Alcon Inc.

Greetings and welcome to the Alcon second quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A 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. I would now like to turn the call over to your host, Mr. Dan Cravens, Vice President, Investor Relations for Alcon. Thank you. You may begin.

Welcome to Alcon's second quarter 2024 earnings conference call. Today we issued a press release and interim financial report. We also posted a supplemental slide presentation on our website to enhance today's call. You can find all these documents in the investor relations section 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 differ materially from those expressed or implied in our forward-looking statements, and as such, you should not place undue reliance on any forward-looking statements. Important factors that could cause our actual results to differ materially from those in our forward-looking statements are included in our Form 20F Earnings Press Release and Interim Financial Report, which are all on file with the Securities Exchange Commission and available on their website at sec.gov. Non-IFRS financial measures used by the company may be calculated differently from and may not be comparable to similar measures used at 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 in 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 second quarter. After his remarks, Tim will discuss our performance and outlook for the remainder of 2024. Then David will wrap up, and we will open the call for Q&A. With that, I'd now like to turn the call over to our CEO, David Endicott.

Thanks, Dan, and thank you all for joining today's call. I'm pleased to report another solid quarter. We grew sales by 6% to $2.5 billion. We grew core diluted earnings by 15% to 74 cents per share. We delivered a core operating margin of 19.8%. These results are a testament to the durability of our end markets, the success and breadth of our innovative portfolio of products, and our geographically balanced footprint. During the quarter, we continued our focus on preparing for product launches that will position us well for future growth, and we achieved some significant regulatory and clinical milestones towards these goals. I'll start with Surgical, where we recently received clearance from the U.S. Food and Drug Administration for our next-generation Unity FACO platform. which includes the combined vitret cataract device and the standalone cataract device. As I've said on previous calls, Unity is designed to create near-physiological conditions during surgery. This should allow Unity to drive significant efficiencies over current systems in the market, including our own Centurion and Constellation devices. By some estimates, there'll be 31 million cataract surgeries in 2024, with that number rising to 37 million by 2029. Given these numbers, case efficiency is going to be crucial to allow surgeons to keep up with demand. If Unity can add even one additional surgery per day, that would be a meaningful improvement and an important value creator for surgeons and payers. Additionally, Unity brings first-to-market technologies and consumables that are designed to deliver meaningful benefits for the surgeon, staff, and patients. These include FACO that is twice as fast as Centurion, as well as cut speeds that are 50% faster on VITREP than Constellation. Globally, there's approximately 28,000 Centurion and Constellation devices in the market that we will target for upgrading over the next decade. We've begun user experience testing Unity in the U.S. with select doctors, and over the coming months, we'll continue to do this work in order to capture real-world data and feedback ahead of a broader commercial launch during the second quarter of 2025. Before I move to implantables, I'm pleased to announce that we recently closed our acquisition with Belkin. With this transaction, we plan to accelerate the global expansion of direct selective laser trabeculoplasty. We see an emerging consensus among leaders in glaucoma that SLP is an effective first-line treatment to reduce intraocular pressure. It also reduces reliance on eye drops, mitigates the cost of medication, and improves patient throughput. This acquisition broadens our existing glaucoma portfolio, which also includes eye drops and the hydrous microstem. Now I'll discuss implantables, where I continue to be extremely impressed with our performance in international markets. In particular, we're seeing strong uptake of both panoptics and Vividi in many regions around the globe. During the second quarter, we also saw inventory build related to China VBP. As we have articulated in the past, we continue to expect this to be a gradual ramp implemented province by province. In the US, we continue to collect surgeon experience and patient outcomes with our next generation panoptics. We expect to make a decision on launch timing in the coming months. Now I'll turn to contact lenses where our innovation continues to win in the market. In daily lenses, we saw another quarter of share gains across the category driven by our product innovation, including the Precision One family and the Daily's total one for astigmatism. Precision One continues to be an important growth driver for us, and even after more than four years in the market, the Precision One family grew approximately 30% in the second quarter. This is a testament to how successful contract lens innovation drives long-term, durable growth. Now I'll discuss reusable lenses, where the category remains strategically important as it drives more than half of the new fits. Our flagship reusable lens is Total 30, which continues to gain traction in markets around the world. It's the first and only reusable lens to leverage water gradient technology. Additionally, our proprietary Seligent technology creates a protective layer that mimics the eye's natural surface in order to help resist deposits and bacteria for a clean, comfortable lens. The Total 30 family currently includes sphere, toric, and multifocal modalities. I continue to be especially pleased by the uptake of Total 30 multifocal. Multifocals are an important category as where a dropout steps up meaningfully beyond the age of 45. For patients, Total 30 multifocal leverages our precision profile lens design which delivers a smooth progress of power gradients for clear, uninterrupted vision and works with the eye's natural pupillary function. And for ECPs, this technology delivers an excellent fit success rate, reducing chair time and improving patient flow. In addition, we will further expand our reusable portfolio with the upcoming launch of Precision 7. Precision 7 is a new contact lens specifically designed for a one-week replacement schedule that's based on a unique proprietary technology. We expect Precision 7 to help drive continued share gains in the reusable category where we have historically been under indexed. As a reminder, one point of share gain in the global reusables category corresponds to approximately 40 million of revenue for Alcon. We're working with a handful of eye care professionals in the US who have started fitting Precision 7 and early feedback has been excellent. We will continue to collect this feedback with select customers through 2024 ahead of a broader commercial launch in 2025. Before I discuss Ocular Health, I want to briefly comment on the inventory provisions we referenced in our press release. In the second quarter, we booked an inventory provision related to a quality issue with a raw material supplied by a third party. This raw material was used in the production of select contact lenses in a single manufacturing site. We've initiated a limited voluntary recall with the appropriate health authorities, and to date we've received no reports of serious adverse events. And moving to Ocular Health, Our over-the-counter portfolio of eye drops continues to perform exceptionally well. I'm particularly pleased with Sustane, where we had our fourth consecutive quarter of double-digit growth driven by our multi-dose preservative-free formulations. In the coming months, we're going to refresh and simplify Sustane's brand around these three products, Sustane Ultra, Sustane Hydration, and Sustane Complete, in order to better reach the appropriate customers for each formulation. And finally, in our pharmaceutical portfolio, Total prescription growth for Roquitane in the second quarter was in the mid-teens, well ahead of the broader glaucoma market. Lastly, I'm pleased to confirm that we submitted the new drug application for AR15512 to the FDA during the second quarter. In addition, we received our NDA acceptance and PDUFA date, which is May 30, 2025. Next, I'll briefly discuss market dynamics for the second quarter. In Cataract, we estimate the global procedures were up approximately low single digits. Additionally, global ATI well penetration was up approximately 190 basis points year-over-year, mainly driven by international markets. In Contact Lenses, we estimate that the retail market was up approximately mid-single digits. This growth was driven by pricing and continued steady wearer trade-up. Now, I'll briefly comment on our eyedrop strategy in China. Earlier this month, we entered into a long-term strategic relationship with OccuMention to commercialize and develop select eye drops in this market, including Sustain Ultra and AR15512, among others. OccuMention is an established leader in the local ophthalmic pharmaceutical industry with strong commercial, R&D, and manufacturing capabilities. We believe this transaction will maximize the long-term potential opportunity in China, and we expect the transaction to close later this year. In surgical and in contact lenses, we remain committed to our direct presence in China, and we're excited to grow these businesses in this important market. With that, I'll pass it to Tim, who will take you through our financial results and provide more color on our outlook.