lastly, MyDay Multifocal's unique advanced 3-add design paired with its easy-fitting system is performing exceptionally well as market availability continues to increase. Turning to clarity, we posted solid results with this high-quality, lower-priced lens portfolio, offering a great alternative to MyDay. The redesigned Multifocal, which now mirrors MyDay's design, is a fantastic product and grew double digits this quarter. And I could speak to this product's great handling, comfort, and visual acuity as I'm happily wearing them right now reading this script. Moving to frequent replacement lenses, BioAffinity continues to strengthen its position as the number one contact lens in the world, with more people wearing it than any other lens. We're seeing nice growth throughout its full portfolio of market-leading prescription options, including spheres, torques, multifocals, extended ranges, made-to-order products, and energists. BioAuthenticity provides eye care practitioners the ability to fit an amazing 99.9% of all patients, by far the widest offering of any contact lens family on the market. Turning to my site, we saw growth in fitting activity accelerate this quarter, with revenue reaching $25 million, up 35%. A key component to the improved fitting activity is the implementation of a new pricing model initiated following the conclusion of our global pricing review that confirmed that the annual wearer cost is not a significant barrier to greater bidding activity. Price certainly matters, and training eye care practitioners and educating parents on myopia is important, but the key driver is just getting kids into the lens. Once kids begin wearing MySite, they love it, and with retention rates running around 90%, they stay in it. And when parents verify the benefits of the treatment with their ECPs, they're sold on the technology. With this data, our focus is now heavily on reducing upfront fitting barriers by offering promotions such as an initial one to three months free. This provides a no-risk opportunity for parents to get comfortable with their children wearing contact lenses and for kids and young adults to get comfortable wearing contacts for the first time. With a broader rollout of this strategy, along with the launch of a large key account private label deal, we're already seeing a nice acceleration in fitting activity in EMEA, and we expect similar success in other markets. This new initial free fitting period will result in a moderate headwind in Q3, but based on current fitting activity, we expect a considerably stronger Q4. And lastly, we're progressing well with our launch planning for MySite in Japan. along with My Day My Site and EMEA, with both anticipated to occur in early 2026. Moving to Cooper Surgical, we reported revenues of $333 million, up 8% or up 7% organically. The quarter was driven by success in our surgical medical devices, labor and delivery portfolio, and Paragard. Fertility was a little softer than we were expecting, so let me start there. For the quarter, fertility revenues were $127 million, up 3% and up 2% organically. Although supported by positive signs, such as double-digit growth in our donor business and in our witness system consumables that fertility labs use to track activity, overall growth was lower than expected due primarily to market softness. This was largely tied to Asia Pac, where fertility cycles continue to decline year over year, and from fertility clinics managing cash tighter, which is including delaying capital purchases and installments. We expect this softness to continue and to put pressure on market growth and our growth. Having said that, cycle growth in EMEA and the Americas remains solid, which supports the market near term, and we remain incredibly bullish on the long-term prospects for fertility as the underlying growth fundamentals remain intact. including women delaying childbirth, improving access to treatment, increasing patient awareness, increasing benefit coverage, and improving technology. Additionally, it's estimated that one in six people worldwide will experience infertility at some point in their lives, so this is an issue that impacts a lot of people. And as a leader in the space, we will continue delivering innovation, launching new products and services, providing extensive clinical training, and expanding geographically. Moving to office and surgical, we posted sales at $206 million, up 13% or up 10% organically. As mentioned on our last earnings call, we expected a strong Q2, and we delivered. Performance was driven by strength in minimally invasive gynecological surgical devices, such as our Ally uterine manipulator portfolio, and within labor and delivery with products such as fetal pillow and our cervical ripening balloons. Although not included in organic growth, we also saw considerable strength in OBP Surgical, our most recent acquisition of an innovative suite of single-use lighted cordless surgical retractors, which grew 31%. Paragard grew 18% this quarter, supported primarily by the conclusion of buy-in activity before our May 1st price increase, but also due to continued interest in our new single-hand inserter, which we launched earlier this year. With Paragard now having grown 15% through the first six months of the year, heavily driven by channel fill, we now expect a mid-teens decline in fiscal Q3 before a flattish Q4 resulting in low to mid single-digit growth for the full fiscal year. To conclude, let me comment on our revenue guidance, which we're tightening and raising at the midpoint. This incorporates our solid Q2 performance and the positive impact from updated currency rates, offset by lower organic growth rates that corresponds to a reduction in our market growth assumptions for contact lenses and fertility. For contact lenses, the industry grew 4% in calendar Q1, so we're reducing growth expectations to the 4% to 6% range for the year, down from 5% to 7%. This new range matches the industry's historical growth range which we saw for many years pre-COVID. With this change, we're adjusting Cooper Vision's organic growth expectations to 6% to 7%. To be fair, industry pricing remains solid and consumption remains healthy, so this may prove conservative depending on market conditions and channel inventory. For Cooper Surgical, we're reducing market growth expectations for fertility to the low single digits, down from mid to upper single digits, and correspondingly reducing our fertility growth expectations. This is partially offset by the strength we've seen in Paragard, but still reduces Cooper Surgical's consolidated organic growth rate to the 3.5% to 4.5% range. Again, it's important to note our commercial execution at Cooper Vision and Cooper Surgical remains strong, and we're taking share, but against an expectation for softer market growth. And with that, I'll turn the call over to Brian to cover our financial results in more detail, including our earnings guidance.