Varex Announces Financial Results for First Quarter Fiscal Year 2021
Varex Imaging Corporation (Nasdaq: VREX) reported its 1QFY21 financial results, showing revenues of $177 million, a 4% increase sequentially from 4QFY20. The company achieved a GAAP gross margin of 32% and a non-GAAP gross margin of 34%, reflecting a 580 basis points improvement due to cost reductions and a favorable product mix. GAAP net earnings were $(0.16) per diluted share, while non-GAAP earnings were $0.08. The outlook for 2QFY21 estimates revenues between $180 million and $200 million and non-GAAP earnings per diluted share between $0.05 and $0.25.
- Sequential revenue growth of 4% indicates recovery.
- Non-GAAP gross margin improved to 34%, up 580 basis points.
- Non-GAAP operating expenses declined by $3 million.
- GAAP net earnings of $(0.16) per diluted share signify a loss.
- -
Varex Imaging Corporation (Nasdaq: VREX) today announced its unaudited financial results for the first quarter of fiscal year 2021.
1QFY21 Summary
-
Revenues
$177 million -
GAAP gross margin
32% | Non-GAAP gross margin*34% -
GAAP operating expense
$51 million | Non-GAAP operating expense*$46 million -
GAAP operating margin
3% | Non-GAAP operating margin*8% -
GAAP net earnings
$(0.16) per diluted share | Non-GAAP net earnings*$0.08 per diluted share
“Our financial results for the first quarter of fiscal year 2021 were stronger than our expectations,” said Sunny Sanyal, Chief Executive Officer of Varex.
“Revenues increased
Balance Sheet & Cash Flow
Cash flow from operations was
Outlook
The following guidance is provided for the second quarter of fiscal year 2021:
-
Revenues are expected to be between
$180 million and$200 million -
Non-GAAP earnings per diluted share is expected to be between
$0.05 and$0.25
Guidance for the company's net earnings per diluted share is provided on a non-GAAP basis only. This non-GAAP 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 restructuring costs.
Non-GAAP Financial Measures
*Please refer to "Reconciliation between GAAP and 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 2020 today at 3:00 p.m. Mountain Time. The conference call, including a supplemental slide presentation, will be webcast live and can be accessed at Varex’s website at investors.vareximaging.com. Access will also be available by dialing 877-524-8416 from anywhere in the U.S. or by dialing 412-902-1028 from non-U.S. locations. The webcast and supplemental slide presentation will be archived on Varex’s website. A replay of the call will be available from today through February 18th at 877-660-6853 from anywhere in the U.S. or 201-612-7415 from non-U.S. locations. The replay access code is 13715201.
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 70+ 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 Varex’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 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; the impact of COVID-19 on Varex’s business; benefits of current and future restructurings and other cost reduction actions; industry or market outlook; customer demand; potential impact of tariffs, revenues, product volumes, 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 Varex’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 the severity and duration of the COVID-19 pandemic and its impact on both the global economy and the Varex’s business; our ability to maintain compliance with our financial covenants; shifts in product mix; not receiving the intended benefit of current or future restructurings or cost reduction actions; the continued impact of tariffs or a global trade war on Varex’s products and customer purchasing patterns; global economic conditions; demand for and delays in delivery of products of Varex or its customers; litigation costs; Varex’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. Varex assumes no obligation to update or revise the forward-looking statements in this release because of new information, future events, or otherwise.
Varex has not filed its Form 10-Q for the first quarter of fiscal year 2021. All financial results described here should be considered preliminary, and are subject to change to reflect any necessary adjustments or changes in accounting estimates, that are identified prior to the time Varex files the Form 10-Q.
VAREX IMAGING CORPORATION
|
||||||||
|
Three Months Ended |
|||||||
(In millions, except for per share amounts) |
January 1, 2021 |
January 3, 2020 |
||||||
Revenues: |
|
|
||||||
Medical |
$ |
139.2 |
|
$ |
155.6 |
|
||
Industrial |
37.9 |
|
44.5 |
|
||||
Total revenues |
177.1 |
|
200.1 |
|
||||
Gross profit: |
|
|
||||||
Medical |
44.1 |
|
43.8 |
|
||||
Industrial |
13.1 |
|
17.3 |
|
||||
Total gross profit |
57.2 |
|
61.1 |
|
||||
Operating Expenses: |
|
|
||||||
Research and development |
16.7 |
|
21.7 |
|
||||
Selling, general and administrative |
34.4 |
|
34.8 |
|
||||
Operating expenses |
51.1 |
|
56.5 |
|
||||
Operating earnings: |
6.1 |
|
4.6 |
|
||||
Interest expense |
(10.3 |
) |
(5.4 |
) |
||||
Other expense, net |
(0.5 |
) |
(0.4 |
) |
||||
Interest and other expense, net |
(10.8 |
) |
(5.8 |
) |
||||
Loss before taxes |
(4.7 |
) |
(1.2 |
) |
||||
Income tax expense |
1.6 |
|
— |
|
||||
Net loss |
(6.3 |
) |
(1.2 |
) |
||||
Less: Net earnings attributable to noncontrolling interests |
0.1 |
|
0.1 |
|
||||
Net loss attributable to Varex |
$ |
(6.4 |
) |
$ |
(1.3 |
) |
||
Net loss per common share attributable to Varex |
|
|
||||||
Basic |
$ |
(0.16 |
) |
$ |
(0.03 |
) |
||
Diluted |
$ |
(0.16 |
) |
$ |
(0.03 |
) |
||
Weighted average common shares outstanding |
|
|
||||||
Basic |
39.1 |
|
38.5 |
|
||||
Diluted |
39.1 |
|
38.5 |
|
||||
VAREX IMAGING CORPORATION
|
||||||
(In millions, except share amounts) |
January 1, 2021 |
October 2, 2020 |
||||
Assets |
|
|
||||
Current assets: |
|
|
||||
Cash and cash equivalents |
$ |
105.5 |
$ |
100.6 |
||
Accounts receivable, net |
121.0 |
123.8 |
||||
Inventories |
269.8 |
271.9 |
||||
Prepaid expenses and other current assets |
26.3 |
25.7 |
||||
Total current assets |
522.6 |
522.0 |
||||
Property, plant and equipment, net |
144.8 |
145.2 |
||||
Goodwill |
295.3 |
293.1 |
||||
Intangibles assets, net |
64.5 |
67.5 |
||||
Investments in privately-held companies |
49.7 |
51.3 |
||||
Deferred tax assets |
— |
0.5 |
||||
Operating lease assets |
26.3 |
27.7 |
||||
Other assets |
33.9 |
32.2 |
||||
Total assets |
$ |
1,137.1 |
$ |
1,139.5 |
||
Liabilities and shareholder's equity |
|
|
||||
Current liabilities: |
|
|
||||
Accounts payable |
$ |
68.1 |
$ |
72.9 |
||
Accrued expenses and other current liabilities |
67.4 |
70.5 |
||||
Current operating lease liabilities |
6.1 |
6.1 |
||||
Current maturities of long-term debt |
2.6 |
2.5 |
||||
Deferred revenues |
8.3 |
8.6 |
||||
Total current liabilities |
152.5 |
160.6 |
||||
Long-term debt |
457.5 |
452.8 |
||||
Deferred tax liabilities |
1.7 |
2.3 |
||||
Operating lease liabilities |
22.2 |
23.1 |
||||
Other long-term liabilities |
38.8 |
34.9 |
||||
Total liabilities |
672.7 |
673.7 |
||||
|
|
|
||||
Shareholders' equity: |
|
|
||||
Preferred stock, $.01 par value: 20,000,000 shares
|
— |
— |
||||
Common stock, $.01 par value: 150,000,000 shares
|
|
|
||||
Shares issued and outstanding: 39,184,538 and
|
0.4 |
0.4 |
||||
Additional paid-in capital |
439.2 |
434.4 |
||||
Accumulated other comprehensive (loss) income |
0.9 |
0.8 |
||||
Retained earnings |
9.7 |
16.1 |
||||
Total Varex stockholders' equity |
450.2 |
451.7 |
||||
Noncontrolling interests |
14.2 |
14.1 |
||||
Total stockholders' equity |
464.4 |
465.8 |
||||
Total liabilities and shareholder's equity |
$ |
1,137.1 |
$ |
1,139.5 |
||
VAREX IMAGING CORPORATION
|
||||||||
|
Three Months Ended |
|||||||
(In millions, except per share amounts) |
January 1, 2021 |
|
January 3, 2020 |
|||||
GROSS PROFIT RECONCILIATION |
|
|
|
|||||
Revenues |
$ |
177.1 |
|
|
$ |
200.1 |
|
|
Gross profit |
$ |
57.2 |
|
|
$ |
61.1 |
|
|
Amortization of intangible assets |
2.2 |
|
|
2.5 |
|
|||
Restructuring charges |
0.1 |
|
|
0.3 |
|
|||
Other non-operational costs |
— |
|
|
1.9 |
|
|||
Purchase price accounting adjustments |
— |
|
|
0.3 |
|
|||
Non-GAAP gross profit |
$ |
59.5 |
|
|
$ |
66.1 |
|
|
Gross margin % |
32.3 |
% |
|
30.5 |
% |
|||
Non-GAAP gross margin % |
33.6 |
% |
|
33.0 |
% |
|||
|
|
|
|
|||||
OPERATING EXPENSE RECONCILIATION |
|
|
|
|||||
Operating expense |
$ |
51.1 |
|
|
$ |
56.5 |
|
|
Amortization of intangible assets |
2.0 |
|
|
2.1 |
|
|||
Separation and related costs |
— |
|
|
2.5 |
|
|||
Restructuring charges |
0.2 |
|
|
0.5 |
|
|||
Acquisition and integration related costs |
0.9 |
|
|
0.6 |
|
|||
Other non-operational costs |
2.5 |
|
|
0.1 |
|
|||
Non-GAAP operating expense |
$ |
45.5 |
|
|
$ |
50.7 |
|
|
|
|
|
|
|||||
OPERATING EARNINGS RECONCILIATION |
|
|
|
|||||
Operating earnings |
$ |
6.1 |
|
|
$ |
4.6 |
|
|
Amortization of intangible assets (includes amortization
|
4.2 |
|
|
4.6 |
|
|||
Purchase price accounting adjustments (includes purchase price accounting impacts to cost of revenues) |
— |
|
|
0.3 |
|
|||
Separation and related costs |
— |
|
|
2.5 |
|
|||
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