Q4 2024 Earnings Summary
- MiSight shows strong underlying demand with strong back-to-school fits, indicating robust growth potential despite temporary inventory adjustments by distributors.
- The company is confident in delivering strong results in fiscal '25 and has a history of outperforming guidance, signaling strong management and growth prospects.
- Management demonstrates transparency and proactive management in addressing inventory fluctuations, suggesting they are well-prepared to handle short-term challenges and maintain growth momentum.
- The company experienced unexpected softness in the U.S. and China markets during the fourth fiscal quarter, which persisted into November, potentially indicating slowing demand.
- Paragard sales declined 10% in Q4 due to competitive pressures, and the company expects continued challenges with potential flat or slightly negative growth in fiscal 2025.
- Inventory contraction in MiSight, the company's myopia management product, due to distributors tightening inventory, may lead to fluctuations and volatility in sales.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +10% | The increase to $1,018.4M was primarily driven by continued strong performance in both CooperVision (+9% YoY) and CooperSurgical (+12% YoY). Competitive product offerings in daily silicone hydrogel lenses and growth in fertility/office-surgical products further contributed to revenue gains. |
CooperVision | +9% | Growth to $676.4M was fueled by high demand for specialty lenses (toric, multifocal) and daily silicone hydrogel products, building on the prior year’s market expansion and product innovation. Favorable geographic mix and ongoing investments in R&D also supported this increase. |
CooperSurgical | +12% | Revenue rose to $342M as its fertility segment and office-surgical portfolio continued to expand globally, following acquisitions and new product launches from the prior periods. This sustained momentum in fertility services and procedural device sales boosted YoY growth. |
United States | +7% | Reached $505.3M, reflecting strong adoption of new lens technologies and healthy procedural volumes for surgical products. Positive product mix and successful commercialization efforts built on last year’s gains. |
Europe | +16% | Climbed to $305.6M, driven by robust uptake of advanced contact lenses and expansion in fertility services, building on successful launches in previous quarters. Favorable macro conditions and increased patient volumes also propelled this region’s growth. |
Rest of World | +8% | Grew to $207.5M, benefitting from ongoing market penetration in Asia Pacific and other international markets, with silicone hydrogel offerings retaining strong share from prior years. Localized marketing initiatives and channel expansion aided results. |
Net Income | +39% | Increased to $117.5M, supported by higher operating income as revenue scales and operational efficiencies improve compared to last year. These gains outweighed rises in interest expense and other costs, driving net income growth. |
EPS (Diluted) | –65% | Dropped to $0.59 largely due to accounting impacts, one-time charges, and share-related factors, even as net income rose. The disproportionate effect of certain items (e.g., acquisition-related amortization or capital structure changes) resulted in lower EPS compared to the prior year. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
CooperVision Organic Growth | Q4 2024 | no prior guidance | 8% to 10% | no prior guidance |
CooperSurgical Organic Growth | Q4 2024 | no prior guidance | 6% to 8% | no prior guidance |
Non-GAAP EPS | Q4 2024 | no prior guidance | $0.98 to $1.01 | no prior guidance |
Consolidated Revenue | FY 2024 | no prior guidance | $3.89B to $3.91B (8% to 8.5% organic growth) | no prior guidance |
CooperVision Revenue | FY 2024 | no prior guidance | $2.61B to $2.62B (9% to 9.5% organic growth) | no prior guidance |
CooperSurgical Revenue | FY 2024 | no prior guidance | $1.286B to $1.294B (5.5% to 6.5% organic growth) | no prior guidance |
Interest Expense | FY 2024 | no prior guidance | ~$109M | no prior guidance |
Effective Tax Rate | FY 2024 | no prior guidance | Slightly over 14% | no prior guidance |
Non-GAAP EPS | FY 2024 | no prior guidance | $3.64 to $3.67 (14% to 15% growth) | no prior guidance |
CooperVision Revenue | FY 2025 | no prior guidance | $2.733B to $2.786B (6.5% to 8.5% organic growth) | no prior guidance |
CooperSurgical Revenue | FY 2025 | no prior guidance | $1.347B to $1.372B (4% to 6% organic growth) | no prior guidance |
Consolidated Revenue | FY 2025 | no prior guidance | $4.08B to $4.158B (6% to 8% organic growth) | no prior guidance |
Operating Income Growth | FY 2025 | no prior guidance | 10% to 12% constant currency growth | no prior guidance |
Non-GAAP EPS | FY 2025 | no prior guidance | $3.92 to $4.02 | no prior guidance |
Interest Expense | FY 2025 | no prior guidance | ~$90M | no prior guidance |
Effective Tax Rate | FY 2025 | no prior guidance | Slightly over 15% | no prior guidance |
FX Impact | FY 2025 | no prior guidance | 1.5% headwind to revenues; 4% headwind to earnings | no prior guidance |
Free Cash Flow | FY 2025 | no prior guidance | Improving free cash flow will be prioritized to reduce debt | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Consolidated Revenue | FY 2024 | $3.89B to $3.91B | $3.8954B (Sum of Q1 $931.6M, Q2 $942.6M, Q3 $1,002.8M, Q4 $1,018.4M) | Met |
CooperVision Revenue | FY 2024 | $2.61B to $2.62B | $2.6094B (Sum of Q1 $621.5M, Q2 $635.9M, Q3 $675.6M, Q4 $676.4M) | Met |
CooperSurgical Revenue | FY 2024 | $1.286B to $1.294B | $1.286B (Sum of Q1 $310.1M, Q2 $306.7M, Q3 $327.2M, Q4 $342M) | Met |
Interest Expense | FY 2024 | $109M | $114.3M (Sum of Q1 $29.9M, Q2 $28.9M, Q3 $28.5M, Q4 $27M) | Missed |
CooperVision Organic Growth | Q4 2024 | 8% to 10% | 8.58% YoY (from $622.9MIn Q4 2023 to $676.4MIn Q4 2024) | Met |
CooperSurgical Organic Growth | Q4 2024 | 6% to 8% | 12.4% YoY (from $304.2MIn Q4 2023 to $342MIn Q4 2024) | Surpassed |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Consistent strong contact lens demand | Previously emphasized strong demand with market outperformance, capacity challenges, and myopia management growth. | Solid quarter with strength in silicone hydrogel dailies, torics, and multifocals; gained share globally, and myopia management up 7%. | Continues to be a key driver of growth with no negativity indicated. |
Capacity expansion and constraints | Previously discussed ongoing capacity constraints and expansions, particularly for MyDay, affecting growth and launch activities. | Focus on heavy capacity investments, especially for MyDay; demand still exceeds supply in some regions, with expansions positioning the company well for future years. | Ongoing theme with long-term investments; sentiment remains positive yet tempered by constraints. |
Pricing power and inflation offset strategies | Cited price raises to offset inflation, contributing 2%–3% tailwind, supported by strong product mix and efficiency gains. | Company is comfortable passing along price increases with inflation around 2.5%–3%; expects pricing to contribute ~one-third of growth. | Remains a key lever to maintain margins and offset cost pressures. |
Market share gains in daily lenses, multifocals, and torics | Consistent leadership in torics; multifocals and daily lenses outpacing market due to innovation and wide SKU ranges. | Strong gains in daily silicone hydrogel lenses (MyDay, clariti); torics and multifocals each grew ~9%, with robust parameter expansions. | Steady momentum as core products continue to outgrow the market. |
Myopia management and MiSight expansion | Significant global leadership in myopia management with robust growth and new initiatives in multiple markets. | MiSight seeing ~40% growth expectation; strong fit activity and global awareness campaigns; major focus on U.S., Korea, and Europe. | Continues to expand globally; long-term growth driver given pediatric population trends. |
Paragard performance and competition risk | Generally stable but susceptible to competition; has seen stocking effects and mid-single-digit price impacts. | Sales declined ~10% in the latest quarter; still only non-hormonal IUD in the market but facing pressure from other birth control alternatives. | Weaker near-term performance; company cautious on future outlook given potential new entrants. |
Operating margin expansion | Gradual improvements attributed to high gross margins, SG&A leverage, and post-COVID efficiency gains. | Expanded by 130 basis points this year; expecting further growth through pricing, cost efficiency, and volume leverage. | Continued focus on balancing investment with margin improvements. |
Currency impacts on profitability | FX repeatedly cited as a negative factor on revenues, hedged but remains a headwind. | 1.5% revenue headwind and 4% EPS headwind expected, but still projecting margin expansion. | No major change; remains a headwind though partially offset by hedging strategies. |
Ortho-K in China | Historically noted softness in China, impacting sales volatility; previous declines with uneven recovery. | No mention this quarter. | Not discussed recently; previously highlighted as a volatile segment in China. |
Unexpected sales softness in the US and China | Minimal or no mention of unexpected softness in the US in prior calls; some references to China weakness in select product lines. | Mentioned softness from mid-October through early November, then stabilized; also noted difficulty pinpointing causes. | New mention of unexpectedly softer sales, potentially short-term and market-specific. |
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Margins and Profitability Outlook
Q: How will margins and profitability look in FY 2025?
A: Management expects gross margin expansion driven by price increases, better freight costs, and improved manufacturing productivity. They are committed to operating margin expansion with 10%-12% constant currency operating income growth. -
FY 2025 Guidance
Q: What is the growth outlook and guidance for FY 2025?
A: The company guides for 6.5%-8.5% growth in CooperVision, continuing to grow faster than the market. They expect to outperform their guidance, as usual. -
Supply Constraints and Capacity Expansion
Q: When will MyDay supply constraints improve?
A: Supply remains tight due to strong demand exceeding capacity. They are adding manufacturing lines but it takes time; they expect improvements through the year and into fiscal 2026 and 2027. -
Market Softness in October
Q: What caused the unexpected softness at quarter-end?
A: There was unexpected softness in the U.S. and China from mid-October into early November, possibly due to hurricanes, but things have now returned to normal. -
Competition and Market Share
Q: How confident are you in outperforming the market in 2025?
A: Management remains confident in growing faster than the market, expecting to continue taking share despite increased competition. -
Pricing Environment and Inflation
Q: Will the favorable pricing environment continue?
A: The contact lens industry will offset inflation impacts with price increases, expecting pricing to offset inflation around 2.5%-3%, and this trend is expected to continue. -
MiSight Growth and Inventory Adjustments
Q: What's the outlook for MiSight growth and recent inventory changes?
A: MiSight is expected to grow around 40% in FY 2025, driven by markets worldwide. Recent inventory tightening by distributors caused some fluctuations, but overall growth remains strong. -
Paragard Performance and Competition
Q: What's impacting Paragard's recent performance and outlook?
A: Paragard revenue was down 10% in Q4, with expectations of flat to slightly down performance in FY 2025 due to competitive pressures. A new competitive product has not been approved yet. -
Fertility Business Growth
Q: How is the fertility business performing and expected to grow?
A: The fertility business showed strong growth across consumables, genomics, donor activity, and capital equipment. The market is expected to grow mid-single digits, with the company aiming for high single-digit growth, supported by favorable trends and potential positive impact from the incoming administration. -
Tariff Exposure and Manufacturing Locations
Q: What's the exposure to potential tariffs and manufacturing locations?
A: They have no manufacturing in China, Mexico, or Canada, so potential tariffs from the new administration are expected to have minimal impact. -
FX Headwinds
Q: How will FX headwinds impact financials in FY 2025?
A: FX creates a 1.5% headwind to revenues and 4% headwind to EPS, impacting revenues evenly throughout the year. -
M&A Environment
Q: Do you expect to continue being active in M&A?
A: The M&A environment is currently very quiet, and while previous acquisitions are performing well, they do not anticipate significant M&A activity in the near term.