Yahoo Finance Alcon (ALC) Q4 Earnings Match Estimates, Margins Contract
Alcon Inc. ALC delivered core earnings per share (EPS) of 42 cents in the fourth quarter of 2022, down 25% from the year-ago quarter’s figure (down 4% at the constant exchange rate or CER). The figure matched the Zacks Consensus Estimate. Alcon’s “core” results are based on non-IFRS (International Financial Reporting Standards) measures.
For the fourth quarter, the company’s reported loss per diluted share was 20 cents compared to the reported EPS of 28 cents in the prior year’s quarter.
For the full year, the core EPS was $2.24 (up 4.2% year over year and 23% at CER). The figure was also in line with the Zacks Consensus Estimate.
Revenues in Detail
Alcon’s net sales to third parties in the fourth quarter were $2.16 billion, exceeding the Zacks Consensus Estimate by 0.9%. The top line increased 1% from the year-ago quarter’s levels (up 7% at CER).
For the full-year 2022, net sales were $8.65 billion, up 5.3% from 2021 and 0.1% ahead of the Zacks Consensus Estimate.
Quarter in Detail
In the fourth quarter, total Surgical (consisting of implantables, consumables and equipment/other) sales amounted to $1.27 billion, up 1.2% year over year and 8% at CER. Net sales in implantables increased 11% at constant currency. Consumables and Equipment/other net sales also improved 6% and 7% respectively at CER.
Alcon Price, Consensus and EPS Surprise
Alcon price-consensus-eps-surprise-chart | Alcon Quote
Vision Care (consisting of contact lenses and ocular health) reported total sales of $881 million compared with $875 million in the year-ago quarter (up 7% year over year at CER). Net sales of contact lenses increased 6% at CER. Sales were led by silicone hydrogel contact lenses, including the Precision1 and the total families of products, which were partially offset by declines in legacy lenses.
Sales in ocular health increased 8% at CER. This was primarily driven by the portfolio of eye drops, including the recently acquired ophthalmic pharmaceutical products and Systane.
Margins
The cost of net sales in the quarter was $986 million, up 6.0% year over year. The core gross profit fell 2.9% to $1.17 billion in the reported quarter. The core gross margin contracted 217 basis points (bps) to 54.2% in the fourth quarter of 2022.
The core operating margin was 9.7% in the quarter, marking a year-over-year contraction of 9 bps at CER. The company’s operating margin in the quarter was impacted by legal settlement costs, rising inflationary costs, acquisition and integration-related expenses and increased R&D investments, post the acquisition of Aerie Pharmaceuticals, Inc.
Financial Position
Alcon exited the year 2022, with cash and cash equivalents of $0.98 billion compared with $1.57 billion at the end of 2021.
The cumulative net cash flow from operating activities at the end of the fourth quarter was $1.22 billion compared with $1.34 billion a year ago. Free cash flow totaled $581 million at the end of 2022 compared with $645 million a year ago.
Based on 2022 financial results, Alcon’s board of directors proposed a dividend of Swiss Franc (CHF) 0.21 per share, which is subject to the approval of shareholders at the AGM to be held on May 5, 2023.
2023 Outlook
Alcon initiated its 2023 guidance, assuming market growth to be slightly lower than historical rates and the ease of supply-chain disruptions and inflation in the latter half of the year. The guidance also considers that exchange rates as of Jan 31 will prevail throughout the year.
The company projects net sales in the range of $9.2-$9.4 billion, indicating growth of 6-8% at CER from 2022. The Zacks Consensus Estimate for ALC’s revenues is pegged at $9.11 billion.
Alcon also projects core EPS in the range of $2.55-$2.65, suggesting growth of 16-20% at CER over 2022. The Zacks Consensus Estimate for ALC’s earnings is currently pegged at $2.51 per share.
Our Take
Alcon exited the fourth quarter of 2022 with earnings in line with estimates and revenues beating the same. Within the Surgical segment, CER growth in net sales was driven by improving market conditions in most international markets and the rising demand for the company’s cataract products including Vivity and Hydrus Microstent.
However, growth in net sales across all segments continued to be marred by unfavorable currency impacts. Contraction in both margins also raises apprehension.
On a positive note, ALC’s 2023 guidance with strong growth projections from 2022 buoys optimism for investors.
Zacks Rank and Key Picks
Alcon currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Avanos Medical AVNS, LivaNova LIVN and ShockWave Medical SWAV.
Avanos Medical, currently carrying a Zacks Rank #2 (Buy), reported a fourth-quarter fiscal 2023 adjusted EPS of 60 cents, beating the Zacks Consensus Estimate by 25%. Revenues of $218 million outpaced the consensus mark by 1.11%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Avanos Medical has an expected earnings growth rate of 19.75% for a year. AVNS’ earnings surpassed estimates in all the trailing four quarters, the average being 11.01%.
LivaNova, with a Zacks Rank #2, reported a fourth-quarter fiscal 2023 adjusted EPS of $0.81, which beat the Zacks Consensus Estimate by 12.5%. Revenues of $275 million outpaced the consensus mark by 4.12%.
LivaNova has an expected earnings growth rate of 17.83% for a year. LIVN’s earnings surpassed estimates in three of the trailing four quarters and missed the same in the last one, the average being 2.62%.
ShockWave Medical reported fourth-quarter fiscal 2023 adjusted earnings of $3.71 per share, beating the Zacks Consensus Estimate by 274.75%. Revenues of $144 million surpassed the Zacks Consensus Estimate by 1.12%. The company currently has a Zacks Rank #2.
ShockWave has an expected earnings growth rate of 17.14% for a year. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 118.36%.
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Alcon (ALC) : Free Stock Analysis Report
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ShockWave Medical, Inc. (SWAV) : Free Stock Analysis Report
