Alcon Inc. (NYSE:ALC) Q2 2023 Earnings Call Transcript

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Those two brands or what’s driving the ATIOL market right now. And so if it takes a little breather during this kind of COVID hangover, we’re not super surprised about that, we’ve been talking about it for a while. I suspect it will come back into what’s a much more normal frame historically 50 basis points a year that kind of thing in the US and look for international to really be the driver of ATIOL penetration because it’s starting right now around 12. It probably has got a lot more room to grow and there are some really interesting markets. We talked about China in the prepared remarks, because it’s a fairly low penetration rate and we’re just getting in there now with the right products. So we’ll see how that takes shape in this next year.

Unidentified Analyst: Thanks very much.

Operator: Our final question is from Chris Gretler with Credit Suisse. Please proceed.

Chris Gretler: Thank you, operator. Hi, David and Tim. Two questions, the first is on guidance, actually to what degree is your guidance upgrade on top line driven by the improved market assessment and to what degree, is it to Alcon specific factors? And then related to that, why was there no increase in margin guidance given the stronger top line one obviously would have expected some leverage innovative higher sales, could you maybe discuss that quickly? Thank you. And I have a follow-up question on China.

David Endicott: Yeah, Chris. Let me take the first half and I’ll give Tim the second half of that. This was really driven a — it is a combination of really great performance in equipment consumables and contact lenses. As you look at, and frankly, our eye drops business, those have all been overperforming relative to expectations for us. I think implantables right on pretty much what we expected. So I think directionally, we’re doing better in all cases for our business than expected but the market has also improved. So I think we had concerns in the beginning of the year as everyone did really about what was going to happen with the consumer. Consumer has been relatively robust in most markets and I think as we look out through the remainder of this year, I think we can confidently say there’s probably not much that’s going to happen timing wise for us to have for the rest of this year that’s going to affect us much more.

So, markets look solid, a little bit better than expected performance, little bit better than expected.

Tim Stonesifer: Yeah, and as far as the margin rate, it’s really driven by FX. I mean, if you look at the rates as of the end of July and compare them to when we last spoke, the dollar has continued to appreciate. So that’s really what’s driving the pressure on the margin rate which is why we didn’t increase it. But again we’re still comfortable with that 19.5% to 20.5% range.

Chris Gretler: Okay. And then on the follow-up, on China, you broke out about four percentage point contribution in consumables from China, is that kind of just COVID recovery effect or would you expect kind of a more of a structural kind of element to that as the year progresses? Thank you for taking the questions.

David Endicott: Well, the four percentage points, just to be clear, it’s the revenue percentage of our total revenue just to kind of size China for you. So many companies have much larger exposure to China than we do, so that’s a reason to give you that number. I think directionally, China is an opportunity for us, we see it that way. But largely as a matter of equipment and consumables going forward, we certainly sell implantables there and we see an opportunity there, but directionally, we’re very interested in what’s happening in the market. The market itself, it is wrapping around a pretty big COVID number, so I think to your point, we had a big growth in China this particular quarter because there was a pretty soft year last year. So I think the combination of what picked up in — really pick up in China started in kind of late February, really March, April, May has been very solid for us. So we hope that continues.

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