The Cooper Companies - Earnings Call - Q3 2025

Executive Summary

• Q3 2025 delivered mixed results: revenue rose 6% y/y to $1.060B but came in below expectations; non-GAAP EPS grew 15% y/y to $1.10 on margin expansion, while GAAP EPS dipped to $0.49.
• Management raised full‑year non‑GAAP EPS guidance to $4.08–$4.12 (from $4.05–$4.11 in Q2) despite lowering revenue guidance, citing strong operational execution and free cash flow.
• Key swing factors: softer Clarity orders and weakness in APAC pure-play e‑commerce offsetting strong MyDay momentum and EMEA performance; Q4 guide embeds caution on the pace of conversion from fitting to revenue.
• Street context: COO beat consensus EPS and slightly missed revenue in Q3; EBITDA tracked below consensus. The company highlighted tariff mitigation and a three‑year ~$2B free cash flow target as medium‑term catalysts.
• Near‑term stock reaction catalysts: raised EPS guidance and robust FCF in Q3 ($165M), plus MyDay fitting momentum and >30 new private-label MyDay wins set up FY26 trajectory.

What Went Well and What Went Wrong

What Went Well

• MyDay regained momentum; multifocal grew ~20% and premium MyDay variants (toric, multifocal, Energys) posted double‑digit growth as fitting sets and trial lens activity accelerated globally.
• EMEA became CVI’s largest region, growing 14% reported (6% organic) with strong MyDay fitting activity and share gains; CSI gained share in EMEA fertility consumables/genomics.
• Operational execution drove margin expansion and EPS outperformance; non‑GAAP gross margin rose 70 bps to 67% and operating margin reached 26%, enabling a full‑year EPS guidance raise.
• “We delivered strong margins, double-digit earnings growth, and robust free cash flow… revenues were below expectations but we're raising earnings guidance… expect improving revenue in Q4 and fiscal 2026 driven by MyDay®” — Al White, CEO.

What Went Wrong

• Clarity softness: customers paused Clarity orders to prioritize MyDay fittings, notably in Japan/Asia-Pac; this unexpectedly pressured near-term revenue.
• APAC pure‑play e‑commerce weakness (especially China) persisted with pricing aggression from competitors; impact to profitability minimal due to low margins in that channel.
• CSI fertility cycles in Asia‑Pac remained soft; clinics delayed capital purchases, pressuring CSI growth; PARAGARD volumes declined y/y (offset by pricing) with Q3 a softer quarter.
• GAAP gross margin and operating margin declined y/y (65% vs 66%, and 17% vs 19%) due to a product line exit at CSI.

Transcript

Speaker 8

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 The 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.

Speaker 4

Good afternoon and welcome to The 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.

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 [email protected]. Now I'll turn the call over to Al for his opening remarks.

Speaker 0

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.

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 CooperVision, 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-Pacific and a slowdown in the Americas and EMEA as customers continued favoring premium daily lenses. The significant increase in MyDay fitting sets and trial lenses led to a faster than expected return to MyDay fitting activity. While MyDay 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.

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 being CooperVision's largest revenue region globally. Additionally, early fit set and trial lens activity for MyDay 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.

Asia-Pacific 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 pure-play e-commerce channel. Digging deeper into MyDay, we're encouraged by several positive developments surrounding this flagship product family. First and foremost, we 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 and feature MyDay as a growth driver, and we won several new private label agreements that offer significant MyDay 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 products grew 6% while spheres were down 1%. Within modalities, our daily silicone hydrogel lenses, MyDay and Clarity, grew 7%, and our silicone hydrogel frequent replacement lenses, Biofinity and Avaira, were up 2%. MiSight grew 23%. Starting with MyDay and adding some additional color, MyDay grew double digits this quarter with our most innovative and premium price lenses, toric, multifocal, and Energist, all posting double-digit growth. In particular, MyDay multifocal grew 20% as this fantastic lens continues to perform extremely well, and importantly, the full family of MyDay 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 MyDay Energous featuring our Premium Digital Boost technology designed for today's digital lifestyle, which we expect to launch in Europe in early fiscal 2026, MyDay multifocal, which we expect to launch in several major Asia-Pacific markets soon along with increasing availability in others, and our MyDay 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 MyDay. 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 Clarity Multifocal, which recently entered the U.S. market and grew double digits, and from wearers focused on high quality at a reasonable price.

Turning to frequent replacement lenses, our Biofinity brand maintained strong fitting activity across its broad portfolio, while a reduction in channel inventory impacted spheres. Growth was supported by continuing strength in toric and multifocal products. Additionally, our innovative made-to-order products such as the toric, multifocal, and extended range spheres and torics 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 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 FIPs. 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 MyDay MiSight across Europe and select Asia-Pacific 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.

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-Pacific.

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 in 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 digit, and our specialty surgical device portfolio, which grew upper single digits.

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 CooperVision. We expect continued headwinds from Clarity. While trends for MyDay 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 quarters to convert into revenue.

As a result, we're guiding to 2% to 4% organic growth to avoid being overly optimistic about the ramp of MyDay, and this guidance also factors in risk with the pure-play e-commerce channel in Asia-Pacific as well as the potential for any further inventory contraction for Cooper Surgical. We're also guiding the 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 CooperVision. This confidence is grounded in the strong momentum we're seeing with MyDay, the positive impact we'll 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 as the Asia-Pacific 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. With that, I'll turn the call over to Brian.

Speaker 7

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 CooperVision and Cooper Surgical as we continue advancing several exciting development programs and 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%.

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. CooperVision'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.

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 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.

Speaker 0

Looking.

Speaker 7

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. 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.

Lastly, regarding free cash flow, with the completion of CooperVision's large CapEx investment cycle, which significantly expanded our MyDay capacity, we expect much stronger free cash flow ahead. 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. 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.

Speaker 8

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 or are listening via speakerphone on your device, please pick up your handset 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. Our first question comes from the line of Jonathan David Block with Stifel Nicolaus & Company Incorporated. Your line is open.

Speaker 0

Thanks, guys. Good afternoon.

Speaker 9

Al, we back out to likely 100 basis points from MiSight growth contribution this year. Your 2025 CVI growth is probably 3.5% at the midpoint, and you know that's lagging market that I think you said is around mid-single digits this year. Just how do we think about CVI for fiscal 2026? You gave some high-level commentary, but is your portfolio outside MiSight lagging market, in line with market when we think about fiscal 2026, and if you're talking about outgrowing 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 100 basis point kicker from MiSight. I know there's a lot of numbers. I tried to move slowly, but hopefully.

Speaker 0

That came across okay. Yeah. Yep, I gotcha. 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 4, we grew 5. In calendar Q2 here, the market grew 4 and we grew 2. 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 MyDay. We were basically fighting with one hand tied behind our back because we just weren't able to provide the product everyone wanted.

I think our team did really well and they did the best of their ability with what they had available to them. That has changed and it wasn't quite a snap of a finger, but it was pretty close. We have put out a significant number of fitting sets and trial lenses and so forth into the market to drive that success. I think that when you say the portfolio is 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 SiHIs. 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.

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

Speaker 9

Okay, that was great. Maybe just sort of a quicker follow up. I don't know if I missed something, but why is MyDay success arguably like disproportionately coming from Clarity? I think about Clarity as a really good but cost effective SiHy daily, you know, is how it fit into the portfolio. MyDay more of a premium. When you talk about MyDay and it's great to hear about the traction, you know, after the fitting sets, why seemingly is it disproportionately coming from Clarity versus just competing SiHy dailies? Brian, any maybe one liner on how we think about margins?

Speaker 7

Clarity versus MyDay? Thanks for your time.

Speaker 0

Yeah. What we ended up seeing here that did surprise us some is that there are segments of the market, and it's definitely true in some geographies such as Asia-Pacific, where we had people out there selling Clarity lenses that wanted to sell MyDay. They were almost viewed as somewhat similar type of products. There wasn't a clear differentiation between the two products. You see that differentiation in some markets. We didn't see much of an impact with all this MyDay activity there. In some of those markets, like Japan being one of them, those were sold much more similar. When we brought MyDay back in the fitting sets and everything else, what ended up happening 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.

I'm basically going to tell everybody, hey, try this MyDay. See if you like it. I want to fit you in MyDay. Let's kind of like take a little bit of time here. We've got these lenses. Fit in them, take them, try them, see if you'll like them. Let's figure out if you like those better before we reorder Clarity. That was a little surprising to us in terms of the magnitude of that. It was pretty focused on a few markets where MyDay and Clarity are much closer than you'd think. 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 MyDay and for Clarity. As I mentioned, that's not exactly true everywhere.

Speaker 7

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 MyDay's.

Speaker 0

Thanks, guys.

Speaker 8

Our next question comes from the line of Lawrence H. Biegelsen with Wells Fargo Securities LLC.

Speaker 0

Caroline Shulkin, good afternoon.

Speaker 6

Thanks for taking the question. Al, you know, it looks like the contact lens market has slowed each year since 2021, and it slowed to, as you said, 4% growth in the first half of calendar 2025. Maybe just zoom out a little bit, you know, why has the market slowed so much? How confident are you there isn't something else going on here like some consumer softness?

Speaker 0

I had one follow up. Yeah, 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 started to lag. Especially outside of the U.S., we saw some of that. In particular with this pure-play e-commerce channel stuff I was talking about in Asia-Pacific where we maintained our pricing but some competitors got a little bit more aggressive to actually win share and take sales there. 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, but I wouldn't go too far with that. I think you could see a little bit on the consumer side. Okay, that's helpful.

Speaker 6

Brian, on fiscal 2026, thanks for the preliminary color. Maybe a little bit just to push a little bit more consensus. EPS growth at 9% in 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've heard you correctly, FX looks like a tailwind. 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%?

Speaker 0

Thank you.

Speaker 7

Hi Larry, all good questions. You know we did give some color, we gave some directional commentary and 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. 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, you know, fair estimate. Again, we'll update you in December.

Speaker 0

All right, thanks Brian. Yep.

Speaker 8

Next question comes from the line of Jeffrey D. Johnson with Robert W. Baird & Co. Incorporated. Your line is open.

Speaker 0

Thank you, guys.

Speaker 2

Good afternoon. Al, I'm still trying to reconcile a little bit maybe the Clarity and MyDay 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 MyDay, you should get some nice benefit from that, not pressures from that. Even if there's a little bit of timing uncertainty in those Clarity orders going down this quarter and just bidding activity on MyDay 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 MyDay benefit, but feeling the immediacy of the Clarity headwind.

Speaker 0

Yeah, you're spot on, Jeff. That question is something that we've been spending some considerable time here on over at least the last couple 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 MyDay, or does it not? 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. I think that the guidance that we gave assumes a very similar quarter, if you will, Q3 to Q4. I'm pretty optimistic, as you know. I'm an optimistic guy in this kind of stuff. When I look at that data, I feel pretty good about it. We cannot get in front of ourselves.

We've had a couple quarters here where we got ahead of ourselves a little bit and 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 MyDay fitting activity doesn't translate into the size of revenue orders that we're hoping to get.

Speaker 2

All right, fair enough. Maybe just on the e-commerce side, could you 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-Pacific market's a little harder for us to get intelligence on.

Speaker 0

Thanks. 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. You know, we lose that business. China was down 25% in the first quarter and was down similar to this quarter. It has very little margin impact because it's such low margin business. We didn't want to lose it. We've seen some more aggressive pricing that's out there outside of the U.S. and certainly in the Asia-Pacific region. Thank you.

Speaker 8

Next question comes from the line of Issie Kirby with Redburn. Your line is open.

Speaker 1

Sorry, I think I was on mute. Can you hear me now?

Speaker 0

Yeah.

Speaker 1

Great. Sorry about that. I just wanted to touch upon the restructuring that was mentioned at the end of your prepared remarks.

Speaker 0

Sort of.

Speaker 1

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? What prompted you to take a look at this now?

Speaker 0

have a follow up. Yeah, I had a couple comments. One is that we had 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, 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 Cooper 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 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 TNA areas and can we leverage all those investments we've done. 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. We are going through that challenging period of saying we have to drive more efficient long term growth. We've invested very, very considerably over the last several years to put us in a position where we can complete that analysis and take some appropriate action. We are going through all that work literally right now.

Speaker 1

Great. No, thanks for the color. 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? 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?

Speaker 0

Thanks. 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 MyDay MiSight coming next year in that market. That'll include at some point MiSight, MiSight Toric. We're going to continue to hit that market hard. We're doing really well there, including with some key strategic accounts. I'd kind of say Asia-Pacific is doing okay. 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-Pacific region and we don't have that product there. 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 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. 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 with the FDA. I'll provide an update as soon as I can on that, but nothing new to add.

Speaker 1

Great, thanks.

Speaker 0

Yeah.

Speaker 8

Next question comes from the line of Joanne Karen Wuensch with Citigroup Inc. Your line is open.

Speaker 4

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.

Speaker 8

It all seems to be tied to MyDay.

Speaker 4

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. Thank you.

Speaker 0

Yeah, Joanne, you're right. It is tied to MyDay. MyDay 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 bidding activity and everything we have going on right now. We got into a situation where we just weren't able to get enough MyDay out to meet all the demand that was in the marketplace. We're there now and based on all this activity, we're going to sell more MyDay. I mean, I can tell you right now we have over 30 brand new MyDay private label contracts and launches going on right now.

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. Those are pretty dramatic numbers out there that support the fact that we're going to do well with MyDay and we're going to get MyDay going again. 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 million, a little bit over $600 million of that is associated with MyDay. 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, 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 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. I do end up saying it's almost all tied to MyDay and I think we'll be pretty damn successful with it.

Speaker 8

Our next question comes from the line of Jason M. Bednar with Piper Sandler & Co. Your line is open.

Speaker 0

Hey, good afternoon. Want to come at this MyDay Clarity discussion from a different angle? I'm sorry to beat a dead horse here, but Al, this has been a, it's been a market of trade ups over the last several years, couple decades, this whole dynamic. We're trading at the silicone hydrogels and then the dailies and then daily silicone hydrogels. I don't recall ever a situation like this where you run into like this. The expected drawdown in demand for one lens ahead of the buildup for other lenses. Kind of similar track that Jeff was asking around.

Can you talk about why this situation with Clarity and MyDay 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, you're going through, the market's going through and digesting versus some competitive challenge you're running into? 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? Yes. 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 MyDay and Clarity. Much more similar to the way you're thinking about the marketplace. They were differentiated, so to speak. That's not necessarily as true in the Americas market, and that's where we saw some of the softness there.

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. 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 successes, 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 MyDay. I've talked about this on prior calls. We've never had enough MyDay 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 MyDay over the years, and that's put us in a situation where that region has a higher percentage of Clarity associated with it. That's what we really saw that kind of surprised us and caught us off guard. Was that that segment that's "supposed to be" MyDay, that was Clarity, took this kind of immediate hit, and we just need to reposition a little bit Clarity in Asia-Pacific, and we need to attack the market in a little bit different of a way. That is well underway with us, and hopefully that kind of explains it a little bit clearer.

Speaker 7

Okay.

Speaker 0

All right. It sounds like you've a pretty good handle that it's not competitive. As a follow-up question, building on some of the pricing comments earlier, this seems like the first time today where you're acknowledging that industry pricing may be moderating ever so slightly, I guess. Where do you think we sit on a global basis as we look ahead and start thinking about our Fitar models here for 2026 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?

Speaker 9

I think you're still seeing some.

Speaker 0

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 in the Asia-Pacific, you are seeing more price pressure. 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 for sales, I'm not sure you're going to see pricing increase there. 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.

All right, helpful, thank you.

Speaker 8

Next question comes from the line of David Joshua Saxon with Needham & Company LLC. Your line is open.

Speaker 0

Oh great.

Speaker 7

Thanks for taking my questions.

Speaker 0

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.

Speaker 7

Mid to upper teens from a free cash flow margin.

Speaker 0

What's that $2 billion imply on the margin, and how does that ramp over the three-year period?

Speaker 7

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. We're now at a place where CapEx comes down. The operating margin improvements are converting to better, stronger operational profits. The actions we're taking will contribute to that as well as the working capital initiatives. 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, we'll take another stair step next year, again the year after and again the year after. 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. I feel pretty confident about that.

Speaker 0

Okay, great. Maybe switching back to CooperVision.

Speaker 7

Last quarter you talked about some.

Speaker 0

Distributor inventory dynamics, I guess, has that normalized or will there be any impact?

Speaker 7

In the fiscal fourth quarter?

Speaker 0

As we think about fiscal.

Speaker 7

26, does any of that distributor inventory.

Speaker 0

The Clarity, the Asia-Pacific pure-play e-commerce stuff, does that, does any of that spill into fiscal 2026?

Speaker 7

Thanks so much.

Speaker 0

Sure. We have some of that. I'll break it into the two markets. Right. We had some of that in the U.S. market here. We did factor into our guidance some additional channel inventory reductions in the U.S. 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 2026. If I look at the pure-play e-commerce channel over at Asia-Pacific, 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 annualized that. 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. I don't see a lot.

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

Speaker 7

Thank you.

Speaker 8

Next question comes from the line of Navann Ty Dietschi with BNP Paribas Exane. Your line is open.

Speaker 1

Hi, thanks for taking my questions. Thanks for the color on the contact lenses side in fertility. Can you please clarify the driver of the expected Q4 rebound? Was that driven by the upcoming year of the horse? Can you also comment on fertility in 2026, at least qualitatively?

Speaker 0

Thank you. Sure. 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. I think we saw just a little bit of progression there. The year of the snake is behind us. I mentioned that last quarter. We're seeing a little bit of improvement in Asia-Pacific, although we're still seeing cycle softness there. When I look at us finishing the year out, we have a really, really hard comp of like 13% again last year. I think we probably have another pressured quarter for ourselves here to finish up our fiscal year. I think that you're going to have cycles coming back in Asia-Pacific.

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

Speaker 4

Thank you.

Speaker 1

That's helpful.

Speaker 8

Next question comes from the line of Anthony Petroni with Mizuho Securities USA LLC. Your line is open.

Speaker 5

Hey, thanks for taking the questions. Bradley Thomas Bowers on for Anthony, first one. Going to start with Paragard. It's been a drag for a while.

Speaker 0

On the volume side.

Speaker 5

You're able to cover it with pricing, but wanted to get an update on market situation, market share dynamics with the competing product launch. Maybe any way to potentially stymie some of the revenue loss, allow the rest of the business to kind of show.

Speaker 7

Some of the growth.

Speaker 0

Yeah. 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 single handed. SERTA 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. 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. We'll see what next year holds.

As we sit here today, it'll probably be similar challenges on volumes and an offset by pricing. Helpful. Thank you. Just if I could, on the.

Speaker 5

Margin side, obviously tariff impacts sounds like.

Speaker 0

It's a little bit better.

Speaker 5

Also sounds like some of the CapEx projects are behind us, so we might start to see some throughput improvements. I just wanted to hear about some tailwinds to gross margin. It sounds like on the operating margin side a lot of the leverage might be coming or upside might come from gross margin, maybe some SG&A. Just how we should think through that.

Speaker 0

Thank you. 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 MyDay 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. The product mix itself probably puts a little pressure on gross margins. You also get pressure from the tariffs Brian mentioned. Brian can quantify it more. He definitely quantified on the Q4 call. The restructuring activity and that work that we're looking to make the organization as efficient as possible should offset that, so we end up with year over year operating margin improvements and still deliver a good year. Thank you. Add anything?

Speaker 7

Yeah, I don't have much more to add there. I mean, I think Al said it well. We'll give details on gross and 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. You've got some puts and takes in gross margin as Al talked about. 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.

Speaker 8

Next question comes from the line of Robert Justin Marcus with JPMorgan Chase & Co. Your line is open.

Speaker 4

Thanks.

Speaker 0

For me.

Speaker 4

First, Al, can you help us understand?

Speaker 0

What happened between the last earnings call and this earnings call? There were two months, you know, the street was sitting at 5.3%, 5.8%, something like that. You know there's a big gap between your expectation and the results. Help us just bridge exactly what happened in the two months from the last earnings call. I got a follow up. 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-Pacific, especially China, was behind us. We did not see that play out right. That was a hit to us. The other one was Clarity. 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.

That activity was at the latter end of this past quarter. 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 MyDay and how everything would hold up. I think that the guidance incorporates a reset of that to say that we believe at least that we fully incorporated all of this risk activity into the numbers. Great. Maybe just a quick follow up. 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. Sure.

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 during COVID and we had a strong rebound from that. 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. Right now, a little over a third of people are myopic, and half of people are going to be myopic by the year 2050. 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, and everybody wants that. The cleanliness associated with that, the flexibility associated with that.

You are continuing to see this move over to dailies. You're seeing better fitting activity by optometrists around the world when it comes to toric. You're seeing much better lenses when it comes to multifocals. You're seeing more people wear those. You have kind of this underlying theme I sometimes compare it to, like you could 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. The contact lens market is that way. 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. All the underlying fundamentals will end up pushing it in that direction. I think that's where it'll grow.

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. That's why I think we'll be able to at least hit, if not exceed, market growth when you layer in MiSight. Great. Thanks a lot, Al. Appreciate it. Yeah.

Speaker 8

Next question comes from the line of Brett Adam Fishbin with KeyBanc Capital Markets Inc. Your line's open.

Speaker 3

Hey, guys, thanks very much for taking the questions. Just thinking about some of the points that you made on central drivers supporting improvement in growth in CVI in FY2026. 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 you were seeing them. I'm wondering if it's substantially all MyDay or across some of the different brands or some of your different brands under the private labels, and then just like any way to think about how much upside these opportunities could deliver next year.

Speaker 9

Yeah, I won't go too far onto it.

Speaker 0

That is because a lot of that gets tied into customers. These are MyDay 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 MyDay products. They wanted a larger portfolio or they wanted to offer MyDay as a private label offering. We have not been able to provide that product to them. During this quarter, especially at the end of this quarter, we negotiated a number of new contracts with people to give them that product and give them the availability. We started getting fitting sets and trial lenses out to them so that they can start all that activity. I think they'll be active with that throughout the fourth quarter and I think that'll translate into revenues. 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 MyDay 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.

Speaker 3

All right, that was helpful. Just one other question on the TBI business. I think 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 MiSight and potentially become long term users. It sounded like the early results were mixed. I'm 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 going back and reevaluating if that's the right approach to the market.

Speaker 0

Thank you. Yeah, sure, great question on that one. Where we saw success was in EMEA, 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 is converted into revenues. Where we did not have that standardized, we have had situations where people are saying, hey, is that coming this way and when am I going to get it? Should I wait and fit until we have that new pricing structure in place, what kind of promotional programs are there, and so forth? That's where we got some of the mixed results. That was largely here in the U.S. market that we saw that. We need to get all of that kind of activity resolved.

We're working on that very actively right now 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. I would say that the early indications or the early returns on that kind of pricing model, which is 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. We're going to continue to deploy that around the world. All right, perfect. Thanks again. Yeah.

Speaker 8

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

Speaker 0

Thanks. I want to follow up on MiSight. I had one for Brian as well. Al, you talked about still being on track to do over $100 million from MiSight this year. I think the original goal for the year was 40% growth and three quarters.

Speaker 3

By our math, you're maybe a.

Speaker 0

Little bit below 30%. 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 FY2026 between the promotional pricing starting to have a positive impact, the Japan launch, MyDay, MiSight. Can that drive an acceleration or should we expect further growth moderation just because the numbers are getting larger? I think that it ends up being, I hate to give anything for next year yet on that. 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 of some of the pricing changes and the promotional activity.

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. I will say that I feel pretty good about MiSight. We're going to get good growth next year. It's certainly going to support the overall business driving our growth. Okay. Brian, 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. How do we think about how that grows relative to sales going forward? In the past, it's been hard for CooperVision to have both strong revenue growth and moderate that investment in CapEx, kind of been one or the other. Is it different this time?

Speaker 7

Yeah, that's a great, great question, Chris. I would first of all just talk about next year and CapEx. CapEx is going to come down on a percentage basis and on an absolute dollar basis. We've been trending high as a percentage of revenues on CapEx over, if you look back in time, we've been kind of anywhere from like 7% to 10% of revenues for CapEx. 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. That'll be a part of the number.

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. You're exactly right. 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. 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.

Speaker 0

Thanks.

Speaker 8

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

Speaker 0

Beautiful.

Speaker 3

Thank you very much. I'll keep it to one just to keep things flowing. It's probably a dumb question, but you.

Speaker 0

How do you guys know about.

Speaker 3

The Clarity versus MyDay sort of dynamic? Was that feedback that came from chatting to optometrists, or was that coming from the salesforce, or did you kind of back into it because you saw the really strong MyDay, you know, sort of emotional side of things?

Speaker 0

Was it all three?

Speaker 3

I'm just curious, how did you work it out?

Speaker 0

Because it's obviously a big market.

Speaker 3

A lot of different things happening, it can be hard to seize. That's my main question.

Speaker 0

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. It's a pretty straightforward conversation with them of, hey, what's going on? Getting what turned out to be a pretty straightforward response of we're focusing our time and efforts and everything else on MyDay fitting activity right now and taking a little bit of a pause on Clarity. Their feedback was we're going to make that move right now and we'll see what happens. We're doing, Cooper, what you've asked us to do and what we want to do. It was pretty straightforward, oddly enough to see that.

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

Speaker 3

That's encouraging to hear.

Speaker 0

Thanks, guys.

Speaker 8

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

Speaker 0

Thank you, everyone. 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. We can discuss that on our next earnings call. Thank you, everyone. Appreciate your time.

Speaker 8

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