Alcon Conference Call Notes – US doing really well, International Markets: Back to 2019 levels in early 2022, Capacity Expansion in Vision Care, Plenty of Capacity in Surgical Business

Today I listened in on the Alcon Conf Call and must say I was impressed by the answers and the products this company offers. The good results are a reflection of how Alcon improves lives of many, many people around the world.

The quotes below are from the CFO and CEO.

US doing really well

Let me let me try and give a little bit of color on the quarter itself. I think inside the quarter we had pretty steady momentum. It wasn't choppy. I think what was happening really was the US was doing really well. Coming back through April May June, kind of consistently and again, it was relatively consistent month, the month in terms of its growth.

International Markets: Back to 2019 levels early 2022 – Delta Variant

I don't know that we have seen any real signs of deceleration in the US around Delta. I would say outside the US in the second quarter, we actually saw a little bit of improvement in Europe. But obviously some real challenges in India and Japan. And so the international markets broadly are quite complicated to describe, but I would just say that we think it's going to take a fair bit longer for the international markets to get back to 2019 levels. And we said, kind of early 21, they'll get back to 19 levels early next year, which is 2022.
I think we are comfortable that we understand where we are right now. But you know, again, the Delta variant is moving around the US quite quickly and we have a trajectory on it. We kind of have a view of it. I don't know that anybody really knows what's gonna happen there. So, it's baked in to our thinking for sure. But I would just say that there's no certainty around what's going to happen. 
US should grow. Our assumption is the US is going to grow through the rest of the year. And again, the rate of that growth is kind of hard to know based on the Delta variant. But the only thing we've seen really is few hospitals here and there, where they've shut down some elective procedures, but in the US our businesses dominantly in the ASCs. And those ASCs, you know, are not shut. So again, we haven't really seen any material impact on surgical procedure, volume in the U. S. Internationally. You know, again it's it just depends on what market we're talking about. And I think that's going to be more of a slow grind.

Capacity Expansion in Vision Care, Plenty of Capacity in Surgical Business

We have plenty of capacity in our surgical business right now to manage, key accounts and our expansion around the surgical business. Capacity expansion is going on principally to kind of keep up with demand in the vision care. That's our principal xpansion effort. And again, our expansion is related really to our interpretation of demand right now, demand has been better than we expected, but you're going to keep a close eye on it, evaluate capacity as we go forward.

Penetration, Vivity, Monofocal Business, clear movement towards ATIOLs

On penetration. Vivity looks like it's adding about 300 basis points over the last three years. Or I should say 300 basis points has been the improvement over the last three years which is higher than the typical 50 points I think I've said to you before. Now what's really hard to know about that is whether or not that's just the mix of public hospitals, who dominantly do monofocal business. So if you take India: A lot of the numbers we'll quote against 2019 exclude India because it's a massive amount of procedures and a massive number of local manufactured mono focal lenses. So if you look at the world market right now, it's down quite a lot. If you exclude India, it's still down probably mid single digits in surgical procedures. 
What we're seeing is a clear movement towards ATIOLs by about 300 basis points over the last three years. So let's call that 100 basis points a year. That's mostly, that's principally the US. Right. So that's good. Taking us now to 17% in the second quarter From what was roughly 14% several years ago. So again better than expected, but hard to know if that isn't just mix. I will tell you we're a little bit optimistic about it every quarter. I get a little bit more willing to say we're seeing better penetration than expected. But I would just wait until we get to a normal, really kind of a normal setting When mom to focus our back as much as I thought. But look, the more people that come in and talk about ATIOLs in the us the better. And I think we're going to continue to see growth on the back of Vivity because it's it's turning out to be quite a useful product. 

Conf Call Audio (1/3 of Q&A)

Margin Outlook: Investments, Inflationary Pressure, Product Mix

Analyst Q: On the comments you made in the back half margin outlook implied by your guidance, I think you bucketed a couple of things that would weigh on the margin including product mix, spend timing and inflationary pressures. Can you maybe just calibrate us a little bit on how much in each of those buckets will weigh and and which dominates and then how do we think about those items as we look ahead into 2022.

If you take the first half we're at about 18% from a margin rate perspective, that would imply 17% in the second half to get you to the approximately 17.5%. So to your point that the three components are investments, some inflationary pressure and mix.
I'd say the investments are roughly roughly half of that pressure point. And that's primarily driven by the fact that we're going to continue to invest behind our new launches. So if you think about David's point, you know, T30 Sphere and Torque in the U. S, we've got BT1 Torque in the US and europe Precision1 in Europe and Japan. So we still have quite a few launches in the second half that we're going to continue to invest behind.
I'd say the other half is probably a 50-50 split, inflation being part of that. Again, we did see some inflation in particularly in Q2, we were able to mitigate that. We'd expect to see continued inflation in the second half. If you think about raw materials, wages, freight, we plan on offsetting some of that, but probably won't be able to offset all of it. And then the other component is mix and it's really a combination of geographic mix and some product mix. So those are the components in the breakdowns as far as 2022. Again, we would expect to see continued margin margin progression. We'll give you more color on the 22 but we're still on track obviously for that low twenties in 2023. And then the guidance we gave at the capital markets day.

Conf Call Audio (2/3 of Q&A)

Using Python to transcribe Conf Calls, Webcasts

The above audio was uploaded to an S3 Amazon Bucket, then was fed via a Python script to Amazon Transcribe service which resulted in a raw transcript. That raw transcript was then used for the quotes above. By default Amazon Transcribe does not seperate speakers, has difficulty with abbreviations or names.

For more on transcription see this article: Link

Questions or feedback?

Feel free to write me at contact@zuberbuehler-associates.ch or add a comment.

Similar Posts:

    None Found

Be the first to comment on "Alcon Conference Call Notes – US doing really well, International Markets: Back to 2019 levels in early 2022, Capacity Expansion in Vision Care, Plenty of Capacity in Surgical Business"

Leave a comment

Your email address will not be published.


*