Q3 2025 The Cooper Co Inc Earnings Call

Companys earnings conference call all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ASIC Western during this time simply press star followed by the number one on your telephone keypad. If he would like to withdraw your question again the press the star one I would now like to turn to conquer.

<unk> over to Kim Duncan Vice President of Investor Relations and risk management you may begin.

Good afternoon, and welcome to Cooper Companies' third quarter 2025 earnings conference call. During today's call. We will discuss the results and guidance included in the earnings release, and then use the remaining time for questions. Our presenters on today's call are al White, President and Chief Executive Officer, and Brian Andrews, Chief Financial Officer and Treasurer.

Before we begin I'd like to remind you that this conference call will contain forward looking statements, including statements relating to revenues EPS cash flows interest FX and tax rates tariffs and other financial guidance and expectations strategic and operational initiatives market conditions and trends and product launches and demand.

Forward looking statements depend on assumptions data or methods that maybe incorrect or imprecise and are subject to risks and uncertainties.

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 Cooper COSE dotcom.

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 #3: Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q3 2025 Cooper Companies earnings conference call.

Desiree: Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q3 2025 Cooper Companies Earnings Conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw a question again, press the star one. I would now like to turn the conference over to Kim Duncan, Vice President of Investor Relations and Risk Management. You may begin.

Should you have any additional questions. Following the call. Please email IR at Cooper co Dot com.

And now I'll turn the call over to al for his opening remarks.

Speaker #3: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad.

Thank you Kim and welcome everyone to our earnings call.

<unk> will cover our Q3 results Q4 guidance and early thoughts on.

Fiscal 2026.

Starting with the numbers Q3 consolidated revenues were up five 7% year over year or up 2% organically to 1.06 billion.

Speaker #3: If you would like to withdraw your question again, press the star one. I would now like to turn the conference over to Kim Duncan, Vice President of Investor Relations and Risk Management.

Margins improved in non-GAAP earnings grew double digits to a $1 10 of 15% year over year.

Speaker #3: You may begin.

Speaker #4: Good Good afternoon, and welcome to COOPER COMPANIES, third 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.

Kim Duncan: Good afternoon, and welcome to Cooper Companies' third quarter 2025 Earnings Conference call. During today's call, we will discuss the results and guidance included in the earnings release and then use the remaining time for questions. Our presenters on today's call are Al White, President and Chief Executive Officer, and Brian Andrews, Chief Financial Officer and Treasurer. Before we begin, I'd like to remind you that this conference call will contain forward-looking statements, including statements relating to revenues, EPS, cash flows, interest, FX and tax rates, tariffs, and other financial guidance and expectations, strategic and operational initiatives, market conditions and trends, and product launches and demand. Forward-looking statements depend on assumptions, data, or methods that may be incorrect or imprecise and are subject to risks and uncertainties.

Free cash flow was strong at $165 million, and we repurchased $52 million of our stock during the quarter.

While revenues were lower than expected and I'll speak to that in a minute I'm pleased to report that we delivered strong margins double digit earnings growth and robust free cash flow, reflecting the operational excellence that remains central to our growth strategy.

Speaker #4: Our presenters on today's call are Albert White, President and Chief Executive Officer, and Brian Andrews, Chief Financial Officer and Treasurer. Before we begin, I'd like to remind you that this conference call will contain forward-looking statements, including statements relating to revenues, EPS, cash flows, interest, FX and tax rates, tariffs, and other financial guidance and expectations, strategic and operational initiatives, market conditions and trends, and product launches and demand.

These results reflect disciplined execution and our ability to capitalize on prior investments to drive consistent operating performance across our business and.

Looking ahead, we expect this type of execution to continue as reflected in our updated earnings guidance and upcoming commentary on free cash flow.

Speaker #4: Forward-looking statements depend on assumptions, data, or methods that may be incorrect or imprecise and are subject to risks and uncertainties. Events that could cause our actual results and future actions of the company to differ materially from those described in forward-looking statements are set forth under the caption "Forward-looking statements" in today's earnings release and are described in our SEC filings, including Cooper's Form 10-K and Form 10-Q filings, all of which are available on our website at coopercos.com.

For Coopervision, we reported revenues of $718 million for the quarter, reflecting six 3% reported growth and two 4% organic growth. These.

Kim Duncan: 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. Should you have any additional questions following the call, please email IR@cooperco.com. And now I'll turn the call over to Al for his opening remarks.

These results came in below our expectations driven primarily by two factors.

First clarity declined globally led by a noticeable drop in Asia Pac and a slowdown in the Americas and EMEA as customers continue favoring premium daily lenses. The significant increase in <unk> bidding SaaS and trial lenses led to a faster than expected return to my day bidding activity.

Speaker #4: Also, as a reminder, the non-GAAP financial information we will provide on this call is intended 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.

While my day delivered double digit growth this quarter and this bidding activity indicates the future is incredibly bright this near term activity meaningfully impacted clarity orders.

Speaker #4: Should you have any additional questions following the call, please email ir@cooperco.com. And now, I'll turn the call over to Al for his opening remarks.

We saw greater than expected weakness within the pure play E Commerce segment in Asia Pac excluding Japan.

Speaker #5: Thank you, Kim, and welcome everyone to our earnings call. In today's discussion, we'll cover our Q3 results, Q4 guidance, and early thoughts on fiscal 2026.

Al White: Thank you, Kim, and welcome everyone to our earnings call. In today's discussion, we'll cover our Q3 results, Q4 guidance, and early thoughts on fiscal 2026. Starting with the numbers, Q3 consolidated revenues were up 5.7% year over year, or up 2% organically to $1.06 billion. Margins improved and non-GAAP earnings grew double digits to $1.10, up 15% year over year. Free cash flow was strong at $165 million, and we repurchased $52 million of our stock during the quarter. While revenues were lower than expected, and I'll speak to that in a minute, I'm pleased to report that we delivered strong margins, double-digit earnings growth, and robust free cash flow, reflecting the operational excellence that remains central to our growth strategy. These results reflect disciplined execution and our ability to capitalize on prior investments to drive consistent operating performance across our business.

This mirrored our experienced in Q1 in China and was again most pronounced there. Although it also affected several smaller regional markets. Despite the topline pressure from this activity the impact on profitability was minimal as this region's pure play E. Commerce channel has very low margins.

Speaker #5: Starting with the numbers, Q3 consolidated revenues were up 5.7% year over year, or up 2% organically, to $1.06 billion. Margins improved, and non-GAAP earnings grew double digits to $1.10, up 15% year over year.

Regarding the regional results importantly, EMEA delivered a strong quarter growing 14% or 6% organically driven by continued strength across key markets.

Speaker #5: Free cash flow was strong at $165 million, and we repurchased $52 million of our stock during the quarter. While revenues were lower than expected—and I'll speak to that in a minute—I’m pleased to report that we delivered strong margins, double-digit earnings growth, and robust free cash flow, reflecting the operational excellence that remains central to our growth strategy.

Performance reinforced our number one position in the region and moved EMEA to be in Coopervision largest revenue region globally. Additionally.

Additionally, early fits and trial activity for <unk> is extremely strong in this region and we expect continued success moving forward.

Speaker #5: These results reflect discipline execution and our ability to capitalize on prior investments to drive consistent operating performance across our business. And looking ahead, we expect this type of execution to continue as reflected in our updated earnings guidance and upcoming commentary on free cash flow.

Meanwhile, the Americas grew 2% or 3% organically navigating the distributor channel inventory dynamic that we discussed on last quarter's earnings call and clarity softness.

Al White: And looking ahead, we expect this type of execution to continue as reflected in our updated earnings guidance and upcoming commentary on free cash flow. For Cooper Vision, we reported revenues of $718 million for the quarter, reflecting 6.3% reported growth and 2.4% organic growth. These results came in below our expectations, driven primarily by two factors. First, clarity declined globally, led by a noticeable drop in Asia PAC and a slowdown in the Americas and EMEA. As customers continued favoring premium daily lenses, the significant increase in MIDAY fitting sets and trial lenses led to a faster-than-expected return to MIDAY fitting activity. While MIDAY delivered double-digit growth this quarter, and this fitting activity indicates the future is incredibly bright, this near-term activity meaningfully impacted clarity orders. Second, we saw greater-than-expected weakness within the pure-play e-commerce segment in Asia PAC, excluding Japan.

In Asia Pac grew 1%, but declined 5% organically, reflecting the pressure from clarity, which was down double digits in Japan, and China and the weakness in the E Commerce channel.

Speaker #5: For CooperVision, we reported revenues of $788 million for the quarter, reflecting 6.3% reported growth and 2.4% organic growth. These results came in below our expectations, driven primarily by two factors.

Digging deeper into my day, we're encouraged by several positive developments surrounding those flagship product family first and foremost we successfully resolved the manufacturing constraints that previously limited our ability to fully compete.

Speaker #5: First, clarity declined globally, led by a noticeable drop in Asia-Pacific and a slowdown in the Americas and EMEA. As customers continue favoring premium daily lenses, the significant increase in MiDay fitting sets in trial lenses led to a faster-than-expected return to MiDay fitting activity.

With both sales execution capabilities now in place, we're regaining momentum as we accelerate the global rollout of fitting sets and trial lenses.

This marked a key turning point in our ability to deliver sustained growth and meet increasing demand across global markets. We've also recently renewed several large contracts and feature mind day as a growth driver and we won several new private label agreements.

Speaker #5: While MiDay delivered double-digit growth this quarter, and this fitting activity indicates the future is incredibly bright, this near-term activity meaningfully impacted clarity orders. Second, we saw greater-than-expected weakness within the pure-play e-commerce segment in Asia Pacific, excluding Japan.

That offer significant growth opportunities. These wins are driving bid activity and increasing our confidence in accelerating growth as we move into fiscal 2026.

Turning back to the quarterly details and reporting on an organic basis within categories Toric and multifocal is grew 6%, while spears were down 1% with N modalities, our daily silicone hydrogel lenses, <unk> and clarity grew 7% and our silicone hydrogel frequent replacement lenses <unk> and <unk> were up to.

Speaker #5: This mirrored our experience in Q1 in China and was again most pronounced there, although it also affected several smaller regional markets. Despite the top-line pressure from this activity, the impact on profitability was minimal, as this region's pure-play e-commerce channel has very low margins.

Al White: This mirrored our experience in Q1 in China and was again most pronounced there, although it also affected several smaller regional markets. Despite the top-line pressure from this activity, the impact on profitability was minimal, as this region's pure-play e-commerce channel has very low margins. Regarding the regional results, importantly, EMEA delivered a strong quarter, growing 14% or 6% organically, driven by continued strength across key markets. This performance reinforced our number one position in the region and moved EMEA to be in Cooper Vision's largest revenue region globally. Additionally, early fit set and trial lens activity for MIDAY is extremely strong in this region, and we expect continued success moving forward. Meanwhile, the Americas grew 2% or 3% organically, navigating the distributor channel inventory dynamic that we discussed on last quarter's earnings call and clarity softness.

Speaker #5: Regarding the regional results, importantly, EMEA delivered a strong quarter, growing 14%, or 6% organically, driven by continued strength across key markets. This performance reinforced our number one position in the region and moved EMEA to being CooperVision's largest revenue region globally.

Percent <unk> grew 23%.

Starting with my day, and adding some additional color <unk> grew double digits this quarter with our most innovative and premium price lenses toric multifocal and energize all posting double digit growth in particular <unk> multifocal grew 20% is this fantastic lens continues to perform extremely well.

Speaker #5: Additionally, early fit set and trial lens activity for MiDay is extremely strong in this region, and we expect continued success moving forward. Meanwhile, the Americas grew 2%, or 3% organically, navigating the distributor channel inventory dynamic that we discussed on last quarter's earnings call, and clarity softness.

And importantly, the bulb family of <unk> products has considerable upside as we expand availability and deepen penetration within existing accounts and new customer segments around the world.

Supporting this we have considerable activity with fitting sets and trial lenses, but also launch activity. This includes by de energize featuring our premium digital boost technology designed for today's digital lifestyle, which we expect to launch in Europe in early fiscal 2026, <unk> multifocal, which we expect to launch in several may.

Speaker #5: In Asia, PAC grew 1%, but declined 5% organically, reflecting the pressure from Clarity, which was down double digits in Japan and China, and the weakness in the e-commerce channel.

Al White: And Asia PAC grew 1% but declined 5% organically, reflecting the pressure from clarity, which was down double digits in Japan and China, and the weakness in the e-commerce channel. Digging deeper into MIDAY, we're encouraged by several positive developments surrounding this flagship product family. First and foremost, we've successfully resolved the manufacturing constraints that previously limited our ability to fully compete. With full sales execution capabilities now in place, we're regaining momentum as we accelerate the global rollout of fitting sets and trial lenses. This marks a key turning point in our ability to deliver sustained growth and meet increasing demand across global markets. We've also recently renewed several large contracts that feature MIDAY as a growth driver, and we've won several new private label agreements that offer significant MIDAY growth opportunities.

Speaker #5: Digging deeper into MiDay, we're encouraged by several positive developments surrounding this flagship product family. First and foremost, we've successfully resolved the manufacturing constraints that previously limited our ability to fully compete.

APAC markets soon along with increasing availability and others.

And our my day tour parameter expansion, which is actively being rolled out in multiple markets now.

Speaker #5: With full sales execution capabilities now in place, we're regaining momentum as we accelerate the global rollout of fitting sets and trial lenses. This marks a key turning point in our ability to deliver sustained growth and meet increasing demand across global markets.

Moving to clarity this was a challenging quarter as customers shifted focus to my day. However, looking ahead, we are confident that this high quality value priced labs will regain its footing with success from new launches such as our <unk> multifocal, which recently entered the U S market and grew double digits.

Speaker #5: We've also recently renewed several large contracts that feature MiDay as a growth driver, and we've won several new private label agreements that offer significant MiDay growth opportunities.

And from where is focused on high quality at a reasonable price.

Turning to a frequent replacement lenses are biofilm any brand maintains strong bidding activity across its broad portfolio.

Speaker #5: These wins are driving fit activity and increasing our confidence in accelerating growth as we move into fiscal 2026. Turning back to the quarterly details and reporting on an organic basis, within categories, TORX and multifocals grew 6%, while SPURs were down 1%.

Al White: These wins are driving fit activity and increasing our confidence in accelerating growth as we move into fiscal 2026. Turning back to the quarterly details and reporting on an organic basis, within categories, Torx and multifocals grew 6%, while spears were down 1%. Within modalities, our daily silicone hydrogel lenses, MIDAY, and clarity grew 7%, and our silicone hydrogel frequent replacement lenses, Biofinity and Abera, were up 2%. MiSight grew 23%. Starting with MIDAY and adding some additional color, MIDAY grew double digits this quarter with our most innovative and premium price lenses, Torx, multifocals, and Energist, all posting double-digit growth. In particular, MIDAY multifocal grew 20% as this fantastic lens continues to perform extremely well. And importantly, the full family of MIDAY products has considerable upside as we expand availability and deepen penetration within existing accounts and new customer segments around the world.

While a reduction in channel inventory of impacted spheres growth was supported by continuing strength in towards a multifocal.

Additionally, our innovative made to order products, such as the toric multifocal and extended range sphere, and toric delivered healthy growth again this quarter. These offerings remain unmatched in the market offering the broadest range of prescriptions available eyecare professionals consistently value of these products are enabling patients with complex vision needs.

Speaker #5: Within modalities, our daily silicone hydrogel lenses, MiDay and Clarity, grew 7%, while our silicone hydrogel frequent replacement lenses, VALFINITY and AVERA, were up 2%.

Speaker #5: MiCyte grew 23%. Starting with MiDay and adding some additional color, MiDay grew double digits this quarter, with our most innovative and premium-priced lenses: TORX, multifocals, and Energis, all posting double-digit growth.

The ability to wear contact lenses.

Turning to Myopia management My site grew nicely led by another record setting quarter in EMEA. This performance was driven by increased bidding activity and robust customer engagement initiatives, the new pricing promotions, we discussed last quarter, gaining traction and generating encouraging momentum and we expect this to continue.

Speaker #5: In particular, MiDay multifocal grew 20%, as this fantastic lens continues to perform extremely well. An importantly, the FOLK family of MiDay products has considerable upside, as we expand availability and deepen penetration within existing accounts and new customer segments around the world.

In the Americas MISO delivered mixed results as we rolled out the new promotional structure.

But our back to school campaign is well underway and we're seeing positive trends and fits. We're also pleased to share that we just received final regulatory approval from my side to launch in Japan and commercialization is planned for early 2026. Additionally.

Speaker #5: Supporting this, we have considerable activity with fitting sets and trial lenses, but also launch activity. This includes MiDay Energis, featuring our premium digital boost technology designed for today's digital lifestyle.

Al White: Supporting this, we have considerable activity with fitting sets and trial lenses, but also launch activity. This includes MIDAY Energist, featuring our premium digital boost technology designed for today's digital lifestyle, which we expect to launch in Europe in early fiscal 2026, MIDAY multifocal, which we expect to launch in several major APAC markets soon, along with increasing availability in others, and our MIDAY Toric parameter expansion, which is actively being rolled out in multiple markets now. Moving to clarity, this was a challenging quarter as customers shifted focus to MIDAY. However, looking ahead, we're confident that this high-quality value-priced lens will regain its footing with success from new launches such as our 3-AD multifocal, which recently entered the US market and grew double digits, and from wearers focused on high quality at a reasonable price.

Additionally, we're actively preparing for the launch of <unk> My site across Europe, and select Asia Pac countries in the first half of 2026.

Speaker #5: Which we expect to launch in Europe in early fiscal 2026. MiDay multifocal, which we expect to launch in several major APAC markets soon, along with increasing availability in others.

We remain well on our way to hitting our objective of a $100 million of buy side sales. This year and are confident that our momentum and upcoming launches will support continued success in fiscal 2026.

Speaker #5: And our MiDay TOR parameter expansion, which is actively being rolled out in multiple markets now. Moving to clarity, this was a challenging quarter as customers shifted focus to MiDay.

To conclude on vision, let me share a few thoughts on the contact lens market overall market conditions remained healthy and continued to track to the mid single digit growth range. We discussed on last quarter's earnings call.

Speaker #5: However, looking ahead, we're confident that this high-quality, value-priced lens will regain its footing with success from new launches such as our 3M multifocal, which recently entered the US market and grew double digits.

<unk> trends remained solid and the market continues to see a steady shift towards silicone hydrogel lenses and sustained interest in toric and multifocal products.

Speaker #5: And from wearers focused on high quality, at a reasonable price. Turning to frequent replacement lenses, our VALFINITY brand maintains strong fitting activity across its broad portfolio.

Al White: Turning to frequent replacement lenses, our Biofinity brand maintains strong fitting activity across its broad portfolio. While a reduction in channel inventory impacted spears, growth was supported by continuing strength in Torx and multifocals. Additionally, our innovative made-to-order products such as the Toric multifocal and extended-range spears and Torx delivered healthy growth again this quarter. These offerings remain unmatched in the market, offering the broadest range of prescriptions available. Eye care professionals consistently value these products for enabling patients with complex vision needs the ability to wear contact lenses. Turning to myopia management, MiSight grew nicely, led by another record-setting quarter in EMEA. This performance was driven by increased fitting activity and robust customer engagement initiatives. The new pricing promotions we discussed last quarter are gaining traction and generating encouraging momentum, and we expect this to continue.

Looking ahead, we expect this level of market performance to continue with the key drivers remaining the ongoing transition to silicone hydrogel dailies, expanding adoption of toric, and multifocal and to a lesser extent pricing and growth in wearers.

Speaker #5: While a reduction in channel inventory impacted SPURs, growth was supported by continuing strength in TORX and multifocals. Additionally, our innovative made-to-order products, such as the TORK multifocal and extended-range SPURs and TORX, delivered healthy growth again this quarter.

Moving to Cooper surgical we posted quarterly revenues of $342 million up four 5% or up 2% organically within this fertility revenues totaled $137 million growing 6% or up 3% organically led by strength in genomics and consumables, where we gained market share in EMEA.

Speaker #5: These offerings remain unmatched in the market, offering the broadest range of prescriptions available. Eye care professionals consistently value these products for enabling patients with complex vision needs the ability to wear contact lenses.

However, we're still seeing signs of pressure on the market with clinics continuing to manage cash conservatively by delaying capital purchases and installations, along with ongoing softness in cycles in Asia Pac.

Speaker #5: Turning to myopia management, MiCyte grew nicely, led by another record-setting quarter in EMEA. This performance was driven by increased fitting activity and robust customer engagement initiatives.

Speaker #5: The new pricing promotions we discussed last quarter are gaining traction and generating encouraging momentum, and we expect this to continue. In the Americas, MiCyte delivered mixed results.

Despite these near term headwinds we remain highly optimistic about the long term outlook for fertility. The underlying fundamentals are strong supported by trends such as delay childbirth, increasing access to treatment raising patient awareness expanded benefits coverage and continued innovation in technology. It's.

Al White: In the Americas, MiSight delivered mixed results as we rolled out the new promotional structure. But our back-to-school campaign is well underway, and we're seeing positive trends in fits. We're also pleased to share that we just received final regulatory approval for MiSight to launch in Japan, and commercialization is planned for early 2026. Additionally, we're actively preparing for the launch of MIDAY MiSight across Europe and select Asia PAC countries in the first half of 2026. We remain well on our way to hitting our objective of 100 million of MiSight sales this year, and are confident that our momentum and upcoming launches will support continued success in fiscal 2026. To conclude on vision, let me share a few thoughts on the contact lens market. Overall, market conditions remain healthy and continue to track to the mid-single-digit growth range we discussed on last quarter's earnings call.

Speaker #5: As we rolled out the new promotional structure, but our back-to-school campaign is well underway, and we're seeing positive trends in fits. We're also pleased to share that we just received final regulatory approval for MiCyte to launch in Japan, and commercialization is planned for early 2026.

It's estimated that one in six people globally will experience and fertility at some point in their lives underscoring the significance and resilience of this market.

Moving to the office and surgical we reported sales of $205 million up 3% year over year and up 1% organically.

Speaker #5: Additionally, we're actively preparing for the launch of MiDay MiCyte across Europe and select Asia-Pac countries in the first half of 2026. We remain well on our way to hitting our objective of $100 million in MiCyte sales this year, and our confidence in the momentum and upcoming launches will support continued success in fiscal 2026.

The medical devices was driven by our labor and delivery portfolio of products, which grew double digit.

In our specialty surgical device portfolio, which grew upper single digits and within this portfolio. While not included in organic growth. We continue to see excellent performance from OBP surgical our most recent acquisition featuring an innovative suite of single use lighted cordless surgical retractors, which grew 23%.

Speaker #5: To conclude on vision, let me share a few thoughts on the contact lens market. Overall market conditions remain healthy and continue to track to the mid-single-digit growth range we discussed on last quarter's earnings call.

This was offset by a 10% decline in PARAGARD. Following a strong start to this fiscal year driven by advanced purchasing ahead of our price increase and the successful launch of our one handed in Cerner.

Speaker #5: Consumption trends remain solid, and the market continues to see a steady shift towards silicone hydrogel lenses and sustained interest in TORK and multifocal products.

Al White: Consumption trends remain solid, and the market continues to see a steady shift towards silicone hydrogel lenses and sustained interest in Toric and multifocal products. Looking ahead, we expect this level of market performance to continue, with the key drivers remaining the ongoing transition to silicone hydrogel dailies, expanding adoption of Toric and multifocals, and to a lesser extent, pricing and growth in wearers. Moving to Cooper Surgical, we posted quarterly revenues at $342 million, up 4.5% or up 2% organically. Within this, fertility revenues totaled $137 million, growing 6% or up 3% organically, led by strength in genomics and consumables, where we gained market share in EMEA. However, we're still seeing signs of pressure on the market, with clinics continuing to manage cash conservatively by delaying capital purchases and installations, along with ongoing softness in cycles in Asia PAC.

Speaker #5: Looking ahead, we expect this level of market performance to continue, with a key driver remaining the ongoing transition to silicon hydrogel dailies, expanding adoption of TORK and multifocals, and to a lesser extent, pricing and growth in wearers.

Now before turning the call over to Brian Let me share thoughts on our Q4 revenue expectations for Coopervision, we expect continued headwinds from clarity.

While trends for my day are very positive and May present upside a significant portion of the activity is tied to fits in trial lenses, which typically take a couple of quarters to convert into revenue.

Speaker #5: Moving to Cooper's surgical, we posted quarterly revenues of $342 million, up 4.5%, or up 2% organically. Within this, fertility revenues totaled $137 million, growing 6%, or up 3% organically.

As a result, we are guiding to 2% to 4% organic growth to avoid being overly optimistic about the ramp of <unk>.

And this guidance also factors in risk with the pure play E Commerce channel in Asia Pac as well as the potential for any further inventory contraction.

Speaker #5: Led by strength in genomics and consumables, where we gained market share in EMEA. However, we're still seeing signs of pressure on the market, with clinics continuing to manage cash conservatively, by delaying capital purchases and installations.

For Cooper surgical we're also guiding to 2% to 4% organic growth as softness in fertility as it is expected to persist through Q4.

Speaker #5: Along with ongoing softness in cycles in Asia PAC, despite these near-term headwinds, we remain highly optimistic about the long-term outlook for fertility. The underlying fundamentals are strong, supported by trends such as delayed childbirth, increasing access to treatment, rising patient awareness, expanded benefits coverage, and continued innovation in technology.

Looking ahead to fiscal 2026, we remain confident in our ability to deliver sustainable revenue growth and gain market share.

Al White: Despite these near-term headwinds, we remain highly optimistic about the long-term outlook for fertility. The underlying fundamentals are strong, supported by trends such as delayed childbirth, increasing access to treatment, rising patient awareness, expanded benefits coverage, and continued innovation in technology. It's estimated that one in six people globally will experience infertility at some point in their lives, underscoring the significance and resilience of this market. Moving to the office and surgical, we reported sales at $205 million, up 3% year over year, and up 1% organically. Growth in medical devices was driven by our labor and delivery portfolio of products, which grew double digits, and our specialty surgical device portfolio, which grew upper single digits.

For Coopervision this confidence is grounded in the strong momentum, we're seeing with <unk>. The positive impact we will receive from upcoming product launches and recent contract wins, we expect to outpace the contact lens market and bidding activity and to gain market share for Cooper surgical we expect improvements driven by a rebound in the fertility market.

Speaker #5: It's estimated that one in six people globally will experience infertility at some point in their lives, underscoring the significance and resilience of this market.

Is the Asia Pac region returned to growing cycles and fertility clinic start investing again.

Speaker #5: Moving to office and surgical, we reported sales of $205 million, up 3% year over year, and up 1% organically. Growth in medical devices was driven by our labor and delivery portfolio of products, which grew double digits.

On the topline we expect operating margin expansion as we lever prior investment activity and a more efficient organization and with that I'll turn the call over to Brian.

Speaker #5: And our specialty surgical device portfolio, which grew upper single digits. And within this portfolio, while not included in organic growth, we continue to see excellent performance from OBP surgical, our most recent acquisition featuring an innovative suite of single-use lighted cordless surgical retractors.

Okay.

Thank you al 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.

Al White: And within this portfolio, while not included in organic growth, we continue to see excellent performance from OBP Surgical, our most recent acquisition featuring an innovative suite of single-use lighted cordless surgical retractors, which grew 23%. This was offset by a 10% decline in Paragard following a strong start to this fiscal year, driven by advanced purchasing ahead of our price increase and the successful launch of our one-handed inserter. Now, before turning the call over to Brian, let me share thoughts on our Q4 revenue expectations. For Cooper Vision, we expect continued headwinds from clarity. While trends for MIDAY are very positive and may present upside, a significant portion of the activity is tied to fits and trial lenses, which typically take a couple of quarters to convert into revenue.

For the third fiscal quarter consolidated revenues were $1 6 billion up five 7% as reported and up 2% organically.

Speaker #5: Which grew 23%. This was offset by a 10% decline in Perigard, following a strong start to this fiscal year, driven by advanced purchasing ahead of our price increase and the successful launch of our one-handed inserter.

Gross margin improved by 70 basis points.

67, 3% driven by continued efficiency gains mix and positive foreign exchange.

Speaker #5: Now, before turning the call over to Brian, let me share thoughts on our Q4 revenue expectations. For CooperVision, we expect continued headwinds from clarity.

Operating expenses grew in line with sales, reflecting disciplined cost management.

Within this we delivered targeted SG&A leverage while continuing to invest in R&D, which was up 11%.

Speaker #5: While trends from MiDay are very positive and may present upside, a significant portion of the activity is tied to fits and trial lenses, which typically take a couple of quarters to convert into revenue.

These R&D investments are consistent with our planned activity around product development at both coopervision and <unk> surgical as we continue advancing several exciting development programs and support several regulatory initiatives.

Speaker #5: As a result, we're guiding to 2% to 4% organic growth to avoid being overly optimistic about the ramp of MiDay. This guidance also factors in risks associated with the pure-play e-commerce channel in Asia Pacific, as well as the potential for any further inventory contraction.

Al White: As a result, we're guiding to 2% to 4% organic growth to avoid being overly optimistic about the ramp of MIDAY. And this guidance also factors in risk with the pure-play e-commerce channel in Asia PAC, as well as the potential for any further inventory contraction. For Cooper Surgical, we're also guiding to 2% to 4% organic growth as softness in fertility is expected to persist through Q4. Looking ahead to fiscal 2026, we remain confident in our ability to deliver sustainable revenue growth and gain market share. For Cooper Vision, this confidence is grounded in the strong momentum we're seeing with MIDAY, the positive impact we'll receive from upcoming product launches, and recent contract wins. We expect to outpace the contact lens market in fitting activity and to gain market share.

Operating income rose, 8% with operating margin expanding to 26, 1%.

Speaker #5: For CooperSurgical, we're also guiding to 2% to 4% organic growth, as softness in fertility is expected to persist through Q4. Looking ahead to fiscal 2026, we remain confident in our ability to deliver sustainable revenue growth and gain market share.

Interest expense was $24 $7 million and the effective tax rate was 13, 4%.

non-GAAP EPS was $1 10 up 15% based on approximately 200 million average shares outstanding.

Speaker #5: For COOPERVISION, this confidence is grounded in the strong momentum we're seeing with MiDay, the positive impact we'll receive from upcoming product launches, and recent contract wins.

Free cash flow was $165 million with capex of $97 million.

Net debt declined to 235 billion.

Speaker #5: We expect to outpace the contact lens market and fitting activity, gaining market share. For CooperSurgical, we anticipate improvements driven by a rebound in the fertility market as the Asia-Pacific region returns to growth cycles and fertility clinics begin investing again.

And our bank defined leverage ratio improved to 177 times.

Al White: For Cooper Surgical, we expect improvements driven by a rebound in the fertility market as the Asia PAC region returns to growing cycles and fertility clinics start investing again. Beyond the top line, we expect operating margin expansion as we lever prior investment activity and a more efficient organization. And with that, I'll turn the call over to Brian.

Finally, we repurchased 724000 shares of stock for $52 1 million.

Speaker #5: Beyond the top line, we expect operating margin expansion as we lower prior investment activity and a more efficient organization. And with that, I'll turn the call over to Brian.

Leaving approximately $164 million of availability under our $1 billion board approved repurchase plan.

Moving to guidance with just one quarter remaining in the fiscal year I will focus on our Q4 outlook and then share some preliminary thoughts on fiscal 2026.

Speaker #6: Thank you, Al, 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: Thank you, Al, 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. For the third fiscal quarter, consolidated revenues were $1.06 billion, up 5.7% as reported, and up 2% organically. Gross margin improved by 70 basis points to 67.3%, driven by continued efficiency gains, mix, and positive foreign exchange. Operating expenses grew in line with sales, reflecting disciplined cost management. Within this, we delivered targeted SG&A leverage while continuing to invest in R&D, which was up 11%. These R&D investments are consistent with our planned activity around product development at both Cooper Vision and Cooper Surgical. As we continue advancing, several exciting development programs support several regulatory initiatives. Operating income rose 8%, with operating margin expanding to 26.1%. Interest expense was $24.7 million, and the effective tax rate was 13.4%.

For the fourth quarter consolidated revenue guidance is $1 49 to $1 <unk> six 9 billion.

Speaker #6: For the third fiscal quarter, consolidated revenues were $1.06 billion, up 5.7% as reported, and up 2% organically. Gross margin improved by 70 basis points, to 67.3%, driven by continued efficiency gains, mixed, and positive foreign exchange.

Representing 2% to 4% organic growth.

Coopervision revenue is expected to be in the range of $700 million to $713 million up 2% to 4% organically.

Cooper's surgical's revenue was expected to be $3 $50 million to $356 million up 2% to 4% organically.

Speaker #6: Operating expenses grew in line with sales, reflecting discipline cost management. Within this, we delivered targeted SG&A leverage, while continuing to invest in R&D, which was up 11%.

For earnings we are guiding to non-GAAP EPS of $1 <unk>.

<unk> to $1 14.

This assumes slightly lower year over year gross margins primarily from tariffs.

Speaker #6: These R&D investments are consistent with our planned activity around product development at both COOPERVISION and COOPER surgical. As we continue advancing, several exciting development programs and support several regulatory initiatives.

<unk> by solid operational execution, which we expect will result in better operating margins <unk> margins.

Interest expense is expected to be around $21 million and the effective tax rate is expected to be in the range of 14% to 15%.

Speaker #6: Operating income rose 8%, with operating margin expanding, to 26.1%. Interest expense was 24.7 million, and the effective tax rate was 13.4%. Non-GAAP EPS was $1.10, up 15%.

For fee for free cash flow, we expect to generate roughly $100 million in Q4, bringing our full year total to roughly $385 million, which aligns with the up mid to upper part of our previously communicated guidance range.

Brian Andrews: Non-GAAP EPS was $1.10, up 15% based on approximately 200 million average shares outstanding. Free cash flow was $165 million, with CAPEX of $97 million. Net debt declined to $2.35 billion, and our bank-defined leverage ratio improved to 1.77 times. Finally, we repurchased 724,000 shares of stock for $52.1 million, leaving approximately $164 million of availability under our $1 billion board-approved repurchase plan. Moving to guidance, with just one quarter remaining in the fiscal year, I'll focus on our Q4 outlook and then share some preliminary thoughts on fiscal 2026. For the fourth quarter, consolidated revenue guidance is $1.049 to $1.069 billion, representing 2% to 4% organic growth. Cooper Vision's revenue is expected to be in the range of $700 to $713 million, up 2% to 4% organically, and Cooper Surgical's revenue is expected to be $350 to $356 million, up 2% to 4% organically.

Speaker #6: Based on approximately 200 million average shares outstanding, free cash flow was $165 million, with capital expenditures (CapEx) of $97 million. Net debt declined to $2.35 billion, and our bank-defined leverage ratio improved to 1.77 times.

We will continue to focus on debt Paydown and share repurchases with these proceeds.

Looking ahead to fiscal 2026 al covered revenues, so I'll highlight a few additional items.

Starting with tariffs.

Speaker #6: Finally, we repurchased $724 thousand shares of stock for 52.1 million dollars. Leaving approximately $164 million of availability, under our $1 billion board-approved repurchase plan.

We've begun implementing mitigation strategies and now expect the impact to be approximately $24 million lower than previously anticipated.

While this will pressure gross margins, we plan to more than offset it through disciplined operating expense management.

Speaker #6: Moving to guidance, with just one quarter remaining in the fiscal year, I'll focus on our Q4 outlook and then share some preliminary thoughts on fiscal 2026.

To support this we're currently executing several productivity and efficiency initiatives to position ourselves for a strong 2026.

Speaker #6: For the fourth quarter, consolidated revenue guidance is $1.049 to $1.069 billion, representing 2% to 4% organic growth. CooperVision's revenues are expected to be in the range of $700 to $713 million, up 2% to 4% organically.

These actions correlate with the significant progress we've made implementing it upgrades and finishing integration activity.

With this progress.

We've been taking a fresh look at our entire organizational infrastructure to ensure we efficiently leverage future growth.

Speaker #6: And Cooper Surgical's revenue is expected to be $350 million to $356 million, up 2% to 4% organically. For earnings, we're guiding to non-GAAP EPS of $1.10 to $1.14.

Although it's too early to quantify any related charges or P&L benefits.

We expect them to be meaningful and will provide more detail on our next earnings call.

Brian Andrews: For earnings, we're guiding to non-GAAP EPS of $1.10 to $1.14. This assumes slightly lower year-over-year gross margins, primarily from tariffs, offset by a solid operational execution, which we expect will result in better operating margins. Interest expense is expected to be around $21 million, and the effective tax rate is expected to be in the range of 14% to 15%. For free cash flow, we expect to generate roughly $100 million in Q4, bringing our full year total to roughly $385 million, which aligns with the mid to upper part of our previously communicated guidance range. We'll continue to focus on debt paydown and share repurchases with these proceeds. Looking ahead to fiscal 2026, Al covered revenues, so I'll highlight a few additional items. Starting with tariffs, we've begun implementing mitigation strategies and now expect the impact to be approximately $24 million, lower than previously anticipated.

And lastly.

Regarding free cash flow.

Speaker #6: This assumes slightly lower year-over-year gross margins, primarily from tariffs, offset by solid operational execution, which we expect will result in better operating margins.

With the completion of Coopervision is large capex investment cycle, which significantly expanded our mighty capacity, we expect much stronger free cash flow ahead.

Operating margins remain healthy and we are committed to further improvement.

Speaker #6: Interest expense is expected to be around $21 million, and the effective tax rate is expected to be in the range of 14% to 15%.

But just as important is our focus on converting those margins into free cash flow at a higher rate by executing on our working capital initiatives.

Speaker #6: For free cash flow, we expect to generate roughly $100 million in Q4, bringing our full-year total to roughly $385 million, which aligns with the mid to upper part of our previously communicated guidance range.

Maximizing returns on investments and maintaining disciplined cost control.

As a result of these efforts.

We expect to generate approximately $2 billion.

And free cash flow over the next three fiscal years.

From a capital deployment perspective, we'll continue investing in growth and innovation.

Speaker #6: We'll continue to focus on debt paydown and share repurchases with these proceeds. Looking ahead to fiscal 2026, I'll cover revenues, so I'll highlight a few additional items.

While also prioritizing debt reduction and share repurchases.

With that I'll now hand, it back to the operator for questions.

Thank you we will now begin the question and answer session. If you have dialed in and we would like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue.

Speaker #6: Starting with tariffs, we've begun implementing mitigation strategies and now expect the impact to be approximately $24 million, lower than previously anticipated. While this will pressure gross margins, we plan to more than offset it through disciplined operating expense management.

Brian Andrews: While this will pressure gross margins, we plan to more than offset it through disciplined operating expense management. To support this, we're currently executing several productivity and efficiency initiatives to position ourselves for a strong 2026. These actions correlate with the significant progress we've made implementing IT upgrades and finishing integration activity. With this progress, we've been taking a fresh look at our entire organizational infrastructure to ensure we efficiently leverage future growth. Although it's too early to quantify any related charges or P&L benefits, we expect them to be meaningful and will provide more detail on our next earnings call. And lastly, regarding free cash flow, with the completion of Cooper Vision's large CAPEX investment cycle, which significantly expanded our MIDAY capacity, we expect much stronger free cash flow ahead. Operating margins remain healthy, and we're committed to further improvement.

I would like to withdraw your question simply brush Star one again.

We are called upon to ask a question in a listening via speakers wanting advice. Please pickup your handset to ensure that your phone is not on mute and asking a question again press star one to join the queue.

Speaker #6: To support this, we're currently executing several productivity and efficiency initiatives to position ourselves for a strong 2026. These actions correlate with the significant progress we've made in implementing IT upgrades and finishing integration activity.

A question for todays session that you. Please limit to one question and one follow up question. Thank you.

And our first question comes from the line of Jon Block with Stifel. Your line is open.

Speaker #6: With this progress, we've been taking a fresh look at our entire organizational infrastructure to ensure we efficiently leverage future growth. Although it's too early to quantify any related charges or P&L benefits, we expect them to be meaningful and will provide more detail on our next earnings call.

Thanks, guys good afternoon.

However, if we back out the likely 100 basis points from my sides growth contribution this year.

Going into 2025, CVI growth is probably three and a half at the midpoint.

And you know Thats lagging.

Market that I think you said is around.

Mid single digits. This year. So just how do we think about CVI for fiscal 2006, he gave some high level commentary.

Speaker #6: And lastly, regarding free cash flow, with the completion of CooperVision's large CapEx investment cycle, which significantly expanded our MiDay capacity, we expect much stronger free cash flow ahead.

What is your portfolio outside my site.

Lagging markets in line with market when we think about fiscal 2016, and Youre talking about our growing.

Speaker #6: Operating margins remain healthy, and we're committed to further improvement. But just as important is our focus on converting those margins into free cash flow at a higher rate, by executing on working capital initiatives, maximizing returns on investments, and maintaining disciplined cost control.

The industry next year.

Brian Andrews: But just as important is our focus on converting those margins into free cash flow at a higher rate by executing on working capital initiatives, maximizing returns on investments, and maintaining disciplined cost control. As a result of these efforts, we expect to generate approximately $2 billion in free cash flow over the next three fiscal years. From a capital deployment perspective, we'll continue investing in growth and innovation while also prioritizing debt reduction and share repurchases. With that, I'll now hand it back to the operator for questions.

Is that how we get there in other words like core CVI portfolio call. It in line ish with overall market and then a 100 basis points kicker for my side and I know Theres a lot of numbers I tried to move slowly, but hopefully that came across okay.

Speaker #6: As a result of these efforts, we expect to generate approximately $2 billion in free cash flow over the next three fiscal years. From a capital deployment perspective, we'll continue investing in growth and innovation, while also prioritizing debt reduction and share repurchases.

Yes, yes, I got you. So if we look at the market in calendar Q1 in calendar Q2 of this year the market grew 4%, 4% each quarter in the first quarter. The market grew four we grew 5% in calendar Q2 here in the market group or and we grew too. So so you are right a little bit.

Speaker #6: With that, I'll now hand it back to the operator for questions.

Share loss, if you will through the first half of this year.

Speaker #3: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue.

Would say that our portfolio has been lagging the market.

Desiree: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your headset to ensure that your phone is not on mute when asking your question. Again, press star one to join the queue. We do request for today's session that you please limit to one question and one follow-up question. Thank you. And our first question comes from the line of John Block with Stifel. Your line is open.

Where I look at it year to date and maybe even some went into last year I'd say the portfolio is lagging because we didn't have full availability of my day.

Speaker #3: If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via speakerphone in your device, please pick up your handset to ensure that your phone is not on mute when asking your question.

We were basically fighting with one hand tied behind our back because we just werent able to provide the product everyone wanted.

And I think our team did really well and they did the best of their ability with what they had available to them.

Speaker #3: Again, press star one to join the queue. We do request for today's session that you please limit it to one question and one follow-up question.

But that's changed.

Speaker #3: Thank you. And our first question comes from the line of John Block with Stifel. Your line is open.

And it wasn't quite a snap of a finger, but it was pretty close and we have put out a significant number of fitting sets and trial lenses and so forth into the market to drive that success. So I think that when you say the portfolio is lagging if you will this year significantly better from a bidding perspective as we exit the year in <unk>.

Speaker #7: Thanks, guys. Good afternoon. Al, we back out the likely 100 basis points from MiCyte's growth contribution this year. I think your 2025 CVI growth is probably 3.5% at the midpoint.

John Block: Thanks, guys. Good afternoon. Al, if we back out to like the 100 basis points from MiSight's growth contribution this year, your 2025 CVI growth is probably 3.5% at the midpoint. And you know that's a lagging market that I think you said is around mid-single digits this year. So just how do we think about CVI for fiscal '26? You gave some high-level commentary, but is your portfolio outside MiSight lagging market in line with market when we think about fiscal '26? And if you're talking about our growing industry next year, is that how we get there? In other words, like core CVI portfolio, call it in line-ish with overall market and then a 100 basis point kicker for MiSight. And I know there's a lot of numbers. I tried to move slowly, but hopefully that came across OK.

Materially better next year from the perspective of daily Si. So I think that if I look at next year, we're at least at market.

Speaker #7: And, you know, that's a lagging market that I think you said is around mid-single digits this year. So just how do we think about CVI for fiscal '26?

Based on our core portfolio, if you will at least at market plus the share gains that compromise site and I think we've got a chance to be above that depending upon how fast this setting activity converts into actual revenues.

Speaker #7: You gave some high-level commentary, but is your portfolio outside MiCyte, lagging market, in line with market when we think about fiscal '26? And if you're talking about Al growing industry next year, is that how we get there?

Okay that was great and maybe just sort of a quicker follow up and I don't know if I missed something but why is my success arguably like disproportionately coming from clarity I think about clarity is a really good with cost effective Si Hy daily as how it fit into the portfolio might be more of a premium so when you talk about.

Speaker #7: In other words, like, core CVI portfolio call it in line-ish with overall market and then 100 basis point kicker? From MiCyte. And I know there's a lot of numbers.

Speaker #7: I tried to move slowly, but hopefully that came across. Okay.

Mike it's great to hear about the traction.

Speaker #5: Yeah, yeah, I gotcha. So if we look at the market and calendar Q1 and calendar Q2 of this year, the market grew 4%. 4% each quarter.

After the fitting sets, but why seemingly has a disproportionately coming from clarity versus just competing Si Hy dailies and Brian any maybe one liner on how we think about margins priority versus my day. Thanks for your time.

Al White: Yeah, yeah, I got you. So if we look at the market in calendar Q1 and calendar Q2 of this year, the market grew 4%, 4% each quarter. In the first quarter, the market grew four, we grew five, and in calendar Q2 here, the market grew four and we grew two. So you are right, a little bit of share loss, if you will, through the first half of this year. I would say that our portfolio has been lagging the market. where I look at it, year to date and maybe even some went into last year, I'd say the portfolio was lagging because we didn't have full availability of MIDAY. you know, we were basically fighting with one hand tied behind our back because we just weren't able to provide the product everyone wanted.

Speaker #5: In the first quarter, the market grew 4%, we grew 5%. In calendar Q2, the market grew 4% and we grew 2%. So you are right, there has been a little bit of share loss, if you will, through the first half of this year.

Yes, so what we ended up seeing here that did surprise US is there are segments of the market and it's definitely true in some geographies such as Asia, Pac, where where we had people out there selling clarity that wanted to sell my day and they were they were almost viewed as somewhat similar type of prop.

Speaker #5: I would say that our portfolio has been lagging the market. When I look at it year to date, and maybe even some from last year, I'd say the portfolio was lagging because we didn't have full availability of MiDay.

Alex there wasn't a clear differentiation between the two products and you see that differentiation in some markets and we didn't see much of an impact with all this might activity there, but in some of those markets like Japan being one of them where those were so much more similar when we brought <unk> back in.

Speaker #5: You know, we were basically fighting with one hand tied behind our back because we just weren't able to provide the product everyone wanted. And I think our team did really well; they did the best of their ability with what they had available to them.

Al White: and I think our team did really well, and they did the best of their ability with what they had available to them. but that's changed. I mean, and it wasn't quite a snap of a finger, but it was pretty close. And we have put out a significant number of fitting sets and trial lenses and so forth into the market to drive that success. So I think that when you say the portfolio was lagging, if you will, this year, significantly better from a fitting perspective as we exit the year and materially better next year from the perspective of daily si-highs. So I think that if I look at next year, we're at least at market, based on a core portfolio, if you will, at least at market, plus the share gains that come from MiSight.

Speaker #5: But that's changed. And I mean, and it wasn't quite a snap of a finger, but it was pretty close. And we have put out a significant number of fitting sets and trial lenses and so forth into the market to drive that success.

The fitting sets and everything else. What you ended up having happened was a number of optometrists are ophthalmologists and some of these markets, saying, hey, I'm going to hold off for a little while on clarity and I'm basically going to tell everybody Hey try this <unk> get I want to pitch in my day and.

Speaker #5: So I think that when you say the portfolio was lagging, if you will, this year, it is significantly better from a fitting perspective as we exit the year, and materially better next year from the perspective of daily sigh highs.

Let's kind of like take a little bit of time here. We've got these lenses.

Take them try and see if you will like let's figure out if you like those better before we reorder clarity so that was a little surprising to us in terms of the magnitude of that but but it was pretty focused on a few markets, where my day and clarity are much closer than you'd think because your your comment John It is true that youll see here in the Americas and you see it.

Speaker #5: So I think that if I look at next year, we're at least at market, based on a core portfolio, if you will, at least at market, plus the share gains that come from MiCyte.

Speaker #5: And I think we've got a chance to be above that, depending upon how fast this fitting activity converts into actual revenues.

Al White: And I think we've got a chance to be above that, depending upon how fast this fitting activity converts into actual revenues.

In EMEA, where there is almost like separate channels for <unk> for <unk> and for clarity, but but as I mentioned thats not exactly true everywhere.

Speaker #6: Okay, that was great. Maybe just sort of a quicker follow-up. And I don't know if I missed something, but why is MiDay success arguably like disproportionately coming from clarity?

John Block: OK, that was great. And maybe just sort of a quicker follow-up. And I don't know if I missed something, but why is MIDAY's success arguably like disproportionately coming from clarity? I think about clarity as a really good but cost-effective si-high daily, you know, is how it fit into the portfolio. MIDAY, more of a premium. So when you talk about MIDAY, and it's great to hear about the traction, you know, after the fitting sets, but why seemingly is it disproportionately coming from clarity versus just competing si-high dailies? And Brian, any maybe one-liner on how we think about margins, clarity versus MIDAY? Thanks for your time.

Yes.

Yes, John on your question on margin I won't I won't get into the exact margins, but <unk> margins are a little bit better than <unk>.

Speaker #6: I think about clarity as a really good, but cost-effective sign high daily. You know, is how it fits into the portfolio. MiDay is more of a premium.

Thanks, guys.

Okay.

Speaker #6: So when you talk about MiDay, and it's great to hear about the traction, you know, after the fitting sets, but why seemingly is it disproportionately coming from clarity versus just competing sigh high dailies?

Our next question comes from the line of Larry Nicholson with Wells Fargo. Your line is open.

Good afternoon, thanks for taking the question.

Speaker #6: And Brian, any maybe one-liner on how we think about margins clarity versus MiDay? Thanks for your time.

Al.

It looks like the contact lens market slowed each year since 2021, and it's slow to as you said, 4% growth in the first half of calendar 2025, So maybe just zoom out a little bit.

Speaker #5: Yeah, so what we ended up seeing here that did surprise us is there's segments of the market, and it's definitely true in some geographies, such as Asia Pacific, where we had people out there selling clarity that wanted to sell MiDay.

Al White: Yeah, so what we ended up seeing here that did surprise us some is there are segments of the market, and it's definitely true in some geographies such as Asia PAC, where we had people out there selling clarity that wanted to sell MIDAY. And they were almost viewed as somewhat similar types of products. There wasn't a clear differentiation between the two products. And you see that differentiation in some markets, and we didn't see much of an impact with all this MIDAY activity there.

Why is the market slowed so much.

How confident are you there isn't something else going on here like some consumer softness and I had one follow up.

Speaker #5: And they were, they were almost viewed as somewhat similar types of products. There wasn't a clear differentiation between the two products. You see that differentiation in some markets, and we didn't see much of an impact with all this MiDay activity there.

Yes. So you are right Larry I mean, the market grew 7% last year has grown 4% so far this year.

I think there is a little bit of lightness in some areas, where we had strength.

One of those areas would be pricing, where we saw higher pricing, we've seen higher pricing and that started to lag, especially outside of the U S.

Speaker #5: But in some of those markets, like Japan, being one of them, where those were sold much more similar, when we brought MiDay back in, if the fitting sets and everything else, what you ended up having happened was a number of optometrists or ophthalmologists in some of these markets saying, "Hey, I'm going to hold off for a little while on clarity, and I'm basically going to tell everybody, 'Hey, try this MiDay, see if you like it.

Al White: But in some of those markets, like Japan being one of them, where those were sold much more similar, when we brought MIDAY back in, if the fitting sets and everything else, what you ended up having happened was a number of optometrists or ophthalmologists in some of these markets saying, hey, I'm going to hold off for a little while on clarity, and I'm basically going to tell everybody, hey, try this MIDAY, see if you like it. I want to fit you in MIDAY. And let's kind of like take a little bit of time here. We've got these lenses, fit them, take them, try them, see if you'll like them. Let's figure out if you like those better before we reorder clarity. So that was a little surprising to us in terms of the magnitude of that.

We saw some of that in particular with its pure play E channel stuff I was talking about in Asia Pac, where we maintained our pricing, but some competitors got a little bit more aggressive to actually win share and take sales there.

So I think that youre seeing some of the pricing.

<unk> come off the market a little bit that's probably one of your key indicators I think there could be a little bit when consumer activity I talked about that on the call last quarter, but.

Speaker #5: I want to fit you in MiDay. And let's kind of take a little bit of time here. We've got these lenses; fit them, take them, try them, see if you'll like them.

But I Wouldnt go too far with that but I think you could see a little bit on the consumer side.

Speaker #5: Let's figure out if you like those better before we reorder clarity. So, that was a little surprising to us, in terms of the magnitude of that.

Okay. That's helpful.

Brian on fiscal 'twenty six thanks for the preliminary color.

Speaker #5: But it was pretty focused on a few markets where MiDay and clarity are much closer than you'd think. Because your comment, John, is true.

Al White: But it was pretty focused on a few markets where MIDAY and clarity are much closer than you'd think. Because your comment, John, is true. You'll see it here in the Americas, and you see it more in EMEA, where there's almost like separate channels for MIDAY and for clarity. But as I mentioned, that's not exactly true everywhere.

Maybe a little bit just to push a little bit more.

Incentives EPS growth at 9% and in reaction to that and I heard I heard about the operating margin leverage from al but I didn't hear the reiteration of double digit constant currency operating income growth.

Speaker #5: You'll see it here in the Americas, and you see it more in EMEA, where there's almost like separate channels for MiDay and for clarity.

Speaker #5: But as I mentioned, that's not exactly true everywhere.

And any of the other just walk us through it sounds like tariffs are going to be completely offset if I heard you correctly.

Speaker #6: Yeah, John, on your question on margin, I won't get into the exact margins, but clarity's margins are a little bit better than MiDay's.

Brian Andrews: Yeah, John, on your question on margin, I won't get into the exact margins, but clarity's margins are a little bit better than MIDAY's.

FX looks like a tailwind and then how do we think about tax it looks like it's coming in at about 14%. This year should we still think about 15, 5%. Thank you.

Speaker #7: Thanks, guys.

John Block: Thanks, guys.

Speaker #3: Our next question comes from the line of Larry Bigelson with Wells Fargo. Your line is open.

Desiree: Our next question comes from the line of Larry Beagleson with Wells Fargo. Your line is open.

Hi, Larry all good questions.

Speaker #8: Good afternoon. Thanks for taking the question. So, Al, you know, it looks like the contact lens market has slowed each year since 2021, and it slowed too, as you said, 4% growth in the first half of calendar 2025.

Yes, we did give some color we give some directional commentary on next year in our prepared remarks.

John Block: Good afternoon. Thanks for taking the question. So, Al, you know, it looks like the contact lens market has slowed each year since 2021, and it's slowed to, as you said, 4% growth in the first half of calendar 2025. So maybe just zoom out a little bit. You know, why has the market slowed so much? And how confident are you there isn't something else going on here, like some consumer softness? And I had one follow-up.

We are always going to target driving low double digit constant currency oi growth, especially over a multiyear period.

Speaker #8: So maybe just zoom out a little bit. You know, why has the market slowed so much? And how confident are you that there isn't something else going on here?

There's a lot of moving parts, not the least of which tariffs.

We're focused on tariff mitigation and driving solid operational execution.

Speaker #8: Like some consumer softness? And I had one follow-up.

But really we're going to provide more details in December on how that all translates to oi growth and EPS growth.

Speaker #5: Yeah, so you are right, Larry. I mean, the market grew 7% last year. It's grown 4% so far this year. I think there's a little bit of lightness in some areas where we had strength.

Al White: Yeah, so you are right, Larry. I mean, the market grew 7% last year. It's grown 4% so far this year. I think there's a little bit of lightness in some areas where we had strength. One of those areas would be pricing, where we saw higher pricing. We've seen higher pricing, and that's started to lag, especially outside of the US. We saw some of that in particular with this pure-play e-channel stuff I was talking about in Asia PAC, where we maintained our pricing, but some competitors got a little bit more aggressive to actually win share and take sales there. So I think that you're seeing some of the pricing come off the market a little bit. That's probably one of your key indicators. I think there could be a little bit with consumer activity. I talked about that on the call last quarter.

I think the tax rate you've assumed.

It's probably a fair estimate, but again, we'll update you in December.

Speaker #5: One of those areas would be pricing, where we saw higher pricing. We've seen higher pricing, and that started to lag, especially outside of the U.S.

Alright, Thanks, Brian.

Yes.

Next question comes from the line of Jeff Johnson with Baird. Your line is open.

Speaker #5: We saw some of that in particular with this pure-play e-channel stuff I was talking about in Asia PAC, where we maintained our pricing, but some competitors got a little bit more aggressive to actually win share and take sales there.

Thank you guys. Good afternoon al I'm still trying to reconcile a little bit maybe the.

Clarity in my day.

Comments I think.

Speaker #5: So, I think that you're seeing some of the pricing come off the market a little bit. That's probably one of your key indicators. I think there could be a little bit of a shift with consumer activity.

As I think about it, especially from a topline perspective, you should trade outs happen from clarity into my day, you should get some nice benefit from that not pressures from that and even if there is a little bit of timing uncertainty in those clarity orders going down this quarter I'm just bidding activity on Monday picking up why does that not translate to then a nicer inflection in.

Speaker #5: I talked about that on the call last quarter. But I wouldn't go too far with that; I think you could see a little bit on the consumer side.

Al White: But I wouldn't go too far with that, but I think you could see a little bit on the consumer side.

Speaker #8: Okay, that's helpful. Brian, on fiscal '26, thanks for the preliminary color. Maybe just to push a little bit more, consensus EPS growth is at 9%.

John Block: OK, that's helpful. Brian, on fiscal '26, thanks for the preliminary color. Maybe a little bit just to push a little bit more, consensus EPS growth at 9%. Any reaction to that? And I heard about the operating margin leverage from Al, but I didn't hear the reiteration of double-digit constant currency, operating income growth, and any of the other. Just walk us through. It sounds like tariffs are going to be completely offset, if I heard you correctly. FX looks like a tailwind. And then how do we think about tax? It looks like it's coming in at about 14% this year. Should we still think about 15.5%? Thank you.

For Q1, and that's kind of the <unk> CVI number coming down it just seems like there's an extended period, where we're not getting the benefit but dealing the immediacy of the clarity.

Speaker #8: Any reaction to that? I heard about the operating margin leverage from Al, but I didn't hear the reiteration of double-digit constant currency operating income growth.

Linda.

Yes.

Hi, Jeff.

And that question is something that we've been spending some considerable time here on over at <unk>.

The last couple of weeks.

Speaker #8: And any of the other, just walk us through. It sounds like tariffs are going to be completely offset, if I heard you correctly. FX looks like a tailwind.

Is how does that transition happened and does clarity bounce back a little bit faster or does it not as the fitting activity.

Speaker #8: And then how do we think about tax? It looks like it's coming in at about 14% this year. Should we still think about 15.5%?

Translate to a faster uptake in terms of revenues or <unk> or does it not or do we get a situation, where we have a similar quarter to this quarter, where they they kind of come together and it doesn't come to fruition.

Speaker #8: Thank you.

Speaker #5: All right, Larry, all good questions. I'll Yeah, we did get some color. We gave some directional commentary on next year in our prepared remarks.

Brian Andrews: All right, Larry, all good questions. I'll, you know, we did give some color. We gave some directional commentary in next year in our prepared remarks. You know, we are always going to target driving low double-digit constant currency OI growth, especially over a multi-year period. There's a lot of moving parts, not the least of which tariffs. You know, we're focused on tariff mitigation and driving solid operational execution. But really, we're going to provide more details in December on how that all translates to OI growth and EPS growth. I think the tax rate you've assumed is probably a fair estimate. But again, we'll update you in December.

That's a question Mark right, so I think that the.

The guidance that we gave assumes a very similar quarter. If you will Q3 to Q4, I mean, I'm pretty optimistic as you know I'm an optimistic guy in this kind of stuff and when I look at that data I feel pretty good about it.

Speaker #5: You know, we are always going to target driving low double-digit constant currency OI growth, especially over a multi-year period. There's a lot of moving parts, not the least of which are tariffs.

But we cannot get in front of ourselves we've had a couple of quarters here, where we got ahead of ourselves a little bit and we wanted to ensure that we gave guidance that was that was certainly reasonable and something that we were going to be able to reach even if we do see a situation where clarity orders continue to lag and by day all the mandate.

Speaker #5: You know, we're focused on tariff mitigation and driving solid operational execution. But really, we're going to provide more details in December on how that all translates to OI growth and EPS growth.

Speaker #5: I think the tax rate you've assumed is probably a fair estimate. But again, we'll update you in December.

Adding activity doesn't translate into the size of revenue orders that were hoping to get.

Speaker #8: All right. Thanks, Brian.

John Block: All right, thanks, Brian.

Speaker #5: Yep.

Brian Andrews: Yep.

Speaker #3: Next question comes from the line of Jeff Johnson with Baird. Your line is open.

Desiree: Next question comes from the line of Jeff Johnson with Baird. Your line is open.

Alright fair enough and then maybe just on the ecommerce side, maybe you could flesh that out just a little bit more for US are you seeing that from some of your largest competitors. Some of those pricing actions is that local competitors just help us out that Asia Pac markets, a little harder for us to get intelligence on thanks.

Speaker #9: Thank you, guys. Good afternoon. Al, I'm still trying to reconcile a little bit maybe the clarity and MiDay comments. I think, you know, as I think about it, especially from a top-line perspective, you should, as tradeouts happen from clarity into MiDay, you should get some nice benefit from that, not pressures from that.

John Block: Thank you, guys. Good afternoon. Al, I'm still trying to reconcile a little bit maybe the clarity and MIDAY comments. I think, you know, as I think about it, especially from a top-line perspective, you should, as trade-outs happen from clarity into MIDAY, you should get some nice benefit from that, not pressures from that. And even if there's a little bit of timing uncertainty in those clarity orders going down this quarter and just fitting activity on MIDAY picking up, why does that not translate to then a nicer inflection in 4Q and instead kind of the 4Q CVI number coming down? It just seems like there's an extended period where we're not getting the MIDAY benefit but feeling the immediacy of the clarity headwind.

Yeah.

I hate to go too much into it.

A competitor to details and so forth, but yes, we are seeing some of that that aggressiveness from some of our larger competitors.

Speaker #9: And even if there's a little bit of timing uncertainty in those clarity orders going down this quarter and just fitting activity on MiDay picking up, why does that not translate to then a nicer inflection in Q4, and instead kind of the Q4 CVI number coming down?

And again, Mike we lose that business.

China was down 25% in the first quarter was down somewhat this quarter.

Very little margin impact because it's such a low margin business.

Speaker #9: It just seems like there's an extended period where we're not getting the MiDay benefit, but feeling the immediacy of the clarity. Headwind?

We didn't want to lose it but yes, we've seen some.

Some more aggressive pricing that's out there outside of the U S and certainly in the Asia Pac region.

Speaker #5: Yeah, you're spot on, John. I mean, that question is something that we've been spending considerable time on here over at least the last couple of weeks.

Al White: Yeah, you're spot on, Jeff. I mean, and that question is something that we've been spending some considerable time here on over at least the last couple of weeks, is how does that transition happen? And does clarity bounce back a little bit faster, or does it not? Does the fitting activity translate to a faster uptake in terms of revenues of MIDAY, or does it not? Or do we get a situation where we have a similar quarter to this quarter where they kind of come together and it doesn't come to fruition? That's a question mark, right? So I think that the guidance that we gave assumes a very similar quarter, if you will, Q3 to Q4. I mean, I'm pretty optimistic, as you know. I'm an optimistic guy in this kind of stuff. And when I look at that data, I feel pretty good about it.

Thank you next.

Our next question comes from the line of EC Kirby with Redburn. Your line is open.

Speaker #5: Is how does that transition happen? And does clarity bounce back a little bit faster? Or does it not? Does the fitting activity translate to a faster uptake in terms of revenues of MiDay?

Your line is open.

Sorry, I think I was on mute back can you hear me now.

Yes.

Great sorry about that.

Yeah, I just wanted to touch upon the restructuring that.

Speaker #5: Or does it not? Or do we get a situation where we have a similar quarter to this quarter, where they kind of come together and it doesn't come to fruition?

As mentioned.

Your prepared remarks.

Any more color you could give us on what particular areas you're looking at.

Speaker #5: That's a question mark, right? So I think that the guidance we gave assumes a very similar quarter, if you will, Q3 to Q4.

Okay.

Is it in such a call more across the board.

Thats helpful.

And then I have a follow up.

Speaker #5: I mean, I'm pretty optimistic. As you know, I'm optimistic about this kind of stuff. When I look at that data, I feel pretty good about it.

Yes, I had a couple of comments one is we have done a number of acquisitions over many years.

Speaker #5: But we cannot get in front of ourselves. We've had a couple of quarters here where we got ahead of ourselves a little bit and, you know, we wanted to ensure that we gave guidance that was certainly reasonable and something that we were going to be able to reach, even if we do see a situation where clarity orders continue to lag and MiDay, all the MiDay fitting activity doesn't translate into the size of revenue orders that we're hoping to get.

Al White: But we cannot get in front of ourselves. We've had a couple of quarters here where we got ahead of ourselves a little bit. And you know, we wanted to ensure that we gave guidance that was certainly reasonable and something that we were going to be able to reach, even if we do see a situation where clarity orders continue to lag and all the MIDAY fitting activity doesn't translate into the size of revenue orders that we're hoping to get.

We haven't done an acquisition in a little while here and we don't have any in the cards. We've done some really hard work on completing some of the integration activity and we're now taken a fresh look at that and saying Okay. Now that we've got some of that behind us how does our organization setup and what's what can we do to make it as efficient as possible moving forward.

We've also had some changes in coopervision, that's akubra surgical and coopervision over the years in terms of how we've grown coming out of Covid and when we take a look at our implementations at number of upgrades that we've done that have been very successful. It's a good time to take a look at that and say hey, we all talk about artificial intelligence and <unk>.

Speaker #8: All right, fair enough. And then maybe

John Block: All right, fair enough. And then maybe just on the e-commerce side, maybe you could flesh that out just a little bit more for us. Are you seeing that from some of your largest competitors, some of those pricing actions? Is that local competitors? Just help us out. That Asia PAC market's a little harder for us to get intelligence on. Thanks.

Speaker #9: Be just on the e-commerce side. Maybe you could flesh that out just a little bit more for us. Are you seeing that from some of your largest competitors, some of those pricing actions?

Speaker #9: Is that local competitors just help us out that Asia PAC market's a little harder for us to get intelligence on? Thanks.

We talked about it and so forth, let's look at our organization throughout our opex structure and with a heavy focus on kind of your your G&A areas and can we leverage all of those investments we've done and it's a hard thing to do youre seeing a lot of companies do it we're doing the exact same thing right now so we're going through that challenging period of.

Speaker #5: Yeah, I hate to go too much into the competitor details and so forth, but yes, we are seeing some of that aggressiveness from some of our larger competitors.

Al White: Yeah, I hate to go too much into the competitor details and so forth. But yes, we are seeing some of that aggressiveness from some of our larger competitors. And again, like, you know, we lose that business. China was down 25% in the first quarter, was down similar this quarter. It has very little margin impact because it's such a low-margin business. We didn't want to lose it. But yeah, we've seen some more aggressive pricing that's out there outside of the US and certainly in the Asia PAC region.

Speaker #5: And again, you know, we lose that business. China was down 25% in the first quarter, and was down similarly this quarter. It has very little margin impact because it's such a low-margin business.

Saying, we have to drive more efficient long term growth and we've invested very considerably over the last several years to put us in a position where we can complete that analysis and take some appropriate action. So we're going through all that work.

Speaker #5: We didn't want to lose it, but yeah, we've seen some more aggressive pricing that's out there outside of the U.S. and certainly in the Asia Pacific region.

Speaker #8: Thank you.

John Block: Thank you.

Currently right now.

Oh, great. Thanks for that color and then just on the <unk> business.

Speaker #3: Next question comes from the line of EC Kirby with Redbird. Your line is open.

Desiree: Next question comes from the line of EC Kirby with Redbird. Your line is open. EC Kirby, your line is open.

No I think Mike might actually holding up pretty well despite some of that potential cost impact is that really coming from Europe.

How is my site.

And then do you have any update on glass.

Craig it's all of them, whether that something we could see towards the backend of this yet.

Speaker #9: Oh, yeah.

Speaker #3: EC Kirby, your line is open.

Yes.

Sure, Yes, my site I would say is performing really well in Europe.

Speaker #9: Sorry, I think I was on mute there. Can you hear me now?

Issie Kirby: Sorry, I think I was on mute there. Can you hear me now?

Speaker #5: Yep.

John Block: Yeah.

Some of the stuff I talked about last quarter is playing out successfully.

Speaker #9: Great. Sorry about that. Yeah, I just wanted to touch upon the restructuring that was mentioned at the end of your prepared remarks. Any more color you could give us on what particular areas you're looking at?

Issie Kirby: Great. Sorry about that. Yeah, I just wanted to touch upon the restructuring that was mentioned at the end of your prepared remarks. Sort of any more color you could give us on what particular areas you're looking at? Is it mainly in vision? Is it in surgical or more across the board? And what prompted you to take a look at this now? And then I have a follow-up. Thanks.

We've got good momentum in that marketplace right now we've got <unk> coming next year in that market that will include at some point <unk> toric. So we're going to continue to hit that market hard and we're doing really well there, including with some key strategic accounts.

Speaker #9: Is it mainly in vision? Is it in surgical, or is it more across the board? And what prompted you to take a look at this now?

Speaker #9: And then I have a follow-up. Thanks.

It kind of say Asia Pac is doing okay.

Speaker #5: Yeah, I had a couple of comments. One is that we have completed a number of acquisitions over many years. We haven't done an acquisition in a little while here, and we don't have any in the cards.

Al White: Yeah, I had a couple of comments. One is that we have done a number of acquisitions over many years. We haven't done an acquisition in a little while here, and we don't have any in the cards. We've done some really hard work on completing some of that integration activity. And we're now taking a fresh look at that and saying, OK, now that we've got some of that behind us, how does our organization set up and what can we do to make it as efficient as possible moving forward? We've also had some changes in Cooper Vision. That's at Cooper Surgical and Cooper Vision over the years in terms of how we've grown coming out of COVID.

We can kind of have our fits and starts there.

But I'm excited about getting my site into Japan, that's going to be a pretty big market for us that's over half our revenues in the Asia Pac region, and we don't have that product. There. So we'll be launching that at the beginning of next year and I think that'll give us an extra kick a little bit slower here in the Americas and in the U S. Some of this promotional activity we talked about.

Speaker #5: We've done some really hard work on completing some of that integration activity, and we're now taking a fresh look at that and saying, "Okay, now that we've got some of that behind us, how does our organization set up, and what can we do to make it as efficient as possible moving forward?" We've also had some changes in CooperVision.

Coming into the marketplace now and there has been a little bit of confusion almost if you will around that as we roll that out and work to standardize that so we'll get that going with the back to school work and so forth, but a little bit slower in the Americas.

Speaker #5: That's Cooper Surgical, and CooperVision. Over the years, in terms of how we've grown coming out of COVID, when we take a look at our IT implementations and the number of IT upgrades that we've done that have been very successful, it's a good time to take a look at that and say, "Hey, we all talk about artificial intelligence, and we talk about IT and so forth."

Al White: And when we take a look at our IT implementations, a number of IT upgrades that we've done that have been very successful, it's a good time to take a look at that and say, hey, we all talk about artificial intelligence and we talk about IT and so forth. Let's look at our organization throughout our OPEX structure and with a heavy focus on kind of your G&A areas. And can we leverage all those investments we've done? And it's a hard thing to do. You're seeing a lot of companies do it. We're doing the exact same thing right now. So we're going through that challenging period of saying we have to drive more efficient long-term growth. And we've invested very considerably over the last several years to put us in a position where we can complete that analysis and take some appropriate action.

No update on side glass right now.

With the FDA will provide an update as soon as I can on that but nothing new to add.

Alright. Thanks.

Yes.

Speaker #5: Let's look at our organization to route our OPEX structure and with a heavy focus on kind of your G&A areas, and can we leverage all those investments we've done?" And it's a hard thing to do.

Next question comes from the line of Joanne Wuensch with Citibank. Your line is open.

Good afternoon, and thanks for taking my question.

I wanted to sort of press a little bit on the commentary about the market growing mid single digits.

Speaker #5: You're seeing a lot of companies do it. We're doing the exact same thing right now. So, we're going through that challenging period of saying, 'We have to drive more efficient long-term growth.' And we've invested very considerably over the last several years to put us in a position where we can complete that analysis and take some appropriate action.

Potential to grow at the market and it all seems to be tied to my day, maybe that's just too broad oven.

Scripps, Jim, but I am just trying to understand.

With CVI segment has slowed so much and how its expected to reaccelerate and thank you.

Speaker #5: So, we’re going through all that work literally right now.

Al White: So we're going through all that work literally right now.

Yes, Joanne you're right. It is tied to my day by day was very successful for a long time growing well north of 20%.

Speaker #9: Sounds great. No, thanks for the color. And then just on the myopia business overall, I think MiCyte is actually holding up pretty well, despite some of the potential cost impact.

Issie Kirby: Oh, great. No, thanks for the color. And then just on the Myopia business overall, I think MiSight actually holding up pretty well despite some of the potential cost impact. Is that really coming from Europe? How is MiSight doing in Asia? And then do you have any update on the Sightglass approval and whether that's something we could see towards the back end of this year still? Thanks.

It still grew double digits this quarter, because all the capacity that we have been bringing on.

Speaker #9: Is that really coming from Europe? How is MiCyte doing in Asia? And do you have any update on the site glass approval and whether that's something we could see towards the back end of this year still?

Over the last year, or so we've been producing product and selling product out into the marketplace. Now thankfully, we have a lot more capacity coming because we need that capacity based on all the bidding activity and everything we have going on right. Now so we got into a situation, where we just werent able to get enough <unk> out to meet all the demand that was in the mark.

Speaker #9: Thanks.

Speaker #5: Sure, yeah. MiCyte, I would say, is performing really well in Europe. Some of the stuff I talked about last quarter is playing out successfully.

Al White: Sure, yeah. MiSight, I would say, is performing really well in Europe. Some of the stuff I talked about last quarter is playing out successfully. We've got good momentum in that marketplace right now. We've got MIDAY MiSight coming next year in that market. That'll include at some point MIDAY MiSight Toric. So we're going to continue to hit that market hard, and we're doing really well there, including with some key strategic accounts. I kind of say Asia PAC is doing OK. We kind of have our fits and starts there. But I'm excited about getting MiSight into Japan. That's going to be a pretty big market for us. That's over half our revenues in the Asia PAC region. And we don't have that product there. So we'll be launching that at the beginning of next year, and I think that'll give us an extra kick.

It plays.

And we're there now and based on all of this activity, we're going to sell more by day I mean I can tell you right. Now we have we have over 30 brand new <unk> private label contracts and launches going on right now we have <unk>.

Speaker #5: We've got good momentum in that marketplace right now. We've got MiDay MiCyte coming next year in that market. That'll include, at some point, MiDay MiCyte TORC.

Speaker #5: So we're going to continue to hit that market hard, and we're doing really well there, including with some key strategic accounts. I'd kind of say Asia PAC is doing okay.

Almost 50% increase in our fitting sets that are out in the market year over year right now and we have over 300% increase in trial <unk> trial lenses associated with those fitting sets I mean, those are there are pretty dramatic numbers out there that support the fact that we're going to do well with <unk> and we're going to get my they go on.

Speaker #5: We kind of have our fits and starts there, but I'm excited about getting MiCyte into Japan. That's going to be a pretty big market for us.

Speaker #5: That's over half our revenues in the Asia PAC region, and we don't have that product there. So we'll be launching that at the beginning of next year, and I think that'll give us an extra kick.

Again, so I look at it and say Hey, if.

If we step back and we say, we're going to do somewhere around $1 billion in sales of daily silicone hydrogel lenses. This year about lets call 600, a little bit over $600 million of that is associated with my day right somewhere around $400 million is clarity that demand around the activity the fitting sets the trial lenses and so forth.

Speaker #5: A little bit slower here in the Americas. In the U.S., some of this promotional activity we talked about is coming into the marketplace now, and there's been a little bit of confusion, almost, if you will, around that as we roll that out and work to standardize that.

Al White: A little bit slower here in the Americas and in the US. Some of this promotional activity we talked about is coming into the marketplace now, and there's been a little bit of confusion, almost, if you will, around that as we roll that out and work to standardize that. So we'll get that going with the back-to-school work and so forth, but a little bit slower in the Americas. No update on Sightglass right now. It's with the FDA. I'll provide an update as soon as I can on that, but nothing new to add.

Speaker #5: So we'll get that going with the back-to-school work and so forth, but it's a little bit slower in the Americas. No update on Site Glass right now.

These new contracts that we have like it's pretty exciting and maybe it'll convert a little bit faster as Jeff was asking about I hope. It does maybe it doesn't it takes a little while longer but it is still there and we're still going to be successful with it I really truly believe that so I do end up saying, it's almost all tied to my day and I.

Speaker #5: With the FDA, I will provide an update as soon as I can on that, but nothing new to add.

Speaker #3: Right, thanks.

Issie Kirby: Great, thanks.

Speaker #5: Yep.

Al White: Yeah.

Speaker #3: Next question comes from the line of Joanne Wench with CitiBank. Your line is open.

Desiree: Next question comes from the line of Joanne Wench with CD Bank. Your line is open.

Speaker #9: Good afternoon, and thanks for taking my question. I want to sort of press a little bit on the commentary about the market growing mid-single digits.

Issie Kirby: Good afternoon, and thanks for taking the question. I want to sort of press a little bit on the commentary about the market growing mid-single digits and the potential to grow at the market. And it all seems to be tied to MIDAY. Maybe that's just too broad of a description, but I'm really trying to understand how the CVI segment has slowed so much and how it's expected to reaccelerate. And thank you.

It will be pretty damn successful with it.

Speaker #9: And the potential to grow at the market. And it all seems to be tied to MiDay. Maybe that's just too broad of a description.

Our next question comes from the line of Jason Bender with Piper Sandler Your line is open.

Speaker #9: But I'm really trying to understand how the CVI segment has slowed so much and how it's expected to reaccelerate. And thank you.

Hey, good afternoon.

One comment that's my day clearer discussion from a different angle I'm, sorry to beat a dead horse here, but yes. This has been it's been a market a trade ups over the last several years a couple of decades. This whole dynamic with train the silicone hydrogel dailies and daily silicone hydrogel I don't recall ever a situation like this where you run into like the big expected.

Speaker #5: Yeah, Joanne, you're right. It is tied to MiDay. MiDay was very successful for a long time, growing well north of 20%. It still grew double digits this quarter because all the capacity that we have been bringing on over the last year or so. We've been producing product and selling product out into the marketplace.

Al White: Yeah, Joanne, you're right. It is tied to MIDAY. MIDAY was very successful for a long time, growing well north of 20%. It still grew double digits this quarter because all the capacity that we have been bringing on over the last year or so, we've been producing product and selling product out into the marketplace. Now, thankfully, we have a lot more capacity coming because we need that capacity based on all the fitting activity and everything we have going on right now. So we got into a situation where we just weren't able to get enough MIDAY out to meet all the demand that was in the marketplace. And we're there now. And based on all this activity, we're going to sell more MIDAY. I mean, I can tell you right now, we have over 30 brand new MIDAY private label contracts and launches going on right now.

<unk> down in demand for one land ahead of a buildup for other lenses. So kind of similar track that Jeff was asking around but can you talk about why this situation with clarity and <unk> would be different from other trade up cycles that we've seen and how youre confident this is just.

Speaker #5: Now, thankfully, we have a lot more capacity coming because we need that capacity based on all the fitting activity and everything we have going on right now.

Speaker #5: So, we got into a situation where we just weren't able to get enough MiDay out to meet all the demand that was in the marketplace.

Just an internal trade up that you are kind of you're going through the market's going through and digesting versus some competitive challenger right now too.

Yeah, Yeah, absolutely Jason.

Speaker #5: And we're there now. Based on all this activity, we're going to sell more MiDay. I mean, I can tell you right now, we have over 30 brand new MiDay private label contracts and launches going on right now.

EMEA is a good example of a place where you didn't really see that activity did we see a little bit of softness in clarity yes.

But but still plugged along with a pretty good quarter.

Speaker #5: We have almost a 50% increase in our fitting sets that are out in the market year over year right now. And we have over a 300% increase in trial sets, trial lenses associated with those fitting sets.

Al White: We have almost a 50% increase in our fitting sets that are out in the market year over year right now. And we have over a 300% increase in trial sets, trial lenses associated with those fitting sets. I mean, those are pretty dramatic numbers out there that support the fact that we're going to do well with MIDAY and we're going to get MIDAY going again. So I look at it and I say, hey, if we step back and we say we're going to do somewhere around $1 billion in sales of daily silicone hydrogel lenses this year, about, let's call 600, a little bit over 600 million of that is associated with MIDAY, right? Somewhere around $400 million is clarity. The demand around the activity, the fitting sets, the trial lenses, and so forth, these new contracts that we have, like, it's pretty exciting.

That would be a quarter, where you kind of had a split almost if you will between <unk> and clarity much more similar to the way youre thinking about the marketplace. They were they.

They were differentiated so to speak.

Speaker #5: I mean, those are pretty dramatic numbers out there that support the fact that we're going to do well with MiDay, and we're going to get MiDay going again.

It's not necessarily as true in the Americas market and Thats, where we saw some of the softness there and it's definitely not true in some of those Asia Pac markets, where they where those two products have kind of been on top of one another.

Speaker #5: So I look at it and I say, "Hey, if we step back and we say we’re going to do somewhere around $1 billion in sales of daily silicone hydrogel lenses this year, about, let’s call it $600 million—a little bit over $600 million of that is associated with MiDay, right? Somewhere around $400 million is Clarity."

One of the things that we're spending time on right now and that we need to do is ensure that we're properly positioning clarity into the appropriate channels, where it's successful we've seen it have a lot of success as this kind of high quality lower praised entrant product in and going into some of these bigger key accounts.

Speaker #5: The demand around the activity, the fitting sets, the trial lenses, and so forth—these new contracts that we have—it's pretty exciting. And maybe it'll convert a little bit faster, as Jeff was asking about.

Thats, where its been successful that's where it's going to be successful in the future.

Al White: And maybe it'll convert a little bit faster, as Jeff was asking about. I hope it does. Maybe it doesn't, and it takes a little while longer. But it's still there, and we're still going to be successful with it. I really, truly believe that. So I do end up saying it's almost all tied to MIDAY, and I think we'll be pretty damn successful with it.

Because we never had enough my day I've talked about this on prior calls right. We've never had enough might aid meet the demand in Asia Pac as a lower margin region, we pushed a lot more clarity into that region than we did over the years right and that's put us in a situation where that region has a higher percentage.

Speaker #5: I hope it does. Maybe it doesn't, and it takes a little while longer. But it's still there, and we're still going to be successful with it.

Speaker #5: I really, truly believe that. So, I do end up saying it’s almost all tied to MiDay, and I think we’ll be pretty damn successful with it.

Of clarity associated with it and Thats, what we really saw that kind of surprised us and caught US off guard was was that that segment. That's quote unquote supposed to be mined Kay that was clarity took this kind of immediate hit and we just we need to reposition a little bit clarity in Asia Pac and we need to attack.

Speaker #3: Our next question comes from the line of Jason Bendar with Piper Sandler. Your line is open.

Desiree: Our next question comes from the line of Jason Bendar with Piper Sandler. Your line is open.

Speaker #8: Hey, good afternoon. I want to come at this MiDay clarity discussion from a different angle. I'm sorry to be the dead horse here, but Al, this has been a market of trade-ups over the last several years, a couple of decades.

John Block: Hey, good afternoon. I want to come at this MIDAY clarity discussion from a different angle. I'm sorry to be the dead horse here. But, Al, this has been a market of trade-ups over the last several years, a couple of decades, this whole dynamic of trading up the silicon hydrogels and then the dailies and then daily silicon hydrogels. I don't recall ever a situation like this where you run into like this big expected drawdown in demand for one lens ahead of a build-up for other lenses. So kind of a similar track that Jeff was asking around.

The market a little bit different of a way so.

Speaker #8: This whole dynamic of trading up the silicon hydrogels and then to dailies and then daily silicon hydrogels. I don't recall ever a situation like this where you run into like this big expected drawdown in demand for one lens ahead of a buildup for other lenses.

That's well underway with us, but but that's hopefully that kind of explains it a little bit clear.

Okay, alright, so it doesn't sound it sounds like you have a pretty good handle that it's not competitive but.

Speaker #8: So, kind of a similar track that Jeff was asking about, can you talk about why this situation with Clarity and MiDay would be different from other trade-up cycles that we've seen? And how you're confident this is, you know, just an internal trade-up that you're going through, the market's going through, and digesting versus some competitive challenge you're running into?

As a follow up question and building out some of the pricing comments earlier it seems like the first time.

John Block: But can you talk about why this situation with clarity in MIDAY would be different from other trade-up cycles that we've seen and how you're confident this is just an internal trade-up that you're kind of going through, the market's going through and digesting versus some competitive challenge you're running into?

Today, where you're acknowledging that pricing industry pricing, maybe moderating ever so slightly.

I guess, where do you think we sit on a global basis will be look ahead and start thinking about the car models here for 2006 and go forward is there still a market where you think you can take price.

Speaker #5: Yeah, yeah, absolutely, Jason. I'll take EMEA as a good example of a place where you didn't really see that activity. Did we see a little bit of softness in clarity?

Al White: Yeah, yeah, absolutely, Jason. Like, I'll take EMEA as a good example of a place where you didn't really see that activity. Did we see a little bit of softness in clarity? Yes. But EMEA still plugged along with a pretty good quarter. That would be a quarter where you kind of had a split, almost, if you will, between MIDAY and clarity, much more similar to the way you're thinking about the marketplace. They were differentiated, so to speak. You know, that's not necessarily as true in the Americas market, and that's where we saw some of the softness there. And it's definitely not true in some of those Asia PAC markets where those two products have kind of been on top of one another.

Yes, I think you typically take price in the fall time period is that something youre looking to do again this year.

Speaker #5: Yes, but EMEA still plugged along with a pretty good quarter. That would be a quarter where you kind of had a split, almost, if you will, between MiDay and clarity.

Yes, so I think youre still seeing some pricing in the Americas now Thats, mostly list pricing and there is a decent amount of discount activity that no. One wants to talk about that comes off those list prices, but youre still seeing positive pricing in the Americas when I look outside of the Americas, especially in the Asia Pac you are seeing.

Speaker #5: Much more similar to the way you're thinking about the marketplace. They were differentiated, so to speak. You know, that's not necessarily as true in the Americas market.

More price pressure and I'm not sure this coming year that youre actually going to see year over year pricing based on some of that activity IC from some competitors region for market share for sales I'm not sure you're going to see pricing increase there. So I would say on a global basis.

Speaker #5: And that's where we saw some of the softness. It's definitely not true in some of those Asia-Pacific markets, where those two products have kind of been on top of one another.

Speaker #5: One of the things that we're spending time on right now and that we need to do is ensure that we're properly positioning clarity into the appropriate channels where it's successful.

Al White: One of the things that we're spending time on right now and that we need to do is ensure that we're properly positioning clarity into the appropriate channels where it's successful. You know, we've seen it have a lot of success as this kind of high-quality, lower-priced entrant product and going into some of these bigger key accounts. That's where it's been successful. That's where it's going to be successful in the future. Because we never had enough MIDAY, I've talked about this on prior calls, right? We've never had enough MIDAY to meet the demand in Asia PAC. It's a lower margin region. We pushed a lot more clarity into that region than we did MIDAY over the years, right? And that's put us in a situation where that region had a higher percentage of clarity associated with it.

We're probably looking at somewhere for next year wouldn't surprise me, if we were around 1% price increases something like that down from kind of the two and 3% that we've been talking about it I think it just goes a little bit lighter.

Speaker #5: You know, we've seen it have a lot of success as this kind of high-quality, lower-priced entrant product and going into some of these bigger key accounts.

Speaker #5: That's where it's been successful. That's where it's going to be successful in the future. Because we never had enough MiDay. I've talked about this on prior calls, right?

Alright helpful. Thank you.

Yes.

Next question comes from the line of David Saxon with Needham Your line is open.

Speaker #5: We've never had enough MiDay to meet the demand in Asia Pacific. It's a lower margin region. We pushed a lot more clarity into that region than we did MiDay over the years, right?

Oh, great. Thanks for taking my questions maybe.

Maybe I'll.

Switch over to some financials with.

Brian just on the free cash flow comment I think you talked about doing 2 billion over the next three years I think you've been historically in the kind of mid to upper teens from a free cash flow margin.

Speaker #5: And that's put us in a situation where that region has a higher percentage of clarity associated with it. And that's what we really saw that kind of surprised us and caught us off guard: that that segment that's "supposed to be MiDay" that was clarity took this kind of immediate hit.

Al White: And that's what we really saw that kind of surprised us and caught us off guard was that that segment that's quote unquote supposed to be MIDAY that was clarity took this kind of immediate hit. And we just need to reposition a little bit clarity in Asia PAC, and we need to attack the market in a little bit different of a way. So that's well underway with us. But hopefully, that kind of explains it a little bit clearer.

What's that two billing imply on the margin and how does that ramp over that three year period.

Yes, David Thanks for the question you are right I think we've actually had free cash flow margin.

Speaker #5: And we need to reposition a little bit. Clarity in Asia PAC, and we need to attack the market in a little bit different of a way.

Back in 2018, 2019 kind of in the low twenty's or right around there so.

Speaker #5: So that's well underway with us, but hopefully that kind of explains it a little bit clearer.

We're now at a place where capex comes down.

Speaker #8: Okay, all right. So it doesn't sound, it sounds like you're probably a pretty good handle that it's not competitive. But you know, as a follow-up question, you know, building out some of the pricing comments earlier, it seems like the first time today where you're acknowledging that pricing industry pricing may be moderating ever so slightly.

John Block: OK, all right. So it sounds like you've had a pretty good handle that it's not competitive. But you know, as a follow-up question, you know, building on some of the pricing comments earlier, this seems like the first time today where you're acknowledging that pricing, industry pricing, maybe moderating ever so slightly. You know, I guess where do you think we sit on a global basis as we look ahead and start thinking about our fifth-hire models here for '26 and go forward? Is this still a market where you think you can take price? I think you typically take price in the fall time period. Is that something you're looking to do again this year?

The operating margin improvements are converting to better stronger operational profits.

The actions, we're taking will contribute to that as well the working capital initiatives. So I would expect.

We're going to take a meaningful step forward next year, it's kind of a stair step like we took a stair step this year will take another stair step next year again, the year after and again the year. After so that we're not talking about any kind of.

Speaker #8: You know, I guess, where do you think we sit on a global basis as we look ahead and start thinking about our models here for 2026?

Speaker #8: And going forward, is this still a market where you think you can take price? You know, I think you typically take price in the fall time period.

Hockey stick. This is this is a step forward consistently each and every year that gets us to that $2 billion, we feel pretty confident about that.

Speaker #8: Is that something you're looking to do again this year?

Speaker #5: Yeah, so I think you're still seeing some pricing in the Americas. Now, that's mostly list pricing, and there's a decent amount of discount activity that no one wants to talk about that comes off those list prices.

Al White: Yeah, so I think you're still seeing some pricing in the Americas. Now, that's mostly list pricing, and there's a decent amount of discount activity that no one wants to talk about that comes off those list prices. But you're still seeing positive pricing in the Americas. When I look outside of the Americas, especially into Asia PAC, you are seeing more price pressure. And I'm not sure this coming year that you're actually going to see year-over-year pricing. Based on some of the activity I see from some competitors reaching for market share or for sales, I'm not sure you're going to see pricing increase there.

Okay, Great and then maybe switching back to CVI. So last quarter, you talked about some distributor inventory dynamics I guess, how does that normalize or will there be any impact in the fiscal fourth quarter and then as we think about fiscal 'twenty six does any of that distributor.

Speaker #5: But you're still seeing positive pricing in the Americas. When I look outside of the Americas, especially into Asia Pacific, you are seeing more price pressure.

Speaker #5: And I'm not sure that this coming year you're actually going to see a year-over-year pricing increase. Based on some of the activity I see from some competitors in the region for market share for sales, I'm not sure you're going to see pricing increases there.

Inventory clarity.

<unk> E Commerce stuff does that does any of that spill into fiscal 'twenty six thanks, so much.

Sure. So we have some of that I'll break it in kind of the two markets, where we had some of that in the U S market here.

Speaker #5: So I would say, on a global basis, we're probably looking at somewhere around 1% price increases for next year. It wouldn't surprise me if we were around that.

Al White: So I would say on a global basis, we're probably looking at somewhere for next year, it wouldn't surprise me if we were around 1% price increases, something like that, you know, down from kind of the 2% and 3% that we've been talking about. I think it just goes a little bit lighter.

We did factor into our guidance some additional.

Channel inventory reductions in the U S market in Q4, we will see if that happens or what degree I don't see a scenario, where we're talking about that when it comes to fiscal 'twenty six if I look at.

Speaker #5: Something like that. You know, down from kind of the 2% and 3% that we've been talking about. I think it just goes a little bit lighter.

Speaker #8: All right, helpful. Thank you.

John Block: All right, helpful. Thank you.

Speaker #5: Yep.

Kind of.

Speaker #3: Next question comes from the line of David Saxon with Medium. Your line is open.

<unk> a pure play E.

Desiree: Next question comes from the line of David Saxon with Needham. Your line is open.

Channel over.

Pure play E Commerce channel over in Asia Pac.

Speaker #8: Oh, great. Thanks for taking my questions. Maybe I'll switch over to some financials with Brian, just on the free cash flow comment. I think you talked about doing $2 billion over the next three years.

John Block: Oh, great. Thanks for taking my question. Maybe I'll switch over to some financials with Brian. Just on the free cash flow comment, I think he talks about doing $2 billion over the next three years. I think you've been historically in the kind of mid to upper teens from a free cash flow margin. What's that $2 billion imply on the margin? And how's that ramp over the three-year period?

We had that happen in Q1 with China, we talked about it we got a bounce back in Q2 had another challenge here in Q3.

I think we have a challenge with that again in Q4, but I think we just annualize that so maybe theres a little bit of residual impact that happens there in a few markets, but that should be pretty small and should go away. So I don't see a lot if theres anything it would be.

Speaker #8: I think you've been historically in the kind of mid to upper teens from a free cash flow margin. What's $2 billion imply on the margin?

Speaker #8: And how's that ramp over the three-year period?

A modest amount in Q1, but.

Speaker #5: Yeah, David, thanks for the question. You're right. I think we've actually had free cash flow margin back in 2018 and 2019, kind of in the low 20s or right around there.

Brian Andrews: Yeah, David, thanks for the question. You're right. I think we've actually had free cash flow margin back in 2018, 2019, kind of in the low 20s or right around there. So we're now at a place where CAPEX comes down. You know, the operating margin improvements are converting to, you know, better, stronger operational profits. The actions we're taking will contribute to that as well, the working capital initiative. So I would expect, you know, we're going to take a meaningful step forward next year. It's kind of a stair step. You know, like we took a stair step this year, we'll take another stair step next year, again the year after, and again the year after. So we're not talking about any kind of hockey stick. This is a step forward consistently each and every year that gets us to that $2 billion.

But I really I don't see very much.

Great. Thank you.

Next question comes from the line of Nathan <unk> with BNP Paribas. Your line is open.

Speaker #5: So, we're now at a place where CapEx comes down. You know, the operating margin improvements are converting to better, stronger operational profits.

Hi, Thanks for taking my questions and thanks for the color on that.

Okay.

Speaker #5: The actions we're taking will contribute to that as well—the working capital initiatives. So, I would expect, you know, we're going to take a meaningful step forward next year.

Can you please clarify the driver.

Thanks, Paul Q4 rebound.

Stephen by the upcoming Hereafter horse.

Speaker #5: It's kind of a stair step. You know, like we took a stair step this year, we'll take another stair step next year, again the year after, and again the year after.

Also comment on <unk> in 2026.

Quantitatively. Thank you.

Speaker #5: So we're not talking about any kind of hockey stick. This is a step forward consistently each and every year. That gets us to that $2 billion.

Sure. So when we look at fertility of the market is getting a little bit better it got a little bit better. This quarter, we saw some improvements in some areas genomics and consumables.

Speaker #5: I feel pretty confident about that.

Brian Andrews: I feel pretty confident about that.

Speaker #8: Okay, great. And then maybe switching back to CVI. So, last quarter you talked about some distributor inventory dynamics. I guess, has that normalized? Or will there be any impact in the fiscal fourth quarter?

John Block: OK, great. And then maybe switching back to CVI. So last quarter, you talked about some distributor inventory dynamics. I guess, has that normalized or will there be any impact in the fiscal fourth quarter? And then as we think about fiscal '26, does any of that distributor inventory, the clarity, the APAC e-commerce stuff, does any of that spill into fiscal '26? Thanks so much.

And we took some share in some spots in Europe, and so forth. So I think we saw just a little bit of progression there.

Year to snake is behind US I mentioned that last quarter. So we're seeing a little bit of improvement in Asia Pac, Although we're still seeing cycle softness there.

Speaker #8: And then, as we think about fiscal '26, does any of that distributor inventory, the clarity, the APAC e-commerce stuff, does any of that spill into fiscal '26?

When I look at us, finishing the year out we have a really really hard comp of like 13% again.

Last year. So I think we probably have another pressured quarter for ourselves here to finish up our fiscal year, but I think that youre going to have cycles coming back in Asia Pac Youre going to have fertility clinics that have been delayed for a while will start doing some investing again theyre going to upgrade some equipment and so forth. So I think youre going to start seeing.

Speaker #8: Thanks so much.

Speaker #5: Sure, so we had some of that. I'll break it into kind of the two markets, right? We had some of that in the U.S. market here.

Al White: Sure. So we had some of that. I'll break it in kind of the two markets, right? We had some of that in the US market here. We did factor in our guidance some additional channel inventory reductions in the US market in Q4. We'll see if that happens or what degree. I don't see a scenario where we're talking about that when it comes to fiscal '26. If I look at kind of the pure-play e-channel over pure-play e-commerce channel over in Asia PAC, you know, we had that happen in Q1, which I know we talked about it. We got a bounce back in Q2. We had another challenge here in Q3. I think we have a challenge with that again in Q4. But I think we just annualized that.

Speaker #5: We did factor in our guidance some additional channel inventory reductions in the U.S. market in Q4. We'll see if that happens or to what degree.

The fertility industry continued to improve from here I mean, we're seeing improved a little bit right now and I think we'll continue to see it improve over the coming quarters.

Speaker #5: I don't see a scenario where we're talking about that when it comes to fiscal '26. If I look at kind of the pure-play channel over the pure-play e-commerce channel over in Asia Pacific, you know, we had that happen in Q1, which I know we talked about.

Thank you.

Yes.

Okay.

Next question comes from the line of Anthony Petrone with Mizuho. Your line is open.

Hey, Thanks for taking the questions you've Brad Bowers on for Anthony.

Speaker #5: We got a bounce back in Q2. We had another challenge here in Q3. I think we have a challenge with that again in Q4.

First of all I'm going to start with PARAGARD, it's kind of been attractive for a while on the volume side Youre able to cover it with pricing, but kind of wanted to get an update on.

Speaker #5: But I think we just annualized that. So maybe there's a little bit of residual impact that happens there in a few markets. But that should be pretty small and should go away.

Al White: So maybe there's a little bit of residual impact that happens there in a few markets, but that should be pretty small and should go over.So

Market situation market share dynamics with a competing product launch and maybe any way to potentially stymie. Some of the revenue loss and allow the rest of the business to kind of show some of the growth.

Speaker #5: So I don't see a lot. If there's anything, it would be like a modest amount in Q1. But I really, I don't see very much.

Al White: I don't see a lot. If there's anything, it would be like a modest amount in Q1, but I really, I don't see very much.

Yeah, So on PARAGARD no competitive launch in the marketplace as of now.

Speaker #8: Great, thank you.

Desiree: Great, thank you.

Speaker #3: Next question comes from the line of Naben Thai with BNP Paribas. Your line is open.

Conference Operator: Next question comes from the line of Naveen Thai with BNP Paribas. Your line is open.

Our ride volumes are decreasing on that product they have been for a while the non hormonal IUD space is seeing declining volume activity as a matter of fact, you are seeing pressure on the entire IUD market from some alternative options.

Speaker #9: Hi, thanks for taking my question. And thanks for the color on the contact lenses side. In fertility, can you please clarify the driver of the expected Q4 rebound?

David Brown: Hi, thanks for taking my question and thanks for the caller on the contact liences. In fertility, can you please clarify the driver of the expected Q4 rebound? Is that driven by the upcoming year of the horse? And can you also comment on fertility in 2026, at least qualitatively? Thank you.

We have been able to offset that by pricing, we had a pretty good start to the beginning of this year. A single handed cerner was part of that which we launched that kind of put us on equal footing. If you will with with Marina and some of the hormonal IUD. So we had the softer quarter here I think in Q4, we grow a little bit so we get to the we get to the point, where we end up.

Speaker #9: Is that driven by the upcoming Year of the Horse? And can you also comment on fertility in 2026? At least qualitatively. Thank you.

Speaker #5: Sure, so when we look at fertility, the market is getting a little bit better. It got a little bit better this quarter. We saw some improvements in some areas.

Al White: Sure. So when we look at fertility, the market is getting a little bit better. It got a little bit better this quarter. We saw some improvements in some areas, genomics and consumables, and we took some share in some spots in Europe and so forth. So I think we saw just a little bit of progression there. The year of the snake is behind us. I mentioned that last quarter. So we're seeing a little bit of improvement in Asia Pac, although we're still seeing cycle softness there. For when I look at us finishing the year out, we have a really, really hard comp of like 13% against last year. So I think we probably have another pressured quarter for ourselves here to finish up our fiscal year. But I think that you're going to have cycles coming back in Asia Pac.

And okay year, driven by those price increases we.

We will see what next year holds but as we say here today, it'll probably be similar challenges.

Challenges on on volumes, and then offset by pricing.

Yes.

Helpful. Thank you and then just if I could on the margin side, obviously tariff impact sounds like its a little bit better although it sounds like some of the capex projects.

Are behind us so we might start to see some.

Throughput improvements so just wanted to hear about some tailwind to gross margin and it sounds like on the operating margin side a lot of the leverage.

It might be coming for upside might come from gross margin, maybe some SG&A, but just how we should think through that thank you.

Al White: You're going to have fertility clinics that have been delaying for a while. We'll start doing some investing again. They're going to upgrade some equipment and so forth. So I think you're going to start seeing the fertility industry continue to improve from here. I mean, we're seeing it improve a little bit right now, and I think we'll continue to see it improve over the coming quarters.

Yeah, I'll just quickly and then certainly let Brian jump in easy expert on this.

My perspective at a high level I talked a lot about the growth in my day, and we think thats going to be the big driver for us as Brian mentioned earlier.

Gross margins are okay on that and are certainly improving as we increase capacity, so much but they're a little bit lighter than clarity. So the product mix itself, probably puts a little pressure on gross margins and then you also get the pressure from the tariffs Brian mentioned.

David Brown: Thank you. That's helpful.

Conference Operator: Next question comes from the line of Anthony Petroni with Mizuo. Your line is open.

And then yeah, I mean, Brian can quantify it more volume definitely quantify it on the Q4 call, but the restructuring activity and that work that we're looking to make the organization as efficient as possible should offset that so we ended up with year over year operating margin improvements and still deliver a good year. Thank you.

Desiree: Hey, thanks for taking the questions. You've had Brad Bowers on for Anthony. First of all, I'm going to start with Paragard. You know, it's kind of been a drag for a while on the volume side. You're able to cover it with pricing, but kind of wanted to get an update on the market situation, you know, market share dynamics with the competing product launch, and you know, maybe any way to potentially stymie some of the revenue loss and, you know, allow the rest of the business to kind of show some of the growth.

I don't have much more to add there I mean, I think <unk> said it well, we'll give details on a gross and gross margin SG&A and I'd say, we have a we have an ethos here of continuous improvement that's all the way through from manufacturing down through the organization.

Al White: Yeah, so on Paragard, no competitive launch in the marketplace as of now. You are right, volumes are decreasing on that product. They have been for a while. The non-hormonal IUD space is seeing declining volume activity. As a matter of fact, you're seeing pressure on the entire IUD market from some alternative options. We have been able to offset that by pricing. We had a pretty good start to the beginning of this year. A single-hand inserter was part of that, which we launched that kind of put us on equal footing, if you will, with Mirena and some of the hormonal IUDs. So we had the softer quarter here. I think in Q4, we grow a little bit. So we get to the point where we end up with an okay year driven by those price increases.

So you've got some puts and takes in gross margin as I talked about.

But certainly the disciplined cost.

Management that we discussed earlier along with some of the actions. We're taking are going to help drive SG&A leverage more so next year to help offset some of those headwinds.

Thank you.

Yeah.

Next question comes from the line of Robbie Marcus with Jpmorgan. Your line is open.

Okay. Thanks.

And for me.

First.

Can you help us understand what happened between the last earnings call and this earnings call there were two months.

Al White: We'll see what next year holds, but as we sit here today, it'll probably be similar. You know, challenges on volumes and an offset by pricing.

The street was setting.

5.758% something like that.

And there's a big gap between your expectation and the results.

Desiree: Helpful, thank you. And then just if I could, on the margin side, obviously tariff impact sounds like it's a little bit better. Also sounds like some of the CapEx projects are behind us, so we might start to see some throughput improvements. So just wanted to hear about some tailwinds to gross margin. And it sounds like on the operating margin side, you know, a lot of the leverage, you know, might be coming or upside might come from gross margin, maybe some SG&A, but just how we should think through that. Thank you.

Great is exactly what happened in the two months from the last earnings call and then I've got a follow up.

Sure I would put it on those two points, Rob we were talking about earlier, one was an expectation that what would happen with the pure play E Commerce channel in Asia, Pac, especially China was behind us.

We did not see that play out right. So that was that was a hit to us and then the other one was was clarity like we were getting a relatively consistent cadence of clarity orders and revenues from a number of customers.

Al White: Yeah, I'll just quickly, and then certainly let Brian jump in, he's the expert on this. You know, from my perspective at a high level, I talked a lot about the growth in my day, and we think that's going to be the big driver for us. As Brian mentioned earlier, gross margins are okay on that, and they're certainly improving as we increase capacity so much, but they're a little bit lighter than clarity. So the product myth itself probably puts a little pressure on gross margins, and then you also get the pressure from the tariffs Brian mentioned. And then, yeah, I mean, Brian can quantify it more. Well, he definitely quantified it on the Q4 call, but the restructuring activity and that work that we're looking to make the organization as efficient as possible should offset that.

And certainly some larger ones.

That did not transpire as we ended this quarter so.

Certainly that activity was at the very at the.

The latter end of this past quarter and then we incorporated that into the guidance I think maybe we were a little a little optimistic or whatever you want to call. It in terms of how fast some of this ramp activity would happen with my day, and how everything would hold off and I think that the guidance incorporates a reset of that to say that we built.

We've at least that we fully incorporated all of this risk activity into the numbers.

Al White: So we end up with year-over-year operating margin improvements and still deliver a good year. Thank you. Anything to add?

Great maybe just a quick follow up.

Desiree: Yeah, I don't have much more to add there. I mean, I think I'll set it well. We'll give details on gross margins and SG&A. I'd say, you know, we have an ethos here of continuous improvement that's all the way through from manufacturing down through the organization. So you've got some puts and takes in gross margin as I'll talk about. But certainly the discipline cost management that we discussed earlier, along with some of the actions we're taking, are going to help drive SG&A leverage more so next year to help offset some of those headwinds.

Yes, I don't have much more to add there I mean, I think al said it well, we'll give details on a gross and gross margin SG&A and I'd say, we have we have an ethos here of continuous improvement that's all the way through from manufacturing down through the organization.

Given some of the uncertainties here in the below market growth.

How do you get comfortable with what the market will grow next year and your ability to grow at least with market.

A lot.

Sure. So if we look at the contact lens market it's grown.

So you've got some puts and takes in gross margin as al talked about.

But certainly the disciplined cost.

Wherever it seems in the mid single digits and we had some of course, some some downtime during COVID-19 and we had a strong rebound from that but if you step back from that you end up with kind of an oligopoly. That's that supported by this underlying factor that people need more visual correction.

Management that we discussed earlier along with some of the actions. We're taking are going to help drive SG&A leverage more so next year to help offset some of those headwinds.

Thank you.

Conference Operator: Next question comes from the line of Robbie Marcus with JP Morgan. Your line is open.

Next question comes from the line of Robbie Marcus with Jpmorgan. Your line is open.

Right now at 30 little over 30 people are myopic and half of people are going to be myopic by the year 2050. So you have more people needing my site and.

Kim Duncan: Thanks for me. First, Al, can you help us understand what happened between the last earnings call and this earnings call? There were two months. You know, the Street was sitting at 5.7, 5.8%, something like that. And you know, there's a big gap between your expectation and the results. So help us just bridge exactly what happened in the two months from the last earnings call. And then I got to follow up.

Thanks, Chris.

I think for me.

First.

Can you help us understand what happened between the last earnings call and this earnings call there were two clients.

Visual correction at the same time, you have people and optometrists want the comfort and they want the ability to put lenses in every single day and be able to take those out that's a great thing to be able to do and everybody wants that the cleanliness associated with that the flexibility associated with that so youre continuing to see.

The street was setting.

5.758% something like that.

And there's a big gap between your expectation and the results.

Great is exactly what happened in the two months from the last earnings call and then I've got a follow up.

This move over to dailies youre seeing better fitting activity by optometrists around the world when it comes to torque youre seeing much better lenses when it comes to multifocal.

Al White: Sure, I would put it on those two points, Robbie, we were talking about earlier. One was an expectation that what had happened with the pure play e-commerce channel in Asia Pac, especially China, was behind us. We did not see that play out, right? So that was a hit to us. And then the other one was clarity. Like we were getting a relatively consistent cadence of clarity, orders, and revenues from a number of customers, and certainly some larger ones that did not transpire as we ended this quarter. So certainly that activity was at the latter end of this past quarter. And then we incorporated that into the guidance. I think maybe we were a little optimistic or whatever you want to call it in terms of how fast some of this ramp activity would happen with my day and how everything would hold up.

Sure I would put it on those two points Rob we were talking about earlier, one was an expectation that what had happened with the pure play E Commerce channel in Asia, Pac, especially China was behind us.

So youre seeing more people were though so you'd have kind of just underlying theme, sometimes compare it to like you could either be going down. The river you can be going up the river. It's nice when the times with you and helping you in the contact lens market is that way. So does it end up growing 6% next year or does it grow 4% or somewhere in between I believe.

We did not see that play out right. So that was that was a hit to us and then the other one was was clarity like we were getting a relatively consistent cadence of clarity orders and revenues from a number of customers.

It will grow somewhere in there is all the underlying fundamentals all ended up pushing in that direction. So I think thats, where it will grow and then when I look at how we fit in the marketplace right now and I'd say, what's been holding us back our ability to deliver all of the product that's being demanded by our customers is what's held us back.

And certainly some larger ones.

That did not transpire as we ended this quarter so.

Certainly that activity was at the very at the.

The latter end of this past quarter and then we incorporated that into the guidance I think maybe we were a little a little optimistic or whatever you want to call. It in terms of how fast some of this ramp activity would happen when my day, and how everything would hold off and I think that the guidance incorporates a reset of that to say that we believe.

Having the capacity finally to be able to get all of that product out as a big big swing for us. So that's why I think we'll be able to at least hit if not exceed.

Al White: And I think that the guidance incorporates a reset of that to say that we believe at least that we've fully incorporated all of this risk activity into the numbers.

Market growth when you layer in my site.

We've at least that we fully incorporated all of this risk activity into the numbers.

Great. Thanks, a lot I appreciate it.

Yep.

Next question comes from the line of Brett Fishman with Keybanc capital markets. Your line is open.

Kim Duncan: Great. Maybe just a quick follow-up. You know, given some of the uncertainties here and the below market growth, how do you get comfortable with what the market will grow next year and your ability to grow at least with market? Thanks a lot.

Great maybe just a quick follow up.

Given some of the uncertainty Sierra and the below market growth.

Hey, guys. Thanks, very much for taking my questions just thinking about.

How do you get comfortable with what the market will grow next year and your ability to grow at least with market.

Of the points that you made on central drivers supporting improvement and growth in CVI in FY 'twenty. Six you mentioned that you won some new private label agreements and was just curious if you could maybe expand a little bit on some of those wins, where youre seeing them I'm wondering if it's substantially all my day or across some of the different brand.

A lot.

Al White: Sure. So if we look at the contact lens market, it's grown forever, it seems, in the mid-single digits. And we had some, of course, some downtimes, you know, during COVID, and then we had a strong rebound from that. But if you step back from that, you end up with kind of an oligopoly that's supported by this underlying factor that people need more visual correction. I mean, right now, a very little over a third of people are myopic, and half of people are going to be myopic by the year 2050. So you have more people needing my sight or visual correction. At the same time, you have people and optometrists want the comfort, and they want the ability to put lenses in every single day and be able to take those out. That's a great thing to be able to do.

Sure. So if we look at the contact lens market it's grown.

Wherever it seems in the mid single digits and we had some of course, some some downtime during COVID-19 and we had a strong rebound from that but if you step back from that you end up with kind of an oligopoly.

<unk>.

Some of the different brands under the private labels and then just like any way to think about like how much upside these opportunities could deliver next year.

Supported by this underlying factor that people need more visual correction.

Yes, I won't go too far out to that because a lot of that gets tied into customers. But these are my day private label launches that we're talking about I.

Right now it <unk> little over a third of people are myopic and half of people are going to be myopic by the year 2050. So you have more people needing my site and.

I made a comment of over 30 of them earlier and Thats. What those are those are those are customers of ours, who wanted <unk> products and they wanted a larger portfolio or they wanted to offer my day as a private label offering and we have not been able to provide that product to them. So.

Visual correction at the same time, you have people and optometrists want the comfort and they want the ability to put lenses and every single day and be able to take those out that's a great thing to be able to do and everybody wants that the cleanliness associated with that the flexibility associated with that so youre continuing to see.

Al White: And everybody wants that, the cleanliness associated with that, the flexibility associated with that. So you're continuing to see this move over to dailies. You're seeing better fitting activity by optometrists around the world when it comes to torics. You're seeing much better lenses when it comes to multifocals. So you're seeing more people wear those. So you have kind of this underlying theme. I sometimes compare it to like you're, you know, you can either be going down the river or you can be going up the river. It's nice when the tide's with you and helping you. And the contact lens market is that way. So does it end up growing 6% next year or does it grow 4% or somewhere in between? You know, my belief is it will grow somewhere in there. All the underlying fundamentals will end up pushing it in that direction.

This quarter as we especially at the end of this quarter.

This move over to dailies youre seeing better fitting activity by optometrists around the world when it comes to Torrance Youre seeing much better lenses when it comes to multifocal.

Negotiated new contracts with a number of new contracts when people too to give them that product and given the availability and we started getting fitting sets and trial lenses out to them. So that they can start all that activity and I think there'll be active with that.

So youre seeing more people, where those so you have kind of just good underlying theme, sometimes compare it to <unk>.

Could either be going down the river you can be going up the river. It's nice when the tides with you and helping you in the contact lens market is that way. So does it end up growing 6% next year or does it grow 4% or somewhere in between my belief is it will grow somewhere in there is all the underlying.

Throughout the fourth quarter, and I think that'll translate into revenues, so I won't quantify it other than to say that it does it's the thing that gives me the most comfort.

When I think about the fitting number of fitting sets out there when I think of the activation meeting the number of trial lenses that are going out and try it you'll like it when I think about the number of contracts that we signed and that were already out there actively working on it's that that gives me confidence that we're going to be successful with my day, and it's going to ramp up to me. It's a question of.

Lying fundamentals will end up pushing in that direction. So I think thats, where it will grow and then when I look at how we fit in the marketplace right now and I'd say, what's been holding us back our ability to deliver all the product that's being demanded by our customers is what's held us back.

Al White: So I think that's where it'll grow. And then when I look at how we fit in the marketplace right now, and I'd say what's been holding us back, our ability to deliver all the product that's being demanded by our customers is what's held us back. Having the capacity finally to be able to get all that product out is a big, big swing for us. So that's why I think we'll be able to at least hit, if not exceed, market growth when you layer in my sight.

Timing as to when it's going to be.

More so than if it's going to happen.

Having the capacity finally to be able to get all of that product out as a big big swing for us. So that's why I think we'll be able to at least if not exceed market growth when you layer in my site.

Alright that was helpful. And then just one other question on the Pgi business.

I think last quarter, you were talking about implementing short term promotions I think you were saying, 1% to three months of lenses to get people fitting with my site.

Desiree: Great. Thanks a lot, Al. Appreciate it.

Great. Thanks, a lot I appreciate it.

Yes.

Conference Operator: Next question comes from the line of Brett Fishman with KeyBank Capital Markets. Your line is open.

Next question comes from the line of Brett Fishman with Keybanc capital markets. Your line is open.

Essentially become like long term users, but it sounded like the early results were mixed so just curious where maybe you saw some initial success or lack of success driving that commentary and curious if you are sticking with the same approach into the back to school season, or if youre kind of going back and reevaluating if thats the right approach.

Al White: Hey guys, thanks very much for taking the questions. Just thinking about, you know, some of the points that you made on central drivers supporting improvement in growth in CBI and FY26, you mentioned that, you know, you won some new private label agreements. And I was just curious if you could maybe expand a little bit on some of those wins where you were seeing them. I'm wondering if it's substantially all my day or across some of the different brands or some of the different your brands under the private labels. And then just like any way to think about how much upside these opportunities could deliver next year.

Hey, guys. Thanks, very much for taking my questions just thinking about.

The point that you made on central drivers supporting improvement and growth in CVI in FY 'twenty. Six you mentioned that you won some new private label agreements and was just curious if you could maybe expand a little bit on some of those wins, where youre seeing them I'm wondering if it's substantially all my day or across some of the different brands.

The market. Thank you.

Sure Greg Great question on that one so where we saw success was in EMEA, where we initiated that program and have implemented that pricing.

<unk>.

We've seen great fitting activity and.

Some of the different brands under the private labels and then just like any way to think about like how much upside these opportunities could deliver next year.

And frankly, we've already been seeing some sell through on that is that fitting is converted into revenues.

Where we did not have that standardized we have had situations, where we have people are saying hey is that coming this way when am I going to get it in and should I wait and fit until we have that new pricing structure in place.

Al White: Yeah, I won't go too far onto that because a lot of that gets tied into customers. But these are my day private label launches that we're talking about. I made a comment of over 30 of them earlier, and that's what those are. Those are customers of ours who wanted my day products, and they wanted a larger portfolio or they wanted to offer my day as a private label offering. And we have not been able to provide that product to them. So during this quarter, as we especially at the end of this quarter, we negotiated new contracts and a number of new contracts with people to give them that product and give them the availability. And we started getting fitting sets and trial lenses out to them so that they could start all that activity.

Yes, I won't go too far out to that because a lot of that gets tied into customers. But these are <unk> private label launches that we're talking about.

I made a comment of over 30 of them earlier and Thats. What those are those are those are customers of ours, who wanted mind a products and they wanted a larger portfolio or they wanted to offer my day as a private label offering and we have not been able to provide that product to them. So during this quarter as we.

What kind of promotional programs are there and so forth.

So that's where we got some of the <unk> results that was largely here in the U S market that we saw that so we need to get all of that kind of activity resolved. We are working on that very actively right now.

And we will get that resolved. So we can kind of level set ourselves. If you will correctly. So that pricing is standardize around the world, but I would say that the early indications are the early returns on that kind of pricing model, which was which is basically.

At the end of this quarter.

Negotiated new contracts at a number of new contracts when people too to give them that product and given the availability and we started getting fitting sets and trial lenses out to them. So that they can start all of that activity and I think there'll be active with that.

Al White: And I think they'll be active with that throughout the fourth quarter. And I think that'll translate into revenues. So I won't quantify it other than to say that it does, it's the thing that gives me the most comfort. When I think about the number of fitting sets out there, when I think of the activation, meaning the number of trial lenses that are going out, try it, you'll like it. When I think about the number of contracts that we've signed and that we're already out there actively working on, it's that that gives me confidence that we're going to be successful with my day and it's going to ramp up. To me, it's a question of timing as to when it's going to be more so than if it's going to happen.

Allow parents to take lenses home and see if there are children can put the context of it and take them out and would actually Lanka.

Throughout the fourth quarter, and I think that'll translate into revenues. So I won't quantify other than to say that it does is the thing that gives me the most comfort.

That strategy is working so we're going to continue to deploy it out around the world.

Alright, perfect. Thanks again.

When I think about that fitting number of fitting sets out there when I think of the activation meeting the number of trial lenses that are going out and try it you'll like it when I think about the number of contracts that we signed and that were already out there actively working on it's that that gives me confidence that we're going to be successful with my day and thats going to ramp up to me. It's a question of <unk>.

Next question comes from the line of Chris Pasquale with Nephron Research. Your line is open.

Thanks, I wanted to follow up on <unk>.

And then I had one for Brian as well.

Al you talked about still being on track to do over 100 million from my side. This year I think your original goal for the year was 40% growth in three quarters and by our math you are maybe a little bit below 30, So obviously still good but not quite where you hoped just curious how youre thinking about where that goes from here you've got a bunch of stuffs heading into FY 'twenty six.

Timing as to when it's going to be.

More so than if it's going to happen.

Al White: All right, that was helpful. And then just one other question on the TBI business. I think like last quarter you were talking about implementing short-term promotions. I think you were saying one to three months of lenses to get people fitting with my site and potentially become long-term users. But it sounded like the early results were mixed. So just curious where maybe you saw some initial success or lack of success driving that commentary. And curious if you're sticking with the same approach into the back-to-school season or if you're kind of going back and reevaluating if that's the right approach to the market. Thank you.

Alright that was helpful. And then just one other question on the CVI business.

I think last quarter, you were talking about implementing short term promotions I think you were saying, 1% to three months of lenses to get people fitting with my site.

Between the promotional pricing starting to have a positive impact upon launch milestones.

Essentially become like long term users, but it sounded like the early results were mixed but I'm just curious where maybe you saw some initial success or lack of success driving that commentary and curious if you are sticking with the same approach into the back to school season, or if youre kind of going back and reevaluating if thats the right approach.

Can that drive an acceleration.

Or should we expect further growth moderation just because the numbers are getting larger.

Yeah, I think that it ends up being I hate to give anything for next year yet.

Some of those plays out, but I think that the growth ends up being more similar.

Year over year than an acceleration just because the numbers are getting bigger.

The market. Thank you.

Al White: Yeah, sure. Great question on that one. So where we saw success was in Mia, where we initiated that program and have implemented that pricing. We've seen great fitting activity and frankly, we've already been seeing some sell-through on that as that fitting has converted into revenues. Where we did not have that standardized, we have had situations where we have people who are saying, "Hey, is that coming this way and when am I going to get it? And should I wait and fit until we have that new pricing structure in place? What kind of promotional programs are there and so forth?" So that's where we got some of the mixed results. That was largely here in the US market that we saw that. So we need to get all of that kind of activity resolved. We are, we're working on that very actively right now.

Yes, sure Greg Great question on that one so where we saw success was in EMEA, where we initiated that program and have implemented that pricing.

Youre right, we took a little bit of a hit this year because some of the pricing changes in our promotional activity.

But we're getting better fitting on that and we do have all of those launches coming so we will see I'll give an update on that as we get to next quarter, but I will I will say that I feel pretty good about my site, we're going to get good growth next year, it's certainly going to support the overall business driving our growth.

We saw we've seen great fitting activity and.

Frankly, we've already been seeing some sell through on that is that setting is converted into revenues.

We did not have that standardized we have had situations, where we have people are saying hey is that coming this way and when am I going to get added and should I wait and fit until we have that new pricing structure in place.

Okay.

And then Brian Capex has obviously been really elevated over the past three years with $2 billion free cash flow target it seems to imply a pretty big step back.

What kind of promotional programs are there and so forth.

Would love you to put a finer point on what exactly Youre thinking next year for Capex and then how do we think about how that grows relative to sales.

So that's where we got some of the mixed results that was largely here in the U S market that we saw that so we need to get all of that kind of activity resolved. We are working on that very actively right now.

Going forward in the past, it's been hard for CVI.

Both strong revenue growth and.

Al White: And we'll get that resolved so we can kind of level set ourselves, if you will, correctly so that pricing is standardized around the world. But I would say that the early indications or the early returns on that kind of pricing model, which was basically to allow parents to take lenses home and see if their children could put the contacts in and take them out and would actually like them. That strategy is working. So we're going to continue to deploy that around the world.

And we will get that resolved. So we can kind of level set ourselves. If you will correctly. So that pricing is standardize around the world, but I would say that the early indications are the early returns on that kind of pricing model, which was which was basically to allow parents to take lenses home and see if their children could put the context and take them out.

Moderate that investment in Capex kind of on one or the other so.

Is it different this time.

Yeah, that's a great great question Chris.

I would first of all I'll just talk about next year in Capex Capex is going to come down on a percentage basis and on an absolute dollar basis.

We've been trending high.

Would actually Lanka.

Uh huh.

That strategy is working so we're going to continue to deploy that around the world.

As a percentage of revenues on Capex.

If you look back in time we've.

Al White: All right, perfect. Thanks again.

Alright, perfect. Thanks again, yes.

Kind of we've been anywhere from like 7% to 10% of revenues.

Al White: Yeah.

Yes.

Conference Operator: Next question comes from the line of Chris Pasquale with Nephron Research. Your line is open.

Next question comes from the line of Chris <unk> with quality with Nephron Research. Your line is open.

For Capex. So as we continue moving forward, we're still going to have to put capital we're going to deploy capital for investments in new growth and Thats innovation, and new lines, and new equipment and new launches so that'll be a part of the number.

Desiree: Thanks. I wanted to follow up with my site and then I had one for Brian as well. So Al, you talked about still being on track to do over 100 million for my site this year. I think the original goal for the year was 40% growth and three quarters in by our math, you're maybe a little bit below 30. So obviously still good, but not quite where you hoped. Just curious how you're thinking about where that goes from here. You got a bunch of stuff heading into FY26 between the promotional pricing, starting to have a positive impact with Japan launch, my day, my site. Can that drive an acceleration or should we expect further growth moderation just because the numbers are getting larger?

Thanks, I wanted to follow up on my side, and then I had one for Brian as well so.

Talked about still being on track to do over 100 million from my side this year.

But it's all of the other things that are happening around it with capex kind of starting to moderate and normalize and all those other elements that are driving it forward that allow us to continue to confidently drive free cash flow higher similar to historical levels. So you're exactly right. I mean, we're going to have to invest into this business. We have a lot of why it's still that need to come in over.

Our goal for the year was 40% growth in three quarters and by our math you are maybe a little bit below 30, So obviously still good but not quite where you hoped just curious how youre thinking about where that goes from here you've got a bunch of stuffs heading into FY 'twenty six between the promotional pricing starting to have a positive impact upon launch Milo models.

The next couple of years and those are on order and that will continue to play out but.

Good.

Can that drive an acceleration or should we expect further growth moderation just because the numbers are getting larger.

The peak level of Capex that we've been seeing.

It's not going to be normalizing and thats, what drives along with the other steps that we're taking will drive the free cash flow higher.

Al White: Yeah, I think that it ends up being, I hate to give anything for next year yet on that, you know, as some of this plays out, but I think that the growth ends up being more similar year over year than an acceleration just because the numbers are getting bigger. You're right. We took a little bit of a hit this year because some of the pricing changes and the promotional activity, but we're getting better fitting on that and we do have all those launches coming. So we'll see. I'll give an update on that as we get to next quarter, but I will say that I feel pretty good about my site. We're going to get good growth next year. It's certainly going to support the overall business driving our growth.

Yes, I think that it ends up being I hate to give anything for next year yet.

Some of those plays out, but I think that the growth ends up being more similar.

Thanks.

Okay.

Year over year than an acceleration just because the numbers are getting bigger.

Our last question comes from the line of Patrick Wood with Morgan Stanley. Your line is open.

You're right, we took a little bit of a hit this year because some of the pricing changes in our promotional activity.

Beautiful, thank you very much and I'll keep it to one just keep things.

But we're getting better fitting on that and we do have all of those launches coming so we'll see I will give an update on that as we get to next quarter, but I will I will say that I feel pretty good about my site, we're going to get good growth next year, it's certainly going to support the overall business driving our growth.

Slowing.

It is probably a dumb question, but.

How do you guys know.

About the clarity <unk> sort of dynamic was that feedback that came from like chatting to optometrists was that coming from the sales force or did you kind of back into it because you saw the really strong <unk>.

Desiree: Okay. And then Brian, you know, CapEx has obviously been really elevated over the past three years. The $2 billion free cash flow target seems to imply a pretty big step back. We'd love you to put a finer point on what exactly you're thinking next year for CapEx. And then how do we think about how that grows relative to sales going forward? In the past, it's been hard for CBI to have both strong revenue growth and, you know, moderate that investment in CapEx. It's kind of been one or the other. So is this, is it different this time? Yeah.

Okay.

And then Brian Capex has obviously been really elevated over the past three years with $2 billion of free cash flow target it seems to imply a pretty big step back.

So the promotional side of things like what was it all three I'm just curious how would you bucket out because it's obviously a big market with a lot of different things happening it can be hard to seize.

Would love you to put a finer point on what exactly Youre thinking next year for Capex and then how do we think about how that grows relative to sales.

Great question.

Yes, Patrick it's pretty straightforward in that a lot of that activity was with larger accounts and you know whether theyre standard order cycle is if you will when they order and how much they order and.

Going forward in the past, it's been hard for CVI, both strong revenue growth and.

When those orders did not happen right, it's a pretty straightforward conversation with them of what's going on and.

Moderate that investment in Capex kind of on one or the other so is it different this time.

Al White: That's a great, great question, Chris. You know, I would, I would first of all just talk about next year in CapEx. CapEx is going to come down on a percentage basis and on an absolute dollar basis. You know, we've been trending high, you know, as a percentage of revenues on CapEx. Over, you know, if you look back in time, you know, we've been kind of, we've been anywhere from like 7 to 10% of revenues for CapEx. So as we continue moving forward, we're still going to have to put capital, we're going to have to deploy capital for investments and new growth, and that's innovation and new lines and new equipment and new launches. So that'll be a part of the number.

Yes, that's a great great question Chris.

Getting it turned out to be a pretty straightforward response of.

I would first of all I'll just talk about next year in Capex Capex is going to come down on a percentage basis and on an absolute dollar basis.

We're focusing our time and efforts and everything else that might aid fitting activity right now and taking a little bit of a pause on clarity and their feedback was we're going to make that move right now and we will and we will see what happens, but we're doing we're doing Cooper, what you've asked us to do and what we want to do so it was pretty straightforward.

We've been trending high.

As a percentage of revenues on Capex.

If you look back in time.

Kind of we've been anywhere from like 7% to 10% of revenues.

For Capex. So as we continue moving forward, we're still going to have to put capital we're going to have to deploy capital for investments in new growth and Thats innovation, and new lines, and new equipment and new launches so that'll be a part of the number.

Enough to see that I don't want to act like that was the entire thing because theres bits and pieces that go to optometrists and smaller shops, and so on and so forth, but the biggest clear his point was pretty obvious visibility on some of the order patterns from some of the larger accounts.

Al White: But it's all of the other things that are happening around it with CapEx kind of starting to moderate and normalize and all those other elements that are driving it forward that allow us to continue to confidently now drive free cash flow higher similar to historical levels. So you're exactly right. I mean, we're going to have to invest in the business. We have a lot of lines still that need to come in over the next couple of years, and those are on order, and that'll continue to play out. But you know, the peak level of CapEx that we've been seeing is now going to be normalizing, and that's what drives, along with the other steps that we're taking, will drive the free cash flow higher.

But it's all of the other things that are happening around it with capex kind of starting to moderate and normalize and all those other elements that are driving it forward that allow us to continue to confidently drive free cash flow higher similar to historical levels. So youre exactly right I mean, we're going to have to invest in the business. We have a lot of why it's still that need to come in over.

Please go ahead, thanks guys.

Yeah.

Okay.

That concludes the question and answer session I would like to turn the call back over to al White for closing remarks.

Thank you everyone and thank you for being on the call I'm sure. We'll have a lot of post call conversations here and look forward to talking about them going through the details and.

The next couple of years and those are on order and that will continue to play out.

The peak level of Capex that we've been seeing.

Driving some continued success. So we can discuss that on our next earnings call. So thank you everyone. Appreciate your time.

Now going to be normalizing and Thats, what drives along with the other steps that we're taking will drive the free cash flow higher.

Yeah.

Ladies and gentlemen that concludes today's call. Thank you all for joining and you may now disconnect.

Desiree: Thanks.

Thanks.

Conference Operator: Our last question comes from the line of Patrick Wood with Morgan Stanley. Your line is open.

Our next question comes from the line of Patrick Wood with Morgan Stanley. Your line is open.

Al White: Beautiful. Thank you very much. I'll keep it to one just to keep things flowing. And it's probably a dumb question, but you know, how do you guys know about the clarity versus my day sort of dynamic? Was that feedback that came from like chatting to optometrists, or was that coming from the sales force, or did you kind of back into it because you saw the really strong my day, you know, sort of promotional side of things? Like, or was it all three? I'm just curious, how did you work it out? Because it's obviously a big market with a lot of different things happening. It can be hard to seize. That's my main question.

Beautiful. Thank you very much I'll keep it to one just key things.

<unk>.

I was hoping you dumb question, but.

How do you guys know.

About the clarity <unk> sort of dynamic was that feedback that came from like chatting to optometrists was that coming from the sales force or did you kind of back into it because you saw the really strong <unk>.

Sort of promotional.

Side of things like or was it all three I'm just curious how did you broke it out because it's obviously a big market with a lot of different things happening it can be hard to seize that's my main question.

Al White: Yeah, Patrick, it's pretty straightforward in that a lot of that activity was with larger accounts, and you know what their standard order cycle is, if you will, you know, when they order and how much they order. And when those orders did not happen, right, it's a pretty straightforward conversation with them of, "Hey, what's going on?" And getting what turned out to be a pretty straightforward response of, "We're focusing our time and efforts and everything else on my day fitting activity right now and taking a little bit of a pause on clarity." And their feedback was, "You know, we're going to make that move right now and we'll see what happens, but we're doing, Cooper, what you've asked us to do and what we want to do." So it was pretty straightforward, oddly enough, to see that.

Yes, Patrick it's pretty straightforward in that a lot of that activity was with larger accounts and you know whether they are standard order cycle is if you will when they order and how much they order and when those orders did not happen right, it's a pretty straightforward conversation with them.

What's going on and.

Getting it turned out to be a pretty straightforward response of.

We're focusing our time and efforts and everything else that might exiting activity right now and <unk> taken a little bit of a pause on clarity and their feedback was we're going to make that move right now and we'll see what happens, but we're doing we're doing Cooper, what you've asked us to do and what we want to do so it was pretty strong.

400, oddly enough to see that I don't want to act like that was the entire thing because theres bits and pieces that go to optometrists and smaller shops, and so on and so forth, but the biggest clear. His point was was pretty obvious visibility on some of the order patterns from some of the larger accounts.

Al White: I don't want to act like that was the entire thing because there's bits and pieces that go to optometrists at smaller shops and so on and so forth. But the biggest, clearest point was pretty obvious visibility on some of the order patterns from some of the larger accounts.

Al White: Super clear. That's encouraging to hear. Thanks, guys.

Thanks, guys.

Okay.

Conference Operator: That concludes the question and answer session. I would like to turn the call back over to Al White for closing remarks.

That concludes the question and answer session I would like to turn the call back over to al White for closing remarks.

Al White: Thank you, everyone. And thank you for being on the call. I'm sure we'll have a lot of post-call conversations here and look forward to talking about and going through the details and driving some continued success so we can discuss that on our next earnings call. So thank you, everyone. Appreciate your time.

Thank you everyone and thank you for being on the call I'm sure. We'll have a lot of post call conversations here and look forward to talking about them going through the details.

Driving some continued success. So we can discuss that on our next earnings call. So thank you everyone. Appreciate your time.

Yeah.

Conference Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect.

Ladies and gentlemen that concludes today's call. Thank you all for joining and you may now disconnect.

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