Cooper Companies ((COO)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Cooper Companies’ recent earnings call highlighted a robust financial performance, underscored by strategic growth initiatives. The sentiment was largely positive, driven by strong results from CooperVision and an aggressive share repurchase program. However, there were some concerns about market challenges, particularly in China and the fertility segment.
Record Earnings and Free Cash Flow
Cooper Companies reported its eighth consecutive quarter of surpassing consensus earnings expectations. In the fourth quarter, the company achieved a free cash flow of $150 million, exceeding forecasts. Additionally, the company raised its fiscal 2026 to 2028 free cash flow target to over $2.2 billion, showcasing confidence in its financial trajectory.
Strong Performance in CooperVision
CooperVision demonstrated impressive growth with revenues reaching $710 million, marking a 4.9% increase, or 3.2% organically. The MyDay product line experienced double-digit growth, while MiSight saw a remarkable 37% increase, highlighting the segment’s strong market position.
Share Repurchase and Capital Return
The company continued its capital return strategy by repurchasing nearly $200 million of stock in the fourth quarter, totaling almost $300 million for the fiscal year. The share repurchase plan was expanded to $2 billion, reflecting a commitment to returning value to shareholders.
Improved Operating Margins
Operating margins saw significant improvement, with non-GAAP earnings increasing by 11% to $1.15. This improvement underscores the company’s effective cost management and operational efficiency.
Market Softness in Asia Pacific
The Asia Pacific region experienced flat growth, with a notable 28% decline in China due to weaknesses in low-margin e-commerce channels. This market softness poses a challenge for the company’s expansion efforts in the region.
Impact of Tariffs and Product Mix on Gross Margin
Gross margins declined to 66.2%, influenced by tariffs and changes in product mix. These factors present ongoing challenges to maintaining profitability.
Challenges in Fertility Market
Fertility revenues increased by only 1%, affected by tightened consumer spending, particularly in the Asia Pacific region. This segment’s sluggish growth highlights the need for strategic adjustments to capture market opportunities.
Forward-Looking Guidance
Looking ahead, Cooper Companies provided detailed guidance for fiscal 2026, anticipating organic growth of 4.5% to 5.5% in CooperVision, driven by MyDay silicone hydrogel lenses and new product launches. CooperSurgical is expected to grow 4% to 5% organically, buoyed by optimism in the fertility market and strong performance in the Office and Surgical segment. The company aims for non-GAAP EPS of $4.45 to $4.6, with operating margin improvements despite gross margin pressures. Free cash flow is projected to reach $575 million to $625 million, with a long-term target of over $2.2 billion through fiscal 2028. A significant portion of free cash flow will be allocated to share repurchases and debt reduction, with an increased share repurchase plan of $2 billion.
In conclusion, Cooper Companies’ earnings call reflected a strong financial performance and strategic growth initiatives, with positive trends in CooperVision and share repurchases. However, challenges in the Asia Pacific market and the fertility segment remain areas of concern. The company’s forward-looking guidance suggests continued growth and strategic focus, promising a positive outlook for investors.