Q1 2024 Cooper Companies Inc Earnings Call

Speaker Change: [music].

Okay.

Operator: Good afternoon. At this time, I would like to welcome everyone to the Q1 2024 Cooper Companies Earnings Conference call. All lines have been placed on mute to prevent any background noise.

Speaker Change: Good afternoon at this time I would like to welcome everyone to the Q1 2020 for Cooper Companies' earnings Conference call.

Speaker Change: All lines have been placed on mute to prevent any background noise.

Operator: 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, again, please press star 1. I would now like to turn the conference over to Kim Duncan, VP of Investor Relations and Risk Management. Please, go ahead.

Speaker Change: After the Speakers' remarks, there will be a question and answer session.

Speaker Change: If you'd like to ask a question during this time.

Speaker Change: Press Star followed by the number one on your telephone keypad.

Speaker Change: She would like to withdraw your question again, each breakfast star one.

Speaker Change: I would now like to turn the conference over to Kim Duncan VP.

Kim Duncan: Investor Relations and risk management.

Kim Duncan: Go ahead.

Kim Duncan: Good afternoon, and welcome to Cooper Companies' first quarter 2024 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.

Good afternoon, and welcome to Cooper Companies' first quarter 2024 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.

Brian G. Andrews: And treasurer.

Kim Duncan: Before we begin, I'd like to remind you that this conference call contains forward-looking statements, including revenues, EPS, operating income, tax rate, FX, and other financial guidance and expectations. Strategic and Operational Initiatives, Market and Regulatory 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 risk and uncertainty, events that could cause our actual results and future actions of the company to differ materially from those described in forward-looking statements. These risks and uncertainties, which 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' 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 in the Investor Relations section of our website. 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.

Brian G. Andrews: Before we begin I'd like to remind you that this conference call contains forward looking statements, including revenues EPS operating income tax rate FX in other financial guidance and expectations strategic and operational initiatives market and regulatory conditions and trends and product launches and demand.

Brian G. Andrews: 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.

Brian G. Andrews: SEC filings, including Supers Form 10-K, and Form 10-Q filings all of which are available on our website at Cooper codes Dot com.

Brian G. Andrews: 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.

Brian G. Andrews: Should you have any additional questions. Following the call. Please email IR at <unk> Dot com.

Brian G. Andrews: I will turn the call over to al for his opening remarks.

Albert G. White: Great. Thank you, Kim, and welcome, everyone, to Cooper Company's 2024 Fiscal First Quarter Conference Call. We're off to an outstanding start this year, posting all-time record quarterly revenues of $932 million. Cooper Vision started the year on a solid note, growing nicely around the world, and Cooper Surgical achieved record quarterly revenues, with our fertility business posting its 13th consecutive quarter of double-digit organic growth. Our earnings were strong, and our momentum is excellent, with capacity expansion progressing well and demand remaining very healthy. Moving to the quarterly numbers and reporting all percentages on an organic basis, consolidated revenues were $932 million, up 8% year-over-year. Cooper Vision posted revenues of $622 million, up 7%, led by strength in our daily silicone hydrogel portfolio.

al: Great. Thank you Kim and welcome everyone to Cooper company's 2020 for fiscal first quarter conference call. We're off to an outstanding start this year posting all time record quarterly revenues of $932 million Coopervision has started the year on a solid note growing nicely around the world and Cooper surgical achieved record quarterly revenues with our fertility business.

al: Posting its 13th consecutive quarter of double digit organic growth our earnings were strong and our momentum is excellent with capacity expansion progressing well and demand remaining very healthy.

al: Moving to the quarterly numbers and reporting all percentages on an organic basis consolidated revenues were $932 million up 8% year over year Coopervision posted revenues of $622 million up 7% led by strength in our daily silicone hydrogel portfolio.

Albert G. White: And Cooper Surgical posted revenues of $310 million, up 8%, led by another great quarter in our fertility business. Margins improved, and profits were solid with non-GAAP earnings per share of $0.85. Remember that we just completed a 4-for-1 stock split last week. For Cooper Vision, the Americas grew 6%, EMEA 10%, and Asia-Pacific 7%. All three regions reported success with our innovative product portfolios, market-leading flexibility, and growth in key accounts.

al: And Cooper surgical posted revenues of $310 million up 8% led by another great quarter and our fertility business.

al: Margins improved and profits were solid with non-GAAP earnings per share of <unk> 85 cents remembering that we just completed a four for one stock split last week.

For Coopervision, the Americas grew 6% EMEA at 10% and Asia Pac 7%, all three regions reported success with our innovative product portfolios market, leading flexibility and growth in key accounts.

Albert G. White: Within modalities, our daily silicone hydrogel lenses, My Day and Clarity, grew 14%, and our silicone hydrogel monthly and two-week lenses, BioAffinity and Avera Vitality, grew 6%. We're continuing to see outsized demand, especially for My Day, but our capacity is improving, and this is reflected in our higher revenue guidance that we'll cover shortly. Turning to products, we're seeing very strong growth in demand for MyDay. Starting with My Day Multifocal, our momentum is truly fantastic. The unique combination of an advanced multifocal design paired with an easy-fitting system is resulting in 98% of patients being fit in two pairs or less. And patient feedback continues to be outstanding, including my own. As many of you know, I wear these lenses, and they're amazing.

al: Modalities, our daily silicone hydrogel lenses <unk> clarity grew 14%.

Silicone hydrogel monthly in two week lens is bio affinity and a very vitality grew 6%.

al: We're continuing to see outsized demand, especially for my day, but our capacity is improving and this is reflected in our higher revenue guidance that will cover shortly.

al: Turning to products, we're seeing very strong growth in demand with my day.

al: Starting with <unk> multifocal, our momentum is truly fantastic. The unique combination of advanced multifocal design paired with an easy fitting system is resulting in 98% of patients being fit in two pairs or less and patient feedback continues to be outstanding including my own.

al: As many of you know where these lenses and they are amazing whether I'm looking at a screen for long hours driving home eating out or doing anything else My vision as crisp in my I feel great I'm comfortable saying these are the best multifocal in the market and our outstanding growth and strong demand certainly supports that.

Albert G. White: Whether I'm looking at a screen for long hours, driving home, eating out, or doing anything else, my vision is crisp, and my eyes feel great. I'm comfortable saying these are the best multifocals in the market, and our outstanding growth and strong demand certainly support that. Moving to MITATORC, this lens is also performing extremely well. The rollout of our parameter expansion across North America and Europe has been a tremendous success, and we look forward to increasing availability as capacity improves. Demand for the product continues to be driven by our market-leading torque design, which mirrors Biofinity's design, and our industry-leading skew range, which is by far the widest torque range in the daily market. In our MyDay Sphere portfolio, MyDay Energis is approaching its one-year anniversary in the U.S. market and is continuing to generate great results. Its innovative digital boost technology delivers optics designed for today's lifestyle, where on average, people spend more than seven hours per day on screens, and wearers love it.

al: Moving to my day tour. This lens is also performing extremely well the rollout of our parameter expansion across North America, and Europe has done a tremendous success and we look forward to increasing availability as capacity improves.

al: <unk> for the product continues to be driven by our market, leading torque design, which mirrors bio affinity these design and our industry, leading SKU range, which is by far the wireless torque range in the daily market.

al: In our mind, a sphere portfolio my de energize is approaching its one year anniversary in the U S market and.

al: And it is continuing to generate great results. It's innovative digital boost technology delivers optics designed for today's lifestyle, where on average people spend more than seven hours per day of screens and wears love it.

Albert G. White: Meanwhile, our premium My Day sphere is also posting great results. To wrap up on My Day, our team has done a phenomenal job supplying existing customers while keeping expectations in check on new product launches and geographic expansion. I'm now happy to report that our success-expanding capacity is easing some of those constraints and allowing us to be more active moving forward. Moving to Clarity. With its full family of silicone hydrogel spheres, torques, and multifocals, we're continuing to do well. The comfort, ease of handling, and price positioning have led Clarity to be a lens of choice for many new wearers.

al: Meanwhile, our premium Monday sphere is also posting great results.

al: Wrap up on my day, our team has done a phenomenal job supplying existing customers, while keeping expectations in check our new product launches and geographic expansion I'm now happy to report that our success expanding capacity is easing some of those constraints and allowing us to be more active moving forward.

al: Moving to clarity with its full family of silicone hydrogel sphere, toric and multifocal, we're continuing to do well the comfort ease of handling and price positioning have like clarity to be a lens of choice for many new wearers.

Albert G. White: Outside of dailies, demand for bioaffinity remains strong, led by torques and multifocals. It's worth highlighting our bioaffinity-torque multifocal, which is growing very nicely, as eye care practitioners continue making it their primary lens for patients experiencing more complex vision needs, balancing presbyopia with differing levels of astigmatism. We'll be expanding availability of this lens in existing markets and launching a new market soon, so we're excited about that. Avera also had a nice quarter led by Torrey.

Outside of dailies demand for bio affinity remains strong led by toric and multifocal it's.

al: It's worth highlighting our bio <unk> toric, multifocal, which is growing very nicely as eyecare practitioners continue making it their primary lens for patients experiencing more complex vision needs balancing presbyopia with differing levels of astigmatism.

al: We'll be expanding availability of this lens in existing markets and launching a new market. Soon so we're excited about that.

<unk> also had a nice quarter led by <unk>.

Albert G. White: Moving to Myopia Management, we posted revenues of $29 million, up 19%, with my site up 51%. This was another excellent quarter from my side, powered by growth across all regions with particular strength in EMEA, where we posted record quarterly sales. Worldwide, we're continuing to see momentum in key accounts, high retention rates, and a nice halo effect. We're also launching new digital tools and programs to streamline the procurement process, making it easier and quicker. My site remains the first and only FDA-approved contact lens for myopia control, and it's backed by extensive clinical data and real-world results. 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.

al: Moving to myopia management, we posted revenues of $29 million up 19% with my site up 51%.

al: This was another excellent quarter from eisai powered by growth across all regions with particular strength in EMEA, where we posted record quarterly sales.

al: Worldwide, we are continuing to see momentum in key accounts high retention rates and a nice Halo effect. We're also launching new digital tools and programs to streamline the fitting process, making it easier and quicker <unk> remains the first and only FDA approved contact lens for myopia control and it's backed by extensive clinical data and real World <unk>.

al: <unk>.

al: This is a critical differentiator as a proactive management of myopia become standard of care within the eye care community to help reduce the progression of myopia in children.

Albert G. White: Outside of my site, our Ortho-K lenses declined 10% due to weakness in China. And at PsyClash, you may have heard from our JV partner, Esalor Luxottica, that the FDA recently granted PsyClash Spectacles breakthrough device designation. We're excited about this update and will continue working closely with the FDA in hopes of obtaining approval in the second half of 2025. Finally, as we look to expand myopia care to all children, we've launched a pilot program in the US called Generation Sight, in collaboration with three top optometry schools, the Illinois College of Optometry, the New England College of Optometry, and the Massachusetts College of Pharmacy and Health Sciences, to provide myopia This program engages local public school systems to drive awareness and treatment of myopia by providing free eye exams and free MiSite.

al: Outside of my site or ortho K lenses declined 10% due to weakness in China.

al: And I'm, sorry glass you may have heard from our JV partner Essilor Luxottica that the FDA recently granted <unk> breakthrough device designation. We're excited about this update and we will continue working closely with the FDA in hopes of obtaining approval in the second half of 2025.

al: Finally, as we look to expand myopia care to all children. We've launched a pilot program in the U S called generation site in collaboration with three top optometry schools.

al: Illinois College of Optometry, the New England College of Optometry, and the Massachusetts College of Pharmacy, and health Sciences to provide myopia care to underserved children.

al: This program engages local public school systems to drive awareness and treatment of myopia by providing free eye exams and free my site that also helps optometry students get real world pediatric experience, while increasing their clinical capabilities as they develop into the next generation of professional leaders.

Albert G. White: It also helps optometry students get real-world pediatric experience while increasing their clinical capabilities as they develop into the next generation of professional leaders. As a leader in the myopia management space, we're certainly proud of programs like this that are making a difference in the lives of kids in our community. To finish on Coopervision, the contact lens market grew 9% in calendar 2023, with Coopervision taking share growing 11%. We expect 2024 to be another strong year, 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 by the year 2050, up from roughly 34% today.

al: As a leader in the Myopia management space. We're certainly proud of programs like this that are making a difference with kids in our communities.

al: To finish on coopervision, the contact lens market grew 9% in calendar 2023, with coopervision, taking share growing 11%. We expect 2024 to be another strong year supported by the long term macro growth trend of more people needing vision correction, it's estimated that 50% of the global population will have my <unk>.

al: <unk> by the year 2050 up from roughly 34% today. When you combine this with the ongoing shift to silicone hydrogel dailies, the increasing focus on higher value products and higher pricing, we expect many years of solid growth for the industry.

Albert G. White: When you combine this with the ongoing shift to silicone hydrogel dailies, the increasing focus on higher value products and higher prices, we expect many years of solid growth for the industry. Within this, we expect to remain a leader with our innovation, robust product portfolio, ongoing product launches, strength and premium torque, and multifocal products, fast-growing myopia management business, and leading new fit data. Moving to Cooper Surgical, we posted record quarterly revenues of $310 million, up 8% organically. Fertility sales were $119 million, up 11%, which is our 13th consecutive quarter of double-digit organic growth.

al: Within this we expect to remain a leader with our innovation robust product portfolio ongoing product launches strengthened premium toric and multifocal products.

al: Growing myopia management business, and leading new fit data.

al: Moving to Cooper surgical we posted record quarterly revenues of $310 million up 8% organically fertility sales were $119 million up 11%, which is our 13th consecutive quarter of double digit organic growth.

Albert G. White: This success is driven by our outstanding team and market-leading products and services within consumables, capital equipment, and reproductive genetic testing. We're also investing for the future, opening new donor sites, providing extensive training in our Centers of Excellence, expanding geographically, and accelerating innovation. We believe our focus on investing in and delivering the most innovative and advanced solutions to fertility clinics and patients remains unmatched. This includes our recent launch of Witness IQ, a cloud-based digital platform that further enhances the benefits of the Witness system to track activity, reduce errors, and improve efficiencies in fertility labs. And we remain at the forefront of fertility-based genetic testing. Cooper Surgical was an early adopter of artificial intelligence to identify the best embryos to transfer during an IVF cycle, and we're now further advancing our leadership position with the launch of primary template-directed amplification, A New Approach to DNA Amplification for Embryo Biopsy Samples.

al: This success was driven by our outstanding team and market, leading products and services within consumables capital equipment and reproductive genetic testing.

al: We're also investing for the future opening new donor sites, providing extensive training in our centers of excellence expanding geographically and accelerating innovation, we believe our focus on investing and delivering the most innovative and advanced solutions that fertility clinics and patients remains unmatched <unk>.

al: This includes our recent launch of witness IQ a cloud based digital platform that further enhances the benefits of the witness system to track activity reduce errors and improve efficiencies and fertility labs.

al: And we remain at the forefront of fertility based genetic testing Cooper surgical was an early adopter of artificial intelligence to identify the best embryos that transfer during an IVF cycle and we're now further advancing our leadership position with the launch of primary template directed amplification.

al: Our new approach to DNA amplification for embryo biopsy samples.

al: As an enhancement to the existing pre implementation genetic testing process. This technology better identify genetic anomalies in a faster more accurate manner.

Albert G. White: As an enhancement to the existing pre-implementation genetic testing process, this technology better identifies genetic anomalies in a faster, more accurate manner. This is the first major advancement to DNA amplification in embryos since 2009 and will help drive better patient outcomes. Delivering these types of innovations is why we're a leader in this space, and it's our commitment to continue this type of work. For the global fertility market, the trends supporting significant long-term growth remain intact, including women delaying childbirth, increasing patient awareness, greater benefits coverage, technology advancements that improve success rates, and, broadly speaking, improving access to treatment. The World Health Organization highlights that one in six people globally will be affected by infertility at some point in their lives.

al: This is the first major advancement to DNA amplification and embryo since 2009 and will help drive better patient outcomes.

Speaker Change: Delivering these types of innovations is why we're a leader in this space and it's our commitment to continue this type of work.

Speaker Change: For the global fertility market the trends supporting significant long term growth remain intact, including women delaying childbirth, increasing patient awareness greater benefits coverage technology advancements that improve success rates and broadly speaking improving access to treatment.

Speaker Change: The World Health organization highlights at one in six people globally will be in fact will be affected by in fertility at some point in their lives. So this is an issue that impacts a lot of people and will continue to do so in the future.

Speaker Change: As part of this we remain incredibly committed to the fertility industry and will always stand in support of patients and clinics access to fertility treatment is incredibly important for so many people and Cooper will continue to advocate for increased accessibility and the advancement of human reproductive rights on a global basis.

Albert G. White: So this is an issue that impacts a lot of people and will continue to do so in the future. As part of this, we remain incredibly committed to the fertility industry and will always stand in support of patients and clinics. Access to fertility treatment is incredibly important for so many people, and Cooper will continue to advocate for increased accessibility in the advancement of human reproductive rights on a global basis.

Speaker Change: Moving to office and surgical we posted sales of $191 million up 6% organically with medical devices growing 6% stem cell storage up 4% and PARAGARD up 7%.

Albert G. White: Moving to office and surgical, we posted sales of $191 million, up 6% organically, with medical devices growing 6%, stem cell storage up 4%, and Paragard up 7%. Within our medical device business, we reported strength in our labor and delivery portfolio, including the Cook products that we acquired last November that grew 13%. We also reported strength in our minimally invasive gynecological surgery products, which include market-leading disposables and innovative capitals such as our Ally uterine manipulator portfolio. Our Stem Cell business had a solid quarter, and Paragard outperformed expectations with outstanding execution around mid-single-digit pricing. To conclude on Cooper Surgical, we take great pride in being able to say that every minute, somewhere around the world, a baby is born using Cooper Surgical products.

Speaker Change: Within our medical device business, we reported strengthen our labor and delivery portfolio, including the Cook products that we acquired last November that grew 13% we.

Speaker Change: We also reported strike in our minimally invasive gynecological surgery products, which include market, leading disposables and innovative capital such as our ally uterine manipulator portfolio, our stem cell business had a solid quarter and PARAGARD outperformed expectations with outstanding execution around a mid single digit price increase.

Speaker Change: <unk>.

Speaker Change: To conclude our Cooper surgical we take great pride in being able to say that every minute somewhere around the world. A baby is born using Cooper surgical products, we're making a difference in people's lives and Thats, a big part of what makes this business special for us.

Speaker Change: Before turning the call over to Brian Let me say that in addition to our strong operational performance our efforts around environmental sustainability corporate social responsibility and other important areas within our business are also advancing well.

Speaker Change: Thank you to our 15000 plus employees around the world for their hard work and dedication as they drive our success and now I'll turn the call over to Brian.

Albert G. White: We're making a difference in people's lives, and that's a big part of what makes this business special for us. Before turning the call over to Brian, let me say that, in addition to our strong operational performance, our efforts around environmental sustainability, corporate social responsibility, and other important areas within our business are also progressing well. So, thank you to our 15,000-plus employees around the world for their hard work and dedication as they drive our success. Now, I'll turn the call over to Brian. Thank you, Alan. Good afternoon, everyone.

Brian: Thank you al and good afternoon, everyone. Most of my commentary will be on a non-GAAP basis. So please refer to our earnings release for a reconciliation of GAAP to non-GAAP results.

Brian: For the first quarter consolidated revenues were $932 million up 9% as reported and up 8% organically.

Brian: Consolidated gross margin was 67, 3% up from 65, 7% last year driven by efficiency gains in price at both coopervision at Cooper surgical.

Brian G. Andrews: Most of my commentary will be on a non-GAAP basis, so please refer to our earnings release for a reconciliation of GAAP to non-GAAP. For the first quarter, consolidated revenues were $932 million, up 9% as reported, and up 8% consolidated gross margin was 67.3%, up from 65.7% last year, driven by efficiency, gains, and price at both Cooper Vision. Operating expenses grew 8%, improving to 43% of revenues as we continue leveraging prior SG&A investments. Consolidated operating margin improved to 24.4%, up from 22.6, led by the Gross Margin Improvement, NSG. Below operating income, interest expense was $28.6 million, and the effective tax rate was lower than expected at 13.3% due to stock options.

Brian: Operating expenses grew 8% improving to 43% of revenues as we continued leveraging prior SG&A investment activity.

Brian: Consolidated operating margin improved to 24, 4% up from 22, 6% led by the gross margin improvement and SG&A leverage.

Brian: Below operating income interest expense of $28 6 million and the effective tax rate was lower than expected at 13, 3% due to stock option exercises.

Brian: non-GAAP EPS was <unk> 85.

Brian: Up 18% with roughly $200 million average shares outstanding.

Brian: The impact from FX was <unk> <unk> negative year over year for the quarter.

Brian: Free cash flow was $5 million with capex of $118 million.

Brian: As discussed on prior calls free cash flow continues to be impacted as we progressed with our capacity expansion projects.

Brian G. Andrews: Non-GAAP EPS was $0.85, up 18%, with roughly $200 million average. The impact from FX was 3 cents negative year-over-year. Free cash flow was $5,000,000 with CapEx of $100,000,000. As discussed on prior calls, free cash flow continues to be impacted as we progress with our capacity expansion project. Net debt increased to $2.6 billion at the closing.

Brian: Net debt increased to $2 6 billion due to the closing due to closing of most of the Cook medical acquisition in November.

Brian: To summarize fiscal Q1 this was an excellent start to the year.

Brian: Coopervision and Cobra surgical both posted strong results and we expect this to continue.

Brian: We remain focused on exceptional operated operational execution combined with high return investment activities, such as increasing capacity and expanding geographically and we're confident this will drive significant long term shareholder value.

Brian G. Andrews: Due to closing the Pook Medical Acquisition, To summarize fiscal Q1, this was an excellent start. Cooper Vision and Cooper Surgical both posted strong results, and we expect this to continue. We remain focused on exceptional operational execution, combined with high-return investment activities, such as increasing capacity and expanding geographically, and we're confident this will drive significant long-term share Moving to fiscal 2024, we're increasing expectations for revenues and earnings by incorporating our Q1, Better Future Operational and slightly lower. This results in full-year consolidated revenues of $3.85 to $3.9 billion, up 7% to 8% For CooperVision, we expect strong results to be driven by healthy demand and improving capacity, which translates to an increase in Organic Revenue Guidance. Eternite, which equates to 2.57 to 2.6 billion years old.

Brian: Moving to fiscal 2024 guidance.

Brian: We're increasing expectations for revenues and earnings by incorporating our Q1 beat.

Brian: Better future operational performance and slightly lower interest expense.

Brian: This results in full year consolidated revenues of $3 85 to $3 9 billion up 7% to 8% organically.

For Coopervision, we expect strong results to be driven by healthy demand and improving capacity.

This translates to an increase in organic revenue guidance, the 8% to 9%, which equates to $2 five 7% to two $6 billion.

Brian: Procurement surgical we expect continuing strength and fertility along with solid performance in our office and surgical product category.

Brian: This translates to an increase in our organic revenue guidance to 5% to 7%, which equates to $1 two seven to $1 9 billion.

Brian G. Andrews: For Cooper Surgical, we expect continuing strength and fertility, along with solid performance in our office and surgical product lines. This translates to an increase in organic revenue guidance to 5-7%, which equates to 1.27 to 1.29. We're increasing our non-GAAP EPF guidance to an expected range of $3.50 to $3.00, up 9% to 12%, or of 15 to 17. This guidance assumes roughly $108 million of interest, which includes no interest rate changes by the Fed during the remainder. For tax, we're expecting a full year effective tax rate of roughly 14.5% by incorporating Q1 and assuming no additional or current.

Brian: We're increasing our non-GAAP EPS guidance to an expected range of $3 50.

Brian: To $3 58.

Brian: 9% to 12% year over year are up 15% to 17% in constant currency.

Brian: This guidance assumes roughly $108 million of interest expense.

Brian: Which includes no interest rate changes by the fed during the remainder of our fiscal year.

Brian: For tax we're expecting a full year effective tax rate of roughly 14, 5% by incorporating Q1 and assuming no additional discrete items.

Brian: Foreign currency rates.

Brian G. Andrews: Rates are very similar to our initial annual. Thus, the impact to Q2 to Q4 is essentially on... And the full year impact is still roughly a negative 1% to revenue and a negative five. To wrap up, we had an excellent fiscal Q1, and the business is trending. We're leveraging our prior investment activity, advancing our production efforts, and Investing to Drive. Demand and momentum are strong, and that's reflected in our updated guidance. With that, I'll hand it back to you. The floor is now open for your questions. So to ask a question at this time, please press star then the number one on your telephone keypad.

Brian: Rates are very similar to our initial annual guidance. Thus the impact to Q2 to Q4 is essentially unchanged.

Brian: And the full year impact is still roughly a negative 1% to revenues.

Brian: And a negative 5% to earnings.

Brian: To wrap up we had an excellent fiscal Q1 and the business is trending well.

Brian: We're leveraging our prior investment activity advancing our production efforts and investing to drive continued growth.

Brian: Demand and momentum are strong and that's reflected in our updated guidance.

Speaker Change: And with that I'll hand, it back to the operator for questions.

Speaker Change: Sure.

Speaker Change: The floor is now open for your questions.

Speaker Change: So ask a question at this time please.

Speaker Change: Fresh start and the number one on your telephone keypad.

Craig William Bijou: For this Q&A, you'll be provided the opportunity to ask one question and one further follow-up question. For now, we'll pause for just a moment to compile the Q&A roster. www.youtube.com.au Your first question comes from the line of Craig Bijou with Backup America. Please go ahead.

Speaker Change: For the Q&A you will be provided the opportunity to ask one question and one follow up question.

Speaker Change: For now we will pause for just a moment to compile the Q&A roster.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Your first question comes from the line of Craig Bijou with Bank of America.

Craig William Bijou: Go ahead.

Craig William Bijou: Thanks.

Craig William Bijou: Good good afternoon, and congrats on a good start to year two.

Albert G. White: Good, good afternoon, and congrats on a good start to your 2024. So maybe, I guess, you know, maybe just start with, you know, some of the backdrop on the overall contact lens market. Obviously, you know, Still pretty strong. I've heard your comments, Al, on the growth of the market, but I'd love to hear a little bit about pricing, volume trends, and just kind of the transition to daily and just where you guys are with your supply and how you can capitalize on that. Sure, yeah, absolutely. I'll cover that. Several comments, I guess, as we think about it.

Craig William Bijou: 2024.

Craig William Bijou: So.

Speaker Change: Maybe I guess, maybe just start with some of the backdrop on the overall contact lens market obviously.

Speaker Change: Still still pretty pretty strong.

And I heard your comments al on the growth market, but love to hear a little bit about pricing and volume trends.

Speaker Change: The transition to daily.

Speaker Change: And.

Speaker Change: Just where you guys are with your.

Speaker Change: Supply and how we can capitalize on that.

Speaker Change: Sure Yeah, absolutely can cover that.

Speaker Change: Several comments, so I guess as we think about it you are correct. The contact lens market is strong right now.

Albert G. White: You're correct, the contact lens market is strong right now, and it doesn't show any indications of slowing down. So we as an industry are in pretty good shape. When you look at pricing and volume trends and the transition to dailies, I mean, those are the hot points that are driving the market, and it does go back really to the transition to dailies. I mean, that's one of the biggest drivers as the market continues to shift to dailies away from the two-week and monthly modalities.

Speaker Change: It doesn't show any indications of slowing down.

Speaker Change: So were we.

Speaker Change: We as an industry are in pretty good shape.

Speaker Change: When you look at pricing and volume trends in the transition to dailies I mean, those are the high points that are driving the market.

Speaker Change: And it does go back relate to the transition to dailies I mean, that's one of the biggest drivers as the market continues to shift to dailies away from the two week and monthly modalities, that's driving growth of the overall marketplace and thats continuing to happen and it has just many many years I think in front of us.

Albert G. White: That's driving growth in the overall marketplace, and that's continuing to happen, and we have just many, many years, I think, in front of us. From a pricing perspective, you're continuing to see positive pricing. We saw that through the price increases in Q1. I think you're, frankly, going to continue to see price increases as we move forward, given where the market is right now. Volume trends, when you think about it, if you take that in terms of wearers, we are seeing wearers increase. The number of wearers around the world is increasing at a modest pace, kind of as it does consistently.

From a pricing perspective, youre continuing to see positive pricing, we saw that through the price increases in Q1.

Speaker Change: I think you are frankly going to continue to see price increases as we move forward given where the market is right now.

<unk> trends when you think about it if you take that in terms of where we are seeing wearers increase the number of wearers around the world is increasing at a at a modest pace kind of as it does consistently so you have that kind of underlying the growth, but then that transition to dailies and pricing being a big component of it the other thing that I want to mention there.

Albert G. White: So you have that kind of underlying growth, but then that transition to dailies and pricing being a big component of it. The other thing that I want to mention is the growth in torque and multifocals. You're seeing, you obviously see that in our numbers because we report it, but as a market, you're seeing a lot of growth in torques and multifocals. Those are higher-priced products that are doing really well, and they're going to continue to grow because they're underpenetrated throughout the world.

Speaker Change: <unk> is the growth in toric and multifocal Youre seeing you, obviously see that in our numbers because we report it but as the market youre seeing a lot of growth and toric and multifocal is those are higher priced products that are doing really well.

Speaker Change: And theyre going to continue to grow because our underpenetrated throughout the world. So you have a lot of potential for future growth and towards multifocal as and when I roll that into dailies and we talk about what's hitting the marketplace now with daily towards daily Multifocal.

Albert G. White: So you have a lot of potential for future growth in torques and multifocals. And when I roll that into dailies, and we talk about what's hitting the marketplace now with daily torques and daily multifocals, that supports. Even more so, given the kind of strong market growth that's out there. From a supply perspective, we're in a much better spot than we were when we were talking at the start of this year. We made a lot of progress. My hat's off to the team.

Speaker Change: Supports.

Speaker Change: Even more so that the kind of strong market growth that's out there.

Speaker Change: From a supply perspective, we are in a much better spot than we were.

Speaker Change: When we were talking to start this year, we made a lot of progress my hats off to the team we have fantastic manufacturing team within coopervision.

Albert G. White: We have a fantastic manufacturing team within Cooper Vision, and they've made some tremendous progress over the last quarter. So we're in a much better position to be able to support our existing customer base and also be able to launch products, new products, and geographic expansion.

Speaker Change: And they've made some tremendous progress over the last quarter. So we're in a much better position to be able to.

Speaker Change: To support our existing customer base and also be able to launch products <unk>.

Speaker Change: New products and geographic expansion.

Albert G. White: Thanks, Alan. If I can just follow up on the fertility environment, and obviously, you guys had pretty strong growth. Again, in double digits. Obviously, there are a lot of headlines around IVF fertility.

Speaker Change: Got it thanks al if I could just follow up on on the fertility environment and obviously you guys had pretty strong growth again in double digits, obviously, theres a lot of headlines around IVF fertility.

Albert G. White: And, you know, some companies calling or pointing out that benefits may be getting pushed. So, I guess I just wanted to ask you about the benefit environment and, you know, it sounds like the overall environment for fertility is still very strong, you know, strong trends, but any reason to think that you can't continue to do double-digit growth? You're right. Fertility is getting a lot of headlines. Now, that's largely a US-based thing because it's tied to Alabama and the court ruling.

Speaker Change: And.

Speaker Change: Hey at some companies.

Speaker Change: Colin are pointing out that benefits may be getting pushed so I guess I just wanted to ask you.

Speaker Change: To benefit the environment and it sounds like the overall environment for fertility is still very strong strong trends, but any reason to think that you can continue to do double digit.

Speaker Change: Double digit growth.

Speaker Change: You are right for till he is getting a lot of headlines.

Speaker Change: That's largely a U S based thing because it's tied to Alabama and a court ruling.

Albert G. White: I won't kind of get on my high horse, if you will, with my frustration about what's going on there. But obviously, as a big player, we support fertility and all the patients and all the fertility clinics out there, and we'll continue to do so. So there's some commentary that's out there more in the US market than anywhere else around the world. But when I look at the global fertility market and how we're doing, I would only put so much weight on that because, at the end of the day, the fertility markets can continue to be really strong, and we'll see how we do quarter to quarter, but we're going to continue to post double-digit growth for a number of years, I The underlying characteristics of that market are just too strong and are going to support too much growth for many years. Thanks for taking the questions.

Speaker Change: I won't kind of get on my high horse. If you will my frustration about what's going on there, but obviously it is a big player we support fertility and all the patients and all the fertility clinics out there and we'll continue to do so.

Speaker Change: So there's some commentary that's out there more in the U S market than anywhere else around the world.

When I look at the global fertility market and how we're doing.

Speaker Change: I would only put so much weight on that because I think at the end of the day that fertility market is going to continue to be really strong and we will see how we do quarter to quarter, but.

Speaker Change: We're going to continue to post double digit growth for a number of years I believe.

Speaker Change: The underlying characteristics of that market are just too strong.

Speaker Change: We're going to support too much growth.

Speaker Change: For many years in front of us.

Speaker Change: Great. Thanks for taking the questions.

Albert G. White: Yep. Our next question comes from the line of Larry Pickleson with Wells Fargo. Please go ahead. Good afternoon.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Our next question comes from the line of Flaring Nicholson with Wells Fargo. Please go.

Flaring Nicholson: Go ahead.

Lawrence H. Biegelsen: Thanks for taking the question. I'll echo my congratulations on the quarter here. Hey, Al and Brian, I actually wanted to start with margins and then one on CSI.

Flaring Nicholson: Good afternoon, and thanks for taking the question I'll Echo my congratulations on the quarter here.

Flaring Nicholson: Al and Brian I actually wanted to start with margins and then one CSI.

Lawrence H. Biegelsen: So Brian, the gross and operating margins were up nicely in Q1. How do we think about the gross margin and operating margin for fiscal 2024 and the phasing? It seems like we could see upside to the margins based on what's implied in the guidance, from what I can tell. Hi Larry.

Flaring Nicholson: So Brian the gross and operating margins were up nicely in Q1, how do we think about the gross margin and operating margin.

Flaring Nicholson: For fiscal 2024, and the phasing it seems like we could see upside to the margins based on what's implied in the guidance.

Speaker Change: What I can tell.

Brian: Hi, Larry Yes. Thank you.

Brian G. Andrews: Yeah, thank you. You know, our story is largely pretty similar to the commentary we provided last. Outside of the FXP piece, which is negative to us on revenues and EPS and OI, frankly, and cost of goods, we're still holding gross margins pretty similar to last year. So, you know, it'll depend a little bit on product mix as you work through the year. It'll bounce around a little bit, but I'd expect that we'll land somewhere in there where we ended last year.

Brian: The story is largely pretty similar to the commentary we provided last quarter.

Larry: Outside of the FX piece, which is negative to us in on revenues and EPS in Oi frankly.

Larry: And cost of goods.

Larry: Still holding gross margins pretty similar to last year. So.

Larry: And a little bit on product mix as you work through the year, it'll bounce around a little bit, but I would expect that we'll land somewhere in the neighborhood of where we ended last year on an as reported basis from a gross margin perspective.

Brian G. Andrews: Operating margin, you know, we've taken up our implied constant currency OI growth to 14 to 17%. We're effectively increasing our operating margin a touch from where we were, where we had guided last quarter, but yeah, I would expect operating margins to be up on an as-reported basis, year-over-year, taking quite a bit more on the constant currency. And from a gating perspective, I wouldn't really... http://TheBusinessProfessor.com a little bit more of a negative in 2, which is our worst FX quarter, and so it's going to impact. That's helpful. And Al, to follow up on Craig's question on CSI, you know, you grew 8% in Q1 organically, and you're guiding to 5 to 7. So why does growth slow?

Larry: Operating margin.

Larry: We've taken up our implied constant currency oi growth to 2014% to 17%. So we're effectively increasing our operating margin a touch from where we were where we had guided last quarter.

Larry: But yes, I would expect operating margins to be up on an as reported basis year over year quite a bit more on a constant currency basis.

Larry: And from a gaming perspective, I wouldn't really point out anything in particular outside of the fact that FX as we've been telling people last quarter is a bit more of a negative.

Larry: <unk>.

Larry: In Q2.

Larry: Which is our worst that next quarter or so is going to impact us a little bit there.

Speaker Change: That's helpful and al to follow up on.

Speaker Change: Craig's question on CSI, you grew 8% in Q1 organically you're guiding to five to seven so why does growth slow are you assuming some slowdown in IVF or are you assuming.

Albert G. White: Are you assuming some slowdown in IVF? Or are you assuming, you know, new competition for Paragard? Talk about that, please.

Speaker Change: But new competition to PARAGARD and talk about that please thank you.

Albert G. White: Thank you. Yeah, we'll see how fertility does on a quarterly basis, right? I mean, the underlying factors that drive or continue to be strong.

Speaker Change: Yes, we will see how fertility does on a quarterly basis right I mean underlying the underlying factors that drive fertility or continue to be strong and I believe we're going to continue to put up strong fertility growth moving forward.

Albert G. White: And I believe we're going to continue to put up strong fertility growth moving forward. When it comes to the growth of five to 7%, you are correct, right? But I would still say so, even with the strength of Peregrine Q1.

Speaker Change: When it comes to the growth 5% to 7% you are correct right I would still say even with the strength in PARAGARD in Q1 and by the way I think we're going to have a good quarter with PARAGARD and Q2.

Albert G. White: And by the way, I think we're going to have a good quarter with Peregrine Q2. I would still kind of guide people to say, hey, that's going to be roughly flat on a year over year basis due to ultimate volume demand and maybe some competitive entrance into that market. Now, maybe that doesn't happen, and you'll get some upside from that. So you could argue there's a little bit of conservatism in that number.

Speaker Change: I would still kind of guide people to say, hey, that's going to be roughly flat on a year over year basis.

Speaker Change: Due to the ultimate volume demand and maybe some competitive entrants into that market now maybe that doesn't happen and you'll get some upside from that so you could argue there is a little bit of conservatism in that number but.

Albert G. White: But after one quarter, I think taking it from four to six, up to five to seven, probably enough, and hopefully, we're able to certainly meet that, if not more. Thank you. Our next question comes from the line of Jeffrey Johnson with Bayer. Please go ahead.

Speaker Change: After one quarter I think taken it from four to six up to five years to seven <unk>.

Speaker Change: And now if and hopefully we're able to certainly meet that if not beat that.

Speaker Change: Thank you.

Okay.

Speaker Change: Our next question comes from the line of Jeff Johnson with Baird. Please go ahead.

Jeffrey D. Johnson: Hey, thanks, guys. Good afternoon, and congratulations on the quarter. So, Al, maybe a similar question, as Larry just asked on CSI, but for CDI, you're taking that up 100 basis points for the year. You know, this first quarter came in right exactly where you guided right at the 7%, so it does imply an acceleration over the back half. So with 1Q being where you expected, you know, what gives you the confidence to raise this early in the year to faster growth over the next few quarters, number one. And number two, I think last quarter, you talked about potentially hitting double digits with CVI in the back three quarters of the year after this first capacity-constrained quarter. Do you still have confidence in that, you know, potentially getting to the double-digit CVI the rest of this year? Thanks. Yeah, yeah, a great question, Jeff.

Jeffrey D. Johnson: Hey, Thanks, guys. Good afternoon, and congratulations on the quarter. So al maybe similar question as Larry just ask on CSI, but for CVI youre, taking that up 100 basis points for the year.

Jeffrey D. Johnson: First quarter came in right exactly where you guys are great at the 7%. So it does imply an acceleration.

Jeffrey D. Johnson: Over the back half, so with <unk> and where you expected what gives you the confidence to raise this early in the year.

Jeffrey D. Johnson: Faster growth over the next few quarters number one and number two I think last quarter, you talked about potentially hitting double digits with CBI in the back three quarters of the year. After this first capacity constrained quarter do you still have the confidence in that.

Speaker Change: Potentially getting to the double digit CVI the rest of this year. Thanks.

Speaker Change: Yeah, Yeah, Great question Jeff.

Albert G. White: Well, in Q1, we did 7%. It was a strong 7%. I mean, we almost got ourselves to round up to 8%.

Speaker Change: Well in Q1, we did 7% it was a strong 7% I mean, we almost got ourselves to round up to 8%. So a good solid Q1 to start the year off.

Albert G. White: So a good solid Q1 to start the year off. I do think we'll get ourselves back to double digits. As a matter of fact, I think we've got a good chance to get to double digits right away here in Q2. So when I look at kind of where we sit today, how we did in Q1, how we closed the quarter out, how February is going, improvements in our capacity that we have, that's going to allow us a little bit more flexibility. Yeah, I feel comfortable taking that seven to nine up to eight to nine.

Speaker Change: I do think we will get ourselves back to double digit as a matter of fact, I think we've got a good chance to get to double digit right away here in Q2 so.

Speaker Change: When I look at kind of where we sit today, how we did in Q1, how we closed the quarter out how February is going.

Speaker Change: <unk> and our capacity that we have that's going to allow us a little bit more flexibility I feel comfortable taking that seven to nine up to eight to nine and we'll see how it goes as.

Albert G. White: And we'll see how it goes, you know, as we move through the year. Fair enough. And then, Brian, could I ask a clarifying question on the gross margin commentary you made. You know, you were up 160 basis points year-over-year in the first quarter. And you're now talking kind of flattish about the year.

Speaker Change: As we move through the year.

Speaker Change: Yes fair enough and then Brian if I could ask a clarifying question on the gross margin commentary you made you were up 100.

Speaker Change: 160 basis points year over year in the first quarter you are now talking kind of flattish for the year. It implies somewhere around 50 basis points down year over year. Each of the next three quarters or maybe it doesn't get out perfectly even like that but.

Jeffrey D. Johnson: It implies somewhere around 50 basis points down year-over-year each of the next three quarters, or maybe it doesn't gate out perfectly even like that. But, you know, is that just simply because currency was plus 100 basis points year-over-year in the first quarter, and it looks like in the second and third quarter it's going to swing back to a negative? Is that just purely currency?

Speaker Change: Is that just simply because currency was plus 100 basis points year over year in the first quarter and it looks like in the second and third quarter, it's going to swing back to a negative is that just purely currency is there something else in there that would get the gross margin from upsell nicely in Q1 year over year to down.

Brian G. Andrews: Is there something else in there that would get the gross margin from up so nicely in FQ1 year-over-year to down, you know, a decent amount year-over-year, the balance of the year? Thanks. Yeah, hi, Jeff.

Amount year over year, the balance of the year. Thanks.

Yes, hi.

Brian G. Andrews: Thanks for the question. Yeah, currency in the first quarter wasn't as impactful as the latter part of the year; certainly, Q2 and Q3 are worse from an operating profit or gross profit perspective. Outside of that, you know, I wouldn't really point to anything in particular. I would say Q1 kind of landed about where we expected. You know, some of it's a little bit of timing, but I would say, in general, we're expecting a pretty similar gross. Our next question comes from the line of Joanne Wuensch, Citigroup. Please go ahead. Thank you for taking the question in a nice quarter. Mechanically, is there a reason you've consolidated the way that you're reporting some of the revenue for Cooper Vision? And part of that, where am I now going to see my...

Speaker Change: Jeff Thanks for the question, yes currency in the first quarter wasn't as impactful.

Speaker Change: As.

Speaker Change: As the latter part of the year, certainly Q2, and Q3 are our worst from a from an operating profit for a gross profit perspective.

Jeffrey D. Johnson: Outside of that I wouldn't really point to anything in particular, I would say Q1 kind of landed about where we expected.

Jeffrey D. Johnson: Some of it is a little bit of timing, but I would say in general we're expecting on an as reported basis pretty similar gross margins as we work through the year.

Jeffrey D. Johnson: Our next question comes from the line of Joanne Wuensch with Citigroup. Please go ahead.

Joanne Karen Wuensch: Thank you for taking the question and nice quarter.

Joanne Karen Wuensch: Typically is there a reason you've consolidated the way that you are reporting some of the revenue for coopervision.

Joanne Karen Wuensch: And part of that we're now am I going to see my site.

Joanne Karen Wuensch: So you'll see my site in SPHERES. It's where we'll report that. And we consolidated it ultimately because I think it's just a better representation of how we look at the business combined with competitive dynamics. And that was really the reason.

Joanne Karen Wuensch: So youll see my site and sphere.

Speaker Change: We'll report that.

Speaker Change: And we consolidated it ultimately because I think it's just a better representation of how we look at the business.

Speaker Change: Combined with the competitive dynamics.

That was really the reason behind it.

Albert G. White: And my sort of second follow-up question has to do with Psyclass. What are the steps now to bringing that to market, and can you please remind us of how the JV shows up on your income statement? Thank you. Yes, sure. So for Cyclast, most of the JV shows up below the line, below operating income.

Speaker Change: And my second follow up question has to do with like glass what are the steps now to bringing that to market and can you. Please remind us of how the JV shows up on your income statement. Thank you.

Speaker Change: Yeah sure so for <unk> most of the JV shows up below the line below operating income. It's it's a loss as you can imagine right now as we continue to invest in that so.

Albert G. White: It's a loss, as you can imagine, right now as we continue to invest in it. So we just run that through our P&L. And that's the way it'll be moving forward, other than if all goes well, that'll obviously turn into a profit, and we'll report that below the line. The process right now is, without getting into too much detail, really to continue to work with the FDA. There are some areas, especially among younger children, where we have some really strong clinical data.

Speaker Change: So we just run that through our P&L.

Speaker Change: And Thats the way it will be moving forward other than if all goes well that will turn obviously to a profit and we will report that below the line.

Speaker Change: The process right now is without getting into too much detail is really to continue to work with the FDA. There are some spots, especially among younger children, where we have some really strong clinical data. So to continue with the FDA meet the requirements that they are looking for and.

Albert G. White: So we continue with the FDA, meet the requirements that they're looking for, and work hard here to get FDA approval for that product in the back half of next year. In the meantime, we're selling it in multiple markets around the world, including in China, and we're getting some great feedback. Thank you very much.

Speaker Change: Work hard here to get approval for that product FDA approval for that product in the back half of next year in the meantime, we're selling that in multiple markets around the world, including in China, and we're getting some great feedback on it.

Speaker Change: Thank you very much.

Speaker Change: Yes.

Anthony Charles Petrone: Our next question comes from the line of Anthony Petrone with Mizuno Group. Please go ahead. Thanks, and congrats again on a quarter here.

Speaker Change: Our next question comes from the line of Anthony <unk> with Mizuho Group. Please go ahead.

Anthony: Alright, Thanks, and congrats again on a quarter here, maybe one just on on lens capacity.

Albert G. White: Maybe one just on lens capacity, and Brian, we spoke about this a little bit earlier this year, just where you are on the build-out, and maybe to clarify, like, how much demand is actually being left out there? Like, how much are you not getting because Cooper is a bit supply-constrained? And then, you know, follow-up on myopia management, just maybe a reset on the TAM opportunity of the combined bundle when we think of SiteGlass with MySite, just kind of a high-level recap of what the overall market opportunity is for those two products combined. Thanks. Sure. Good questions. On lens capacity, yeah, I think, you know, demand is strong, and it's going to continue to be strong because you're continuing to get wearers that are going in, whether it's a new wearer or an existing wearer, moving themselves to dailies and moving into torques and multifocals.

Anthony: And Brian we spoke about this a little bit earlier. This year, just just where are you on the build out and.

Anthony: Maybe to clarify like how much demand is actually being left out there like how much are.

Anthony: Are you not getting because cooper has a bit supply constrained and then I'll.

Anthony: A follow up on Myopia management, just maybe a reset on the Tam opportunity of the combined bundle. When we think of site glass with my site, just just kind of a high level recap of what the overall market opportunity is for those two products combined.

Anthony: Sure.

Anthony: Questions on land capacity I think.

Anthony: Demand is strong it's going to continue to be strong because youre continuing to get wearers that are going in whether it's a new wear or an existing we're moving themselves to dailies and moving into toric and multifocal. So youre going to have that demand I believe that underlying demand for years and years and years and years and years in front of us.

Albert G. White: So you're going to have that demand, I believe that underlying demand, for years and years and years and years in front of us. The position that we're in today from a capacity perspective is allowing us to meet a lot of that demand, not all of it, but a lot of that demand. As I mentioned earlier, I think it may have been Jeff asking about it, right?

Anthony: The position that we're in today from a capacity perspective is allowing us to meet a lot of that demand not all of it but a lot of that demand as I mentioned earlier I think may have been Jeff asking about it right. We're good at.

Albert G. White: We're in a good enough spot here where we're going to be able to, I believe, even return to double-digit growth here in Q2, but certainly put us in a position where we're going to be able to post strong numbers. So that's how I'd answer that right now. And I think that with capacity continuing to come on, it's going to put us in a position to have, frankly, strong years for a number of years in front of us. If I look at the myopia management market, boy, that's crazy exciting. It's taking a while to develop. We obviously thought it would move along a little bit faster, but when I look at what's going on in the marketplace right now with glasses, there are some fantastic products out there, and Sightglass is one of those that's making its way into the marketplace, and the feedback is excellent. MySight's doing really well.

Anthony: A spot here, where we're going to be able to I believe even returned to double digit growth here in Q2, but certainly put us in a position where we're going to be able to post strong numbers. So.

Anthony: That's how I'd answer that right now and I think that with capacity continuing to come on it's going to put us in position to have frankly.

Anthony: Strong years for a number of years in front of us.

Anthony: If I look at the myopia management market.

Anthony: Boy.

Yes.

Speaker Change: <unk> Crazy exciting, it's taking a while to develop.

Speaker Change: We obviously thought it would move along a little bit faster, but when I look at what's going on in the marketplace right now with glasses, there's some fantastic products out there and <unk> is one of those that's making its way into the marketplace and the feedback is excellent.

Speaker Change: The site is doing really well, we're seeing some really good momentum on my site in Europe and some other markets.

Albert G. White: We're seeing some really good momentum with MySight in Europe and some other markets. It's a little difficult to get to a TAM, but we're certainly talking about a marketplace that's going to be in the billions of dollars. It's very widespread, and almost every month we see a society somewhere coming out and pushing myopia management and just saying, hey, this needs to become standard of care. I think the UK was the most recent one coming out and saying to optometrists, this needs to be standard of care, and it is. We need to proactively treat children. It's crazy that we don't do it to the degree that we should.

Speaker Change: It's a little difficult to get to a Tam, but we're certainly talking about.

Speaker Change: A marketplace, that's going to be in billions of dollars, it's very large and and it's almost every month, we see a society somewhat are coming out and pushing myopia management, and just saying hey, this needs to become standard of care I think the U K was the most recent one coming out and saying to optometrists this needs to be standard of care and it.

Speaker Change: Does he need to proactively treat children, it's crazy.

Speaker Change: That we don't do the degree that we should and frankly, you have one and only FDA approved product with.

Albert G. White: Frankly, you have one and only FDA-approved product with MySight right now, which is great, but we need the glasses to come along with that. I'm happy to say that the industry is making a lot of progress there, so big opportunities are still ahead. I appreciate that. Thank you.

Speaker Change: With my thought right now, which is which is great, but we need the glasses to come along with that and I'm happy to say that the industry is making a lot of progress there so big opportunity still in front of us I.

Speaker Change: I appreciate that thank you.

Jason M. Bednar: Yep. Our next question comes from the line of Jason Bednar with ViperSend. Please go ahead. Hey, good afternoon.

Speaker Change: Yes.

Speaker Change: Our next question comes from the line of Jason Bednar with Piper Sandler.

Speaker Change: Yes.

Jason M. Bednar: Hey, good afternoon nice quarter guys.

Jason M. Bednar: Nice quarter, guys. Al wanted to start, you know, in past calls, I think we've heard about your position, maybe from like a new fit perspective, just would, you know, would love to hear what you're seeing out there in the data on dailies, or daily size, torques, multifocals, just, you know, really where you are, where you're punching, pretty well right now. Just any insight on where your share stands on the new fit side, again, maybe in the context of your current market share in those categories? Yeah, as a general answer, I would say that our FIT data is certainly in front of our current market share. And that's a good sign, right? And we've been running that way for a little while now, and we're continuing to run that way. The only caveat I would put on that, or an asterisk, if you will, is that sometimes it's hard to get that data all around the world. We get that through GFK and a few other sources.

Jason M. Bednar: Al I wanted to start you in past calls I think we've heard about your position it maybe from like a new fit perspective.

Jason M. Bednar: Love to hear what you're seeing out there in the data on dailies are dailies <unk> Toric multifocal is just really.

Speaker Change: Really where youre, where youre punch in punch, a pretty well right now I'm just any insight on where your share stands on the new fit side again, maybe in the context of your current market share in those categories.

Speaker Change: Yeah.

Speaker Change: As a general answer I would say that our fifth data is certainly in front of what our current market share is.

Speaker Change: That's a good sign right and we've been running that way for a little while here and we're continuing to run that way.

Speaker Change: The only caveat I would put on that or Astra. If you will is sometimes it's hard to get that data all around the world, we get that through GSK and a few other sources.

Albert G. White: But I'm comfortable continuing to say that our FIT data is in excess of our market share, which is a really good sign. Okay, I mean, maybe one follow-up there and then a separate one. But are there any of those categories where you'd say you have maybe outsized share gains, just as we think about how, you know, where the revenue growth or the accelerated revenue growth is going to come from? You know, as we look out over the next several quarters, and then I think you also mentioned key account strategy wins just across all geographies. Any more color you can add there, you know, maybe the latest update on that strategy and how pricing' Sure.

Speaker Change: I am comfortable continuing to say that our fifth data is in excess of our market share, which is a really good sign for us.

Speaker Change: Okay, I mean, maybe one follow up there and then a separate one but are you.

Speaker Change: Are there any of those categories, where you'd say you're maybe.

Speaker Change: Outsized share gains just as we think about how where the revenue growth or the accelerated revenue growth is going to come from.

Speaker Change: As we look out over the next several quarters and then.

Speaker Change: You also mentioned key account strategy wins, just across all geographies and any more color you can add there and maybe your latest update on that strategy and how pricing is trending in that category.

Albert G. White: I think that, you know, as we look forward here, where you're going to see growth is going to continue to be what you've seen, meaning we're going to do well in torques and multifocals. We have a great position in those categories and a leadership position, right? We do really well.

Speaker Change: Sure I think.

Speaker Change: As we look forward here, where youre going to see growth is is going to continue to be what you've seen meaning we're going to do well and toric and multifocal is we have a great position in those categories and leadership position right. We do really well I think youre going to continue to see strong numbers there.

Albert G. White: I think we're going to continue to see strong numbers there. The other place that you'll see strong numbers where we're doing well from a fit perspective is on the daily silicone hydrogel side of things. Now, that would include some torques and multifocals, but also on the sphere side.

Speaker Change: The other place that Youll see strong numbers, where we're doing well from a fit perspective is in the daily silicone hydrogel side of things.

Speaker Change: That would include some towards the multifocal, but also on the sphere side. So that's where we have strength. If you look at legacy hydrogel and some of that kind of stuff right there as well.

Albert G. White: So that's where we have strength. You know, if you look at legacy hydrogels and some of that kind of stuff, right, we certainly have weakness in those areas. But our fit data and our strength are in the direction that the market's moving, so that's a great sign. Within key accounts, yeah, we're doing well within key accounts. What I highlighted in the script, which I'm excited to talk about, is a kind of key account activity within MySite.

Speaker Change: Certainly have weakness in those areas, but that are fit data and our strength is in the direction that the market's moving so that's a great sign.

Speaker Change: Within key accounts, yes, we're doing well within key accounts, what I highlighted in the script.

Speaker Change: Which I'm excited to talk about is kind of key key account activity within my site.

Albert G. White: The progression with MySite started with independent optometrists, where we did well, and we've been growing, right? But we started to get some of our key accounts more interested in the product and started to roll it out throughout their franchises. They need to figure out how they're going to sell that, standardize it throughout the franchise, how they're going to price it, all the activity that goes around creating a new myopia management or myopia control infrastructure, if you will. That work is being done, and we're seeing progress on that. It's just solid, consistent progress, right?

Speaker Change: The progression we might say is started with independent optometrists, where we did well and we've been growing right, but we started to get some of our key accounts more interested in the product and starting to roll it out throughout their franchises they need to figure out how theyre going to sell that standardized it throughout the franchise, how theyre going to price at all.

Speaker Change: The activity that goes around creating a new myopia management, our myopia control infrastructure. If you will that work is being done and we're seeing progress on that it's just it's just solid consistent progress right. That's why we did what 50% a little over 50% growth this quarter and I think youre going to continue to see that from my side.

Albert G. White: That's why we did, what, 50 percent, a little over 50 percent growth this quarter. And I think you're going to continue to see that from MySite, just plugging away at kind of 50 percent, something like that, you know, 45, 50, 55 percent kind of growth on a consistent basis. That's being driven by underlying strength in those key accounts.

Speaker Change: Plugging away at kind of 50% something like that 45, 55, 5% kind of growth on a consistent basis, that's being driven by underlying strength in those key accounts, where as you know Jason right. We have a good relationship with a lot of them through the store brands and so forth right now so expanding that relationship to include <unk>.

Albert G. White: Whereas, you know, Jason, we have a good relationship with a lot of them through the store brands and so forth right now. So expanding that relationship to include them would be very helpful. All right, very helpful.

Speaker Change: Sure.

Speaker Change: Alright very helpful. Thank you.

Patrick Andrew Wood: Thank you. Yeah Our next question comes from the line of Patrick Wood with Morgan Stanley. Please go ahead. On the Toric side, I'm just kind of curious, you know, astigmatism is probably like a third of the population, so I'm just curious, from the data that you guys have, do you have a good sense of, like, from an Rx perspective, where we are on the lenses, i.e., you know, how underpenetrated that category is in kind of totality? Oh yeah, it's way underpenetrated.

Speaker Change: Yes.

Speaker Change: Our next question comes from the line of Patrick <unk> with Morgan Stanley.

Patrick: Go ahead.

Patrick: Amazing Thank you.

Patrick: On the <unk> side, I'm, just kind of curious like a stigma business, probably like a third a.

Patrick: Third of the population. So I'm just curious from the data that you guys have do you have a good sense of like from an Rx perspective, while we are on the lenses I E.

Patrick: How underpenetrated that category, and then kind of totality.

Speaker Change: Oh, Yeah, it's way Underpenetrated so.

Albert G. White: So I don't have the numbers right off the top of my head, but I would tell you it's definitely underpenetrated in the U.S. market. And the U.S. market is by far the most penetrated, and it's still solidly underpenetrated. When you go outside of the U.S., it would be way underpenetrated.

Speaker Change: I don't know I don't have the numbers right on top of my head, but I would tell you is it's definitely underpenetrated in the U S market in the U S market is by far the most penetrated and it's still solidly underpenetrated. When you go outside of the U S.

Speaker Change: B way Underpenetrated.

Albert G. White: And to your point, you're starting to see that fitting of patients who have an astigmatism has improved over the years, and it's much easier to fit a product, a TORC product. And, by the way, the quality of those products has continued to improve. MyDay TORC is just a fantastic product.

Speaker Change: And to your point you are starting to see is the fitting of patients who have an astigmatism has improved over the years and it's much easier to fit our product a torque product and by the way the quality of those products has continued to improve <unk> toric is just a fantastic product that fits well, it's very stable.

Albert G. White: It fits well. It's very stable. Patients really like it. So that's a great question. I should dig into the details. I mean, I can just tell you it's significantly underpenetrated.

Speaker Change: Patients really like it so.

Speaker Change: That's a great question as you dig into the details I mean I can just tell you it's significantly underpenetrated.

Patrick Andrew Wood: There's, you know, I could just, off the top of my head, I could tell you there's 10 plus years of significant growth that's going to come out of the TORC market as it continues to grow around the world and as eye care practitioners can continue to fit the correct lens for every single patient who comes in looking for the optimal visual correctness. It makes sense. I'm astigmatic as well, so I understand it.

I can do to also top of my head I can tell you. There is 10 plus years of significant growth that's going to come out of the toric market as it continues to grow around the world and as Eyecare practitioners continue to fit the correct lens for every single patient who comes in looking for the optimal visual correction.

Speaker Change: Totally makes it makes sense.

Speaker Change: I think monarch as well so like I got it.

Speaker Change: And then maybe.

Albert G. White: Maybe on the European side, that was a big number within CBI, and you gave some color there. Was there anything in particular, I know you had some of the bigger contracts that were rolling over on that side of things, but Dynamics in Europe, very curious about that as well. Yeah, good, strong number in Europe. I think we're going to continue to have them. We have just a fantastic team there.

Speaker Change: Maybe on the Europe side like that was that was a big number within the CVI and you gave some color that was there anything in particular I know you have some of the bigger contracts that were rolling over on that side of things, but Don IMAX in Europe, very curious about that as well. Thanks.

Speaker Change: Yes, yes.

Speaker Change: Yes, good strong number in Europe, I think we're going to continue to have them.

Speaker Change: Just a fantastic team there our commercial team is just killing it and they have for a number of years.

Albert G. White: Our commercial team is just killing it, and they have for a number of years. So I think when you combine the strength of our team over there with the rollout of products, we're going to get some new products out there. We're going to expand some of the products that we currently have, put ourselves in a better position to sell. Yeah, we're having strengths right there right now with key accounts and so forth. As product availability capacity improves, I think you're going to continue to see success there. Couldn't be happier with what our European, Brilliant.

So I think when you combine the strength of our team over there.

Speaker Change: The rollout of products, we're going to get some new products in there we're going to expand some of the products that we currently have put ourselves in a better position to sell.

Speaker Change: We're having strength right there right now with key accounts and so forth.

Speaker Change: As product availability capacity improves I think youre going to continue to see successor couldnt be happier with what our European team is doing.

Speaker Change: Brian Thanks for taking the questions.

Speaker Change: Yep.

Speaker Change: Our next question comes from the line of Robbie Marcus with Jpmorgan.

Robert Justin Marcus: Go ahead.

Robert Justin Marcus: Oh, great I appreciate it and I'll add congrats on a good quarter.

Robert Justin Marcus: Maybe maybe to start I know, there's some regulations coming out in April for the lab developed tests wanted to see what your exposure to that was and any.

Albert G. White: Thanks for taking the questions. Yep. Our next question comes from the line of Robbie Marcus with J.D. Morgan.

Robert Justin Marcus: Any implications in your view.

Robert Justin Marcus:

Speaker Change: I am kind of raising my eyebrow not sure what you're referring to which means that's probably a really good sign because it wouldn't be applicable to us.

Robert Justin Marcus: Please go ahead. Oh, great. I appreciate it. And I'll add a congratulations on a good quarter. Maybe to start, I know there's some regulations coming out in April for the lab-developed tests. Wanted to see what your exposure to that was and...

Speaker Change: Yeah.

Speaker Change: Got it.

Speaker Change: It is in some of your filings maybe.

Speaker Change: I'll circle back.

Speaker Change: Maybe just to touch on myopia management is down quarter over quarter, you talked about down 10% in China and ortho K, just maybe speak to the ortho K market.

Albert G. White: I'm kind of raising my eyebrow, not sure what you're referring to, which means that it's probably a really good sign because it wouldn't be applicable to us. Got it. I think it's in some of your filings.

Speaker Change: Globally and in China, specifically in your view there both.

Speaker Change: On.

Speaker Change: Underlying basis and competitive thanks, a lot sure, yes, we had ortho K growth around the world.

Speaker Change: So our team continues to do well with ortho K, but within China, It's very body I mean, we grew what.

Robert Justin Marcus: Maybe I'll circle back. Maybe just to touch on myopia management, you know, it's down quarter over quarter, you talked about down 10% in China and ortho-K, just maybe speak to the ortho-K market globally and in China specifically and your view there both, on an underlying basis and Transcribed by https://otter.ai Transcribed by https://otter.ai I appreciate it. Thanks. Yeah. Our next question comes from the line of Chris Calley with Nefron. Please go ahead.

Speaker Change: <unk> upper 30%, 39% or something like that in Q4 and down 10 years, So it's pretty bumpy and whether that's channel fill or some other activity that's happening in China.

Speaker Change: China is I believe going to continue to be bumpy for US now that's not a huge market for us as you know so I'm not going to claim to be an expert in China.

Speaker Change: But we are seeing some volatility with respect to the ortho K market and certainly within China.

I would kind of split that from my side right and maybe that's one of the reasons Youre seeing a little volatility in north Okay is because of the strength that we're seeing in my side is that continues to improve.

Speaker Change: But I would probably say, yes, my site really strong maintaining strong ortho K is still going to grow for the year and it's still going to do fine for the year, but it's going to be choppy.

Chris Calley: Thanks. Al, on the last call, I think you talked about 5 to 7% contact lens market growth in calendar 24. That was the underlying expectation embedded in the guidance. Is that still your expectation, or do you think it'll be better than that? I guess I would probably stick with the five to seven right now, but I would certainly lean towards the upper end of that. OK. And then how are you thinking about how MyCite and CiteGlass fit together in the myopia market longer term? Do spectacles become first-line therapy in this context or reserved for older patients, or is it not that clean?

Speaker Change: Great I appreciate it thanks a lot.

Speaker Change: Yes.

Speaker Change: Our next question comes from the line of Chris Kelly.

Okay.

Chris Kelly: Go ahead.

Chris Kelly: Thanks.

Chris Kelly: Al on the last call I think you talked about 5% to 7% contact lens market growth in calendar 'twenty four was the underlying expectation embedded in the guidance is that still your expectation that you think will be better than that.

Chris Kelly: I guess I would probably stick with the five to seven right now, but I would certainly lean towards the upper end of that.

Chris Kelly: Okay.

Chris Kelly: And then how are you thinking about how my site and site glass fit together in the myopia market longer term does spectacles become first line therapy and contacts or reserve for older patients or is it not that clean I'm, just trying to get a sense for how additives.

Albert G. White: Just trying to get a sense for how additive, you know, the addition of spectacles in markets like the U.S. could be versus cannibalistic with what you've got going on already. Yeah, that's really an interesting one. Spectacles are going to become the first line, if you will, because when a child walks in the door, and we're talking about children, right, so five years old up to 13, 14 years old, the easiest fit by far for the optometrist is to put them in glasses.

Chris Kelly: The addition of spectacles and in markets like the U S could be versus cannibalistic to what you've got going on already.

Speaker Change: Yes, that's really an interesting one spectacles are going to become the first line if you will because.

Speaker Change: When a child walks in the door and we're talking about children. So five years old up to 13 14 years old the easiest fit by far for the optometrist is to put them in glasses.

Albert G. White: And I think that that's really going to push the myopia management market forward because every single optometrist will be able to fit a child in glasses and get them out the door. And I don't know why you wouldn't do that. It'd be almost malpractice not to put somebody in glasses and treat their myopia progression. But what you're going to have off that is a couple of things. One is you're going to have what happens in the normal world, which is people wanting to wear contact lenses. And whether that's for sports or some sort of activity, or whether that's for looks, you're going to have people wanting to wear contact lenses.

Speaker Change: And I think that that's really going to push the myopia management market forward. Because every single optometrists will be able to fit a child and glasses and get them out the door and I don't know why you wouldnt do that it would be almost malpractice not to put somebody in glasses and treat their myopia progression.

Speaker Change: But what youre going to have off that is a couple of things. One is you're going to have what happens in the normal world, which is people want to wear contact lenses and whether that's for.

Speaker Change: Sports or some sort of activity or whether thats for looks youre going to have people wanting to wear contact lenses and that's what's going to happen in that space. The add on to that though is going to be compliant because in order for that treatment and it's a treatment to be successful. The child has to wear their glasses and they have to wear them a lot if the child.

Albert G. White: And that's what's going to happen in that space. The add-on to that, though, is going to be compliance. Because in order for that treatment, and it's a treatment to be successful, the child has to wear their glasses. And they have to wear them a lot. If the child's not wearing them when they're going in for their annual appointment, the optometrist is going to be able to tell.

Speaker Change: Not wearing on when they're going in for their annual appointment optometry is going to be able to tell it's going to be the same thing with invisalign right, if you're not wearing it youre not getting the value of the treatment.

Albert G. White: It's going to be the same thing with Invisalign, right? And if you're not wearing it, you're not getting the value of the treatment. The optometrist is going to be able to see and talk to the parents and say, hey, your child has these myopia control glasses, but they're not wearing them enough, and I can see the progression of myopia.

Speaker Change: The optometrist is going to be able to see and talk to the parents and say Hey, Your child has these myopia control glasses, but theyre not wearing them enough that I can see the progression of myopia, we have to get them into contact lenses. So they are getting the full value of that treatment. So I think youre going to have a higher rate of penetration of contact lenses within the myopia control.

Albert G. White: We have to get them into contact lenses so they're getting the full value of that treatment. So I think you're going to have a higher rate of penetration of contact lenses within the myopia control business than you do within contact lenses. Thanks. Our next question comes from the line of Steve Lichtman, a Doppenheimer. Please call.

Speaker Change: Business than you do within contact lenses in general.

Speaker Change: Thanks.

Speaker Change: Our next question comes from the line.

Speaker Change: Steve Lichtman with Oppenheimer and company.

Steven Michael Lichtman: Got it.

Steven Michael Lichtman: Thank you. Hi guys, congratulations on the quarter.

Steven Michael Lichtman: Thank you hi, guys congrats on the quarter.

Albert G. White: I guess, Brian, you're obviously investing behind capacity expansion. So how should we think about CapEx levels and pre-cash flow this year? And do you expect CapEx as a percent of sales to go higher in the coming years as you maybe try to stay ahead of demand? Hi Steve.

Steven Michael Lichtman: I guess.

Steven Michael Lichtman: Brian.

Brian: Investing behind capacity expansion. So how should we think about capex level and free cash flow. This year and do you expect capex as a percent of sales to go higher in the coming years as you maybe try to stay ahead of demand.

Brian G. Andrews: Yeah, so I guess what I'd say is, you know, we talked about free cash flow last quarter being up versus last year, probably about $100 million this year. You know, I would say that the first half of the year we're gonna see sort of similar kind of free cashflow numbers as we saw in Q1 and Q2, and then I would expect we'll inflect nicely in Q3 and Q4. So cashflow conversion will be improved. You know, I'd say as a percentage of revenues. This is going to be kind of a, I would call it, high.

Brian: Hi, Steve.

Steven Michael Lichtman: Yes, so I guess, what I'd say is we talked about free cash flow last quarter being up.

Steven Michael Lichtman: Versus last year, probably about $100 million this year.

Steven Michael Lichtman: I would say that the first half of the year as we were going to see sort of similar kind of free cash flow numbers as we saw in Q1 and Q2 and in US and then I would expect will inflect nicely in Q3 and Q4, so cash flow conversion will be improved.

Steven Michael Lichtman: I would say as a percentage of revenues.

Steven Michael Lichtman: This is going to be kind of.

Steven Michael Lichtman: I would call it a high I mean, it should be pretty similar to last year.

Brian G. Andrews: I mean, it should be pretty similar to last year on a percentage basis, but as we look at next year and the years thereafter, I would expect it to come down. Okay. And then just to follow up on Cyclads, I appreciate the update there. Do you expect the investments behind Cyclads in the near term to go up to support approval? Or do they go down for a bit, given the sort of later approval expectations? Understanding it's below the line. I'm just curious about that.

Steven Michael Lichtman: On a percentage basis, but as we look at next year and the years thereafter, I would expect it to come down on a percentage basis.

Speaker Change: Okay got it and then just a follow up on on cycle I appreciate the update there.

Speaker Change: Do you expect the investments behind <unk> in the near term to go up to support approval or do they go down for a bit given the sort of the later approval expectations understanding it's below the line.

Albert G. White: Thanks. Well, I think we'll continue to invest as we are now. Once we get FDA approval, we'll work with Essler and Luxottica, and have conversations about the best way to launch that and how to capitalize on the FDA approval. So we'll continue to work on it right now, supporting that product and launches around the world and things we're trying to accomplish, including the clinical work and so forth that we're trying to do. And then we'll determine the best path forward, hopefully, when we get FDA approval kind of in the back half of next year. And that would be a really exciting thing and really open the doors to a pretty significant market for us. So we'll have to have the conversations and see where we go. I have it.

Speaker Change: On that thanks.

Speaker Change:

Speaker Change: I think we will continue to invest as we are now once we get FDA approval will work with Essilor Luxottica have conversations about the best way to launch that and how to capitalize on on the FDA approval. So we will continue to spend on it right now.

Speaker Change: Supporting that product and launches around the world and things, we're trying to accomplish including the clinical work and so forth that we're trying to do and then we will determine the best path forward hopefully when we get the FDA approval kind of in the back half of <unk>.

Speaker Change: Next year in that that would be a really exciting thing and really opened the doors to a pretty significant market for us. So we will have to have the conversations and see where we go in.

Albert G. White: Thanks, y'all. Our next question comes from the line of Brett Fishbin with Key Bank Capital Markets. Please go ahead.

Speaker Change: Got it thanks al.

Speaker Change: Yes.

Speaker Change: Our next question comes from the line of Brett Krishnan.

Brett Adam Fishbin: Krishnan <unk>.

Brett Adam Fishbin: Key banc capital markets.

Brett Adam Fishbin: Go ahead.

Brett Adam Fishbin: Hey guys, thanks so much for taking the questions here. I just had a couple quick ones on pricing. One, just in the context of the full-year CVI guide of 8% to 9%, do you have a directional sense of how much of that is getting driven by price? And then as a follow-up, just curious, because I know you guys are playing a little bit of catch-up this year relative to the market, how the consumer is accepting some of the price changes this year? And if you think going forward there might be a little bit more room for some continued catch-up activity relative to the industry? Yeah, well, we'll see on future price increases as to how the economy continues to move. As of date, we're not seeing significant pushback. But a lot of the growth of the industry, remember, continues to be moved to daily. So a lot of that is a product mix trade-up, which includes higher prices embedded within it, if that makes sense.

Brett Adam Fishbin: Hey, guys. Thanks, so much for taking my questions here just had a couple quick ones on pricing.

Brett Adam Fishbin: One just in the context of the full year CVI guide of 8%, 9% do you have a directional sense of how much of that is getting driven by price and then as a follow up just curious because I know you guys are planning a little bit of catch up this year relative to the market.

Brett Adam Fishbin: How the consumers accepting some of the price changes this year and if you think going forward there might be a little bit more room for some continued pack of activity relative to the industry.

Brett Adam Fishbin: Yeah, well, we'll see on future price increases as too.

Brett Adam Fishbin: How the economy continues to move.

Brett Adam Fishbin: As of date, we're not seeing significant pushback, but a lot of the growth of the industry remember continues to be moved to daily so.

Brett Adam Fishbin: A lot of that is a product mix trade up which includes higher price embedded within it if that makes sense.

Albert G. White: So as we continue to move forward, that's where you're going to see a lot of that. So that's price inflation, if you will, but it's really a product mix shift to higher priced products. You have that within pricing for the market, and for us, it's looking low single digits in that 2% to 3% range I talked about, probably more towards the upper end of that. And that's, you know, kind of where the industry is residing right now and where we're starting. All right, thanks for the caller. And then just one other question.

Brett Adam Fishbin: So as we continue to move forward, Thats, where youre going to see a lot of that.

Brett Adam Fishbin: That's price increasing if you will but it's really a product mix shift to higher priced products.

Brett Adam Fishbin: You have that within pricing for the market and for US it's going to.

Brett Adam Fishbin: It's it's looking low single digits and that 2% to 3% range I talked about probably more towards the upper end of that.

Brett Adam Fishbin: Kind of where the industry is residing right now and where we're sitting.

Alright, thanks for the color and then just one other question. Thank you had a really interesting comment but it was pretty brief on the idea of introducing some new digital tools to help facilitate my side and streamlining the fitting process a little bit.

Albert G. White: I think you had a really interesting comment, but it was pretty brief on the idea of introducing some new digital tools to help facilitate my site and streamlining the fitting process a little bit, which seems like it might be a little bit of a friction that, you know, could be helped with with these kinds of initiatives. So just maybe expand a little bit on what you're doing there and how it can help that process. Thanks a lot for taking the questions. Yeah, absolutely. You know, one of the challenges that optometrists have with my site is that they bring the child in, they have to talk to the child, they have to explain what contact lenses are, how to put lenses in, take lenses out, and they have to explain to the parent what myopia is and the progression of myopia. The process takes a little while. And when you layer contact lenses into it, it makes it a little bit more difficult than glasses.

Brett Adam Fishbin: Which seems like it might it might be a little bit of a friction that could be could be helped with these kind of initiatives. So just maybe expand a little bit what you're doing there and how it can help that process. Thanks, a lot for taking my questions.

Speaker Change: Yes, absolutely.

Speaker Change: One of the challenges that optometrists have with my side as they bring the child in they have to talk to the child. They have to explain what contact lenses are how to put lenses and take lenses out they've got to explain to the parent what myopia is in the progression of myopia that process takes a little while and when you layer contact lenses into it.

Speaker Change: It makes it a little bit more difficult than glasses. So anything that we can do to improve that process and make it faster.

Albert G. White: So anything that we can do to improve that process and make it faster is definitely going to be beneficial. And our marketing team has done a really nice job there, and the development team has streamlined some of that activity to ensure that optometrists understand the sitting process and are able to do it very quickly. I won't necessarily get into the technical attributes and so forth of what we're doing, but suffice it to say, yeah, anything that we can do to streamline that and help make that process easier and faster, the better. Yeah, you picked up on that.

Speaker Change: Is going to be definitely beneficial and our marketing team has done a really nice job there and the development team on streamlining some of that activity to ensure that optometrist understand the fitting process and are able to do it very quickly I wont get necessarily the petro technical attributes and so forth and what we're doing.

Speaker Change: Suffice it to say, yes, anything that we can do to streamline that and help make that process easier and faster the better. So yeah. You picked up on that it's a good point because that is a benefit and it's going to help us continue to drive growth.

Albert G. White: That's a good point because that is a benefit and it's going to help us continue to drive. Our next question comes from the line of John Block with Stifel. Please go ahead. Thanks, guys. I'll try to be somewhat brief. Two quick ones.

Our next question comes from the line of John Baugh with Stifel. Please go ahead.

John Baugh: Thanks, guys.

John Baugh: Try to be somewhat brief two quick ones first on PARAGARD I don't know I just feel like the tar track is seemingly improved maybe from three months ago, nothing has really changed from a regulation standpoint.

Jonathan David Block: First on Paragard, I don't know, I just feel like the talk track has seemingly improved maybe from three months ago. You know, nothing's really changed from a regulatory standpoint. Al, am I right? Is there anything behind that where, again, you had a decent beat in the quarter, you talked about a pretty good start in fiscal 2Q, and it just seems a little less dire. If I'm right, is there something more

John Baugh: Am I right is there anything behind that where again you had a decent beat in the quarter you talked about a pretty good start in fiscal two Q just seems a little less dire if correct is there something more to it.

Albert G. White: I think with respect to Paragard, that's going to be a little bumpy. The underlying demand is still a struggle there in terms of being able to grow volumes. And then the other aspect of that ends up being a competitive product. We've talked about that before. There was a product that could potentially get FDA approval that's essentially a generic.

I think with respect to PARAGARD.

That's going to be a little bumpy the underlying demand is still a struggle there in terms of being able to grow volumes and then the other aspect of that ends up being a competitive product we've talked about that before there was a product that could potentially get FDA approval.

John Baugh: Essentially a generic that if that does get approved and hit the market that would impact us.

Albert G. White: If that does get approved and hit the market, that would impact us. When we gave guidance back in December, we incorporated some of that. But that product has not been approved.

John Baugh: When we gave guidance back in December we incorporated some of that product has not been approved.

Albert G. White: So if you look at it as we move through the year, that makes me, yes, a little bit more optimistic about better performance. Okay, and second quick one just within CVI, just cleaning up a little bit, you know, the overall 7% I think was in line with estimates, you guys sort of signaled that but, from our seat, EMEA was decently ahead, AIPAC below, and anything to call out specific to AIPAC, because when I look at the year-ago comp, it was actually one of the easier ones from fiscal 23. I don't know if that's where we sort of go from a capacity standpoint, but maybe if you could just elaborate on that. Thanks, guys. Yeah, not too much to say on that other than I think it got picked up a little bit on some communication we had in Japan with respect to some capacity constraints. So when you look at the allocation of product and capacity constraints that we had, that negatively impacted Asia Pak and probably will do so again, frankly, a little bit again in the second quarter.

John Baugh: If you look at it as we move through the year that makes me, yes, a little bit more optimistic for better performance. This year.

John Baugh: And second quick one just within CVI, just cleaning up a little bit.

John Baugh: The overall, 7% I think it was in line with estimates you guys sort of signaled that but from.

John Baugh: From RSC EM EMEA was decently ahead, APAC below and anything to call out specific to APAC, because when I look at the year ago comp was actually one of the easier ones from fiscal 'twenty three I don't know if thats, where we sort of go from a capacity standpoint, but maybe if you could just elaborate on that thanks guys.

Speaker Change: Yes, not too much to say on that other than I think it got picked up a little bit about some communication, we had in Japan with respect to some capacity constraints. So when you look at allocation of product and capacity constraints that we had.

Speaker Change: That negatively impacted Asia, Pac and probably will frankly, a little bit again here in the second quarter, but that.

Albert G. White: But the underlying fundamentals and the team and the success we're having in Asia Pak are still strong. I think there's just a little bit on the capacity constraints side of things. Thanks, guys. Next question comes from the line of E.C. Kirby with Redbird Atlantic.

Speaker Change: The underlying fundamentals and the team and the success, we're having in Asia Pac is still strong I think there's just a little bit on the capacity constraint side of things is what you are picking up.

Speaker Change: Thanks, guys.

Okay.

Speaker Change: Next question comes from the line of each of tiers with Redburn Atlantic.

E.C. Kirby: Please go ahead. Hi guys, thanks for taking the time to answer my questions. We'll just stick to one. Obviously, you have your hands full with My Day and the strength of that product, but I would love to know how you're thinking about, you know, potential new innovation within the vision care space, potential new product launches. I think it's been, you know, close to 10 years now since we saw My Day first hit the market, so I guess what is next? How are you thinking about new launches and to what extent does capacity right now hinder your ability to introduce, perhaps, a new LEM family? Yeah, great question. You know, if we look at my day as an example, I think the multifocal just came out a couple years ago. My Day Energiser, as an example, just came out roughly a year ago in the US market.

Ethan: Go ahead.

Speaker Change: Hi, guys. Thanks for taking my question.

Speaker Change: No.

Speaker Change: Thanks to one I mean, obviously you have your hands so.

Speaker Change: Mike.

Speaker Change: That product that would love to know how youre thinking about it.

Speaker Change: Hudson New innovation within the patient.

Speaker Change: Potential new product launches.

Close to 10 years now since we saw my guys have hit the market and I guess what is Max.

Speaker Change: Are you thinking about an intense and to what extent this catastrophe right now.

Speaker Change: And at that time.

Speaker Change: Certainly.

Max: Yes, great question.

Max: If we look at <unk> as an example.

Max: I think the multifocal just came out a couple of years ago.

Max: By de Energize as an example, just came out roughly a year ago in the U S market. So we still need to roll the multifocal out around the world frankly, there's still areas, we need to get the toric out more the expanded parameter range. There is markets, we need to get <unk> into.

Albert G. White: So we still need to roll the multifocal out around the world. Frankly, there's still areas we need to get the torque out more, the expanded parameter range, there's markets we need to get My Day Energis into. So you're just going to continue to see a bunch of launch activity in the coming years, but it'll be associated mostly with products that you've already heard of. Okay, and then just a quick follow-up, if I may, just on daily penetration. I mean, we've talked a lot about the runway in PAREC, but really, I guess, what's the runway left in daily use in terms of units? Where do you see it currently sitting, I guess, for 2023? Where do you think the ceiling really is for dailies in terms of units? Yeah, it's tough in terms of units, because there are so many units when somebody's wearing dailies, right? Because if they go from, like, BioAffinity for us, they need 24 lenses a year. And depending upon how often they're wearing their dailies, right, 700 and some lenses a year.

Max: So youre going to Youre, just going to continue to see for the coming years a.

Max: A bunch of launch activity, but it'll be associated mostly with products that you've already heard of.

Speaker Change: Okay, and then just a quick follow up if I may just on tiny penetration.

Speaker Change: We've talked a lot about the <unk>.

Speaker Change: Roni.

Speaker Change: Lola.

Speaker Change: It's a component of units where do you see it currently session I'd ask the 2023 and why do you think the ceiling.

Speaker Change: Okay.

Speaker Change: Yes, it's tough in terms of units because theres. So many units when somebody is wearing dailies right because if they go from like bio affinity for us they need 24 lenses, a year and depending upon how often they're wearing their dailies <unk> 700, and some lenses a year.

Albert G. White: So it's tough. But I would tell you, if you looked at a comparison of the FRP market, the two-week and monthly market, and said, that's where dailies are going to get, ultimately, that was that kind of, without getting into all the gory details, would tell you that you just have a very significant runway in terms of dailies. So that's where I go back to like saying, hey, the market's a great market for 10 years or something like that because it's so under penetrated on the daily side. Okay, no, sorry, I think I meant users in my question, but oh my gosh.

So it's tough, but I would tell you if you looked at a comparison of the FRP market. The two week and monthly market and said, that's where dailies is going to get ultimately that was that kind of without getting into all the gory details would tell you that you just have a very significant runway in terms of.

Speaker Change: Daily wearers so.

Speaker Change: That's why I go back to like saying, Hey, the market is a great market for 10 years or something like that because it's so underpenetrated on the daily side.

Speaker Change: Okay.

Speaker Change: I think I meant yes.

Speaker Change: Yeah.

E.C. Kirby: Yeah. No further questions at this time. I'll now turn the call over to Al White, President and CEO.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: There are no further questions at this time.

Speaker Change: I'll now turn the call over to Al White, President and CEO.

Albert G. White: Great. Thank you. Thank you to everyone for taking the time are joining the call.

Albert G. White: Thank you to everyone for taking the time and joining the call. As you can probably tell from our commentary and responsive questions, we're excited about where we are now. We started the year off really well. We're in a really good position moving forward. So thanks again and I really look forward to catching up with everyone on our next earnings call. Thank you, operator. This concludes today's conference call. You may now disconnect.

Albert G. White: As you can probably tell from.

Albert G. White: Our commentary and responses to questions. We're excited about where we are now we started the year off really well we're in a really good position.

Albert G. White: Moving forward so.

Speaker Change: Thanks, again, and really look forward to catching effort catching up with everyone on our next earnings call. Thank you operator.

Speaker Change: This concludes today's conference call you may now disconnect.