ALC.SW - Earnings call transcript Q3 2022

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Operator

Greetings. And welcome to the Alcon Third Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. to conference like host, to now Mr. would turn over the your I President of Global Alcon. Cravens, and Dan Vice Head Investor for Relations Thank you.

may You begin.

Dan Cravens

call. enhance and posted to XXXX supplemental slide press Thanks. third our a and Yesterday, website on conference to release report welcome a call. we financial And interim presentation issued today’s Alcon’s earnings quarter

can website at our find section Relations of all You these Investor documents in the investor.alcon.com.

Financial Tim Officer. are David Endicott, Chief Stonesifer, Joining our on and Chief today’s call me Executive our Officer;

Our and obligation statements. update future result presentation required press expressly forward-looking We information as new a forward-looking release, by include will discussion law. as disclaim or to any except of developments, statements

comparable IFRS. but public not directly as to used in IFRS and measures measures a sec.gov. presented see Please by calculated from similarly factors from, between company differ are our Our Commission measures be the website considered our report reliance our place by along therefore, be and implied reconciliation press in expressed to should release forward-looking in undue those or non-IFRS filings. operating at prescribed the from forward-looking and measures in these with statements that actual comparable any alternatives may and results should XX-F actual materially in may used in differently with statements. titled other the Alcon’s forward-looking SEC’s could earnings measures not companies. not non-IFRS results be the to, on Non-IFRS accordance available financial on may cause file Important Securities those as These statements. financial vary our our Accordingly, measures Form with, performance our with interim included on and you Exchange

our will turn For comments currency. CEO, that, expressed call With growth I constant David the over now Endicott. our on discussion are to in only, purposes

David Endicott

results, our third persistent After that begin Q&A. pleased brief of for growth our recent delivered Alcon and I per on overall team I am margin it will X%, to of the $X.X fundamentals quarter discuss and performance. proud will to outlook report quarter core then Based the $X.XX. and by share up were quarter call. our of for market our earnings able remain results, XX.X% we to what the headwinds closing diluted will core wrap my navigate. Welcome up update Dan. with remainder Tim our macroeconomic am giving the with some a continue remarks, of clear year on third Alcon’s these and dynamics I sales and third Thanks, third quarter operating of to we it XXXX it’s that sales we of open given particularly billion, earnings strong. accomplish, performance remarks, Today, I will

lenses, driven the market Now continues market-leading similar strong to of In the portfolio Vivity. PCIOLs, including by with remain Starting results of these PanOptix we products the were market. win commercial of improvements intraocular ongoing second and our products in our leader implantables, driven by Surgical, international markets, quarter, broad share suite the portfolio in our and in to execution. broad comprehensive

and While doctors, lenses. educating recent patients clinical by staff ATIOLs have to we technology on the about driving focus trends penetration continue moderated, value and of penetration benefits advanced

clinic-based For force learning have sales and our in investing peer-to-peer surgeons, continued we programs.

so providing informed their clinic into doctor materials visit come about educational options. advance are they For in their choice lens the patients, we of

the position. AAO, in to Recently, in select States. All us Clareon expand announced we United at plan we are of them defend to rollout showing IOL continue Clareon, practices results our the Toric programs early the our latest monofocals, helped In encouraging material XXXX. of and across these has market-leading

cataract U.S. now offers Alcon options free for introduction on latest material. Toric, our the of astigmatism With robust of patients Clareon with a listening portfolio

the have We biometers make data the provides that phaco And enables lead the Legion great with prediction and and the selection. the with lens upgrade of suite in Argos is phaco favorable than power, supported and refractive doctors to devices. equipment, Centurion including to our deliver most capture are are our extremely lens Sentry easier suite, Legion in Alcon Customers demand the fully delivers continuing responding which may features our handpiece, rates customer favorably urgency. active with is better Customers markets right in and industry-leading for machines also biometer, international Argos of Alcon on improved guidance on with emerging cataract Legion higher performance the image better cataract advanced phaco outcomes other markets. Centurion where also feedback The handpiece advantage emerging machine. for also integrated to system, markets, appreciate phaco by received the legacy market. phaco Centurion it helping we for Argos the price biometer to

meaningful Centurion with Sentry helping practice clinical efficiencies. multicenter when from the demonstrate that at seeing are Active savings time AAO Centurion we using Importantly, Sentry. is surgical Active presented conference Results prospective a drive trial with

and global increasingly this is becoming backlogs persistent staffing important shortages, Given to surgery surgeons.

Now Vision Care. moving to

handling PrecisionX, wear, acuity, be right PrecisionX to to is treat can TotalX TotalX range have continue spherical, for PrecisionX and and continues the care important portfolio, PrecisionX target completes the patients continues This single gradient to Dailies main who wide pleased only our because which underserved a to was right includes water Dailies be significant lens the of the lens our eye balance driver. premium innovative designed a astigmatism, TotalX Dailies and astigmatic family. daily deliver toric growth toric professionals progress lens suite population. mainstream a lenses. for but mainstream with multifocal with now a TotalX with and lenses. launch We the of And ease launched This Dailies feature of comfort for we of been historically now we contact year, first the Earlier of premium this and the to technology. in astigmatism, gold standard including Similarly, be patients lenses, the visual have price for wearer. TotalXX.

share finally, TotalXX TotalXX water a first year. to of lens. in TotalXX. in ocular launching two-thirds a We innovation the this the reusable technology time, adds reusable approximately $X of number wearers. astigmatism next gradient a first expand we commercial acquisition family to represents the market recently the are also lens early billion in category launch for is We announced TotalXX reusable and And major since Recall of with represents health, category plan intended that and a capturing the in years, product for Pharmaceuticals. Aerie of

This the strategy we Rocklatan of acquisition forward expertise in our and Simbrinza see look and our and leveraging Alcon, expanded team even commercial footprint underpins moving natural As Eysuvis Aerie to to to a their entering did as of customers white and and Rhopressa with we more We productive this welcome to bring direction acquisition the portfolio. spaces. rights commercial into this of that U.S. started the patients.

flat. significantly staffing United centers me on procedures global inventory up single continue on versus the quarter timing due was varies of In market available to our Based in and constrained to to let the an were lenses, the in difficult markets estimate by the data, quarter. as procedures the low-teens for continue third grew contact to increases price movements. the we overall improve. growth mid-to-high read In lens growth the shortages, were quarter States, year. Surgical, U.S., In up end market update digits cataract markets. prior relatively where Outside Now region. This provide digits surgical volume the the was by be procedural high-single third

pre-COVID to contact We the have are encouraged we Against lens to that backdrop, in reporting indicate current see returned believe levels. grew line optometry with that that business visits market. our

program. on our Now I’d update like to you transformation

progress transformation the journey and years. business We cultural have with over past made our few significant

have allocating growth. have simplicity the we drive outpace the in engine is us goal created savings As has launches. and market reinvested our to were we speed new before, This expenses product that to and By more said helped innovation business. development into fueled and efficiently,

some To functions business, layers, to established additional have HR streamlined help behind offset Specifically, strategic including headwinds discuss processes. our continuing invest our this as steps while well continue operating macroeconomic to service key streamlining our we in optimize to additional will shared face, we Tim and will our remarks. These transformation priorities. centers finance, commercial the and of spans we management his model and like for greater reviewing IT. as initiatives, us global in identified detail

as environment. new margin operational despite we our currency, operating performance has XX% points. core summarize, launch continue been income to expanded we X% revenue constant So grew particularly to current grew by the pressures we basis by inflationary and operating core given XXX we products, exceptional, In macro

our on year. Tim, to through let of and So, you who outlook rest comment results will with it our take for that, financial the me the pass

Tim Stonesifer

Thanks, David.

$X.X third in recovery prior This our billion, pleased up X% of continued international demand and are quarter by products. for We markets report to was versus year. innovative driven sales growth

Our XXXX, sales of have recall included quarter and X lapped we point Simbrinza second quarter of we contribution contribution. sales Hydrus, overall that from approximately in third late growth the therefore its acquired

included basis foreign U.S. currency. quarter third Our of approximately dollar sales XXX growth points from pressure

sales the billion For grew XXXX, of total months $X.X company of XX%. nine first

Alcon and U.S. macroeconomic challenging the including execution inflation. team continued tightness backdrop delivered of mentioned, supply David strong quarter a chain despite another As a dollar, strong

third Moving results. our to quarter

in sales by year lenses change $X.X In months was months quarter. the to third were primarily billion. of million, quarter XX%. was in revenue were cataract demand year. up XX% up partially reimbursement due of franchise in during first year-over-year strength refractive XX%. Surgical of offset in South and improving consumables the Implantable sales the intraocular in year-over-year, sales sales for Our first XXXX nine across which were portfolio in continued a following high and declines $XXX recovery, million of Implantable growth double-digit in XX% nine to not primarily international growth $XXX markets to United our up and the up Hydrus, market consumables, Korea, driven was advanced in cataract technology by saw This quarter, in the conditions XX% up We Vivity Surgical last first vitret and consumables was consumables. our continued part single-digit revenue States. international the

the equipment. first cataract demand up quarter, For nine months up of year-over-year, year, $XXX due sales million continued to of and in the were the suite strong other sales were In our for XX%. consumable primarily XX% equipment

in to of equipment been are upgrade phaco favorable. our conversion account We machine older Sentry markets to and continuing has international generations

for markets. see year Equipment first sales the We developing our also machine Legion continue the up of for XX%. nine months phaco in to healthy demand were

now Vision Turning to Care.

to sales X% million. quarter up year-over-year $XXX were Third

saw impacted XXX we markets, negatively international demand U.S. in sales points. While foreign currency basis by approximately both and the

year recovery. which and international quarter, the In X% negatively XX%. first to significantly first sales In the solid were Total by X%. year. health, up health third for nine million were XX. year-over-year. this quarter, points. challenges, XXX artificial lenses, nine billion, our of our of supply quarter, and were growth $X.X of impacted innovative up X% of Contact demand sustained tears growth offset the quarter saw lens up PrecisionX, portfolio the sales Vision primarily we our lens basis family in Contact new led This by was TotalX months million, Care for ocular $XXX in chain was contact months $XXX care, versus sales sales the For SiHy up last the approximately year, by ocular market were Similar last lens Dailies

health persist through year. our to will chain, the these were early actively up months sales to supply X% of nine manage we the continue we Although, Ocular for challenges XXXX. first expect

to moving income Now statement.

compensation, quarter, gross operating Third basis primarily on was points points XX pressures. basis dollar leverage basis, increased a on down a operating margin basis U.S. by and was basis, currency inflationary basis. inflationary points improvement higher was by partially The sales Core on XX from margin XX.X% XXX XX.X%, favorability incentive from due to primarily pressures. up the driven in down but quarter offset a currency constant constant

Third expense by $XX quarter million interest was interest higher driven rates. $XX last year, to million, compared

remaining expense increase to we Aerie finance transaction to term the expect and our Going debt loan. forward, interest with look as refinance we

share tax to mix pre-tax certain a was a and year, to of were related was decrease third last year On by third year. earnings across inventory the down due a discrete offset XX%. core the from income in rate last $X.XX, per jurisdictions partially in tax currency basis, diluted diluted constant primarily markets, XXXX. benefit The a XX.X%, build to core quarter fiscal quarter $X.XX XXXX EPS up Core in XX.X% compared geographical of of tax

operations timing $XXX of lens the the investments for to of other for costs cash than XXXX flow in XXXX, net which higher discuss million in and lines. XXXX, in I million, lower cash XXXX. from prior in primarily first primarily last by $XX million remainder I related in Before to the nine payment, Capital contact in from for and couple bonus manufacturing of were flow expenditures quarter driven free Transformation was were our was annual years, the cash on of outlook which to related our compared will working variance months the to CapEx $XXX $XXX nine million flow first primarily production expect Similar quarter. see fourth increase of an capital, in life-to-date. we related the changes $XXX million the Free items. were of This touch a to months XXXX year. was

our targeted We have great progress transformation made delivered our and have savings. with initiatives

incremental incremental are while the starting for expected be identified these we mentioned, cost about is incremental activities generate approximately efficiencies. one-time to $XXX David year, As expected The $XXX be to million transformation savings initiatives annual million. next additional to have

plan Importantly, originally complete communicated. partially mitigate the macroeconomic of innovation launches. we new savings while allowing continue these as incremental We the product to and expect the invest around headwinds program are behind to XXXX to us end to we seeing,

moving our full to guidance. year Now

billion. dollar markets Our the remainder chain net current XXXX billion materially exchange on stays mid-October assumes current for deteriorate and current $X.X global through Based of rates. above to assumptions, does not holds guidance year, the U.S. supply at $X.X steady outlook are levels foreign rate, the updating to that the XXXX at historical slightly we the at grow our sales a our inflation

We growth guidance XX% to currency are tightening our also year-over-year constant XX%. sales to

versus a Foreign impact year. now points expected exchange is to negative percentage have prior approximately of X

operating margin. Moving to core

not FX the our reflects of and basis full inflationary last now impact tightening $XXX million. planned of potential and acquisition expect with from approximately the to XXX approximately we This expense include points be are net pressure to basis We points XXX XX% quarter, and This Consistent year pressure. outlook financial does interest million $XXX other guidance XX.X%. of between range Aerie. to of the

We are the XX% rate XXXXs implies high core effective our guidance XX%, quarter. rate XXXX to tax which fourth a tax in of maintaining

mentioned the I we Swiss agreement. are As with in pricing authorities August, and discussions U.S. advanced an in regarding tax

fourth will impact finalized quarter Our the assumes be new the guidance incorporates in this the of of negotiations agreement and year. the

guidance $X.XX versus of updated of now per XXXX are we Finally, our approximately range $X.XX expect per share. now year. last $X.XX tightening versus core the $X.XX headwind share FX of diluted EPS guidance core to call and EPS diluted and our approximately increase prior This reflects of an

Additionally, XX% we XX% are growth fourth momentum we impact Aerie the EPS the business. in strong which to core diluted from acquisition, outlook by diluted EPS the currency constant pressure quarter. tightening in to excludes This seeing the our due expect core $X.XX to to approximately we any are

Alcon $XX.XX $XXX per will Now approximately which the agreement, million. discuss represents I an of the Under Aerie Aerie of acquire share, intended of will terms value acquisition equity briefly Pharmaceuticals. our for

for the for and but to pleased their in challenges, This assume well I to with to very purchase I approximately which pass of intend companies has in Boards continue performance coming determination. had $XXX year to debt In will its and the Alcon that, a approved total hard to debt. summary, and was transaction will With close back expect the The we want million, closing team third consideration I with net difficult new thank am $XXX of we the agreement remarks. million by manage entire our it David of a environment. finance quarter Additionally, work weeks. we both for approximately

David Endicott

is underlying our business up, well. performing it wrap To Tim. Thanks,

is to team our delivering and our on shareholders. commitments executing Our

portfolio. lead the our We continue of to on innovative market strength the product

We are investing in innovation.

to creation, it again With am associates that, by let’s We margins. thank another health operating results, finally, Aerie. up acquisition are moving I quarter. of in creating And on intended into optimistic and are and Alcon’s leverage spaces and value we great expanding outlook want white of ocular these Based our Q&A. with attractive long-term I the for all for about open expanding once

Operator

Our proceed with comes you. question. Thank Instructions] Ryan your with line [Operator from of Zimmerman Please BTIG. the first question

Ryan Zimmerman

I actually Thanks bit. ask Hey. taking for to transaction David. about morning. want a the Good little my Aerie questions,

that about getting margin if little a can we you provide of As the from transaction, the benefit color. think wonder are you I bit

street I benefit transaction? the their profile, given think points of the assume from next get of op year. of carry that to wanted kind margin existing the some and how Aerie I but looking on for Aerie of XXX to will about margin think load that about we your kind basis take expansion get I

Tim Stonesifer

Yeah. for the Actually, question. Ryan, thanks

on actually, have obviously, relatively neutral, it is through release below when neutral As in then, press will we it the the line. as you, and be an relatively year cost from synergies operating deal, announced the perspective, of is the sort we we work the did what income and financing one,

not it pressure So year’s little in number, next but a that it’s bit of material. cause will

Ryan Zimmerman

helpful, you you comment am Okay. there a seeing do you did for could I are elaborate wondering of That’s very then, Tim. ATIOLs how that turn terms and questions, you moderated taking has expect on kind And guys. start of little bit. if the David, my that when more think for favorable? about end to that to Thanks markets moderation, in you ATIOLs what

David Endicott

had implantables international well. business quarter, Ryan, was business, good the Yeah. as The really good. did though, can pretty up. markets mixed, We was obviously, in you actually the Surgical pretty was the a tell. implantables Penetration

take mean that But a I improvement. penetration good number. from You out Korea it pretty have was to

nice And which, PCIOLs. again, across lost our in Clareon particularly the of category. again, very all directionally, But would was has markets news the share good. little we Toric share was that and stabilize pretty business, a a done helping Our we job in toric good,

I slightly. excitement and considerations from staff, we I of thing And as moving think heard have difficult how think what we on was get the lose to who a back. I and was somebody penetration segue the a the in conventions lot staffing a to have that you the are really are about about thinking had Again, been know U.S. been I think that a the at ATIOLs we is U.S. this people articulate in value lot of the it we think, with that losing like are U.S. right lot them when going

of right docs on focused now a programming are getting also value So we time of training the to spending communicate how quality our lot the on of patient, information to on life and procedures. big spectacle a being premium from free. kind move the again, benefit the value part you is standard And of of lenses how long-term that to of people of

news, don’t mean think I pretty procedures themselves all. I off look procedures guess, good were is normal. I at So

The In world have we the of help something obviously, good on wet that’s, a fact, a to sight mix and we to, that direction procedures. paying move programming number line saw are can penetration that. the got around for but sideways to us like we feel I pretty quarter-to-quarter attention

Ryan Zimmerman

Congrats the a Thanks for questions. nice on taking quarter.

Operator

Thank you.

Our BNP next with question your line comes proceed Please with question. from Julien Dormois of the Paribas.

Julien Dormois

focus called afternoon, have taking guys. AR-XXXXX, am I question. product they Good to right. is and particularly the also Hi. related my on Yes. It’s Aerie which development, under if Thanks the for

expectations the the for competitor drug whatever consensus had Xiidra is think high Novartis this potentially drug very and in in I and a to sales. is direct

could time data much and with than on the update the the the interesting drug filings and So development be you clinical please? more the particularly potential readouts that also, for comfortable Xiidra, you and what topline FDA, line could if program makes us this

David Endicott

the Julien, for question. Yeah. thanks

mainly that of we first out probably to of of the number for eye additive reasons, on there that’s almost mechanism it’s think like but because the dry all, a other product every XXX, in I potential category.

the and part competing are but quite the number is Xiidra, to take additive you of So of a I that a exciting for think that to Xiidra time may products with mechanism bit there, out little work. including isn’t really could find us it be this directly

also its potential be are And about more complementary other a we to so little optimistic to is work quickly what products. and

of profile kind like. the we that’s So

Now the to look, somewhere quarter say data looks will clinical that it’s so we finally data range comes what have want of then and and X what the believe how the to right and readout figure out in Phase third we time we will and about it is after out. kind in next see year line. that it’s I

we So think, we actually about these to we we are deal, getting the pipeline. feel things, the lot that more a say as directionally, good familiar a lot with But about other pretty of will and have this just and I again, product. close

Julien Dormois

quick Okay. very That’s you follow-up, can very if I helpful. have is South on which Korea. And Thank a much.

how directly that trajectory, I it if is Sorry missed XXXX? another that. we or see QX do implantables into impact think in long could impact But you could the

David Endicott

Well, go. it’s more got two to probably quarters

-- now we increase is So revenue that to in come normal are year. next of on the we so this payers in that has there big significant changed. right XX% was of the impact reimbursement the from -- seeing year Korea the levels was and very a in north in was more as that quarter will the down first wrap Korea has What much penetration growth obviously around

more number number, you some of until going think, a us ways but leading are pretty I a of smart think, a Korea so is North challenges first normalized cause still lot good quarter. consequence a going of way certainly the end will in to see And and ATIOLs, that, the as I Still forward. on

Julien Dormois

Great. very much. Okay. you Thank

Operator

you. Thank

comes Daniel Please your question Buchta ZKB. Our line of proceed from question. with with the

Daniel Buchta

inclined that quarter. holding this reported, more one mean, what stated has also J&J in bit, then this a you past, to gentlemen. Maybe my or your how was clearly my have gain about question year personal the much. and expectation want have on that, feel coming than least we year, Yes. ability the this side, you I there from in I the Thanks much higher contact you are products my market side back you growth are here and from the first X% very Is share lenses anything to share. also Maybe this mature mean, organic older that’s years? competitor at first Hello, the do in market little there gain side. seen

David Endicott

really look, good about market Daniel, share Yeah. the business. we in feel lens contact

start growth saying, not. difficult this of market increases, out, quarter. carried to was on the number in gauge depending timing they the or going can by loads into was just when me data. happen, may may be pretty on get come There of market quarters when not a or price things captured let So they on, And similarly, depending inventory

be assumption So relative -- done the about people and inventory carefully what market you should really careful think -- kind other and have to just about of movements. this and inventories what

the digits. of kind lens itself single we it mid-to-high contact market is had Secondly,

just new look and let’s share grow a continue would tell So of nicely, you, to for confidence. switch I we grew X% internationally, market. growing U.S., to it And our we call in continues very of great the and the with share good with fits deal us.

So, one to need to what -- order things levels international, we as and do you exciting, grow to really new to and because happens, of And are the volumes again, particular, a that grow think visits of will was I in think offices, the in to earlier patient get and that’s back a what normal have as, share, patients like pre-COVID that to it’s of we flow the think, I that see. patient through I is mentioned see have roughly we share, switch us that I got patient now as back for well. or kind

I market. and faster So growing good are feel consistently growing certainly about about share good than where feel we

Daniel Buchta

mean, then Okay. you asking your guidance valid Tim mean, much. it’s And on operating dilutive maybe still on low the area I next you clear really one Thank in comment the that At for margin Very you core a least XXs, about into former the not year? second this XXXX thank to or I feel the answer. are for compared margin the really too until year. XXs fortunately, core into next mid-October eased realistic little for margin least, has it bit. to Is material low at then? do EBIT also assumptions still compensate how to headwinds your or

Tim Stonesifer

Yeah. on XXXX. will going a gives all us you Great in this the we you the question, continue Daniel. guide. of not to But customers. details products am resonate can go get share plan details into what I plenty year. I We to are XX% the here, just confidence we to do to have how with performing I when February is we tell mean launch that with we

If you in at revenue, year-to-date. up currency we constant are XX% look our

can demonstrate, able So to been business. obviously, the have we we that grow

We are also at operating constant have third we quarter in if SG&A driving nice an leverage. mean I got you year-to-date, currency. look alone

leverage. have of XXX operating about points got We basis

we will more you that us very, So XXXX the But the give gives share us that’s what confidence tells details with February formal guidance. when in our just that of fundamentals numbers. call on business we are working the very well and

Daniel Buchta

Fully Thanks understood. for conference. the

Operator

Thank you.

with question. of comes Fargo. question Please your the line with from next Larry Our Wells proceed Biegelsen

Larry Biegelsen

Hey, had morning. its that morning strategy reporting Aerie? talk that David, Good approach I is your and Thanks ophthalmology $X billion. business it about about business your pharma could right would I Novartis you to Can about your one forward. building M&A? this for selling And considering ask question. you capacity If and asset the became what’s wanted you garner going business your pharma consider follow-up. post for Bloomberg’s large taking to available, the

David Endicott

we are million of not think ideas bigger couldn’t million $XXX do we do really growth transformational that to consistently I are at, think, adds trying what think how at is Look, I this of moment. value steady shareholder I kind It’s to we than say, What real for really kind long-term looking with mean, I we this approach generates a consistently we accretive range. $XX are even something kind looking don’t of like that disciplined we Yeah. to we that, and build but do. nice

think, two approach like products three are about very I plus So would Simbrinza do can think, you you medical now, tell Aerie a doing, therapy nicely and approach been the in that, glaucoma that is glaucoma those about with the for what could maximum is patients. just, probably in we I blend best mechanisms we I together, Simbrinza, Rocklatan So best the doing we has get different are think, what great I to glaucoma products get. that, glaucoma you

that have and can market mechanism think excited get to got synergy come of Nice we be forward, And really that dry we mechanism and long-term. a we dry something exciting a So we already. as we product have Eysuvis that you approach. what XXX about then is like that go complement treats a a kind where with done treats flare complement eye that eye

So are strategy is many or of going would think legacy phase the way we take. late out phase growth what a aren’t they to I are of companies you And that have to are growth in we available potential. business approach And products I they that expensive. there portfolios say say, kind are in see their and really growth really lot don’t would an that, that’s I the, find the directionally have of of

that to you dip to the an that. more kind probably, now in or over and kind again, lot and I area the typically be market million approach time see think more moderated something taking us million to in every into $XX and we thing -- maybe think we come have is, a of like as range of a $XXX think with we as I of there line out interesting values becoming

Larry Biegelsen

How the topline? about I for then mid single-digit guys guys talked on or are some topline, -- XX% and mean, Thanks clear helpful. what a you goal comment puts the on the topline? and XXXX I point margin Tim, should think rate the year-to-date how currency. mean, and this for on on think helpful. are you were Tim David, topline takes And constant the of do about the guys. consider above puts are some you and grow about just to at XX% That’s the your we of takes what

David Endicott

than Look, faster we believe we consistently market. Yeah. really revenue grow on line, the could

I think it are, if comes right and we will. innovation think I doing think, our So are I and which we things, through, the

we good eye should I is what see market, the results. fundamental kind macros because market to have mid going think a growth care drive we got of underneath which are single-digit steady

than if our we grow kind a to X% a bit X% world, faster you should markets think grow little I that. grow, think should of normal So in

depending So where where time. be should I about north think you put bit way then that be I think should the you put little think it market the us on over we of that a and

year, we So I number, mean, we is a because see yeah, back to number wrapping -- don’t to the terrific as wrapping XX% COVID going are the us a around not which big normal getting for but So, now, international, markets big right I back the it’s it’s is of international to, coming right? something are is be. ought is not And the see right numbers in not have to what world. business the U.S. growing, we COVID around

be most relatively next so of like we a year feel frame other year problems. should where macro I And normal, notwithstanding probably coming next at are into

Larry Biegelsen

you. Thank

Operator

Thank you.

question line Matthew question. next with with comes your of Our the Markets. Capital KeyBanc Mishan proceed Please from

Matthew Mishan

taking you Hey. the and questions. Good morning thank for

transformational million and that Thanks. on this quarter. realized coming savings, that $XXX in, majority XXXX? you $XXX in of or in million incremental does that announcing is in the savings, the been those start yet including are incremental first $XXX in million Just XXXX cost cost Have the come does that

Tim Stonesifer

Great Yeah. question.

million projects call But coming have more again, of that going from the said $XXX first, So that the to will transformation, in has of we it, been reinvested get-go, most of be the do We the the have XXXX But savings, numbers that first I business. back that of to place. as some realized. we million in round portion transformation, into is we have identified. and the -- of got taken was place in plans as actions $XXX

that’s that us of some I’d invest call would and strengthen to drive line. those like So expenses we that what to allowed to customer-facing more revenue

million come $XXX has through been incremental in the Now that that identified, will XXXX.

Matthew Mishan

inflation contact on patterns how [ph]? in that’s kind seeing of the And lens are change or Excellent. the one as economy Okay. you one just same trends, consumer potentially buying stay the then move last

David Endicott

Yeah. the XXXX, Look, typically recession. consumer linking think, XXXX back thought about I mean, kind to it I have we of behavior,

that lenses. in could don’t was from back contact modeled you more Sunday, six think our you happen. at stop trade-ups. People saw we what We best see that’s What proxy a ways one, probably that have didn’t of lot

What moving selling reusable lenses. didn’t a you time, So folks same in the are at volumes bunch fine. what end up was pace. at put stays the is, you of that see into Dailies kind their Everybody of

similarly, with more has to we some stand at this to that up HEMA reusable attractive positioned reasonable than, price can the the point I I jump from TotalXX the with our and And you are lenses in trying really you slow, SiHy slow. think point similar at way into the with trade Daillies value is business much still a say, price a think, a trade-ups and reusable, if at good might now, might is, lens product all news get space, are the to But TXX. PX you our GPX. see you better very that well if a So

we lenses will So really well. slowdown was that for got do a value we have we a like like and happened, feel that positioning good But our we certainly happens. market I way you what it some very feel can other I turnaround think if see there’s whatever contact directionally, in well, and that the pretty significant think, pretty as turn. quick manage for

of speaking understand So, are you different what generally it ways. modeled we think, it again, Those I lot we see. and a

Matthew Mishan

Thank you.

David Endicott

Yeah.

Operator

Please comes the of Baird. question next Jeff Our Johnson with your line with proceed question. from

Jeff Johnson

profit on that. like is still rate operating Tim, you XXXX margin operating something path Would a one. want I Aerie to guys. you just couple I you morning, understand. when neutral One, be, made. Good a I say sure follow-ups you. make on just margin or thought Number neutral? going margin maybe you Thank of the said to comments Thanks. comment that? getting you And to or path an XX% operating number two, there’s about back XX% a are a year, for exit or maybe to to for the full a speaking be think that

Tim Stonesifer

Yeah.

goes, As neutral. far will the be dollars operating Aerie as income

bit pressure year then So will it given in have some two. little that accretive becomes we it a year that in apply from revenue of fact the one will

and of our what little apply does a I XX% but is it year not So XX% material, pressure, would say. in a is that number. The bit full

Jeff Johnson

ATIOL the a enough. David, But impact? hearing the on that was different in And in with are and XQ, on what in comments impact but big second think the lot any sits in kind in competitive point South quarter? XQ the do XQ for I field. the we you, Korean of know U.S., buy than Fair any you impact this that did Thanks. quarter put Just All the maybe or just any impact you first of at difference the was well have the right. on that staffing forward,

David Endicott

feel and XQ North what somebody feel slowdown roughly I same good see see I while my with a has now, going going verbiage. to me, the the can share challenged were Korea -- about earlier, right on good pointed out don’t business, it that like for I the it’s on Right necessarily so actually you category. I related now. of this think us. just and is for XQ the some been I kind truth move to we in to that No. missed pretty think programming what’s be do that The on and know sorry pretty geographically we

globally, good take So maybe concern. quarter. lot say, actually In penetration just bit of launches. like I where in we have share, toric, gained take and a PCIOLs, gained offset if business, think, we you it on monofocal our which share we It looks a the had than better down, been. And little -- I the principally we really a Clareon were it but apart if we -- slightly

there. stabilizing think I So

But a competitor Certainly world, affect toric play in have to the now. pretty in now I about think much had the space in been it maybe a you meaningful think got at least to international if we that’s going around everybody strong have we we share be good a we players the U.S. see of a of the there’s markets, opportunity come have position. really to to move in have and smaller But couple full through held cycle more now us.

still up PCIOLs least the is U.S. I over XX%. at in think

good about how So market really the has accepted feel and well PanOptix. Vivity

Jeff Johnson

Understood. Thank you.

Operator

Thank you.

line the proceed with Please from comes Stanley. question Cecilia question. Furlong your next Our Morgan with

Cecilia Furlong

Good thank morning start questions. still the taking for with you to I want cataract. and

think And you us, just if most this after say are are internationally, markets about that you there in as U.S., some at as from you timing your largely to recent think especially And looking at PCIOL update about about PCIOL point you sales at the you penetration can perspective you of as you are point Just back trends? then dynamics, would force, in volumes? the broadly think still OUS. PCIOL specifically as this any could think see pre-COVID growth and recovery penetration, start or the recovery well based U.S. how to in clinical which

David Endicott

a that, Let little little Japan. me to say, our to say around kind year it and got I the pretty even the would the mean, of can I to -- a I solid. what is back We Asia back come of think we Europe, China. probably more coming -- world. America Europe where think do the is around really we through few to the of would about What beginning yet year, we it’s bit was bit if there’s still in international where this to completely not I fourth has still Latin go. to time. try back they other be. is say be. I been and to and kind recovery so and The I those the little of I maybe the shutdown Japan of a they bit been big end of be. a had of of see could still so. -- quarter. markets, slow sense had think, little probably it take really very quarter think COVID stops, left even But would wrap has a That you it back are say wanted of way the first it. strong best we China That’s this it markets Eastern

hard And that we think, at years I benefit kind international discern, to a zone start sales of just best the past that. assume little more the we you continue force, on where we to probably and of true, as a about see year, So fourth of it penetration, are to end are be think get next of to talk gets we the roughly and should but should couple sales clinical we probably, our we into the because it. I then force benefits the not way it, And really quarter. normal, in entirely expanded we are

of United go a in like that and And biometry ATIOLs. of on a practice. the lot needs premium in time a things biometry efficient office clinic because again, lot to that matters, to inside there’s We work on on spending States and are the run really

and thrive really give of work group really and which of the what the an do, the are do have. environment get and U.S. sales get patients prefer the they for so would then training And things that’s to and do to done the decision-making and creating to to is the around another help to need up the work we staff could they force to really aware been where clinic proud prepared surgeons of love surgery do by that they the and folks

help long-term benefits And so of clinical and them in and of try what try obviously to terms the demonstrate the choices are. these outcome, we economics we understand that,

a things of kind of procedures So of think stabilizes and and those mix little as we U.S. have kind gets I like they see, the a we staffing like getting it I looks look the while better. as to we it shift around really, sideways. kind are together, before gone either off bounces imagine penetration I around bit do has don’t a now. to and here think are up really right internationally more now of in themselves for a think noise two where the traditional or right I way lenses economy just are little that’s kind picks that will stabilizes

Cecilia Furlong

continue then terms the where reusable contact lens I in and to share your your follow in was post-pouncing reusable TotalXX seen the now you it’s to up increase market. And specifically lenses, have ability just What for in could on market? share of the versus outlook if segment Great. too, of where the trended

David Endicott

Yeah.

better redundant, not that due, because visit office back new deal, we the tell excited in big is solution. an a obviously would about us is gives I is but to that opportunity do being patients offer the and because to what are I their visit a new getting receive data, that is prescription you when think, Just a really precisely to

little to markets. all to the on our profile. takes outside and So we good and will new in harder always it’s time indicators markets, United leading move see, at U.S., It switch new that data indicator. I a TXXproduct the States, get in get mean, in when the But the again, the fits leading is we look looks the pretty these these U.S. easy really to share And that’s

markets I fast, would outcome. thrilled real these terrific share mean be of year. the none a a we that So point move were with

think are time. TXX great do over to we with we expect and I it doing well

Cecilia Furlong

Thanks the for questions. taking

Operator

Thank you.

proceed Citi. Wuensch line Our next Joanne question comes your from the with of question. Please with

Joanne Wuensch

Good questions. for much -- for morning asking you thank and taking my very

sort they things And than the tax in you mean the economic direction? Thank can far on because simple those lenses. recession? then comments question But the give impact on I on moving appreciate potential of what or any rate, more it please, we on potential my to can penetrated has follow-up do or get or in in FX, a not contact right thoughts I with may XXXX, for today like so things. ATIOLs, commentary are quick headwinds, impact the you. two us recession previous can Just your an really effective may get they were

David Endicott

Joanne. Sure,

this. very out me on look, pretty be pleased if on hard try the have is the The because then Tim grab markets. you it. Penetration a and ATIOL would really international It you Let -- backed and we in don’t rest. nicely grew the it’s up Korea, piece with can know, ATIOLs, to metric

think has market any that U.S. don’t different they a penetration quarters of has really the than U.S. that out necessarily kind or do moved in on quarter are overlays and for hand, kind that of the looks economic know had that, any are this So certainly good actually. sideways I is the we of and the there one of I a the couple recession

that that? how tell any pensions surgeon their I budget, do that seniors oriented. an chunk you time I a think or is you has bigger taking will So, because I effect. inflation more than is decreasing anything of tend staffing out could to it I believe, am see But that, the imagine hearing about else what from this

the our I kind What and have long-term how environment. understand influence train do think economics, is is is to movement, and that over, and interest. particular, these efficient positive we I of way, which share in practice help very simple best do staff adoption is to their think that understand much the get the the be help I can benefits, going about time. continue So in we and to is think into that will what I be turning think that is may challenge because to which I something discerning the the their really can’t our ability a show see and in and them through surgeons over do get folks staff them to do

that over we time out. on hard the see can have to the of works we control just that how working are and things there we So rest will

Tim Stonesifer

But on year grow faster as point perspective we grow next to Yeah. benefiting a go have to high we get to year. we guys to leverage at David’s level, will more we from earlier, would We on Again, revenue call. market. into expect should would give that a just as from to we XXXX tailwinds operating the the be you expect the color this February continue done in

transformation million as next obviously, announced we we We into $XXX the incremental that have help go that that year. will,

shake do be say year. on at are where a versus From to main you depends expect a headwind tailwinds. FX when XXXX. look those the pressure would I just So perspective, rates this the we out XXXX point, It

tax when interest rate you be then if not will that are this thinking but but will close. year. it a in keep there, is about, mind get rate EPS next more you relatively go give an do guidance the on expense thing, up we will thing, And you We

and through March got the $XX,XXX Those have the you We plan Aerie XXXX. have were see financing of some can on to that acquisition refinancing. we due term now we -- in we will on loans plan debt in that

that tailwinds. So headwinds the take of we those will care and are soon, relatively but

Joanne Wuensch

Much appreciated. you. Thank

Operator

Thank you.

from comes your with the of question next Our proceed Deutsche line Falko Friedrichs Bank. Please question. with

Falko Friedrichs

Thank you very much.

comment And that FX to then XXXX into a point, year. so margin bit also a but good your coming back be my the and of your for XX% question should to pressure next previous target still hear confidence thanks is

into headwind? your margin confidence into all-in, is this confidence CER confidence that including FX is a Thank XX% you. into it So an expected even XX%, a or this is

Tim Stonesifer

on Yeah. Again, I think, have XXXX. I enough elaborated the

going February. in are We our have call to

that, the margins and all and the good you feel give we but with revenues will details We plenty guide of about XX%. and the the

Falko Friedrichs

then be with that the quarters elaborate quick Thanks. will QX, bit and what on incentive this a Okay. is can in that for on thing And a you is the from margin little temporary -- favorability the that and Thank follow-up or so next payments, now? us behind you. a

Tim Stonesifer

is more thing than It else. a of anything timing No.

will what last If year. our be this in pool year, bonus anticipated you than was we recall, larger

you -- our accrue bonus every quarter as pool. So we

year. year, So, was basically, our our accrual last than was it higher this

Falko Friedrichs

Okay. Thank you.

Operator

you. Thank

of the Jeffries. proceed line with Weiner comes question. with from question next your Our Please Zach

Zach Weiner

was that you Thanks. the are content manufacturing on some the throughout upgrades any you lens you through could of year. questions. Hey. Thanks I color and that for the if wondering taking working give contact price for an have on update seen that

David Endicott

of can helps any it to as modalities you kind Yeah. efficient we that, in of monthlies in or well. we Dailies the newest again, contact runs and it produce course in capacity of doing The out build beauty you business have proceeding flexibility Zach, making are is, of shorter lens use and which so and the equipment. are continue helps more tremendous lens, our our on prediction, of that to produce

to directionally, see we several continue levels expected. years put mature we the ago, lens So we in at the

as we numbers metric the look we that, original our So use and on been met as exceeded our planned OEE, or line. have at

able have they will remainder to those exceed we we what we as be that of come or planned. the So confidence meet in great lines time, over had

they about going and forward. good we of the way performance in lines So feel those the which are running

margin us we put our of should Vision of should of we the around amount in, outer some in Care moderate in lens that help put So see the years in we we gross business. as plans, our equipment improvement kind the

optimistic, contact that, we we taken think, some mid-single realizable. So there a in that two, of the a by took price the pricing then beginning increases are folks more of year. one, at took they it I digits competitors number a been is On have have We lenses, and than they of twice. and smaller did took larger number

again. forward. out, business, international of of about in to said some going also have that talk begin take and They not mid-single taken digits our we have are we as as well to We kind U.S. going increases place gone have our yet, course, and price business

can terms from we in inflating are as costs gone we this really what are we of of year. material realize have We we the have leakage and we can that best will to as offset trying see kind input what But raw through that.

will to trying it, is keep are and with that tough up we we but see how So goes. it

Zach Weiner

just -- And other if taking where lens give more there the you Thanks. one TXX Alcon on can up color one, share, follow who to with is I competitors? could is that lenses that any as Thanks. lens or

David Endicott

us, lens lens. against target the the It’s X-week -- biggest think, Biofinity obviously, are as one. well. pretty we for J&J’s we mean, well is I But obviously doing are Yeah. I obvious

our the does feels on we a say lens. day same like that think, in get like thing day a is this monthly the or And that X-week against on I like like modalities. we and experience, can lens any the chances as either different monthly XX So we one it is you to

So but we are take pretty done ambivalent to certainly it we well from, it’s who competitively.

case. cannibalize We our are products going to always this in own

do a better TXX our we than have Air on our on margin Optix. We

But good want take feel a of source main ahead going that’s we and we So move to that, to our will whatever at that. people about look not from business.

business of a I of bit source new little it run come toric though. main It we while, product, a give is Our I’d see though. and the It’s a competition. a takes year, little a as because that it beginning family those to of think, happens of things really in in, of really where will practices which is help, one at lenses. the particular, the like have

So fit that of everything sphere as most through patients you to kind toric are having you gives the door. need with many coming

well. that a will big for be So I as uptick think us

Zach Weiner

Thanks taking questions. the

Operator

this We your participation. today. you thank our interest Thank gentlemen, you. Ladies and for question-and-answer our thus and concludes and concludes session call

You disconnect lines. your may now

Alcon (ALC) 16 Nov 222022 Q3 Earnings call transcript