Q1 2025 The Cooper Co Inc Earnings Call
Speaker Change: [music].
Operator: Ladies and gentlemen, thank you for standing by.
Ladies and gentlemen, thank you for standing by my name is Deseret and I will be your conference operator today at this time I would like to welcome everyone to the Q1 'twenty twenty-five Cooper companies' earnings conference call.
Desiree: My name is Desiree and I will be your conference operator today.
Operator: At this time, I would like to welcome everyone to the Q1 2025 Cooper Companies Earnings Conference. All lines have been placed on mute to prevent any background noise.
Speaker Change: All lines have you. Please on mute to prevent any background noise. After the Speakers' remarks, there will be a question and answer session.
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Kim Duncan: I would now like to turn the conference over to Kim Duncan, VP of Investor Relations and Risk Management. You may begin.
Speaker Change: I would now like to turn the conference over to Kim Duncan VP of Investor Relations and risk management you may begin.
Al White: Good afternoon, and welcome to Cooper Company's first quarter of 2019.
Speaker Change: Good afternoon, and welcome to Cooper Companies' first quarter 2025 earnings conference call. During today's call. We will discuss the results and guidance included in the earnings release, and then use the remaining time for questions. Our presenters on today's call are al White, President and Chief Executive Officer, and Brian Andrews, Chief Financial Officer and Treasurer.
Al White: During today's call, Presenters on today's call are Al White and Brian Andrews, Chief Financial Officer and Treasurer.
Al White: Before we begin, I'd like to remind you that this conference call will contain forward-looking statements, including revenues, EPS, operating income, margins, cash flows, and other financial guidance, expectations, and targets. Strategic and Operational Initiatives, Market and Regulatory Conditions and Trends, and Product Launches and Demands.
Speaker Change: Before we begin I'd like to remind you that this conference call will contain forward looking statements, including revenues E. P. S. Operating income margins cash flows and other financial guidance expectations and targets.
Speaker Change: Strategic and operational initiatives market or regulatory conditions and trends and product launches and demand.
Al White: Forward-looking statements depend on assumptions, data, or methods that may be incorrect or imprecise and are subject to risks and uncertainty.
Speaker Change: Forward looking statements depend on assumptions data or methods that maybe incorrect or imprecise and are subject to risks and uncertainties.
Al White: Events that could cause our actual results and future actions of the company to differ materially from those described in forward-looking statements are set forth under the caption Forward-Looking Statements in today's earnings release and are described in our SEC filings, including Cooper's Form 10-K and Form 10-Q filings, all of which are available on our website at coopercos.com. Also, as a reminder, the non-GAAP financial information we will provide on this call is provided as a supplement to our GAAP information. We encourage you to consider our results under GAAP as well as non-GAAP and refer to the reconciliations provided in our earnings release, which is available on the Investor Relations section of our website under Quarterly Materials.
Speaker Change: Events that could cause our actual results and future actions of the company could differ materially from those described in forward looking statements are set forth under the caption forward looking statements in today's earnings release and are described in our SEC filings, including Cooper's Form 10-K, and Form 10-Q filings all of which are available on our website.
Speaker Change: Our two proposed dot com.
Speaker Change: 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 industrial relations section of our website under quarter.
Speaker Change: Really material.
Al White: Should you have any additional questions following the call, please email ir at cooperco.com.
Speaker Change: Should you have any additional questions. Following the call. Please email IRA Cooper co dot com and now I'll turn the call over to al for his opening remarks.
Al White: And now I'll turn the call over to Al for his opening remarks. Thank you, Kim, and welcome, everyone, to today's Fiscal Q1 Earnings Call. We're off to a strong start this year, reporting record Q1 revenues and earnings. We met our expectations for revenues and exceeded expectations for margins, earnings, and free cash flow, and this included hurdling the negative impact of currency. We're also outperforming our operational plans at Cooper Vision and have increased availability and accelerated product launch activity. This includes moving up international launch dates for MyDay Energis, increasing availability of our MyDay multifocal and extended torque ranges, and starting early stage launch planning for MyDay MySight outside the U.S.
al: Thank you, Kevin and welcome everyone to todays fiscal Q1 earnings call. We're off to a strong start this year reporting record Q1 revenues and earnings we met our expectations for revenues and exceeded expectations for margins earnings and free cash flow and this included hurdling the negative impact of currency.
al: We're also outperforming our operational plans at coopervision and have increased availability and accelerated product launch activity. This includes moving up international launch dates for my de energize, increasing availability of our <unk> multifocal and extended torque ranges and starting early stage launch planning for <unk> My site outside.
al: The U S.
Al White: We've also increased our private label availability as that part of our business has started accelerating.
al: We've also increased our private label availability is that part of our business has started accelerating will discuss all of this during the call, but let me say we are in excellent shape driven by strong operational execution.
Al White: We'll discuss all this during the call, but let me say we're in excellent shape, driven by strong operational execution. Moving to the quarterly numbers, consolidated revenues were $965 million, up 4% year over year and up 5% organically. Cooper Vision reported quarterly revenues of $646 million, up 4% and up 6% organically. Cooper Surgical posted quarterly revenues of $319 million, up 3% and up 2% organically. margins improved nicely and nine gap earnings per share were 92 cents. For Cooper Vision, the Americas grew 8%, EMEA 6%, and Asia Pac 3%. Within categories, torques and multifocals grew 10%, and spheres were up 3%.
al: Moving to the quarterly numbers consolidated revenues were $965 million up 4% year over year and up 5% organically Coopervision reported quarterly revenues of $646 million up 4% and up 6% organically Cooper surgical post accordingly revenues of $319 million up.
al: 3% and up 2% organically.
al: Margins improved nicely and non-GAAP earnings per share were <unk> 92 sets.
al: For Coopervision, the Americas grew 8% EMEA, 6% and Asia Pac, 3% within categories Toric and multifocal is grew 10% and spirits were up 3%.
Al White: Within Modalities, our Daily Silicone Hydrogel Lenses, Mi-Day and Clarity, grew 9%. And our Silicone Hydrogel FRP Lenses, Biothinity and Evera, were up 9%. Our myopia management portfolio grew 20% with my site up 27%. As we discussed on our last earnings call, the quarter started soft with some channel inventory contraction, but quickly returned to normal.
al: We then modalities our daily silicone hydrogel lenses, my day, and clarity grew 9% and our silicon hydrogel FRP lenses, <unk> and <unk> were up 9%.
al: Our myopia management portfolio grew 20% with my site up 27%.
al: As we discussed on our last earnings call the quarter started soft with some channel inventory contraction, but quickly returned to normal the only area that continued to see struggles with China, where our business declined year over year.
Al White: The only area that continued to see struggles was China, where our business declined year over year. Turning to product details and starting with our premium daily silico and hydrogel lenses, Mideye is seeing healthy demand with Torix, Multifocals, and Energis all performing really well. Mideye Torix continues to see success with our parameter expansion rollout being received extremely well in new markets around the world. And we're also increasing availability in existing accounts where demand remains very high. The fantastic design of this toric lens, which mirrors BioAuthenticity's design, combined with the widest toric skew range in the market, gives us a great competitive advantage and we believe we have a long runway of success in front of us.
al: Turning to product details and starting with our premium daily silicone hydrogel lenses.
al: <unk> is seeing healthy demand with toric multifocal and are just all performing really well <unk> continues to see success with our parameter expansion rollout being received extremely well in new markets around the world and we're also increasing availability in existing accounts, where demand remains very high.
al: Fantastic design at this toric lens, which mirrors bio if any of these design combined with the widest towards SKU range and the market gives us a great competitive advantage and we believe we have a long runway of success in front of us.
Al White: Mighty Multifocal also had a strong quarter, driven by the unique combination of its advanced design paired with an easy fitting system that is delivering very high satisfaction levels, driven by an incredible 98% fit success rate in two pairs or less. That's critical for busy eye care practitioners who want to optimize chair time while capitalizing on the large, lucrative, and growing presbyopic segment of the market. And MyDay Energist continues to grow nicely, with ECPs and patients loving its innovative digital boost technology, designed specifically for today's digital lifestyle. We'll be launching this lens in additional markets soon, and believe it will be extremely well received.
al: <unk> Multifocal also had a strong quarter driven by the unique combination of its advanced designs paired with an easy fitting system that is delivering very high satisfaction levels driven by an incredible 98% success rate in two pairs or less that's critical for busy eye care practitioners, who want to optimize chair time, while capped.
al: <unk> on the large lucrative and growing presbyopic segment of the market.
al: <unk> continues to grow nicely with Ecp's in patients loving its innovative digital boost technology designed specifically for today's digital lifestyle will be launching this lens in additional market soon and believe it will be extremely well received.
Al White: Wrapping up on my day, our investments in capacity expansion are running ahead of schedule, allowing us to be more aggressive with all our my day activity, which is obviously great to see given the strong demand. Turning to our Clarity portfolio, we continue posting nice growth with a very high-quality alternative to MyDay at a lower price. We're receiving fantastic feedback from customers in the US and Canada on our redesigned Clarity Multifocal, and we're launching an APAC later this month with more markets to follow. This upgraded multifocal mirrors the MyDay design, providing wearers optimal comfort and vision while giving ECPs confidence they'll have the same fitting success they currently enjoy with the MyDay Multifocal.
al: Wrapping up on my day, our investments and capacity expansion are running ahead of schedule, allowing us to be more aggressive with all our might activity, which is obviously great to see given the strong demand.
al: Turning to our clarity portfolio, we continue posting nice growth with a very high quality alternative to my days at a lower price point or.
al: We're receiving fantastic feedback from customers in the U S and Canada, and our redesign clarity multifocal and we're launching an APAC later this month with more markets to follow this upgraded multifocal mirrors, the <unk> design, providing wearers optimal comfort envision while giving ecp's confidence they will have the same fitting success a current.
al: We enjoy with <unk> multifocal.
Al White: Moving to frequent replacement lenses, BioAuthentity continues to deliver great results, led by the strong performance of our Torx, multifocals, and industry-leading extended range offer. Biofinity remains the number one lens in the world, with more people wearing it than any other contact lens, and the reason is simple. It's an incredibly comfortable lens, it has market-leading technology, it offers more prescription options than any other lens, and it's sold at a great price.
al: Moving to frequent replacement lyons's bio affinity continues to deliver great results led by the strong performance of our toric multifocal and industry, leading extended range offerings.
al: While affinity remains a number one lens in the world with more people wearing it than any other contact lens and the reason is simple it's an incredibly comfortable lands that has market leading technology. It offers more prescription options and any other lens and it's sold at a great price point.
Al White: Turning to Myopia Management. After a soft start to the quarter, we saw a significant pickup in activity, particularly in the U.S. MySite led the way, and we continue forecasting MySite growth of around 40% for the year. Supporting this growth is a recent realignment of our U.S. sales force to double account coverage, additional sales resources in key European markets, expanded digital marketing and CRM programs, and increasing activity around key account private label deals. In parallel, we're reinforcing CooperVision's leadership in this category with investments in R&D and clinical study activity, and with advocacy groups supporting the industry's continuing move to making myopia control standard of care.
al: Turning to myopia management after a soft start to the quarter, we saw a significant pickup in activity, particularly in the U S. <unk> led the way and we continue forecasting <unk> growth of around 40% for the year.
al: Supporting this growth is our recent realignment of our U S sales force to double account coverage additional sales resources in key European markets expanded digital marketing and CRM programs and increasing activity around key account private label deals in.
al: In parallel we're reinforcing coopervision leadership in this category with investments in R&D and clinical study activity and with advocacy groups supporting the industry is continuing move to making myopia control standard of care I'm also happy to report that our capacity improvements in my day have allowed us to start planning for the launch of <unk>.
Al White: I'm also happy to report that our capacity improvements in MyDay have allowed us to start planning for the launch of MyDay MySite outside the US. It'll take a little while to get launched, but it's now on the radar, and we expect a combination of the market-leading comfort and design of MyDay, combined with the technology of MySite, to make MyDay MySite a truly exciting entry into this market. Lastly in this area, we're seeing tremendous growth with SiteGlass in China, which is part of our joint venture with Essilor Luxottica, and we're seeing improving traction with OrthoK, which was up 9% globally.
al: Outside the U S.
al: We'll take a little while to get launch, but it's not on our radar and we expect the combination of the market, leading comfort and design of my day combined with the technology of my site to make my day My site a truly exciting entry into this market.
al: Lastly in this area, we're seeing tremendous growth with site glass in China, which is part of our joint venture with Essilor Luxottica, and we're seeing improving traction with ortho K, which was up 9% globally.
al: For the broader contact lens industry, we forecast market growth of 5% to 7% this year in constant currency with us taking share this.
Al White: For the broader contact lens industry, we forecast market growth of 5-7% this year in constant currency with us taking shares. This follows last year where the market grew 7% and Coopervision grew 8%. Factors driving the market remain largely the same, including the ongoing trade-up to dailies, growth in torques and multifocals, growth in wearers, improved pricing, and for us, growth in myopia management.
al: This follows last year, where the market grew 7% and coopervision grew 8% factors driving the market remained largely the same including the ongoing trade up to dailies growth and toric and multifocal growth in wearers improved pricing and for us growth in myopia management.
Al White: To conclude on CooperVision, we received some questions around our private label business, so let me address those. To start, we have not changed our private label strategy. It's around one third of our revenues, and it's a core part of our long-range strategic growth plan. A few points to note, contact lens manufacturers produce lenses using different materials and different lens features, such as a lens thickness, size, and design. So you can't replace them without patients noticing, especially with torques and multi-focus. Also, for private label, packaging, label, and distribution is more complex as you need tremendous flexibility within your logistics platforms to meet customer demand.
al: To conclude on Coopervision, we received some questions around our private label business. So let me address those.
al: To start we have not changed our private label strategy. It's around one third of our revenues and it's a core part of our long range strategic growth plan, a few points to note contact lens manufacturers produce lenses using different materials and different lens features such as a lens thickness size and design. So you can't replace them.
al: Without patients noticing, especially with toric and multifocal.
al: Also for private label packaging labeling distribution is more complex as you need tremendous flexibility within your logistics platforms to meet customer demands.
Al White: And lastly, our private label portfolio is very diverse, with a significant number of long-term contracts tied to a wide variety of brands, including, at times, different brands within the same customer.
al: And lastly, our private label portfolio is very diverse with a significant number of long term contracts tied to a wide variety of brands, including at times different brands within the same customer.
Al White: Moving to Cooper Surgical, we reported revenues of $319 million, up 3% or up 2% organically. This was actually slightly ahead of our internal expectations, remembering that we implemented an important IT system upgrade in fiscal 2024, which resulted in buy-in activity in Q1 and shipping disruptions in Q2 of last year. This meant a tough comp for Q1, but it's an easier comp for Q2. We also had strong capital equipment sales and fertility in Q4 of last year, which made for a tough quarter sequentially. Regardless, this was all expected and we remain comfortable with our full year guidance of 4-6% organic growth.
al: Moving at Cooper surgical we reported revenues of $319 million up 3% or up 2% organically.
al: This was actually slightly ahead of our internal expectations remembering that we implemented an important it system upgrade in fiscal 2024, which resulted in buying activity in Q1 and shipping disruptions in Q2 of last year.
al: This meant a tough comp for Q1, but it's an easier comp for Q2.
al: We also had strong capital equipment sales in fertility in Q4 of last year, which made for a tough quarter sequentially rigs.
al: Regardless this was all expected and we remain comfortable with our full year guidance of 4% to 6% organic growth.
Al White: Moving to the details, fertility posted quarterly revenues of 120 million up 1%. This was an unusual quarter for us in terms of revenue growth, but it was due to the unique items I mentioned earlier. The important takeaway is that this was a blip, and we expect fertility to return to high single digit to low double digit growth for the remainder of the year. During the quarter, we saw a strong demand for our leading portfolio of innovative products and services, including within consumables, reproductive genetic testing, and donor activity. And our pipeline of planned equipment installations strengthened nicely during the quarter.
al: Moving to the details fertility posted quarterly revenues of $120 million up 1%.
al: This was an unusual quarter for us in terms of revenue growth, but it was due to the unique items I mentioned earlier. The important takeaway is that this was a blip and we expect fertility to return to high single digit to low double digit growth for the remainder of the year.
al: During the quarter, we saw strong demand for our leading portfolio of innovative products and services, including within consumables reproductive genetic testing and donor activity and our pipeline of planned equipment installation strengthened nicely during the quarter.
Al White: We're also continuing to see exciting activity with new innovation, including within our reproductive genetic testing business, where our cutting edge AI-based testing methodologies are advancing efforts at detecting genetic variations at the DNA level in embryos. And our integration activity from prior acquisitions is driving efficiencies, such as the recent consolidation of our donor egg and sperm storage into a centralized location.
al: We're also continuing to see exciting activity with new innovation, including within our reproductive genetic testing business, where our cutting edge AI based testing methodologies are advancing efforts of detecting genetic variations at the DNA level in embryos.
al: And our integration activity from prior acquisitions as driving efficiencies such as the recent consolidation of our donor agonist firm storage into a centralized location.
Al White: Regarding the broader fertility industry, the global market continues to expand, driven by strong underlying macro growth trends. These include women delaying childbirth, improving access to treatment, increasing patient awareness, increasing benefits coverage, and improving technology. The World Health Organization estimates that one in six people worldwide will experience infertility at some point in their lives due to a variety of health factors. So this is a large industry that offers significant long-term growth potential. As a leader in the space, we remain deeply committed to supporting patients and clinics by delivering innovation, launching new products and services, providing extensive clinical training, expanding geographically, and advancing our R&D efforts.
al: Regarding the broader fertility industry. The global market continues to expand driven by strong underlying macro growth trends. These include women delaying childbirth, improving access to treatment, increasing patient awareness, increasing benefits coverage and improving technology.
The World Health organization estimates of 1% to six people worldwide will experience in fertility at some point in their lives due to a variety of health factors. So this is a large industry that offer significant long term growth potential as a leader in the space, we remain deeply committed to supporting patients and clinics by delivering innovation launching new products and services.
al: Providing extensive clinical training expanding geographically and advancing our R&D efforts.
Al White: Moving to our Office of Surgical Products and Services, we posted sales of $199 million, up 4% or up 2% organically. Per my earlier comments, we had a tough cop in Q1, but expect much stronger performance in Q2, and we're already off to a good start. This performance will continue to be driven by strength and targeted minimally invasive gynecological surgical devices, such as our Ally uterine manipulator portfolio, and within labor and delivery with products such as Fetal Pillow and our Cervical Ripening Balloon. We also saw strength in Q1 from Paragard, which grew 12%, although this was primarily tied to channel fill associated with our new single hand inserter upgrade and a price increase.
al: Moving to our office and surgical products and services, we posted sales of $199 million up 4% or up 2% organically for my earlier comments, we had a tough comp in Q1, but expect much stronger performance in Q2, and we're already off to a good start this.
al: This performance will continue to be driven by strength in targeted minimally invasive gynecological surgical devices, such as our ally uterine manipulator portfolio and within labor and delivery with products such as Vito pillow in our cervical ripening glue.
al: We also saw strength in Q1 from PARAGARD, which grew 12%. Although this was primarily tied to channel fill associated with our new single handed <unk> upgrade at a price increase.
Al White: With that, let me conclude by saying that our focus remains on execution, taking share, driving profitability, and delivering on our strategic priorities, including increasing the availability of our innovative products, expanding our state-of-the-art manufacturing capacity, optimizing our technology investments, developing and launching new products, and investing in our people.
al: With that let me conclude by saying that our focus remains on execution, taking share driving profitability and delivering on our strategic priorities, including increasing the availability of our innovative products expanding our state of the art manufacturing capacity, optimizing our technology investments developing and launching new products and.
al: Investing in our people.
Brian Andrews: With that, I'll turn the call over to Brian. Thank you, Adelaide. And good afternoon, everyone. Most of my commentary will be on a non GAAP basis. So please refer to the earnings release for a reconciliation of GAAP tonight. For the first fiscal quarter, consolidated revenues were $965,000. 4% as reported and a 5% Consolidated Gross Margin was 68.7%, up from 67.3%, driven by efficiency. Operating expenses increased 5% to 43.6% of driven largely by commercial and R&D investments. Offset by Leverage in Targeted Areas. From a leverage perspective, we're continuing to see success in several parts of the P&L at both Cooper Vision and Cooper Surgical as our prior investment This was especially evident in our production and distribution activities.
Brian Andrews: I'll turn the call over to Brian.
Brian Andrews: Thank you Alan and good afternoon, everyone. Most of my commentary will be on a non-GAAP basis. So please refer to the earnings release for a reconciliation of GAAP to non-GAAP results.
Brian Andrews: For the first fiscal quarter consolidated revenues were $965 million up 4% as reported and up 5% organically.
Brian Andrews: Consolidated gross margin was 68, 7% up from 67, 3% driven by efficiency gains and mix.
Brian Andrews: Operating expenses increased 5% to 43, 6% of revenues driven largely by commercial and R&D investments.
Brian Andrews: Offset by leverage in targeted areas within G&A.
Brian Andrews: From a leverage perspective, we're continuing to see success in several parts of the P&L at both Coopervision and Cooper Surgical's, our private investment activity pays off.
Brian Andrews: This was especially evident in our production and distribution activities, but also in certain support functions.
Brian Andrews: but also in certain support. We expect this to continue as we deliver efficiency improvements combining our back-office activities. and Leveraging Technology. Consolidated Operating Income was up 6.5%, improving the operating margin to $25. On a constant currency basis, operating income grew a healthy 12. Your Low Operating Income Interest Expense was $25. and the effective tax rate was 14. Non-Gap EPS was $0.92, up 7.4%. or up 14.2% excluding. with roughly 201 million average. With respect to FX, it was $0.06 negative for the quarter, $0.02 worse than what was included in our report. Pre-tax flow was $101 million.
Brian Andrews: We expect this to continue as we deliver efficiency improvements combining our back office activity and leveraging technology.
Brian Andrews: Consolidated operating income was up six 5% improving the operating margins of 25, 1%.
Brian Andrews: On a constant currency basis operating income grew a healthy 12%.
Brian Andrews: Below operating income interest expense was $25 3 million.
Brian Andrews: The effective tax rate was 14, 3%.
Brian Andrews: non-GAAP EPS was <unk> 92.
Brian Andrews: Seven 4%.
Brian Andrews: Or up 14, 2%, excluding FX with roughly 201 million average shares outstanding.
With respect to FX. It was <unk> <unk> negative for the quarter two worst than what was included in our original guidance.
Brian Andrews: Free cash flow was $101 million.
Brian Andrews: With capex of $89 million.
Brian Andrews: We'll be right back. Net debt decreased to $2.44 billion. with our bank-defined leverage ratio reducing to 1%. To summarize Fiscal Q1, this was a solid quarter and a good start to We met our internal revenue expect... and took another step forward with free cash flow generation.
Brian Andrews: Net debt decreased to $2 44 billion.
Brian Andrews: With our bank defined leverage ratio ratio, reducing to 191 times.
Brian Andrews: To summarize fiscal Q1, this was a solid quarter and a good start to the year.
Brian Andrews: Our internal revenue expectations delivered margin expansion and took another step forward with free cash flow generation.
Moving to fiscal 2025 guidance.
Brian Andrews: Moving to fiscal 2025. We're holding CooperVision's Revenue Guidance range unchanged. $2.733 to $2.786 billion. six-and-a-half to eight-and-a-half percent organically and holding Cooper Surgical. Unchanged at 1.347 to $1.372 billion, up $4 billion. On a consolidated basis, this translates to revenues of $4.08 to $4.158. Roughly. We're raising our non-GAP EPS guidance range slightly by increasing the bottom. $3.99 to $4. of seven to nine. for up 11 to 30. Within this, we expect a very similar P&L to what we highlighted on our last earnings call with strength in gross margins and targeted OPEX leverage delivering solid returns. We expect free cash flow to be in the range of $350 to $400.
Brian Andrews: We're holding coopervision revenue guidance range unchanged at $2, 733% to $2 76 billion.
Brian Andrews: $6 five to eight 5% organically and holding Cooper surgical's revenue guidance range.
Brian Andrews: Changed at one 347 to 137 2 billion up 4% to 6% organically.
Brian Andrews: On a consolidated basis this translates to revenues of $4 to $4 158 billion.
Brian Andrews: Roughly 6% to 8% organically.
Brian Andrews: We're raising our non-GAAP EPS guidance range slightly by increasing the bottom end to $3 94.
Brian Andrews: The $4 <unk>.
Brian Andrews: Up 7% to 9% or up 11% to 13% excluding FX.
Brian Andrews: Within this we expect a very similar P&L to what we highlighted on our last earnings call with strength in gross margins and targeted opex leverage delivering solid earnings growth.
Brian Andrews: We expect free cash flow to be in the range of $350 million to $400 million.
Brian Andrews: and we'll continue prioritizing that reduction with.
Brian Andrews: And we will continue prioritizing debt reduction with those proceeds.
Brian Andrews: With that let me conclude by highlighting a few points.
Brian Andrews: With that, let me conclude by highlighting a few points. Our investment activity over the past several years is yielding positive results. We've emphasized our commitment to reporting improved financial returns, and we're delivering on that with efficiency improvements driving higher gross... Targeted OpEx. double-digit constant currency operating and an increase in our We still have a lot of work to do, but we're on a great trajectory to continue our momentum, and we remain laser-focused on strong execution. This includes leveraging our newly deployed IT systems, delivering efficiency from centralizing and harmonizing our organization. including Capitalizing on Cross-Functional Backups.
Brian Andrews: Our investment activity over the past several years is yielding positive results.
Brian Andrews: We've emphasized our commitment to reporting improved financial returns and we're delivering on that with efficiency improvements driving higher gross margins targeted opex leverage double digit constant currency operating income growth.
Brian Andrews: And an increase in our EPS guidance.
Brian Andrews: We still have a lot of work to do but we're on a great trajectory to continue our momentum and we remain laser focused on strong execution.
Brian Andrews: This includes leveraging our newly deployed it systems.
Brian Andrews: Delivering efficiency from centralizing and harmonizing our organizational structure.
Brian Andrews: <unk> capitalize on cross capitalizing on cross functional back office efficiency projects.
Brian Andrews: and Simplifying and Standardizing our Processes and Procedures to Reduce the Need for Data. Our focus remains on ensuring all our activity produces strong operational success. Earnings Growth and Improving Free Cash Flow Generation.
Brian Andrews: And simplifying and standardizing our processes and procedures to reduce the need for further head count.
Brian Andrews: Our focus remains on ensuring all our activity produces strong operational success.
Brian Andrews: Earnings growth and improving free cash flow generation.
Brian Andrews: Now, before moving to Q&A, let me make a quick comment on F- Over the past two days, we've seen the U.S. dollar weaken against most current markets. We did not update our guidance to reflect these moves.
Brian Andrews: Now before moving to Q&A, let me make a quick comment on FX.
Brian Andrews: Over the past few days, we see in the U S dollar weakened against most currencies.
Brian Andrews: We did not update our guidance to reflect these moves but if rates hold there.
Brian Andrews: but it rates whole.
Brian Andrews: It puts us in a great shape to reach, if not expand, top end or And with that, I'll hand it back to the Thank you.
Brian Andrews: It puts us in a great shape to reach if not exceed.
Brian Andrews: At the top end of our EPS guidance range.
Brian Andrews: With that I'll hand, it back to the operator for questions.
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Jeff Johnson: Our first question comes from the line of Jeff Johnson with Baird. Your line is open. Thank you. Good evening, guys. You hearing me okay? Yep, hear you.
Speaker Change: Our first question comes from the line of Jeff Johnson with Baird. Your line is open.
Jeff Johnson: Thank you good evening guys you hear me Okay, yes.
Speaker Change: Hey, Jeff.
Jeff Johnson: Hey guys, so I wanted to start just on some of your My Day commentary. You know, our conversations over the last couple months maybe have suggested that there's actually some markets you don't have My Day in. I think that's pretty clear, that's Japan, but even some more markets beyond that.
Speaker Change: Hey, guys. So I wanted to start just on some of your <unk> commentary.
Speaker Change: Our conversations over the last couple of months, maybe as you suggested that there's actually some markets. You don't have my day, and I think that's pretty clear Thats, Japan, but even some more markets beyond that.
Al White: As you talk about now some of those My Day manufacturing constraints coming off, I guess I'm wondering, are there markets that you've been out of for 6, 12, 18 months that you could go back into and it's almost a slam dunk to get some, you know, faster My Day growth as you go back into those markets? And then I have one follow-up. Yeah, I can probably answer that one very succinctly by saying yes.
Speaker Change: As you talk about some of those manufacturing constraints coming off I guess I'm wondering are there markets that you've been out of first 612 18 months you could go back into and it's almost a slam dunk to get some fat.
Speaker Change: <unk> faster <unk> growth as you go back into those markets and then I have one follow up.
Speaker Change: Yes, I can probably answer that one very succinctly by saying yes.
Al White: Could you expand on it? You are correct. There's demand out there, whether it's countries that we're not in right now that we can re-enter or go into, and then there's accounts within a number of those countries that are asking for more product, including within private label that I mentioned, that are asking for more product. And us just getting them more product, increasing availability and getting them more product or putting that product into a country or an account where the demand currently exists, should result in some nice sales.
Speaker Change: Could you expand on that.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: You are correct there is demand out there whether it's <unk>.
Speaker Change: Countries that were not in right now that we can reenter or go into and then there is accounts within a number of those countries that are asking for more product, including within private label that I mentioned that are asking for more product and us just getting them more product, increasing availability and getting them more product, we're putting that.
Speaker Change: Product into a country or an account where the demand currently exists.
Speaker Change: Should result in some some nice <unk>.
Speaker Change: Sales growth.
Jeff Johnson: Okay, any way you can quantify you're out of, you know, markets that account for 5% of your global revenue that other lenders are in, anything like that, number one.
Speaker Change: Okay any way you can quantify your out of markets that account for.
Speaker Change: 5% of your global revenue that other lenders or anything like that number one and then maybe just you don't talk very often about the private label business that since you brought it up I thought maybe I'd push you there.
Al White: And then maybe just, you don't talk very often about the private label business, but since you brought it up, I thought maybe I'd push you there just a little bit. You know, on private label, how has that been growing each of the last couple years relative to your branded business? Faster, slower, about the same?
Speaker Change: A little bit.
Speaker Change: On private label, how has that been growing each of the last couple of years relative to your branded business faster slower about the same.
Al White: And given some of the questions that have been raised with RFPs out there on one of your bigger clients right now on the private label side, would you expect that private label business to grow, you know, similar trend line relative to branded as you've seen in the last couple of years or any changes there on a go forward basis? Thank you. Sure. On my day, I won't quantify it other than to say, as we're increasing production right now, and things are improving, and I'm seeing product working its way through our channel, it certainly gives me more confidence, especially in Q3 and Q4 of this year, right?
Speaker Change: Given some of the questions that have been raised with Rfps out there on on one of your bigger clients right now on the private label side.
Speaker Change: Would you expect that private label business to grow.
Speaker Change: Similar trend line relative to branded as you've seen the last couple of years or any changes there on a go forward basis. Thank you.
Speaker Change: Sure.
Speaker Change: And my day, I won't quantify I won't quantify other than to say as we're increasing production right now and things are improving and I'm seeing product working its way through our channel.
Speaker Change: It certainly gives me more confidence, especially in Q3 and Q4 of this year right.
Al White: I mean, we kept our guidance the same for a reason, and we have good reason to hold that guidance where it is, based on what we're seeing internally, and the topics we just discussed. Private label growth, the last couple years, it's been growing in line, I would say, roughly the same as what our branded business has been growing. We're starting to see, or we've started to see, a little bit of an acceleration in that part of our market. I would think, as I sit here today, if I was a betting man, I would say that our private label business will grow a little bit faster than our branded business, probably, for the remainder of this year, wouldn't surprise me as next year.
We kept our guidance the same for a reason and we have good reason to hold that guidance where it is.
Speaker Change: Based on what we're seeing internally and the topics we just discussed.
Speaker Change: Private label growth. The last couple of years, it's been growing in line I would say roughly the same as what our branded business has been growing we're starting to see or we've started to see a little bit of an acceleration.
Speaker Change: In that part of our market I would think as I sit here today, if I was a betting man I would say that our private label business will grow a little bit faster than our branded business probably for the remainder of this year wouldn't surprise me as next year if.
Al White: If customers change their purchase habits, we have a tendency to see some increases in private label if they're looking for lower cost or bought purchase opportunities and so forth. So, I would think private label actually strengthens a little bit. Thank you.
Speaker Change: If customers changed their purchase habits.
Speaker Change: We have a tendency to see some increases in private label, if theyre looking for lower costs or bulk purchase opportunities and so forth. So I would think private label actually strengthens a little bit.
Speaker Change: Thank you.
Speaker Change: Yes.
Larry Biegelsen: And our next question comes from the line of Larry Biegelsen with Wells Fargo. Hey, Al. Good afternoon. Thanks for taking the question. So, Al, I mean, the question is just asking, you know, Jeff's question, maybe a little bit differently.
Speaker Change: And our next question comes from the line of Larry <unk> with Wells Fargo. Your line is open.
Speaker Change: Hey al.
Speaker Change: Good afternoon. Thanks for taking the question so I mean.
Speaker Change: The question is just asking Jeff's question, maybe at a little bit differently, maybe just help us understand why your growth was below the peers in fiscal Q1.
Larry Biegelsen: Maybe just help us understand why your growth was below the peers in fiscal Q1. You know, maybe you can give us kind of the calendar year growth, and maybe if you could tell us what January and February did, just a little bit more confidence that you can accelerate the CVI growth. You know, from Q1, and it sounds like, Al, sorry for the multi-part question, but is it Q3 and 4 with some of the supply comes online? I mean, how do we think about just a little more color on Q1, you know, relative to your peers, and how to think about the acceleration through the rest of the year?
Speaker Change: One.
Speaker Change: Okay.
Speaker Change: Maybe you can give us kind of the calendar year growth and maybe if you could tell us what January and February did just a little bit more confidence that you can accelerate the CVI growth from Q1 and it sounds like out sorry for the multipart question, but is it Q3 and four with some of the supply comes online.
Speaker Change: And how do we think about just a little more color on Q1.
Relative to your peers and how to think about the acceleration through the rest of the year.
Al White: Yeah, you know, we spent some time on our last earnings call and through the quarter kind of talking about how we had a soft start to this quarter, right? And we don't give quarterly guidance, so we didn't quantify that. But we did. We had kind of a weekend to last year, last couple of weeks, and then our fiscal Q1 started slow. And then it started picking back up, and actually, we had a strong January, and that's continued. We had a really good February, and I'm optimistic about how things are moving forward now. I think the market's doing well, and I think we're doing well.
Speaker Change: Yeah, we spent some time on our last earnings call.
Speaker Change: And through the quarter kind of talking about how we had.
Speaker Change: Soft start to this quarter right and we don't give quarterly guidance. So we didn't quantify that but.
Speaker Change: But we did we had kind of a weak end to last year last couple of weeks and then.
Speaker Change: Our fiscal Q1 started slow.
Speaker Change: And that has started picking back up and actually we had a strong January and that's continued we had a we had a really.
Speaker Change: A really good February so I'm optimistic about how things are moving forward now I think the market is doing well and I think we're doing well I will go back and just kind of confirm comments I've made before that we saw some channel inventory reductions.
Al White: I will go back and just kind of confirm comments I've made before that we saw some channel inventory reductions that negatively impacted us at the beginning of November. I think we had a couple of competitors running some activity that probably just transferred some inventory holdings in the channel from one party to another party. So to me, whatever, I don't care about that kind of stuff. At the end of the day, when I look at our growth right now and our recent numbers, I'm pretty bullish on where things sit. When I look at the quarterly gating, no reason we're not going to have a good quarter in Q2.
Speaker Change: Negatively impacted us at the beginning of November I think we had.
Speaker Change: A couple of competitors running some some activity that probably just transferred some inventory holdings in the channel from one party to another party. So to me whatever I don't care about that kind of stuff.
Speaker Change: At the end of the day when I look at our growth right now and our recent numbers I'm pretty bullish on where things set when I look at the quarterly gating.
Speaker Change: No reason, we're not going to have a good quarter in Q2, I think we will I think we've got the the potential certainly to have better quarters at Coopervision and Q3 and Q4 when I when I think about the release schedules associated with that <unk> product I'm talking about.
Al White: I think we will. I think we've got the potential, certainly, to have better quarters at Cooper Vision in Q3 and Q4.
Larry Biegelsen: When I think about the release schedules associated with that MyDay product I'm talking about. That's very helpful, Al.
Speaker Change: That's very helpful and just one follow up on the non hormonal IUD was recently approved.
Larry Biegelsen: And just one follow-up, a non-hormonal IUD was recently approved, which I know you've been expecting. What's assumed in the guidance for the competition to Paragard, and how do you think about the longer-term impact of a new competitor? Thanks for taking the question. Sure. You know, I think that Perger is probably going to be the same as what we said. It'll be down a couple percent to up a couple percent this year. We had a good start to the year. We've got some purchasing going with our single hand inserter that we have in the market right now.
Speaker Change: I know you've been expecting what's assumed in the guidance for the competition to PARAGARD and how do you think about the longer term impact of a new competitor. Thanks for taking the question.
Speaker Change: Sure.
Speaker Change: I think the PARAGARD is probably going to be the same as what we said it'll be down a couple percent to up a couple percent. This year, we had a good start to the year.
Speaker Change: Got some purchasing going with our single hand in surgery that we have in the market right now.
Al White: But before I get too optimistic on that, because there's definitely channel fill there, you know, we want to see end user demand increase. So for this year, though, I would say for this fiscal year, yes, somewhere in that kind of minus two to plus two, something like that. You know, when I look at the competitive product, you're right, it got approved. I mean, at the end of the day, they have a couple of hurdles that they have to get over. You know, that product is used making nitinol, which is the same material that was used in Assure, which anyone who knows our space will remember that product.
Speaker Change: But before I get too optimistic on that because there is definitely channel fill there we want to see end user demand increase so for this year, though I would say for this fiscal year, yes somewhere in that kind of minus two to plus two something like that when I look at the competitive product Youre right. It got approved.
Speaker Change: At the end of the day they have a couple of hurdles that they have to get over.
Speaker Change: That product is used making night now which is the same material that was used and assure which anyone who knows our space. So remember that product.
Al White: You know, it's less copper, so it's less efficacious. It has a three year label compared to our 10 year label. So, you know, we'll see how it goes. I think we're well positioned. We've got a we got a great Paragard team, so we'll see how it plays out. super helpful. Thanks, Al. Yep.
Speaker Change: It's less copper so it's less efficacious and has a three year label compared to our 10 year label. So.
Speaker Change: We will see how it goes I think we're well positioned we got we got a great paradigm team. So we'll see how it plays out.
Speaker Change: Super helpful. Thanks Al.
Speaker Change: Yes.
John Locke: Our next question comes from the line of John Locke. Your line is. Thanks, guys.
Jon Block: Our next question comes from the line of Jon Block with Stifel. Your line is open.
Jon Block: Thanks, guys good evening.
Brian Andrews: Good evening. Brian, I'll throw in your way to kick things off.
Speaker Change: And I'll throw on your way to kick things off just gross margin was solid and certainly above our estimate and.
Brian Andrews: Just gross margin was solid and certainly above our estimate.
Brian Andrews: And, you know, curious to anything to call out regarding the sustainability. I think I heard PowerGuard up 12%. You know, I believe, I believe. That's accretive to corporate gross margins, but would just love to get some color on, you know, your thoughts going forward because Of course, everyone wanted the margins, and now the revs were light, but the margins were really a standout, so, in the quarter, that is, so any color you can provide there would be helpful. I'd say the story on gross margins is sort of a continuation of what we talked about last quarter.
Speaker Change: Curious to add anything to call out regarding the sustainability.
Speaker Change: I heard PARAGARD up 12% I believe I believe that's.
Speaker Change: That's accretive to corporate gross margins, but was just love to get some color on your thoughts going forward because of course, everyone wanted the margins and now the reps were light, but the margins are really a standout so in the quarter that is so any color you can provide there would be helpful.
Georgia sure John Thanks for the question.
Speaker Change: Yes, I would say the story on gross margins is sort of a continuation of what we talked about last quarter were as.
Brian Andrews: You know, as we've been driving higher production in existing buildings. We're seeing yields increase, but when we put those manufacturing lines, those high-volume manufacturing lines in existing buildings... We get better utilization, better allocation of overhead, absorption, you know, that all results in lower cost per unit. So those efficiency gains we were expecting to play out this year and those efficiency gains will show up in gross margins year-over-year, probably every quarter this year, resulting in higher gross margins year-over-year on an as-reported versus last. I'd say what happened in Q1, which resulted in maybe higher margins than what you were thinking also, was just kind of, was really tied to product mix and reach.
Speaker Change: As we've been driving higher production in existing buildings, we're seeing yields increase but when we put those manufacturing lines those high volume manufacturing lines in existing buildings.
Speaker Change: We get better utilization better allocation of overhead absorption that all results in lower cost per unit.
Speaker Change: Those efficiency gains we were expecting to play out this year.
Speaker Change: Those efficiency gains will show up in gross margins year over year, probably every quarter. This year, resulting in higher gross margins year over year on an as reported basis versus last year I'd say what happened in Q1, which resulted in higher margins than what you were thinking will also is just kind of.
Speaker Change: It was really tied to product mix and regional mix. So as we've talked about in the past when we have strong Americas Americas revenue growth against sort of weaker Asia Pac growth that results in a lift to gross margins.
Brian Andrews: So, as we've talked about in the past, you know, when we have strong America's revenue growth against sort of weaker Asia-Pac growth, that results in a lift to gross margins. And then, of course, we had a product mix, product mix advantages in Q1 with strong bioaffinity sales, and you referenced Paragard, the strong Paragard. So that probably gave us a bigger lift than maybe what you were thinking. But I would say, yeah, that the story around Gross Mart- Okay, great.
Speaker Change: First we had a product mix.
Speaker Change: Product mix advantages in Q1 with strong buyer affinity sales and you referenced PARAGARD the strong PARAGARD sales.
Speaker Change: That probably gave us a bigger lift than maybe what you were thinking but I would say yes.
Speaker Change: The story around gross margins is going to be a good one for this year.
Speaker Change: Okay great.
Brian Andrews: That was very helpful. Thanks.
Speaker Change: Very helpful. Thanks, and then I'll shift gears and maybe.
Al White: And then I'll shift gears and maybe, essentially, I'll ask the same question that Larry and Jeff did, but for the acceleration in CVI for the balance of this year, you know, against tougher comps, so obviously the two-year stacks are accelerating even more meaningfully, is it just this capacity thing getting better, or are there any other variables that you can point to, and maybe just to tack onto that? I think the capacity issues are on my day. I believe last call you talked about the constraints potentially going all the way to the end of fiscal 26, and so has that now been pulled forward because you see more of a beat on how the manufacturing has gone over the past several months?
Speaker Change: Maybe essential asset question, Larry and Jeff day, but for the acceleration in CVI for the balance of this year against tougher comps obviously, the two year stacks are accelerating even more meaningfully.
Speaker Change: Is it just as capacity thing getting better or are there any other variables that you can point to that maybe just to tag on to that I think the capacity issues are on Monday, I believe last call last call you talked about the constraints potentially going all the way to the end of fiscal 2006, and so has that now been pulled forward because you.
Speaker Change: See more upbeat on how the manufacturer has had gone over the past several months. Thanks.
Al White: Thanks. Sure. Yeah, so much of the contact lens market is driven by upgrades. It's driven by the shift over to daily contact lenses. That's such a material positive, right? And you see it from us and from some of our competitors. So in this case, it's almost that simple, which is the demand is definitely out there for my day. It's just such a great product. I'm wearing it now. I love it. You guys know that. You know, that as we produce more product and get it out to our sales force, they sell it. Regarding 26, I would say, yes, we've improved the production.
Speaker Change: Sure, yes, so much of the contact lens market is driven by upgrades, it's driven by the shift over to daily contact lenses thats, such a material positive right and you see it from us and from some of our competitors. So in this case, it's almost that simple which is the demand is definitely out there for my day.
Speaker Change: It's just such a great product.
We're in it now I Love you guys know that.
Speaker Change: Yes.
Speaker Change: As we produce more product and get it out to our sales force they sell it.
Speaker Change: Regarding 26, I would say, yes, we've improved the production we pull some things forward that would make me more confident in our fiscal 'twenty six maybe than I, even was on our last earnings call.
Issie Kirby: We pulled some things forward that would make me more confident in our fiscal 26 maybe than I even was on our last Our next question comes from the line of Issie Kirby with Redburn Atlantic. Your line is open. Hi guys, thanks for taking my question. I just wanted to follow up on my APR.
Speaker Change: Our next question comes from the line of EC Kirby with Redburn.
Speaker Change: Your line is open.
Speaker Change: Hi, guys. Thanks for taking my question I just wanted to follow up on Brad guys My questions actually.
Issie Kirby: Those are my questions.
Issie Kirby: Firstly on SiteGlass, would love a little more color on any sort of detail you can give around the number of units sold in China, the number of children perhaps you're reaching with those products, and then reminders of the outlook for approval and rollout outside of China, and then just as a follow-up on SiteGlass as well, how we should really think about how the JV is flowing through the P&L and the impact on EPA. For more information, visit www.fema.gov She is, and then I have a. Sure. A couple of points on that.
Speaker Change: Firstly on tight class.
Speaker Change: And then have more color on any sort of detail you can give around in the number of units sold in China.
Speaker Change: Hello, Jim, perhaps you're reaching with base product and then remind us of the outlook for approval of <unk> rollout outside of China, and then just as a follow up on site as well, how we should really think about how the JV is flowing through the P&L.
Speaker Change: Impact on EPS.
Speaker Change: And then ask Matt and thank you for that.
Speaker Change: Sure a couple of points on that on the joint venture just as a reminder.
Al White: On the joint venture, just as a reminder, it's a 50-50 joint venture with Essilor Luxottica. We are both very passionate about myopia control and believe it's going to be a fantastic market and believe it's great for kids, great for society. So I'll speak on both of our halves to say we're excited about it, we're passionate about it. When I look at the joint venture financial impact to us, we recognize that activity as a gain or loss below the operating income line, so it's not recognized in revenue. So that continues to run through our P&L as a loss, which is fine for me.
Speaker Change: It's a 50 50 joint venture with Essilor Luxottica.
Speaker Change: We are both very passionate about myopia control and I believe it's going to be a fantastic market and believe it's great for kids great versus <unk>. So I'll speak on both of our has to say we're excited about it we're passionate about it.
Speaker Change: When I look at the joint venture financial impact to us.
Speaker Change: Recognize that activity as a gain or loss below the operating income line. So it is not recognized in revenue so.
Speaker Change: That continues to run through our P&L as a loss.
Speaker Change: Fine for me I mean, we're continuing to invest in the product and launched the product I had mentioned last quarter I think we had launched the product in Spain under.
Al White: I mean, we're continuing to invest in the product and launch the product. I mentioned last quarter, I think we had launched the product in Spain under MyTech Glasses and we have it in Canada and a few other markets. So we're continuing to kind of as we move along with launch plans in a greater scale.
Speaker Change: Mitek glasses, and we have it in Canada and a few other markets. So we're continuing to kind of test it in a number of markets as we move along with launch plans and a greater scale.
Al White: I'm not going to get into too many details when it comes to China, because again, this is a JV. But I will say that we've seen some, I guess I would call them dramatic increases in demand and unit activity in China. So I remain very, very bullish on SGV. It's a great product, great technology, and it's doing really well live in the market. Great, thank you.
Speaker Change: I'm not going to get into too many details when it comes to China because again this is a JV.
Speaker Change: But I will say that we've seen some.
Speaker Change: I guess I would call dramatic increases in demand and unit activity in China. So I remain very very bullish on STV has great product, great technology, and it's doing really well live in the market.
Speaker Change: Great. Thank you and then just a follow up.
Al White: And then just to follow up, I guess, on my site within China, I think you mentioned China declining. Was that really? K-Business, or does that include my site within China as well?
Speaker Change: On my site with China, I think you mentioned China declining.
Randy: With that Randy.
Speaker Change: Awesome.
Speaker Change: So it does not include my site within China, as well and just broader comments.
Al White: comments on on the demand and the dynamics you're seeing from my site in China would be great. Sure. As a reminder, again, for China, for my site and our Ortho K business, that's through our partnership with Essilor Luxottica. They did a great job. We had a good quarter, we had nice growth in my site in China, we had nice growth with our Ortho K products in China. So we are back on good footing there and certainly moving in the right direction. So I applaud them and their and how well it's going there.
Speaker Change: On the demands in the dynamic from Eisai in China would be great. Thank you.
Speaker Change: Sure.
Speaker Change: As a reminder, again for China for my site in our Ortho K business that's through.
Speaker Change: Our partnership with Essilor Luxottica.
Speaker Change: They did a great job, we had a good quarter, we had nice growth in my site in China, We had nice growth with our ortho K products in China. So we are back on good footing, there and certainly moving in the right direction. So I applaud them in that relationship and how well it's going there.
Al White: That had nothing to do with our myopia management business in China. That was our core business, if you will, the core contact lens business where we saw the Okay, great, and just quickly squeeze in a follow-up, sorry. The declines in China, is that just tied to broader macro, weaker consumer? Sure. I think a little bit, but I think it was more specific to us than it was that. I think some of our competitors, I believe, had good quarters in China, and I believe it pushed their numbers up. And if I had to look at one of the key deltas, when I look at market share and activity in the quarter, comparing ourselves to our competitors, I'll bet you one of the biggest differences by far, if you got to that level of detail, was them having some success in China and us declining.
Speaker Change: It had nothing to do with our myopia management business in China that was our core business. If you will the core contact lens business, where we saw the declines.
Speaker Change: Okay, Great and just quickly squeeze in a follow up sorry, the declines in China or is that just tied to broader Matt.
Speaker Change: We can see some color on that would be great.
Speaker Change: Sure.
Speaker Change: I think a little bit, but but I think it was more specific to us than it was that I think some of our competitors I believe had.
Speaker Change: Good quarters in China, and I believe it pushed their numbers up and if I had to look at one of the key deltas when I look at market share and activity in the quarter comparing ourselves to our competitors I'll bet you one of the big biggest differences by far if you went to that if you got to that level of detail was them, having some success in China and Thats declining.
Al White: So I think that was more us, some things that we need to fix and strengthen.
Speaker Change: So I think that was more us something some things that we need to fix and straight now.
Al White: Thanks so much.
Speaker Change: Okay. Thanks very much.
Speaker Change: Yep.
Robert Marcus: Next question from Robert Marcus with J.P. Morgan. Your line is open. Oh, great. Thanks for taking the questions.
Speaker Change: Next question from Robbie Marcus with Jpmorgan. Your line is open.
Speaker Change: Great.
Speaker Change: Thanks for taking the questions two from me.
Robert Marcus: Two for me. In the script, you said fertility met your expectations, but only came in one percent, well below the street. How do I think about the size of the capital pull forward, or if it was really pull forward fourth quarter to first quarter? And if it was expected, how do you get confidence? return to potentially double-digit.
Speaker Change: And in the script, you said fertility met your expectations.
Speaker Change: But only came in 1% well below the street.
Speaker Change: How do I think about the size of the capital pull forward or if it was really pull forward fourth quarter to first quarter and if it was expected.
Speaker Change: How do you get confidence in the return to potentially double digit growth for the rest of the year and then I have a follow up.
Al White: That's a very fair question. Yeah, we definitely had some capital pulled into Q4. I think I may have mentioned that on the last call, but it was a decent amount of capital that got pulled in. And then we've had a little bit kind of almost get pushed out a little bit, if you will. Our capital backlog for installations improved quite a bit during the quarter, and we have good visibility on that, as you could imagine. So, one, I feel good from that perspective. Two, when I look over the year over year, we definitely had orders pulled into Q1 of last year, and we had a weaker fertility quarter in Q2, which made it a tough comp.
Speaker Change: It doesn't.
Speaker Change: Fair question.
Speaker Change: Yes, we did we definitely had some capital pulled into Q4 I think I may have mentioned on our last call, but we but it was it was it was a decent amount of capital that got pulled in.
Speaker Change: And then we've had a little bit kind of almost get pushed out a little bit. If you will our capital backlog for installations improved quite a bit during the quarter and we have good visibility on that as you can imagine.
Speaker Change: One I feel good from that perspective, too when I look over the year over year, we definitely had orders pulled into Q1 of last year.
Speaker Change: And we had a weaker fertility quarter in Q2, which made it a tough comp. So I think when we move into Q2 here.
Al White: So, I think when we move into Q2 here, and frankly, for the rest of the year, you know, I feel pretty good about fertility. I think fertility is something like 14 of our last 15 quarters was double-digit growth or something like that. So, to me, this was just an anomaly. We have good visibility on that. Our demand for our consumables is strong. Demand for our reproductive genetic testing is strong. Our donor activity is strong. So, the team's really got their arms around it. That's why I call it like a blip. It seems like an oddity, but I feel pretty confident that you'll see a return to something more normal, at least upper single digits.
Speaker Change: And frankly for the rest of the year I feel pretty good about fertility I think.
Speaker Change: Fertility is something like 14 of our last 15 quarters was double digit growth or something like that so to me. This was just an anomaly we have good visibility on that our demand for our consumables is as strong demand for our reproductive genetic testing is strong our donor activity is strong.
The team has really got their arms around it that's why I called it like a blip it seems like an oddity, but I feel pretty confident that you will see a return to something more normal at least upper single digits double digits the rest of the year.
Al White: And double digits the rest of the year.
Al White: Great.
Speaker Change: Great and then.
Al White: And then, um, on China. APAC is about 20% of CBI sales. How do we think about the size of China there and what's assumed in the rest of the year for guidance? Sure. So, China would be a little bit less than 5% of our revenues on a consolidated basis. So, not huge, but it's an important market for us. It can certainly, definitely impact our Asia-Pac growth rates when you have a struggle in China, especially when it's down. We've done some stuff there. We've already made some changes. We have some work going. We're seeing some progress already on that.
Speaker Change: On China <unk>.
Speaker Change: <unk> is about 20% CVI sales, how do we think about the size of China, there and what's assumed in the rest of the year for guidance in China. Thanks.
Speaker Change: Sure, So China would be a little bit less than 5% of our revenues.
Speaker Change: Consolidated basis, so not huge but it's an important market for us it could certainly definitely impact our Asia Pac growth rates.
Speaker Change: When you had a struggle in China, especially when it's down.
Speaker Change: We've done some stuff there we've already made some changes we have some work going we're making and we're seeing some some progress already on that.
Al White: We have incorporated those challenges into our guidance. It's being more than offset by some strength in some other countries and by the increasing amount of my day capacity that we're releasing back through our channel. Great.
Speaker Change: <unk> incorporated those challenges into our guidance.
Speaker Change: It's being more than offset by some strength in some other countries and by the increasing amount of my day capacity that we're that we're releasing back through our channels.
Speaker Change: Great. Thank you very much.
Al White: Thank you very much.
Speaker Change: Yes.
Steve Lichtman: Our next question comes from the line of Steve Lichtman with Oppenheimer. Thank you. Evening, guys.
Speaker Change: Our next question comes from the line of Steve Lichtman with Oppenheimer. Your line is open.
Speaker Change: Yes.
Speaker Change: Thank you evening guys.
Al White: Al, I was wondering if you could talk to what you're expecting for price in your contact lens business this year, and has some of the softening consumer sentiment created any pushback to date? I would say no change from what we talked about last time. You know, the market's probably, on a global basis, 2% to 3% somewhere in there. I would say we're in that same range on a net basis, probably more in the mid-upper part of that, because we took a little bit more price than some of our competitors this year. Have not seen that pushback.
Speaker Change: Al I was wondering if you could talk to what youre expecting for price in your contact lens business. This year and has some of the softening consumer sentiment created any pushback to date.
Speaker Change: I would say no change from what we talked about.
Speaker Change: The last time the market is probably on a global basis, 2% to 3% somewhere in there I would say we're in that same range on a net basis, probably more in the mid upper part of that because we took a little bit more price than some of our competitors. This year.
Speaker Change: I have not seen that pushback I mean, we're continuing to see very strong demand for the premium or the higher priced products. If you will the toric multifocal and then from a segment perspective still seeing very high demand for our products and our competitors' comment on the same when it comes to dailies wanting to where dailies.
Al White: I mean, we're continuing to see very strong demand for the premium or the higher-priced products, if you will, the Torics, the multifocals. And then, from a segment perspective, still seeing very high demand for our products and our competitors coming on the same when it comes to dailies, wanting to wear dailies.
Brian Andrews: Got it thanks, and then Brian just wanted to go back to mix of expenses. This year you talked about the strength in gross margin. You also talk about some of the initiatives on my sites.
Brian Andrews: Brian, I just wanted to go back to the mix of expenses this year. You talked about the strength in gross margin. You also talked about some of the initiatives on my site. Are those initiatives already embedded in sort of what we saw in the OPEX in the first quarter or? that building a little bit, anything more you could talk about on. Sure, Steve, thanks for the question. Yeah, I mean, we've talked about leveraging SG&A. You know, we did that last year with our strong OI growth. You know, we'll do that. We'll continue to see efficiencies within, like I talked about earlier, manufacturing, packaging, and, you know, distribution.
Brian Andrews: Are those initiatives already embedded in sort of what we saw in the opex in the first quarter or should we anticipate that building a little bit anything more you could talk about on that front would be helpful. Thanks.
Speaker Change: Sure Steve Thanks for the question yes.
Brian Andrews: We've talked about leveraging SG&A.
Brian Andrews: We did that last year with a strong OE growth, we will do that because we will continue to see efficiencies within like I talked about earlier manufacturing packaging and distribution.
Brian Andrews: But we're getting leverage from functional areas, within G&A, and, but, you know, the strong growth margins will allow us to balance our... and really ensure that we. So we'll continue to see an ebb and flow as we work through the year.
Brian Andrews: But we are getting leverage from functional areas within G&A.
Brian Andrews: But the strong gross margins will allow us to balance our investment activity and really ensure that we meet or beat our numbers, but we will continue to we will continue to to to see inevitably.
Brian Andrews: And even flow as we work through the year.
Brian Andrews: Got it thank you guys.
Brian Andrews: Yes.
Operator: And again, if you would like to ask a question, press star, then the number 1 on your telephone key. We do request for today's session that the please limit to one question and one follow up. Thank you.
Speaker Change: And again, if you would like to ask a question Press Star then the number one on your telephone keypad CDO request for today's session. Please limit to one question and one follow up thank you.
Joanne Wuensch: Our next question comes from the line of Joanne Wuensch with Citi. Good evening and thank you for taking the question. I'll just put them both up front.
Speaker Change: Our next question comes from the line of Joanne Wuensch with Citi. Your line is open.
Joanne Wuensch: Good evening and thank you for taking the question. This comes from both upfront.
Joanne Wuensch: I'm curious if you have a view on some of the language coming out of Washington as it relates to tariffs and how you think about that and its impact on your business. And then my second question has to do with the market. As I look at all the participants that have reported so far, including yourself, there seems to be a market growing faster than five to seven. What is the mismatch between lining up everybody's results and those markets?
Joanne Wuensch: I'm curious if you have a view on some of the language coming out of Washington, as it relates to tariffs and how you think about that and its impact on your business and then my second question has to do with the market as I look at all of the participants that have reported so far including yourself. This seems to be a market growing faster than 5% to 7% what is the.
Speaker Change: The mismatch between lining up everybody's results as market commentaries market growth commentary. Thank you.
Al White: A couple quick, I mean, one, I won't go too far into what's coming out of the administration in tariffs, other than to say it doesn't really impact us right now. So I won't go down that path because I don't have to. On the market growth, yeah, the market grew 7% last year. As I mentioned, we grew 8%. So I commented that I think the market will grow 5% to 7%. We'll see how that plays out as we go through the year. But the underlying factors that drove that 7% market growth last year are still there.
Speaker Change: A couple of quick one.
Speaker Change: I won't go too far into what's coming out of the administration and tariffs other than to say it doesn't really impact us right now.
Speaker Change: So I won't go down that path, because I don't have to.
Speaker Change: On the market growth yet the market grew 7% last year as I mentioned, we grew 8% so.
Speaker Change: I commented that I think the market will grow 5% to 7% we will see how that plays out as we go through the year, but the underlying factors that drove that 7% market growth last year are still there they're still there the market is still healthy it's still strong were seeing good consumption, we're seeing good demand.
Al White: They're still there. The market is still healthy. It's still strong. We're seeing good consumption. We're seeing good demand. We've got good products as an industry that are going into the marketplace, increasing availability, replacement schedule against older products with newer products. So a lot of good, exciting things going in the market. I don't know if the market goes to 7% again. I sure as hell hope it does. But when I look at it and say, hey, is it going to be somewhere in that 5% to 7%? I think it probably will be.
Speaker Change: We've got good products as an industry that are going into the marketplace increasing availability.
Speaker Change: Replacement schedule against the older products with newer product. So a lot of good exciting things going on in the market.
Speaker Change: I don't know if the market goes to seven again I sure as Hell hope it does but.
Speaker Change: When I look at it and say is it going to be somewhere in that five to seven I think it probably will be.
Al White: Thank you very much.
Speaker Change: Thank you very much.
Speaker Change: Yes.
Speaker Change: Okay.
Jason Bednar: And our next question comes from the line of Jason Bednar with Piper Sandler. Your line is open. Hey, good evening. Thanks for taking the questions. Al, I wanted to start on the My Day, My Site reference. You think you commented you're doing early launch planning. I know it's early, but what exactly does this entail? What are the prerequisites or trial work that might be necessary here? And then I also know it's very early days, but talk to us a little bit about pricing strategy, if you could. I guess I'm wondering, we typically see silicon hydrogel lenses come with a standard price premium.
Speaker Change: And our next question comes from the line of Jason Bednar with Piper Sandler Your line is open.
Speaker Change: Okay. Good evening, thanks for taking the questions al I wanted to start on the <unk> side reference you commented Youre doing early launch planning I know, it's early but what exactly does this entail what are the prerequisites requisite or trial work that might be necessary here.
And then also I know, it's very early days, but talk to us a little bit about pricing strategy. If you could I guess I'm wondering we typically see silicone hydrogel lenses come with the standard price premium is that the right way to think about the approach on what.
Jason Bednar: Is that the right way to think about the approach? Should you hop it on the premium on top of My Site, or would you look to slot this new lens in at your existing price point and use the introduction as a way to make the price on My Site more affordable?
Speaker Change: The premium on top of my site or would you look to slot this new lens into your existing price point and use the introduction as a way to make price on my side more affordable.
Al White: Yeah, Jason, great questions. It's literally what we're talking about internally right now. There's some regulatory work that we have to do in different markets to get the product approved and get it into the markets. So that'll take us a little bit of time. And then we're working around the strategy. I mean, MyDay has an incredibly strong brand name. So I love MyDay, my site, because it's just it's perfect, right? It's two leading products connected together. When I think about pricing, you know, that's, that's something we're working through right now we need to work through, which is, does pricing need to be lower on a more on the more traditional MyDay lens with a higher priced MyDay, my site, or, or how do we put those together?
Speaker Change: Yes, Jason Great questions is literally what we're talking about internally right. Now there is some regulatory work that we have to do in different markets to get the product approved and get it into the markets. So that will take us a little bit of time and then we're working around the strategy I mean, <unk> has an incredibly strong brand name.
Speaker Change: And so I Love My my site, because it's just it's perfect right to leading products connected together.
Speaker Change: When I think about pricing.
Speaker Change: That's something we're working through right now we need to work through which is does pricing need to be lower on a <unk>.
Speaker Change: On the more traditional <unk> lens with a higher priced Monday, my site or or how do we put those together how do we sell that through private label, how do we sell that through independent practitioners. How do we think about ensuring that children can get this product I mean, one of the things I remain passionate about is that this is for children and we need to.
Al White: How do we sell that through private label? How do we sell that through independent practitioners? How do we think about ensuring that children can get this product? I mean, one of the things I remain passionate about is that this is for children, and we need to get this product in the hand in the eyes of children. So for so if price is a challenge, and we could sell more, if we had a lower priced product, especially a really high quality one, like the existing my site product, you know, I'd be an advocate for that, even if it caused us some challenges of getting there, like getting this product on kids eyes, and building this marketplace is really important.
Speaker Change: Get this product in the hand in the eyes of children and so forth. So if prices are challenge and we could sell more if we had a lower priced product, especially a really high quality one like the existing mine site product I'd be an advocate for that even if it caused us some challenges of getting there.
Speaker Change: Getting this product on kids eyes and building. This marketplace is really important. So we are continuing to work through that internally figure out that pricing strategy and so forth because at the end of the day. This is a big win it's just a matter of how we get there and I can tell you. This is a big step the other thing with my team I say is it is going to have a torque and <unk>.
Al White: So we are continuing to work through that internally, figure out that pricing strategy, and so forth, because at the end of the day, this is a big win. It's just a matter of how we get there. And I can tell you, this is a big step. The other thing with MyDay, my site is it's going to have a torque, and there's a decent percentage of the marketplace right now, maybe it's a third of the kids out there where where optometrists are hesitant to fit MyDay because the kid has an astigmatism, we're going to be able to launch a MyDay, my site torque, and that's going to be another great entrance All right, that's really helpful.
As a a decent percentage of the marketplace right now maybe it's a third of the kids out there where optometrists are hesitant to fit my day, because the Kid has been astigmatism, we're going to be able to launch a <unk> torque and thats going to be another great entrants into this market.
Speaker Change: Alright, Thats really helpful. Thanks for all that.
Patrick Wood: Thanks for all that. Our next question comes from the line of Patrick Wood with Morgan Stanley. Thank you. I'll keep it to one. U.S. tariff penetration, I'd love to, like, can you remind us kind of where you think we're up to? and Torrey. for those who are astigmatic and, you know, from the market research you guys are doing, it may be a dumb question, but like, what proportion of those... not switch to TORIC, is it because they don't know they're astigmatic or is it because they're choosing somehow not to? What's the marginal slip there? Yeah, it's a great question and it...
Speaker Change: I guess other.
Patrick Wellington: Our next question comes from the line of Patrick Wellington Morgan Stanley. Your line is open.
Patrick Wellington: Beautiful thank you I'll keep it to one.
Speaker Change: U S Tarrant penetration I'd love to tell you like could you remind us kind of why you think we're upbeat today.
Speaker Change: <unk> penetration for those who are sick moniker.
Speaker Change: The market research you guys are doing.
Speaker Change: And maybe a dumb question, but like what proportion of those do you think.
Speaker Change: Switch to Tarek is it because there are no they're a stigmatic or is it because that choosing somehow not to for one reason or other like what's the what's the marginal slipped there if you see what I mean.
Speaker Change: It's a great question.
Speaker Change: Yeah.
Al White: Long answer. Just because when you break that torque market up into its segments, and you look at monthly versus dailies, and a lot of the daily torques are newer into the marketplace. And then depending upon what market you're looking at with expanded ranges, torques and so forth, it gets pretty broad. The other thing about it is that your torque penetration in a market like the US is quite a bit higher than it is in Europe. And then it would be the lowest, generally speaking, in a lot of the Asia packed markets out there. So it's clearly, clearly showing a lot of growth, it's good growth.
Speaker Change: Long answer.
Speaker Change: Just because when you break that toward market up into its segments and you look at monthly versus dailies and a lot of the daily towards our newer into the marketplace and then depending upon what markets Youre looking at with expanded ranges torches and so forth.
Speaker Change: It gets it gets pretty broad the <unk>.
Speaker Change: Other thing about it is that youre toward penetration in a market like the U S is quite a bit higher than it is in Europe, and then it would be the lowest generally speaking and a lot of the Asia Pac markets out there.
Speaker Change: So.
Speaker Change: It's clearly clearly showing a lot of growth its good growth. If you looked at it on a revenue perspective, it used to be running for many years about 25% of revenues coming from towards that number continues to move up I'm not sure. What it is at now, but 30 something like that low thirty's.
Al White: If you looked at it on a revenue perspective, it used to be running for many years, about 25% of revenues coming from torques, that number continues to move up, I'm not sure what it's at now, but 30, something like that low 30s. Because doctors are doing a better job identifying patients who have astigmatisms and then fitting them correctly. And the old days where it was super difficult to fit someone in a torque and get the right torque and get a stable torque, a lot of those days are moving past us, you know, the bio affinity torque is such a great design, it's such a stable product.
Speaker Change: Because doctors are doing a better job of identifying.
Speaker Change: Patients who have missed Stigmatisms and then fitting them correctly in the old days, where it was super difficult to hit someone in a toric and get the right torque and get a stable toward a lot of those days are moving past us. The biophysics toric is such a great design its such a stable product and that same design being in my day gives you a lot.
Al White: And that same design being in my day, gives you a lens that as a doctor, you're very comfortable fitting, you know, you can fit it, you know, the visual acuity is going to be strong, and you know, the patient's going to walk out the door happy with that product.
Speaker Change: Lens is a.
Speaker Change: Doctor Youre very comfortable fitting you know you can fit it you know the visual acuity is going to be strong and you know the patient is going to walk out the door happy with that product.
Al White: So without getting into a bunch of crazy numbers, I would say, penetration highest in the US, Americas, mid Europe, low Asia pack growing in all areas. And the majority of that growth coming either from daily silicone hydrogels or from bio affinity. Love it, thanks.
Speaker Change: Without getting into budget Crazy numbers, I would say penetration highest in the U S. Americas mid Europe, low Asia Pac growing in all areas and the.
Speaker Change: The majority of that growth coming either from daily silicone hydrogel or from <unk> entity itself.
Speaker Change: Thanks.
Al White: Yep.
Speaker Change: Yes.
Craig Bijou: Next question comes from the line of Craig Bijou with Bank of America. Your line is open. Good afternoon, guys. Thanks for taking the questions. A couple follow-ups from me. One, Al, I guess, maybe a follow-up on the cadence of CBI growth through the year. You know, I heard your comments on Q3, Q4. Those are expected to be strong. You have a pretty tough comp in Q2, so maybe just a little bit more expansion on how to think about that growth in each of the quarters, and then I'll throw my other one on here. EMEA, 6% growth this quarter, slightly lower than kind of the double-digit that you guys have been doing the last couple years, so just want to understand anything with EMEA specifically in Q1 and how to think about that for the rest of the year.
Speaker Change: Next question comes from the line of Craig Bijou with Bank of America. Your line is open.
Craig Bijou: Good afternoon, guys. Thanks for taking the questions a couple of follow ups for me one I guess.
Speaker Change: Maybe a follow up on the cadence of CVI.
Speaker Change: Growth through the year I heard your comments on Q3 Q4, those are expected to be strong you have a pretty tough comp in Q2. So.
Maybe just a little bit more expansion on how to think about that growth in each of the quarters and then I'll throw my other one on here.
Speaker Change: EMEA, 6% growth this quarter slightly lower than kind of the double digit that you guys have been doing the last couple of years. So just wanted to understand.
Speaker Change: Anything with EMEA, specifically in Q1, and how to think about that for the rest of the year. Thanks guys.
Al White: Thanks, guys. Sure, yeah, Mia's been putting out good growth here for a little while. Just a fantastic team over there that's killing it. I got to get over there and see them because it's been a little while since I've been there. I should go there and tip my hat to the level of excellence that that team is delivering. But I wouldn't take anything away from the 6%. I think they're going to they're going to put up good numbers, and they're going to continue to put up, they put up good numbers, they're going to continue to put up good numbers.
Sure, Yes, EMEA has been putting out.
Speaker Change: Good growth here for a little while just a fantastic team over there and it is killing it.
Speaker Change: I got to get over there and see them because it's been a little while since I've been there should go there and tip my hat to the the level of excellence that that team is delivering.
Speaker Change: But I wouldn't take anything away from the 6% I think they're going to they're going to put up good numbers and theyre going to continue to put up they put up good numbers are going to continue to put up good numbers.
Al White: If I look at Cooper Vision growth through the year, yeah, I mean, Q2 is going to be a fine quarter. It's a tough comp, but it's going to be a good quarter. Q3, Q4 have potential to have faster organic growth rates. Maybe the only other wrinkle I'd mention is, you know, Brian just ended his script kind of talking about the fact that we didn't roll in the improvements from Improved FX over the last couple days. That is a benefit, obviously, to earnings if those rates hold. They would also be a benefit to top line, and that would push those benefits would push more on a forward basis, which would positively impact Q3 and Q4 on an as reported basis.
Speaker Change: If I look at coopervision grow through the year, Yes, I mean Q2 is going to be a fine quarter is a tough comp, but it is going to be a good quarter Q3, Q4 have potential to have faster organic growth rates.
Speaker Change: Maybe the only other wrinkle I had mentioned as you know Bryan just ended his script kind of talking about the fact that we didn't roll in the improvements from improved FX over the last couple of days that is a benefit obviously to earnings if those rates hold they would also be a benefit.
Speaker Change: The top line and that would push those benefits would push more on a forward basis, which would positively impact.
Speaker Change: Q3, and Q4 on an as reported basis.
Brett Fishbin: Next question comes from the line of Brett Fishbin with KeyBank. Hey guys, thank you very much for fitting in the questions. Just wanted to ask one follow-up on Paragard.
Speaker Change: Next question comes from the line of Brett Fishman with Keybanc. Your line is open.
Speaker Change: Hey, guys. Thank you very much for fitting in the questions just wanted to ask one follow up on PARAGARD.
Al White: You know, first time that there's been a new entrance into this market in really a long time, so just curious if you could touch on maybe any changes in strategy that you'd be considering, just given the changing dynamics, maybe either around pricing or the marketing of the product. Thank you. Yeah, to me, continue to execute. That's what it's about. We've got a killer team there. They do a great job. They know the product extremely well. We went through a relatively lengthy FDA approval process to get our new one-hand inserter or single-hand inserter approved. We're putting that product in the market, making sure everyone knows how to use it and so forth.
Speaker Change: First time that there has been a new entrants into this market and really a long time. So just curious if you could touch on maybe any changes in strategy that you would be considering just given the change in dynamics, maybe either around pricing or marketing of the product. Thank you.
Speaker Change: Yes to me continue to execute that's what it's about we got a killer team there they do a great job they know the product extremely well.
Speaker Change: Went through a relatively lengthy FDA approval process to get our new one hand insert or a single hand in Cerner approved we're putting that product in the market and making sure everyone knows how to use it and so forth.
Al White: So, to me, it's like, no, you don't need to change. We need to keep executing. We need to keep doing what we're doing. We just had a hell of a Q1. Let's keep our heads down and keep executing and drive end-user unit growth on that because that's ultimately what's going to improve that product.
Speaker Change: So to me, it's like no you don't need to change we need to keep executing we need to keep doing what we're doing we just had a hell of a Q1, let's keep our heads down and keep executing and drive end user unit growth on that because that's ultimately what's going to improve that product's performance.
Al White: Yeah, and then I'll just ask one more follow-up on the same topic. I think you highlighted a couple of the advantages of PowerGuard versus this product. I think you touched on efficacy and duration, so it feels like, you know, those are definitely good points, but just thinking about, you know, how it's incorporated into the guidance, it feels like still a pretty tight range, just given how the product has swung positive and negative at times in the past. Maybe just any thoughts on, like, risk to that guidance and, like, how you'll be evaluating that going forward.
Speaker Change: Yes, and then I'll, let <unk> ask one more follow up on the same topic you highlighted a couple of the advantages of PARAGARD versus this product I think you touched on efficacy and duration.
Speaker Change: It feels like those are definitely good points, but just thinking about what's incorporated into the guidance. It feels like it's still a pretty tight range.
Speaker Change: Given how the product has swung positive or negative at times in the past, maybe just any thoughts on like risk to that guidance and like how youll be evaluating that going forward. Thanks again.
Al White: Thanks. Yeah, I think that the key probably to take away on that is we have all this variability by quarter with that product, which is kind of interesting. You know, last year, I think we grew 2% if I remember right. But the 2% came from some pretty dramatic swings up and down. It won't surprise me if that's similar this year where we get some dramatic swings up and down. But at the end of the day, I think when you look back on it on a full year basis, it's probably somewhere in that tighter range. Because really, that's what it's doing.
Speaker Change: Yes, I think the key probably to takeaway on that is we have all of this variability by quarter with that product, which is kind of interesting you know last year I think we grew 2% if I remember right.
Speaker Change: But the 2% came from some pretty dramatic swings up and down.
Speaker Change: It won't surprise me if thats similar to this year, where we get some dramatic swings up and down.
Speaker Change: But at the end of the day I think when you look back on it on a full year basis, it's probably somewhere in that kind of a tighter range because really that's what it's doing.
Al White: I mean, when I look at the non-hormonal market from a user or unit perspective, it's really not doing that much. It's down probably from a unit perspective. So you're getting a little bit of price. And at the end of the day, you'll get quarterly fluctuations. But the reality is you'll have a product that's relatively flat. Hopefully, it's up a little bit.
Speaker Change: When I look at the non hormonal market from a user or a unit perspective, it's really not doing that much.
Speaker Change: It's down probably from a unit perspective, so youre getting a little bit of price and at the end of the day, you will get quarterly fluctuations, but the reality is you will have a product thats relatively flat hopefully it's up a little bit.
Xuyang Li: Next question comes from the line of Xuyang Li with Jeffreys. Your line is open. All right, great, thanks for taking the question. I guess maybe CSI to start, fertility was kind of an unusual quarter, as you mentioned.
Speaker Change: Next question comes from the line of young Lee with Jefferies. Your line is open.
Young Lee: Alright, great. Thanks for taking my questions.
Speaker Change: I guess maybe.
Young Lee: Yes.
Young Lee: Fertility was kind of an unusual quarter as you mentioned.
Young Lee: The office business based on comps, but wanted to get your updated views.
Al White: I wanted to get your updated views on continued thoughts on M&A or continued investments in CSI, whether it's geographic expansion or products to expand the VAC. Yeah, so I would certainly say we've seen an increase in our R&D within CSI. We're going to continue to work there to develop new products. We are spending some money, certainly with infertility and some within our specialty medical device side in geographic expansion. So I think you'll continue to see that that's where our focus is certainly with respect to Okay, great.
Young Lee: Continued.
Young Lee: Thoughts on M&A, where continued investment.
Young Lee: Yes.
Young Lee: Whether it's geographic expansion or products to expand the bag.
Young Lee: Yes, so I would certainly say we've seen an increase in our R&D within CSI.
Young Lee: We're going to continue to work there to develop new products.
Young Lee: We are.
Young Lee: Spending some money, it's certainly within fertility and some within our specialty medical device side and geographic expansion. So I think you'll continue to see that that's where our focus is certainly with respect to Cooper surgical.
Speaker Change: Okay great.
Al White: And then the follow-up. on the CBI spherical road. You know, 3% organic, comps wasn't too bad. It gets tougher later in the year. You know, when you factor in daily upgrade. It looks like, you know, volume. I guess just kind of curious, you know. You're expecting the second half to have a big increase. Just wanted to hear about the relative... for the rest of the year and, you know, what's sort of driving the comp that's not going to have to be balanced. Sure. That's a really good question. You know, one of the things that's driving that in the, well, the thing that's driving that is my day.
Young Lee: And then follow.
Speaker Change: On the.
Speaker Change: Yes.
Speaker Change: Vertical growth.
Speaker Change: 3%.
Speaker Change: Pumps wasn't too bad I guess tougher later in the year.
Speaker Change: When you factor in David upgrades.
Speaker Change: It looks like.
Speaker Change: Alright.
Speaker Change: I guess kind of.
Speaker Change: Curious.
Speaker Change: You're expecting the second half to have a big increase.
Speaker Change: Just wanted to hear about.
Speaker Change: Relative confidence.
Speaker Change: <unk> growth.
Speaker Change: The rest of the year end.
Speaker Change: What's sort of driving the.
Speaker Change: Comp.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Good question, one of the things that's driving that.
Speaker Change: Well the thing Thats driving that is my day.
Al White: Anytime that you're building out a Toric expanded range, and we have by far the widest Toric range in the market, is you're building a lot of parameters, right? You're building a lot of SKUs, a lot of lenses and so forth out there. And we've been doing a lot of work on that. So as we accelerate our production right now, we are increasing our production levels on our spheres, and it's going to allow us to get more spheres into the marketplace. So that ends up being the answer. It's my day. All right. Thank you.
Speaker Change: Anytime that you're building out a toric expanded range and we have by far the widest toric range in the market.
Speaker Change: As you are building a lot of parameters right Youre building a lot of Skus a lot of lenses and so forth out there and we've been doing a lot of work on that so as we accelerate our production right now we are increasing our production levels on our spheres and it's going to allow us to get more spheres into the marketplace. So that ends up being the answer it's my days fears.
Speaker Change: Alright, thank you.
Speaker Change: Yes.
Chris Pasquale: Next question from Chris Pasquale with Neffern Research. Your line is open. Thanks.
Speaker Change: Next question from Chris Pasquale with Nephron Research your line is open.
Brian Andrews: One quick financial question, and then I had a follow-up on my site. On the financial side, you mentioned that the recent dollar weakness is not reflected in guidance. Can you remind us what you're assuming in terms of interest rates and whether any movement by the Fed could also represent some upside?
Chris Pasquale: Thanks, One quick financial question, and then I had a follow up on my side.
Chris Pasquale: On the financial side, you mentioned that the recent dollar weakness is not reflected in guidance can you remind us what you're assuming in terms of interest rates and weather any movement by the fed could also represent some upside.
Al White: And then on my site, to get to that 40 percent goal for the year, growth does need to pick up from here. Is my day, my site part of how you get there, or is that really more of an FY26 story, and you think 40 percent is within reach? Yeah, I'll answer that one quickly. My day my site would be a fiscal 26 story. So that is not included in 25 numbers, that'll be an increase in my site sales based off our existing Chris, I'll take the... first question. Interest expense or at least the Fed expectations, there's no expectation of any Fed moves later this year.
Chris Pasquale: And then on my side to get to that 40% goal for the year growth does need to pick up from here.
Chris Pasquale: Is my day Mindsight part of how you get there or is that really more of an FY 'twenty six story.
Chris Pasquale: I think 40% is within reach without it.
Chris Pasquale: Yeah, I'll answer that one quickly.
Chris Pasquale: My side would be a fiscal 'twenty six story. So that is not included in 25 numbers that will be an increase in <unk> sales based off our existing platform.
Chris Pasquale: Chris I'll take that.
Speaker Change: The first question.
Chris Pasquale: Interest expense.
Chris Pasquale: As the fed expectations. There is no expectation of any fed moves later this year.
Brian Andrews: As a reminder, we have a large part of our debt fixed as it is, so really a quarter point move really only has about a half a million dollar impact or so. to a quarter, so.
Chris Pasquale: As a reminder, we have a large part of our fixed as it is so.
Chris Pasquale: Really a quarter point move.
Chris Pasquale: Really only has about $5 million impact or so.
Chris Pasquale: Two a quarter so.
Chris Pasquale: But no our interest expense assumptions for the year are largely unchanged.
Anthony Petrone: No, our interest expects Next question comes from the line of Anthony Petrone with Mizzou. Thanks. Two quick ones here.
Chris Pasquale: Great. Thanks.
Speaker Change: Next question comes from the line of Anthony Petrone with Mizuho.
Speaker Change: Alright, Thanks, two quick ones here, one would just be on <unk>.
Al White: One would just be on Contact Lens Inventory both at the distributor level, but as well as big box retail. I was looking at Costco here after hours, it's down. One of the things they're talking about is how tariff is kind of impacting what they're going to have on the shelf. And I imagine tariffs are also going to have an impact at the distributor level. You guys have 10 distributors on the CBI side. Do you think there's any risk just on a D-stock or a tighter inventory situation in contact lenses?
Contact lens inventory trends.
Speaker Change: Both at the distributor level, but as well as big box retailers looking at Costco here after hours, it's down and.
Speaker Change: One of the things you are talking about is how tariffs is kind of impacting what theyre going to have on the shelf and I.
Speaker Change: Imagine tariffs, we're also going to have an impact at the distributor level you guys have 10 distributors on the CVI side. So.
Speaker Change: Do you think there is any risk just someone.
Speaker Change: On a on a destock or a tighter inventory situation in contact lenses and then on CSI.
Al White: And then on CSI, any thoughts on the executive order on IVF? You know, on the one hand, it calls for expanded access. good but on the other side of the equation it's calling for you know reduced out-of-pocket expenses and lower health care costs so just thoughts on that executive order. Thanks. Yeah, I think on the IVF side of things, I think that executive order, and I won't say just that one because there's been other activity around the world, that is all positive. Continuing to look at pricing on that and what needs to be done in pricing and so forth is an ongoing challenge.
Speaker Change: Any thoughts on the executive order on Ibs.
Speaker Change: On the one hand, it calls for expanded access.
Speaker Change: Which is good but on the other side of the equation, it's calling for.
Speaker Change: Reduced out of pocket expenses, and lower health care costs. So just thoughts on that executive order.
Speaker Change: Yes, I think on the Ibs side of things I think that executive order and I won't say just that one because there's been other active.
Speaker Change: Activity around the world that is all positive.
Speaker Change: Continuing to look at pricing on that and what needs to be done in pricing and so forth is an ongoing challenge I mean, frankly, our products are.
Al White: I mean, frankly, our products are a relatively small portion of the cost associated with fertility. That cost gets very heavily driven by the pharma side. But no, more patience and more support for IVF is a positive. On the channel inventory side of things, there could be a little bit of risk of that in spots around the world, talking about tighter channel inventory that could hit people as companies kind of tighten up their hold levels. I will say that for us, speaking on behalf of Cooper, a lot of that is set up around contractual obligations where certain minimums need to be met because of the demand of the product and the flow through the product.
Speaker Change: Relatively small portion of the costs associated with fertility that that cost gets very heavily driven by the pharma side, but.
Speaker Change: But no more patients and more support for IVF is a positive.
Speaker Change: On the channel inventory side of things.
Speaker Change: Okay.
Speaker Change: There is there could be a little bit of risk of that in spots around the world talking about tighter channel inventory that could hit people as companies kind of tightened up our hold levels I will say that for us speaking on behalf of Cooper.
Speaker Change: A lot of that is set up around contractual obligations, where certain minimums need to be met because of the demand of the product and the flow through of the product.
Al White: So I don't see that certainly as no question, not a significant risk or anything. That doesn't mean that there's not some fluctuations that could happen on a quarterly basis. Very good.
Speaker Change: So I don't see that certainly as no question not a significant risk or anything that doesn't mean that theres not some fluctuations that could happen on a quarterly basis.
Speaker Change: Very good thank you.
Yes.
Navanti: Our next question comes from the line of Navanti with BNP Paribas. Hi, thanks for taking my questions.
Speaker Change: Our next question comes from the line of novelty with BNP Paribas. Your line is open.
Speaker Change: Hi, Thanks for taking my questions.
Navanti: Can you discuss further your private label contracts or any high customer concentration or typical length of contract, et cetera? And on Paragard, what have you seen since the approval of the low copper IUD that you mentioned? And do you expect less than competitive impact due to the nickel allergy? Thank you. Sure, and the private label contracts, I mean, we have a lot of them, and they span in time. Obviously, when you sign them, they're longer, and time goes by, and they go down. You renegotiate them and extend them. So, we have contracts that go out as long as 10 years.
Can you discuss further your private label contractual and high customer concentration typical length of contract with Victoria and PARAGARD what have you seen.
Speaker Change: Approval.
Speaker Change: Copper IUD, that's you mentioned and do you expect lessen competitive impact due to that Nicole at Gucci. Thank you.
Sure on the private label contracts I mean, we have a lot of them and they span in time, obviously when you sign them they're longer in time goes by and they go down you renegotiate them and extend them. So we have contracts that go out as long as 10 years.
Al White: A lot of contracts that are in the 2, 3, 4, 5-year range, because both of us are making a commitment on both sides, right? We're making a commitment to have that product and labeled and produced and so forth, and shipped to someone's stores. They're making a commitment around it that they're going to build a brand around it and continue to sell around it. So, those are very much partnership-type deals. And I would say that, yeah, there's just a lot of them. It's a very diverse portfolio of products, and it even has multiple brands to the same customer, and numerous examples and different geographic locations and so forth.
Speaker Change: A lot of contracts that are in that 2345 year range because both of us are making a commitment on both sides right, we're making a commitment to have that product and labeled and produced and so forth and shipped to somewhat stores theyre, making a commitment around it that theyre going to build a brand around it and continue to sell around it.
Speaker Change: So those are very much partnership type deals and I would say that.
Speaker Change: Yes, there's just a lot of it's a very diverse portfolio of products and it even has multiple brands to the same customer and in numerous examples in different geographic locations and so forth.
Al White: With ParaGard, I really don't have too much to say. Competitive product was approved, and we'll see what they do with it and when they launch it and how they launch it, and they have to go through the full REMS process on that for training. So, they'll do what they're going to do. In the meantime, we'll do what we're going to do on that one. Thank you.
Speaker Change: With PARAGARD I really don't have too much to add on that competitive product was approved and we'll see what they do with it and when they launch it and how they launch it and they have to go through the full rems process on that for training. So.
Speaker Change: They'll do what they're going to do in the meantime, we will do what we're going to do on that one.
Speaker Change: Thank you.
Speaker Change: Yes.
David Saxon: And our last question comes from the line of David Saxon with Midam and Company. Great. Hey, guys. Good afternoon. Thanks for introducing me. And just two quick ones. I guess first on CVI, I think in the script you mentioned you pre-aligned the sales force in the myopia management part of the business. So, you know, what drove that move? What's changing and kind of level of confidence you can manage that transition without anything falling through the cracks?
Speaker Change: And our last question comes from the line of David Saxon with Needham and company. Your line is open.
Speaker Change: Great.
Speaker Change: Hey, guys. Good afternoon. Thanks for squeezing me in just two quick ones I guess first on CPI I think in the script you mentioned <unk>.
Speaker Change: Your line with Salesforce in the Myopia management.
Speaker Change: Part of the business, so what drove that move whats changing in kind of a level of confidence you can manage that transition without anything falling through the cracks and then my second is just a follow up on PARAGARD I think a lot of that growth has been driven by pricing. So with this new launch kind of.
Al White: And then my second is just a follow up on PairGuard. I think a lot of that growth has been driven by pricing. So with this new launch, kind of, you know, how are you thinking about your ability to continue to take price and see that product grow? Thanks so much. Sure. Well, on Paragard, that's a fully reimbursed product. IUDs are fully reimbursed, so that is what it is. I mean, we'll see how that plays out in time. We're taking a price increase right now. It's kind of an inflationary plus price increase, but I think you'll continue to see that.
Speaker Change: How are you thinking about your ability to continue to take price and see that product grow. Thanks. So much.
Speaker Change: Sure well on PARAGARD, that's a fully reimbursed product iuds are fully reimbursed so.
Speaker Change: That is what it is I mean, we will see how that plays out in time, we are taking a price increase right now it's kind of a inflationary plus price increase but.
Speaker Change: Youll continue to see that.
Al White: On the Salesforce work that we're doing with respect to myopia management, my site in particular, that work's done. We went ahead and made those moves and adjusted just some of our sales practices there. You'll remember over the years, I've kind of talked about how we had dedicated salespeople and shifted over to dedicated salespeople and specialists who are able to work on myopia control. We have just an amazing team there. I'm super happy with them, super proud of the myopia management specialists that we have in the marketplace and the education they're doing and the travel and the work they do to support that product.
Speaker Change: On the sales force.
Speaker Change: Work that we're doing with respect to myopia management my side in particular.
Speaker Change: That work's done.
Speaker Change: We went ahead and made those moves and adjusted just some of our sales practices. There youll remember over the years have kind of talked about how we had dedicated salespeople and shifted over to dedicated salespeople and specialists, who are able to work on myopia control and we have just some.
Speaker Change: <unk> team, they're super happy without a super proud of myopia.
Speaker Change: Myopia management specialists that we have in the marketplace and the education, they're doing in the travel and the work they do to support that product.
Al White: By reorganizing the sales a little bit to put it more in the traditional Salesforce that's really strong, that's just going to benefit that product. We're already seeing some of that play out here. As I mentioned, we saw acceleration as we went through Q1. That's one of the things that gives me confidence as I think about us reaching that 40% for the full year. Great. Thanks so much.
Speaker Change: By reorganizing the sales a little bit to put it more in the hands of our traditional sales force Thats really strong thats, just going to benefit that product and we're already seeing.
Speaker Change: Some of that play out here is as I mentioned, we saw acceleration as we went through Q1. So that's one of the things that gives me confidence as I think about us reaching at 40% for the full year.
Speaker Change: Great. Thanks, so much.
Speaker Change: Yep.
Al White: That concludes the question and answer session. I would like to turn the call back over to Al White for closing remarks. Great, thank you. Thank you, operator. And thank you, everyone, for taking the time to listen to the call today. There's not really too much to add at this point. So looking forward to continuing to execute this quarter. And I'm really looking forward to getting on our next earnings call here at the end of May. Thank you.
Speaker Change: That concludes the question and answer session I would like to turn the call back over to al White for closing remarks.
Al White: Great. Thank you. Thank you operator, and thank you everyone for taking the time to listen to the call today.
Al White: There's not really too much to add at this point, so looking forward to continuing to execute this quarter.
Al White: Looking forward to getting on our next earnings call here at the end of May Thank you.
Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.
Speaker Change: Ladies and gentlemen. This concludes today's conference call you may now disconnect.
Speaker Change: Yes.
Speaker Change: Yes.