The Cooper Companies, Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Strategic Priorities: Focus on delivering market share gains for CooperVision, continuing commitment to earnings and free cash flow, and returning capital to shareholders. Board authorized increase in share repurchase plan to $2 billion.
• Q4 Results: Consolidated revenues up 4.6% y/y to $1.065 billion, operating margins improved, non-GAAP earnings grew 11% to $1.15. CooperVision revenue up 4.9% or 3.2% organically; CooperSurgical revenue up 4% or 3.9% organically; Office and Surgical sales up 6% organically.
• Reorganization: $89 million in charges associated with reorg and integration activity, expecting annual pretax savings of ~$50 million starting 2026.
• Share Repurchases: Repurchased nearly $200 million of stock in Q4, total FY repurchases ~$300 million; board authorized increase to $2 billion.
• Strategic Review: Formal strategic review announced, chair transition from Bob Weiss to Colleen Jay, TSR added to executive performance plans.

Segment Performance

• CooperVision: Reported revenue of $710 million, up 4.9% or 3.2% organically. This contributed approximately 66.6% of the consolidated revenue of $1.065 billion. By category, torics and multifocals grew 5%, spheres grew 2%, bimodality daily silicone hydrogel lenses grew 5% with double-digit growth in MyDay and declines in Clarity. Regionally, The Americas grew 5%, AMEA grew 3%, and Asia Pac was flat.
• CooperSurgical: Delivered quarterly revenue of $356 million, up 4% or 3.9% organically. Within fertility, revenues were $141 million, up 1% in line with expectations.
• Office and Surgical: Sales were $215 million, up 6% and 6% organically, with PARAGARD growing 16% and medical devices growing 3%.

Guidance

• Q1 2026: Consolidated revenues $1.019 billion-$1.03 billion (3%-4% consolidated organic growth). CooperVision revenue $693M-$700M (3.5%-4.5% organic), CooperSurgical revenue $327M-$330M (2%-3% organic). Non-GAAP EPS $1.2-$1.4.
• FY 2026: Consolidated revenues $4.3B-$4.34B (4.5%-5.5% organic growth). CooperVision $2.9B-$2.925B (4.5%-5.5% organic), CooperSurgical $1.4B-$1.413B (4%-5% organic). Non-GAAP EPS $4.45-$4.6. Free cash flow $575M-$625M. FY 2026-2028 expected free cash flow over $2.2B.

Risks

• Forward-looking statements subject to risks and uncertainties in SEC filings.
• Market softness in China, EMEA for CooperVision and soft US fertility for CooperSurgical.
• Impact of competitor launches and pricing on margins.
• Antitrust risks with strategic review and potential consolidation.

Question and Answer

Q: Jeff Johnson from Baird asked about Clarity's future and MyDay gross margins.

A: Al White and Brian Andrews responded about Clarity's repositioning and MyDay gross margin pressure.

Q: Larry Biegelsen from Wells Fargo asked about the strategic review and splitting up CVI and CSI.

A: Al White stated the strategic review is underway, and the company is evaluating actions to drive long-term shareholder value.

Q: John Block from Stifel asked about contact lens market growth expectations and APAC geography.

A: Al White discussed market growth assumptions and APAC's performance trends.

Q: Robbie Marcus from JPMorgan asked about guidance and improved free cash flow.

A: Al White and Brian Andrews explained guidance details and drivers of free cash flow improvement.

Q: Travis Steed from Bank of America asked about strategic review and balancing short-term for long-term value.

A: Al White talked about the strategic review process and balancing short-term investments for long-term value.

Q: Matt Miksic from Barclays asked about calendar Q4 performance and separation.

A: Al White discussed calendar Q4 performance and the strategic review's focus on unlocking shareholder value.

Q: David Saxon from Needham and Company asked about CSI's PARAGARD and CVI's Asia Pac dynamics.

A: Al White provided details on PARAGARD's guidance and Asia Pac's ecommerce dynamics.

Q: Young Lee from Jefferies asked about the pipeline and fertility business.

A: Al White discussed product pipeline and fertility business expectations.

Q: Nathan Cai from BNP Paribas asked about MyDay private label contracts and fertility technologies.

A: Al White talked about MyDay private label momentum and fertility technology advancements.

Q: Anthony Petrone from Mizuho Group asked about CVI's private label and strategic synergies.

A: Al White discussed private label trends and strategic synergies of CVI and CSI under one umbrella.

Q: David Roman from Goldman Sachs asked about reorganization efforts and retention.

A: Al White explained reorganization efforts and retention strategies focusing on internal promotions and AI adoption.

Q: Anthony Petrone from Mizuho Group asked again about CVI's private label and strategic synergies.

A: Al White provided further details on private label trends and capital allocation synergies.