The Cooper Companies, Inc. (NYSE:COO) Q4 2022 Earnings Call Transcript

Albert White: Sure. Yes. On Cook, I’ll stay away from commenting anything on that. We’re actively out in the market right now, trying to see if we can make a transaction happen. And depending upon what happens, we’ll obviously have a decent impact on what the final numbers will look like, right? Obviously, some things have moved against us interest being clearly one of them when you update for interest rates, that’s clearly more negative than it was when we announced that deal. But I’ll kind of stay away from commenting beyond that just because there’s a lot of activity behind the scenes on that one now. On synergize, yes, a nice little specialty business here in the U.S., around $20 million in revenues. We paid about $30 million for that business.

Just a nice little tuck-in into our specialty business unit. They have cool hybrid lens and some other technologies that will fit well into our space. As you know, we’re a leader in the specialty space, whether it’s things like MiSight and Ortho K and scleral lenses and so forth. So that’s an important part of our legacy, our history and something we want to remain a market leader in. So tucking in that technology is a positive for us. It’s new to us. We don’t have that technology. So it’s adding something new for us. So yes, that’s kind of a story behind that one, small deal though.

Operator: Our next question comes from Steve Lichtman from Oppenheimer & Company.

Steven Lichtman: Brian, you mentioned during the prepared remarks, assuming a mild recession in your guidance. Can you guys talk more about what that means in terms of assumed headwinds? In what ways across CVI and CSI are you assuming modest recession could potentially impact the bit to mix them in line setting? Anything you can provide in terms of qualitatively would be helpful.

Brian Andrews: Sure. Hi, Steve. Yes. I mean as it relates to the recession risk comment, we factored that into our OpEx assumptions primarily but also the revenues and cost of goods. We feel we can hurdle the latter 2 with price increases. Regarding OpEx, you still have wages and freight, for example, that we put in assumptions in around inflation. As I said earlier, we’re seeing some improvements in normalization. We didn’t factor them in, though, into the guidance. So not putting that inflation abatement or any upside that we’re starting to see — we’re starting the year off. We want to be a little bit conservative. We’ve got the full year ahead of us. We want to be prudent, as Al said. So that’s kind of what we put in. And then, of course, just some of the commentary around interest rates and FX, of course, also maybe a touch conservative there, too.

Steven Lichtman: Got it. And then just a quick follow-up. I appreciate the comments on CapEx for this coming year. Can you talk about overall what you’re thinking regarding free cash flow this year, either quantitatively or just directionally versus FY ’22?

Brian Andrews: Sure. Yes, I mean operating cash flow should be better than last year. You still have things like interest and taxes that will offset some of the operating cash flow versus last year, but still net-net, operating cash flow up probably just a bit, just slightly. And then with the $400 million CapEx that I cited, you’re probably somewhere around $300 million of free cash flow in 2023.

Operator: Our last question will come from Matthew Mishan from KeyBanc.

Matthew Mishan: Just the first 1 is on Europe. I understand the Asia growth. I think that seems like it’s been a great market for you for a good amount of time. Just help me understand how you guys are doing like double-digit growth right now in Europe? And maybe is there a difference in how consumers purchase contact lenses in Europe than they do in the U.S.? Is it more of a subscription service versus like a sale of the optometrist?