The Cooper Companies, Inc. (NYSE:COO) Q1 2023 Earnings Call Transcript

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Al White: Well, you know what, I’ll refrain from answering that one. I mean, I’m a believer in accretive transactions, they need to be strategic, and they need to be accretive. And they need to make sense for your company. Short and long term. I guess that’s how I would answer it. There’s enough moving parts on that one behind the scenes that, that I just don’t want to get into details on that.

Robbie Marcus: All right, fair enough. Appreciate it. Thanks, Al.

Operator: Our next question comes from a line of David Saxon from Needham. Please, proceed.

David Saxon: Yes, thanks. And congrats on the quarter. Maybe starting on surgical, you called out go forward buying for PARAGARD and spend some pricing. Just wanted to see if you could quantify that impact and talk about kind of what the underlying demand looks like, with PARAGARD?

Al White: Yes, for PARAGARD, I think we probably had about $3 million. If we had to put a number on it. That was pulled in from what would be Q2 here into Q1. And that’s what I was talking about, like a little bit more positive in this quarter that will result in a little bigger hurdle, if you will, in Q2 from that. From a unit perspective, if you will, I would stand by the statements that I made last quarter, which I think we’re going to have a hard time getting unit growth this year. There’s still patient flow challenges with respect to the OB/GYN marketplace. And definitely with respect to IUD. So, I think for this year, we grow some, but it’s not driven by units, it’s driven by price. I still think we’re kind of there. I hope I’m wrong. I hope I’m being too conservative on that one. But that’s kind of where we’re at right now.

David Saxon: Okay, got it. Thanks. And then you’ve talked about some contact lens capacity expansion projects happening this year. Just wondering if you could give an update there and how we should think about the impact to gross margin this year. Thanks so much.

Al White: Yes, we won’t have much of an impact on gross margins this year, I think Brian was spot on, we’ll see a little bit of improvement in gross margins. I think we’ve got the potential for more expansion of gross margins in the coming years. But if I — if you look at capacity expansion right now, we’ve been busy. We were busy last year, certainly busy. In Q4 I talked about that last quarter. And we started the year but doing some expansion in Puerto Rico and Costa Rica in our U.S. facilities, doing work in the UK. So there’s a lot of facilities around the world. We’re doing expansion right now. And a lot of that’s tied to capacity expansion. I mean, the long term growth dynamics within the contact lenses industry are pretty damn good right now. So we’re looking at mid-upper single digit growth, I think for 10 years or something like that. So we need to put some capacity to support that. So we’re doing that kind of intelligently, if you will.

David Saxon: Got it. And if I could just follow up on that last comment about mid to upper single digit growth. I guess, you had a pure talk about kind of flattish to down unit growth. A lot of it’s driven by pricing and mix. So just wanted to ask if you’re thinking about mid to high single digit growth, how much of that is units versus price and mix. Thanks so much.

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