Alcon Inc. (NYSE:ALC) Q3 2023 Earnings Call Transcript

Some of that is driven by, to your point, the installation of the DSM flex lines, and that has become a bigger percentage of our overall manufacturing footprint. So that drives incremental improvements. And if we get that revenue growth and we control our cost envelope, we should continue to see margin expansion and obviously that will drop right through to our earnings growth. But we’ll give you more color in February.

Anthony Petrone: All right. Thanks a lot.

Operator: Thank you. Our next question is from Steven Lichtman with Oppenheimer & Company. Please proceed with your question.

Unidentified Analyst: Hi, guys. This is [Ron] (ph) on for Steve. I wanted to ask if you guys can talk a little bit about the capital equipment environment you saw during the quarter? Comps were slightly tougher in 3Q versus 2Q. But anything else to note in terms of customer readiness to invest in capital? And then I’ve got a short follow-up. Thanks.

David Endicott: Yeah, Steve, I think on the capital, it is a little bit tougher, I think, in the US, but I think really the bigger picture is in the US capital equipment for us is more of an upgrade cycle phenomenon. So I think we see steady purchasing of equipment still, and we are selling a lot of biometers. We’re selling a lot of visualization in the US. Internationally, we had a very robust quarter. I would have said that we might have expected a little bit more of a slowdown. We didn’t see it. Some of that is that we’re gaining share. Some of it is that we’ve got some very compelling equipment. And I do think we’ve been remarkably successful with our new diagnostic, our new visualization equipment, and a number of our other pieces of equipment and the handpieces and the like. So still solid for us, but I would say the US is a little bit slower than international.

Unidentified Analyst: That’s great. Thanks. And then just a short call up, maybe you guys can give us an update on Precision7.

David Endicott: Yeah, we obviously are working on Precision7 now. We’re building the product. We haven’t announced a launch date. I do think that the kind of key thinking on this will be how do we maximize the number of products that we have right now in the market. We just launched our Total30 multifocal lens. We’re excited about that. We just really launched a year ago our DailiesTotal1 Toric, which has been a long time coming. And we’ve got DailiesTotal1 Toric and Sphere, again, growing really nicely after more than 10 years, as I said in the prepared remarks. P1 is still growing. The toric’s probably the most popular toric right now for new fits. And so I think directionally, we’ve got a lot to work on. So we’ve got T30, T30 Toric, T30 Multifocal.

We’ve got our Precision1 Toric that’s going well. We’ve got DailiesTotal1 Toric. And we just — we’ve got lots to do, let me say it that way. And I am very encouraged about the performance, particularly in the US and Japan, where we’re seeing really nice uptake and very solid share movement. So I think, again, when we think about growth drivers, we feel very good about our Vision Care business.

Unidentified Analyst: Thank you so much.

Operator: Thank you. Our next question is from Jeff Johnson with Baird. Please proceed with your question.

Jeff Johnson: Thank you. Good morning, guys. David, maybe I can follow up just on all the toric multifocal comments you were just making. That 9% contact lens number, obviously a solid number. It’s been solid here for a few quarters running. How much of that was price? I know Larry asked price overall on company, but how much of that was price? And how much is mixed, just given the good cycle you’re going through on all the specialty sides of those product families? Thanks.

David Endicott: Yeah, Jeff, I mean, it was — you’re right. I mean, the global market was 6%. We grew 9%. I think there is a bit of share in there. There’s a bit of price and there’s a bit of mix. And I would just say that price was probably about a third of that. And so I think we feel like, that’s probably a pretty good place to start. I think mix is obviously helping us as we move continuously to Dailies, and particularly our Dailies toric is giving us a nice lift, both in price and mix. And so again, I feel like we’re kind of on a nice move here.

Jeff Johnson: Yeah, and then I guess follow up just on the contact lens business, outside of ATIOLs, it’s rather kind of consumer facing, I guess, some of your OTC stuff as well. But just your outlook with what we’ve seen of the consumer here over the last couple of months, your outlook for kind of consumption of contact lenses, any trade downs, any kind of pause, anything you’re seeing there? I guess that’s it. I thought I had one other part, but I’ll just leave it at that. Thanks.

David Endicott: Yeah, I mean, contact lens, the patients looked like it was pretty normal. I mean, I would say the US was a little bit better than international. I think unit movement on what we call [EQ] (ph) basis, a number of patients getting lenses looked like it was very normal for historical rates, kind of roughly up 1%. I do think that internationally it was a little bit softer. I think it was down 1%. So kind of flat overall. That’s very normal historically. Remember that most of this business is about trade-up and trade-up was exactly where we would have expected it. And again, I think with a little bit of price, a little bit of trade-up and then for us it was a little bit of share.