Alcon Inc.

Greetings and welcome to the ALCOM first quarter 2023 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce our host, Dan Cravens, VP and Investor Relations. Thank you, sir. You may begin.

Welcome to Alcon's first quarter 2023 earnings conference call. Yesterday, we issued a press release, an interim financial report, and posted a supplemental slide presentation on our website to enhance today's call. You can find all these documents in the investor relations sections of our website at investor.alcon.com. Joining me on today's call are David Endicott, our Chief Executive Officer, and Tim Stonecipher, our Chief Financial Officer. Our press release, presentation, and discussion will include forward-looking statements. We expressly disclaim any obligation to update forward-looking statements as a result of new information or future developments, except as required by law. Our actual results may vary materially from those expressed or implied in our forward-looking statements. Accordingly, you should not place undue reliance on any forward-looking statements. Important factors that could cause our actual results to differ from those in our forward-looking statements are included in Alcon's Form 20F and our earnings press release and interim financial report on file with the Securities Exchange Commission and available on the SEC's website at sec.gov. Non-IFRS financial measures used by the company may be calculated differently from and therefore may not be comparable to similarly titled measures used in other companies. These non-IFRS financial measures should be considered along with, but not as alternatives to, the operating performance measures as prescribed per IFRS. Please see a reconciliation between our non-IFRS measures with directly comparable measures presented in accordance with IFRS and our public filings. For discussion purposes, our comments on growth are expressed in constant currency. In a moment, David will begin by recapping highlights from the first quarter. After his remarks, Tim will discuss our performance and outlook for the remainder of the year. Then David will wrap up and we will open the call for Q&A. With that, I will now turn the call over to our CEO, David Endicott.

Thanks, Dan, and welcome to OutCon's first quarter 2023 earnings call. 2023 is off to a great start. We benefited from solid demand, strong commercial execution, and pricing improvements across both our franchises, which resulted in double-digit sales growth for the company in the quarter. In addition, we delivered a core operating margin of 20.6% and a core diluted earnings of 70 cents per share. At Surgical, we had another strong quarter despite challenging comparisons in South Korea. In implantables, recall that last year there was a change in PCIOL reimbursement in Korea, which increased demand during the first quarter. This change has made PCIOL out-of-pocket expense higher for many Korean patients, and as a result, local demand has since reduced. If we exclude the impact from Korea, which we estimate to be approximately 47 million, total implantable sales were up roughly 5% on a reported basis and approximately 9% on a constant currency basis. More broadly, we've continued our ATIL market leadership for another quarter with approximately half of the global market and two-thirds of the U.S. market, despite increasing competitive activity. In equipment, we continue to upgrade and expand our installed base with the Centurion and Legion devices. In the first quarter, our team delivered a record number of new FACO machine installations since spin. Importantly, there remains a sizable installed base of Legacy, Infinity, Lauria, and other machines in international markets. Accordingly, we see continued opportunity for growth in 2023. Additionally, we continue to grow in diagnostics, and we are pleased with our win rate with the Argos Biometer. Argos helps deliver clinic-to-OR connectivity, and results from real-world study highlight that Argos delivers significant time efficiencies for patients during cataract evaluation. We started rolling out Argos across international markets, and customer reception has been positive. Additionally, customers continue to be pleased with the performance of Centurion with Active Sentry, which enhances safety and confidence during surgery. Importantly, as we upgrade and expand our equipment installed base, we see a natural uplift in consumables, where we've also taken some select price increases. At the recent ASCRS conference, Alcon innovations were featured in approximately 180 abstracts across cataract, refractive, and glaucoma surgery, as well as visualization and ocular health. As a leader in the ophthalmic surgical space, we're committed to improving patient outcomes and surgeon efficiency by accelerating the pace of innovation. There are three important studies for the conference I thought I'd like to highlight. First is on Clarion. Data presented at the conference evaluated a head-to-head comparison of distance and intermediate vision of Clarion and a competitive monofocal plus IOL. This study concluded that Clarion, provides excellent distance and no statistically significant difference in intermediate vision potentially offering superior value to the competitive lens. At the conference, we also expanded our connected equipment ecosystem with the introduction of enhanced visualization and data integration. Diagnostic images from the Argos Biometer with image guidance are now connected to the newly available Ingenuity 1.5 to precisely overlay incisions, capsulorhexis, eye well centration, and toric alignment. Data presented at the conference shows that this integration is increasing efficiency and reducing manual errors. This helps surgeons work faster while improving their confidence in delivering better patient outcomes. Given the post-pandemic surgical backlogs, these improvements are critically important. Lastly, data presented on our HYDRAS microstent reinforced that HYDRAS offers long-term glaucoma medication reduction as well as reduction of interlacular pressure. It's important that surgeons consider which stent to recommend to their patients. Additionally, governments and healthcare payers consider this type of data as they determine which products and procedures to reimburse. Now I'll move to vision care, where we had a strong quarter in both contact lenses and ocular health. In contact lenses, we're seeing the benefit of our expanded product portfolio, which now includes sphere, toric, and multifocal options for value, mainstream, and premium customers in both daily and reusable categories. We continue to see meaningful share gains driven by our new TORIC product launches, including Precision One, Total 30, and Daly's Total One. We introduced Total 30 for astigmatism in the first quarter. This is the first reusable lens to use water gradient technology created specifically for astigmatic wearers, and initial customer response has been exceptional. Total 30 TORIC is currently available in the US and parts of Europe, and we anticipate expanding availability to additional markets throughout 2023. Turning to ocular health, we continue to integrate Aerie into the Alcon family. Our U.S. iDrop sales force has already added Roccatan and Repressa to their promotional program, which contributed nicely to our vision care growth this quarter. In addition, we saw growth in our over-the-counter portfolio, mainly driven by favorable pricing and sustained family of products. Finally, in contact lens care, while we continue to navigate supply challenges, we feel increasingly confident about our progress toward resolution in the back half of the year. Now I'll provide an update on our end markets. In surgical, global cataract procedures were up mid-single digits in the first quarter versus prior year. Global ATIOL penetration in the quarter was down 30 basis points versus prior year. However, excluding the impact from Korea, global penetration was up 90 basis points versus prior year, and up 40 basis points sequentially. And we're following penetration trends closely and continue to expand programs that digitally and conveniently educate patients about their lens options early in the cataract journey. Based on recent survey data, we estimate that U.S. ATI well penetration could go as high as 35%. So with current penetration in the high teens, we believe there's plenty of runway for value creation. Moving to contact lenses, retail market growth was up high single digits. In the quarter, we saw a steady wearer trade-up and meaningful contribution from price increases. Now, before I pass it to Tim, I want to briefly comment on our market outlook for the remainder of the year. On our February earnings call, we indicated that we were planning for a modest slowdown in full-year market growth. During the first quarter, global ATI well penetration was resilient, and contact lens trade-ups and price capture were both strong. Historically, our markets have grown around 5%, and given current macroeconomic news, we believe it's prudent to assume market growth at or slightly below historical rates in the back half of the year. However, we continue to expect positive contributions from market share and price, and as a result, we expect to grow faster than the market. With that, I'll turn it over to Tim, who will take you through our financial results and provide more color on our outlook.