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Varex Announces Financial Results for Fourth Quarter and Fiscal Year 2019

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Varex Imaging Corporation (NASDAQ:VREX) today announced its unaudited financial results for the fourth quarter and fiscal year 2019.

Highlights

  • FY19 Revenues were $781 million
  • FY19 Gross margin was 33% | Adjusted gross margin* was 35%
  • FY19 Net earnings were $0.43 per diluted share | Adjusted net earnings were $1.30 per diluted share
  • 4Q19 Revenues were $202 million
  • 4Q19 Gross margin was 35% | Adjusted gross margin* was 36%
  • 4Q19 Net earnings were $0.24 per diluted share | Adjusted net earnings were $0.46 per diluted share

Fiscal Year 2019 Results

Revenues for fiscal year 2019 increased to $781 million compared to $773 million in the prior year. Medical segment revenues decreased 1% to $597 million. Industrial segment revenues increased 7% to $184 million.

"Our annual growth was led by higher sales of medical products for oncology and CT modalities and industrial products for airport baggage screening and non-destructive testing applications," said Sunny Sanyal, Chief Executive Officer of Varex. "In China, shipments of CT tubes to our local OEM customers more than doubled from the prior year level, partially offsetting a tariff-related reduction in sales of radiographic digital detectors," Sanyal added.

Net earnings for fiscal year 2019 were $0.43 per diluted share compared to $0.72 per diluted share in the prior year. Adjusted net earnings* were $1.30 per diluted share, the same as in the prior year.

Fourth Quarter Fiscal Year 2019 Results

Revenues for the fourth quarter of fiscal year 2019 were $202 million compared to $205 million in the prior year quarter. Medical segment revenues were $152 million and Industrial segment revenues were $50 million.

Gross margin for the fourth quarter of fiscal year 2019 was ­­35% of revenues compared to gross margin of 29% of revenues in the prior year quarter. Adjusted gross margin* was 36% of revenues and compared to 33% of revenues in the prior year quarter.

The company recorded $3 million of restructuring charges in the fourth quarter of fiscal year 2019 related to previously announced plans to close its digital detector manufacturing operations in Santa Clara, California and transfer production to other Varex facilities.

Net earnings for the fourth quarter of fiscal year 2019 were $0.24 per diluted share and adjusted net earnings* were $0.46 per diluted share. This compares to net earnings of $0.01 per diluted share and adjusted net earnings* of $0.29 per diluted share, in the prior year quarter.

Cash Flow and Balance Sheet

At the end of fiscal year 2019, cash and cash equivalents were $30 million. Cash flow from operations was $71 million for fiscal year 2019 compared to $85 million in the prior year. The company's total debt outstanding at the end of fiscal year 2019 was $395 million compared to $390 million at the end of the prior year. The company used $70 million during fiscal year 2019 to fund the acquisition of Direct Conversion AB.

Fiscal Year 2020 Outlook

For fiscal year 2020, the company expects revenues to be in a range of $790 to $805 million and expects adjusted net earnings per diluted share* to be between $1.30 and $1.45.

Outlook for the company's net earnings per diluted share is provided on an adjusted basis only. This adjusted financial measure is forward-looking and the company is unable to provide a meaningful or accurate GAAP forecast of net earnings per diluted share without unreasonable effort due to the uncertainty of amounts and timing of unusual items, such as integration or restructuring costs.

Adjusted Non-GAAP Financial Measures

*Please refer to "Reconciliation between GAAP and Adjusted Non-GAAP Financial Measures" below for a reconciliation of non-GAAP items to the comparable GAAP measures.

Conference Call Information

Varex will conduct its earnings conference call for the fourth quarter and fiscal year 2019 today at 3:00 p.m. Mountain Time. The conference call will be webcast live and can be accessed at the company's website at investors.vareximaging.com. Access will also be available by dialing 1-877-524-8416 from anywhere in the U.S. or by dialing 1-412-902-1028 from non-U.S. locations. The webcast of this call will be archived on the company's website and a replay of the call will be available from today through November 26th at 1-877-660-6853 from anywhere in the U.S. or 1-201-612-7415 from non-U.S. locations. The replay conference call access code is 13695628.

About Varex

Varex Imaging Corporation is a leading innovator, designer and manufacturer of X-ray imaging components, which include X-ray tubes, digital detectors and other image processing solutions that are key components of X-ray imaging systems. With a 65+ year history of successful innovation, Varex's products are used in medical imaging as well as in industrial and security imaging applications. Global OEM manufacturers incorporate the company's X-ray sources, digital detectors, connecting devices and imaging software in their systems to detect, diagnose, protect and inspect. Headquartered in Salt Lake City, Utah, Varex employs approximately 2,000 people located at manufacturing and service center sites in North America, Europe, and Asia. For more information visit vareximaging.com.

Forward Looking Statements

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements concerning unaudited financial results; industry or market outlook; the potential benefits of consolidating operations; customer demand; potential impact of tariffs, revenues, product volumes, synergies; earnings guidance for fiscal year 2020, or other expected future financial results or performance; and any statements using the terms "believe," "expect," "intend," "outlook," "future," "anticipate," "will," "could," "estimate," "guidance," or similar statements are forward-looking statements that involve risks and uncertainties that could cause the company's actual results to differ materially from those anticipated. While forward-looking statements are based on assumptions and analyses made by us that we believe to be reasonable under the circumstances, whether actual results and developments will meet our expectations and predictions depend on a number of risks and uncertainties which could cause our actual results, performance, and financial condition to differ materially from our expectations. Such risks and uncertainties include restructuring charges being more than expected; the continued impact of tariffs or a global trade war on the company's products and customer purchasing patterns; our ability to obtain the intended benefits and synergies of acquisitions and facility consolidations; global economic conditions; demand for and delays in delivery of products of the company or its customers; litigation costs; the company's ability to develop, commercialize and deploy new products; the impact of reduced or limited demand by purchasers of certain X-ray products; the impact of competitive products and pricing; the ability to remediate material weaknesses in internal control; and the other risks listed from time to time in our filings with the U.S. Securities and Exchange Commission, which by this reference are incorporated herein. Any forward-looking statements made by us in this news release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. The company assumes no obligation to update or revise the forward-looking statements in this release because of new information, future events, or otherwise.

VAREX IMAGING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

 

 

 

Three Months Ended

 

Twelve Months Ended

(In millions, except for per share amounts)

 

September 27,

2019

 

September 28,

2018(1)

 

September 27,

2019

 

September 28,

2018

Revenues:

 

 

 

 

 

 

 

Medical

$

152.4

 

 

$

156.8

 

 

$

596.8

 

 

$

602.0

 

Industrial

50.0

 

 

48.0

 

 

183.8

 

 

171.4

 

Total revenues

202.4

 

 

204.8

 

 

780.6

 

 

773.4

 

Gross margin:

 

 

 

 

 

 

 

Medical

54.0

 

 

43.6

 

 

189.4

 

 

190.5

 

Industrial

17.1

 

 

15.7

 

 

66.8

 

 

63.4

 

Total gross margin

71.1

 

 

59.3

 

 

256.2

 

 

253.9

 

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