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Varex Announces Financial Results for Third Quarter Fiscal Year 2024

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Varex Imaging (Nasdaq: VREX) announced its unaudited financial results for the third quarter of fiscal year 2024. The company reported revenues of $209 million, down 10% year-over-year. The Medical segment revenue declined 15% to $149 million, while the Industrial segment revenue rose 6% to $60 million. GAAP net earnings were $0.03 per diluted share, and Non-GAAP net earnings were $0.14 per diluted share, down from $0.37 YOY. The GAAP gross margin was 32%, consistent with the non-GAAP gross margin, both down from 34% a year ago. Cash flow from operations was $8 million. Varex holds $192 million in cash and equivalents. The guidance for Q4 FY2024 expects revenues between $190 million and $210 million, with non-GAAP net earnings per diluted share between $0.00 and $0.15. CEO Sunny Sanyal attributed the results to the strength in the cargo inspection business.

Varex Imaging (Nasdaq: VREX) ha annunciato i risultati finanziari non auditati per il terzo trimestre dell'anno fiscale 2024. L'azienda ha riportato ricavi di 209 milioni di dollari, in calo del 10% rispetto all'anno precedente. I ricavi del settore medico sono diminuiti del 15% a 149 milioni di dollari, mentre i ricavi del settore industriale sono aumentati del 6% a 60 milioni di dollari. L' è stato di 0,03 dollari per azione diluita e l' è stato di 0,14 dollari per azione diluita, in calo rispetto a 0,37 dollari rispetto all'anno precedente. Il margine lordo GAAP è stato del 32%, coerente con il margine lordo non GAAP, entrambi in calo dal 34% dell'anno scorso. Il cash flow operativo è stato di 8 milioni di dollari. Varex detiene 192 milioni di dollari in contante e equivalenti. Le previsioni per il quarto trimestre dell'anno fiscale 2024 prevedono ricavi compresi tra 190 milioni e 210 milioni di dollari, con un utile netto non GAAP per azione diluita compreso tra 0,00 e 0,15 dollari. Il CEO Sunny Sanyal ha attribuito i risultati alla solidità nel settore dell'ispezione delle merci.

Varex Imaging (Nasdaq: VREX) anunció sus resultados financieros no auditados para el tercer trimestre del año fiscal 2024. La compañía reportó ingresos de 209 millones de dólares, una disminución del 10% en comparación con el año anterior. Los ingresos del segmento médico cayeron un 15% a 149 millones de dólares, mientras que los ingresos del segmento industrial aumentaron un 6% a 60 millones de dólares. Las ganancias netas GAAP fueron de 0,03 dólares por acción diluida y las ganancias netas no GAAP fueron de 0,14 dólares por acción diluida, bajando de 0,37 dólares en comparación con el año anterior. El margen bruto GAAP fue del 32%, consistente con el margen bruto no GAAP, ambos en disminución desde el 34% del año pasado. El flujo de efectivo de las operaciones fue de 8 millones de dólares. Varex tiene 192 millones de dólares en efectivo y equivalentes. La guía para el cuarto trimestre del año fiscal 2024 espera ingresos de entre 190 millones y 210 millones de dólares, con ganancias netas no GAAP por acción diluida entre 0,00 y 0,15 dólares. El CEO Sunny Sanyal atribuyó los resultados a la fortaleza en el negocio de inspección de carga.

Varex Imaging (Nasdaq: VREX)는 2024 회계연도 3분기 비감사 재무 결과를 발표했습니다. 회사는 2억 900만 달러의 수익을 보고했으며, 이는 지난해 대비 10% 감소한 수치입니다. 의료 부문의 수익은 15% 감소한 1억 4,900만 달러였고, 산업 부문의 수익은 6% 증가하여 6천만 달러에 이르렀습니다. GAAP 기준 순이익은 주당 0.03 달러였고, 비 GAAP 기준 순이익은 주당 0.14 달러로, 지난해의 0.37 달러에서 하락했습니다. GAAP 총 이익률은 32%로, 비 GAAP 총 이익률과 일치하며 모두 지난해 34%에서 감소했습니다. 운영으로부터의 현금 흐름은 800만 달러였습니다. Varex는 현금과 현금 동등물이 1억 9,200만 달러입니다. 2024 회계연도 4분기 순수익은 1억 9,000만 달러에서 2억 1,000만 달러 사이라 예상되며, 비 GAAP 기준 주당 순이익은 0.00에서 0.15 달러 사이입니다. CEO인 Sunny Sanyal은 화물 검사 사업의 강세가 이러한 결과에 기여했다고 전했습니다.

Varex Imaging (Nasdaq: VREX) a annoncé ses résultats financiers non audités pour le troisième trimestre de l'exercice 2024. La société a déclaré des revenus de 209 millions de dollars, en baisse de 10 % par rapport à l'année précédente. Les revenus du secteur médical ont diminué de 15 % pour atteindre 149 millions de dollars, tandis que les revenus du secteur industriel ont augmenté de 6 % pour atteindre 60 millions de dollars. Les bénéfices nets selon les normes GAAP étaient de 0,03 $ par action diluée, et les bénéfices nets non GAAP étaient de 0,14 $ par action diluée, en baisse par rapport à 0,37 $ l'année précédente. La marge brute GAAP était de 32 %, cohérente avec la marge brute non GAAP, toutes deux en baisse par rapport à 34 % l'année dernière. Le flux de trésorerie opérationnel était de 8 millions de dollars. Varex détient 192 millions de dollars en liquidités et équivalents. Les prévisions pour le quatrième trimestre de l'exercice 2024 prévoient des revenus compris entre 190 millions et 210 millions de dollars, avec des bénéfices nets non GAAP par action diluée compris entre 0,00 et 0,15 $. Le PDG Sunny Sanyal a attribué les résultats à la force dans le secteur de l'inspection des cargaisons.

Varex Imaging (Nasdaq: VREX) gab seine nicht testierten Finanzberichte für das dritte Quartal des Geschäftsjahres 2024 bekannt. Das Unternehmen meldete Einnahmen von 209 Millionen US-Dollar, was einem Rückgang von 10% im Vergleich zum Vorjahr entspricht. Der Umsatz im Medizinsektor fiel um 15% auf 149 Millionen US-Dollar, während die Einnahmen im Industriesektor um 6% auf 60 Millionen US-Dollar stiegen. Der GAAP Nettogewinn betrug 0,03 US-Dollar pro verwässerter Aktie, der Non-GAAP Nettogewinn lag bei 0,14 US-Dollar pro verwässerter Aktie, nach 0,37 US-Dollar im Vorjahr. Die GAAP Bruttomarge lag bei 32%, konsistent mit der Non-GAAP Bruttomarge, die beide gegenüber 34% im Vorjahr gesunken sind. Cashflow aus betrieblicher Tätigkeit betrug 8 Millionen US-Dollar. Varex hält 192 Millionen US-Dollar in Bargeld und gleichwertigen Mitteln. Die Prognose für Q4 FY2024 erwartet Einnahmen zwischen 190 Millionen und 210 Millionen US-Dollar mit einem Non-GAAP Nettogewinn pro verwässerter Aktie zwischen 0,00 und 0,15 US-Dollar. CEO Sunny Sanyal führte die Ergebnisse auf die Stärke im Geschäft mit der Frachtinspektion zurück.

Positive
  • Industrial segment revenue increased by 6% year-over-year.
  • GAAP and Non-GAAP gross margins held steady at 32%.
  • Cash flow from operations was positive at $8 million.
Negative
  • Total revenue decreased by 10% year-over-year.
  • Medical segment revenue declined by 15% year-over-year.
  • Non-GAAP earnings per share dropped from $0.37 to $0.14 year-over-year.

Insights

Varex Imaging's Q3 FY2024 results paint a mixed picture, with some concerning trends that investors should closely monitor. The 10% year-over-year revenue decline to $209 million is a significant red flag, particularly driven by a 15% drop in the Medical segment. This suggests potential market share loss or broader industry headwinds in their core business.

On a positive note, the Industrial segment's 6% growth, primarily from cargo inspection, demonstrates some diversification benefits. However, this wasn't enough to offset the Medical segment's decline.

Profitability metrics show pressure, with non-GAAP gross margin contracting from 34% to 32% year-over-year. The sharp decline in non-GAAP EPS from $0.37 to $0.14 is particularly worrying, indicating significant bottom-line impact.

The company's cash position remains relatively stable at $192 million, down slightly from $195 million at FY2023 end. While positive operating cash flow of $8 million is encouraging, it's notably lower than what would be expected for a company of this size.

Looking ahead, the Q4 guidance of $190-210 million in revenue and $0.00-0.15 non-GAAP EPS suggests continued challenges. The wide EPS range, including the possibility of breakeven results, indicates significant uncertainty in the near-term business environment.

Investors should carefully assess Varex's ability to navigate these headwinds, particularly in its Medical segment and whether the Industrial segment's growth can accelerate to compensate for broader weaknesses.

Varex Imaging's Q3 results reveal intriguing market dynamics that warrant deeper examination. The divergence between the Medical and Industrial segments is particularly noteworthy.

The 15% year-over-year decline in the Medical segment raises questions about broader healthcare spending trends. This could be indicative of hospitals and imaging centers delaying capital expenditures, possibly due to economic uncertainties or shifts in healthcare policies. It's important to determine whether this is an industry-wide trend or specific to Varex.

Conversely, the 6% growth in the Industrial segment, driven by cargo inspection, suggests increasing demand for security and inspection technologies. This could be linked to global trade dynamics, heightened security concerns, or regulatory changes in various markets.

The company's guidance for Q4, with revenues expected between $190 million and $210 million, implies a potential sequential decline. This conservative outlook might indicate that management anticipates the challenging market conditions to persist in the near term.

Investors should monitor:

  • Competitive landscape in the Medical imaging market
  • Adoption rates of new imaging technologies
  • Global trade policies affecting the cargo inspection business
  • Potential for market share gains in emerging markets

Understanding these market forces will be important in assessing Varex's long-term growth prospects and its ability to navigate the current headwinds.

From a technological perspective, Varex Imaging's Q3 results raise some intriguing questions about the state of innovation in medical imaging and industrial inspection sectors.

The 15% decline in the Medical segment could potentially signal a transition period in imaging technology. Are healthcare providers holding off on purchases in anticipation of next-generation systems? Or is there a shift towards alternative imaging modalities that Varex might not be fully addressing?

Conversely, the 6% growth in the Industrial segment, particularly in cargo inspection, suggests advancements in this area are gaining traction. This could be driven by improvements in detection capabilities, efficiency, or integration with AI and machine learning for better threat recognition.

The company's R&D efforts and product pipeline will be critical to watch. Are they investing sufficiently in emerging technologies like:

  • AI-enhanced imaging for both medical and industrial applications
  • Advanced materials for improved detector sensitivity
  • Miniaturization for more portable or flexible imaging solutions
  • Integration with other diagnostic or inspection technologies

Varex's ability to innovate and bring new, differentiated products to market will be important in reversing the decline in the Medical segment and accelerating growth in the Industrial segment. Investors should closely monitor technological developments and new product announcements as indicators of future competitiveness and growth potential.

SALT LAKE CITY--(BUSINESS WIRE)-- Varex Imaging Corporation (Nasdaq: VREX) today announced its unaudited financial results for the third quarter of fiscal year 2024.

3QFY24 Summary

  • Revenues $209 million
  • GAAP gross margin 32% | Non-GAAP gross margin* 32%
  • GAAP operating margin 4% | Non-GAAP operating margin* 7%
  • GAAP net earnings $0.03 per diluted share | Non-GAAP net earnings* $0.14 per diluted share
  • Cash flow from operations was $8 million

Sunny Sanyal, Chief Executive Officer, stated, "Revenue in the third quarter of fiscal 2024 came in as expected, driven primarily by continued strength in our cargo inspection business, which drove a 6% year-over-year increase in our Industrial segment."

Varex’s revenue of $209 million was down 10% year-over-year. Medical segment revenue of $149 million was down 15% year-over-year. Industrial segment revenue of $60 million was up 6% year-over-year. Non-GAAP gross margin was 32% in the quarter compared to 34% in the third quarter of fiscal year 2023 and non-GAAP EPS decreased to $0.14 in the quarter from $0.37 in the third quarter of fiscal year 2023.

Balance Sheet & Cash Flow

Cash flow from operations was $8 million in the third quarter of fiscal year 2024. Cash, cash equivalents, marketable securities, and CDs was $192 million at the end of the third quarter of fiscal year 2024 compared to $195 million at the end of fiscal year 2023.

Outlook

Due to challenging market conditions, our guidance for the fourth quarter of fiscal year 2024 is as follows:

  • Revenues are expected to be between $190 million and $210 million
  • Non-GAAP net earnings per diluted share is expected to be between $0.00 and $0.15

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 reconciliation to a GAAP forecast of net earnings per diluted share without unreasonable effort due to certain of these reconciling items being uncertain, out of our control, and the amount and timing of these items being unable to be reasonably predicted. The actual amounts of such reconciling items could have a significant impact on the company's GAAP net income (loss) per diluted share.

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 third quarter of fiscal year 2024 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 www.vareximaging.com/investor-relations. 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 at www.vareximaging.com/financial-reports. A replay of the call will be available from today through August 16th at 877-660-6853 from anywhere in the U.S. or 201-612-7415 from non-U.S. locations. The replay access code is 13745752. The listen-only webcast link is: https://event.choruscall.com/mediaframe/webcast.html?webcastid=8aPvDuBB

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 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 2,300 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 the Private Securities Litigation Reform Act of 1995. Statements concerning revenue and earnings guidance, supply chain and logistics challenges; cost increases and expense management; changes in U.S. and worldwide economic conditions, such as the impact of inflation, and fluctuations in foreign currency exchange rates; geopolitical tensions; including concerns and uncertainty surrounding the outcome of the elections in the United States in 2024 and possible legislative, tariffs, and policy reforms resulting therefrom; industry or market segment outlook; market acceptance of or transition to new products or technologies such as advanced X-ray tube and digital flat panel detector products; growth drivers; future orders, revenues, market share, backlog, earnings or other financial results; and any statements using the terms “believe,” “expect,” “anticipate,” “can,” “should,” “would,” “could,” “estimate,” “may,” “intend,” “potential,” and “possible” or similar statements are forward-looking statements that involve risks and uncertainties that could cause our actual results and the outcome and timing of certain events to differ materially from those projected or management’s current expectations. Any forward-looking statement 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 third quarter of fiscal year 2024. 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 its Form 10-Q.

VAREX IMAGING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

Three Months Ended

Nine Months Ended

(In millions, except for per share amounts)

June 28, 2024

June 30, 2023

June 28, 2024

June 30, 2023

Revenues, net

 

 

 

 

Medical

$

148.6

 

$

175.4

 

$

437.3

 

$

509.6

 

Industrial

 

60.5

 

 

56.8

 

 

168.0

 

 

156.4

 

Total revenues

 

209.1

 

 

232.2

 

 

605.3

 

 

666.0

 

Gross profit

 

 

 

 

Medical

 

46.2

 

 

54.7

 

 

129.8

 

 

152.7

 

Industrial

 

20.7

 

 

21.6

 

 

60.0

 

 

59.6

 

Total gross profit

 

66.9

 

 

76.3

 

 

189.8

 

 

212.3

 

Operating expenses:

 

 

 

 

Research and development

 

22.0

 

 

20.0

 

 

65.1

 

 

63.0

 

Selling, general, and administrative

 

35.6

 

 

32.1

 

 

103.5

 

 

96.5

 

Total operating expenses

 

57.6

 

 

52.1

 

 

168.6

 

 

159.5

 

Operating income

 

9.3

 

 

24.2

 

 

21.2

 

 

52.8

 

Interest income

 

1.8

 

 

0.9

 

 

5.5

 

 

2.1

 

Interest expense

 

(7.4

)

 

(7.3

)

 

(22.6

)

 

(22.1

)

Other expense, net

 

(2.9

)

 

(0.7

)

 

(1.6

)

 

(2.5

)

Interest and other expense, net

 

(8.5

)

 

(7.1

)

 

(18.7

)

 

(22.5

)

Income before taxes

 

0.8

 

 

17.1

 

 

2.5

 

 

30.3

 

Income tax (benefit) expense

 

(0.7

)

 

7.9

 

 

(0.2

)

 

13.6

 

Net income

 

1.5

 

 

9.2

 

 

2.7

 

 

16.7

 

Less: Net income attributable to noncontrolling interests

 

0.1

 

 

0.1

 

 

0.4

 

 

0.4

 

Net income attributable to Varex

$

1.4

 

$

9.1

 

$

2.3

 

$

16.3

 

Net income per common share attributable to Varex

 

 

 

 

Basic

$

0.03

 

$

0.23

 

$

0.06

 

$

0.41

 

Diluted

$

0.03

 

$

0.21

 

$

0.06

 

$

0.40

 

Weighted average common shares outstanding

 

 

 

 

Basic

 

40.9

 

 

40.4

 

 

40.7

 

 

40.2

 

Diluted

 

41.2

 

 

50.4

 

 

41.2

 

 

40.6

 

VAREX IMAGING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(In millions, except share and per share amounts)

June 28, 2024

September 29, 2023

 

(Unaudited)

 

Assets

 

 

Current assets:

 

 

Cash and cash equivalents

$

156.4

 

$

152.6

 

Marketable securities

 

33.6

 

 

41.3

 

Accounts receivable, net of allowance for credit losses of $0.8 million and $0.6 million at June 28, 2024 and September 29, 2023, respectively

 

152.0

 

 

163.6

 

Inventories

 

281.7

 

 

277.5

 

Prepaid expenses and other current assets

 

25.6

 

 

23.3

 

Total current assets

 

649.3

 

 

658.3

 

Property, plant, and equipment, net

 

148.0

 

 

143.6

 

Goodwill

 

288.9

 

 

288.5

 

Intangible assets, net

 

16.4

 

 

22.4

 

Investments in privately-held companies

 

27.1

 

 

29.0

 

Deferred tax assets

 

55.3

 

 

41.3

 

Operating lease assets

 

28.5

 

 

29.0

 

Other assets

 

39.2

 

 

37.5

 

Total assets

$

1,252.7

 

$

1,249.6

 

Liabilities and stockholders' equity

 

 

Current liabilities:

 

 

Accounts payable

$

69.6

 

$

64.7

 

Accrued liabilities and other current liabilities

 

67.0

 

 

82.6

 

Current operating lease liabilities

 

3.7

 

 

3.8

 

Current maturities of long-term debt, net

 

46.2

 

 

1.5

 

Deferred revenues

 

8.1

 

 

10.2

 

Total current liabilities

 

194.6

 

 

162.8

 

Long-term debt, net

 

396.9

 

 

441.1

 

Operating lease liabilities

 

22.8

 

 

23.1

 

Other long-term liabilities

 

43.1

 

 

41.6

 

Total liabilities

 

657.4

 

 

668.6

 

Stockholders' equity:

 

 

Preferred stock, $.01 par value: 20,000,000 shares authorized, none issued

 

 

 

 

Common stock, $.01 par value: 150,000,000 shares authorized

 

 

Shares issued and outstanding: 40,860,965 and 40,529,573 at June 28, 2024 and September 29, 2023, respectively.

 

0.4

 

 

0.4

 

Additional paid-in capital

 

462.2

 

 

450.4

 

Accumulated other comprehensive loss

 

(1.8

)

 

(1.2

)

Retained earnings

 

120.4

 

 

118.1

 

Total Varex stockholders' equity

 

581.2

 

 

567.7

 

Noncontrolling interests

 

14.1

 

 

13.3

 

Total stockholders' equity

 

595.3

 

 

581.0

 

Total liabilities and stockholders' equity

$

1,252.7

 

$

1,249.6

 

VAREX IMAGING CORPORATION

RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL MEASURES

(Unaudited)

 

 

Three Months Ended

Nine Months Ended

(In millions, except per share amounts)

June 28, 2024

June 30, 2023

June 28, 2024

June 30, 2023

GROSS PROFIT RECONCILIATION

 

 

 

 

Revenues, net

$

209.1

 

$

232.2

 

$

605.3

 

$

666.0

 

Gross profit

 

66.9

 

 

76.3

 

 

189.8

 

 

212.3

 

Amortization of intangible assets

 

1.0

 

 

1.8

 

 

4.7

 

 

5.4

 

Non-GAAP gross profit

$

67.9

 

$

78.1

 

$

194.5

 

$

217.7

 

Gross margin %

 

32.0

%

 

32.9

%

 

31.4

%

 

31.9

%

Non-GAAP gross margin %

 

32.5

%

 

33.6

%

 

32.1

%

 

32.7

%

 

 

 

 

 

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSE RECONCILIATION

 

 

 

 

Selling, general, and administrative

$

35.6

 

$

32.1

 

$

103.5

 

$

96.5

 

Amortization of intangible assets

 

0.7

 

 

1.6

 

 

4.2

 

 

4.8

 

Restructuring charges

 

0.1

 

 

0.7

 

 

0.2

 

 

2.2

 

Other non-operational costs

 

3.7

 

 

0.8

 

 

7.5

 

 

4.6

 

Non-GAAP selling, general, and administrative expense

$

31.1

 

$

29.0

 

$

91.6

 

$

84.9

 

 

 

 

 

 

OPERATING EXPENSE RECONCILIATION

 

 

 

 

Total operating expenses

$

57.6

 

$

52.1

 

$

168.6

 

$

159.5

 

Amortization of intangible assets

 

0.7

 

 

1.6

 

 

4.2

 

 

4.8

 

Restructuring charges

 

0.1

 

 

0.7

 

 

0.2

 

 

2.2

 

Other non-operational costs

 

3.7

 

 

0.8

 

 

7.5

 

 

4.6

 

Non-GAAP operating expense

$

53.1

 

$

49.0

 

$

156.7

 

$

147.9

 

VAREX IMAGING CORPORATION

RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL MEASURES

(Unaudited)

 

 

Three Months Ended

Nine Months Ended

(In millions, except per share amounts)

June 28, 2024

June 30, 2023

June 28, 2024

June 30, 2023

OPERATING INCOME RECONCILIATION

 

 

 

 

Operating income

$

9.3

 

$

24.2

 

$

21.2

 

$

52.8

 

Amortization of intangible assets (includes amortization impacts to cost of revenues)

 

1.7

 

 

3.4

 

 

8.9

 

 

10.2

 

Restructuring charges (includes restructuring impact to cost of revenues)

 

0.1

 

 

0.7

 

 

0.2

 

 

2.2

 

Other non-operational costs (includes other non-operational impacts to cost of revenues)

 

3.7

 

 

0.8

 

 

7.5

 

 

4.6

 

Total operating income adjustments

 

5.5

 

 

4.9

 

 

16.6

 

 

17.0

 

Non-GAAP operating income

$

14.8

 

$

29.1

 

$

37.8

 

$

69.8

 

Operating margin

 

4.4

%

 

10.4

%

 

3.5

%

 

7.9

%

Non-GAAP operating margin

 

7.1

%

 

12.5

%

 

6.2

%

 

10.5

%

 

 

 

 

 

INCOME BEFORE TAXES RECONCILIATION

 

 

 

 

Income before taxes

$

0.8

 

$

17.1

 

$

2.5

 

$

30.3

 

Total operating income adjustments

 

5.5

 

 

4.9

 

 

16.6

 

 

17.0

 

Acquisition related (benefit) costs

 

 

 

 

 

(2.1

)

 

 

Other non-operational costs

 

 

 

 

 

0.6

 

 

 

Total income before tax adjustments

 

5.5

 

 

4.9

 

 

15.1

 

 

17.0

 

Non-GAAP income before taxes

$

6.3

 

$

22.0

 

$

17.6

 

$

47.3

 

 

 

 

 

 

INCOME TAX EXPENSE RECONCILIATION

 

 

 

 

Income tax (benefit) expense

$

(0.7

)

$

7.9

 

$

(0.2

)

$

13.6

 

Tax effect on non-GAAP adjustments

 

(1.1

)

 

3.4

 

 

(2.7

)

 

3.3

 

Non-GAAP income tax expense

$

0.4

 

$

4.5

 

$

2.5

 

$

10.3

 

VAREX IMAGING CORPORATION

RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL MEASURES

(Unaudited)

 

 

Three Months Ended

Nine Months Ended

(In millions, except per share amounts)

June 28, 2024

June 30, 2023

June 28, 2024

June 30, 2023

NET INCOME AND DILUTED NET INCOME PER SHARE RECONCILIATION

 

 

 

 

Net income attributable to Varex

$

1.4

 

$

9.1

 

$

2.3

 

$

16.3

 

Total income before tax adjustments

 

5.5

 

 

4.9

 

 

15.1

 

 

17.0

 

Effective tax rate on non-GAAP adjustments

 

20.0

%

 

(69.4

)%

 

17.9

%

 

(19.4

)%

Tax effect on non-GAAP adjustments

 

(1.1

)

 

3.4

 

 

(2.7

)

 

3.3

 

Non-GAAP net income

 

5.8

 

 

17.4

 

 

14.7

 

 

36.6

 

Interest expense on Convertible Notes, net of tax

 

 

 

1.4

 

 

 

 

 

Diluted Non-GAAP net income

 

5.8

 

 

18.8

 

 

14.7

 

 

36.6

 

Diluted net income per share

 

0.03

 

 

0.21

 

 

0.06

 

 

0.40

 

Non-GAAP diluted net income per share

$

0.14

 

$

0.37

 

$

0.36

 

$

0.90

 

 

 

 

 

 

ADJUSTED EBITDA RECONCILIATION

 

 

 

 

Net income attributable to Varex

$

1.4

 

$

9.1

 

$

2.3

 

$

16.3

 

Interest expense

 

7.4

 

 

7.3

 

 

22.0

 

 

22.1

 

Income tax (benefit) expense

 

(0.7

)

 

7.9

 

 

(0.2

)

 

13.6

 

Depreciation

 

5.3

 

 

4.9

 

 

15.6

 

 

14.2

 

Amortization

 

1.7

 

 

3.4

 

 

8.9

 

 

10.2

 

Stock based compensation

 

3.9

 

 

3.6

 

 

11.8

 

 

10.1

 

Restructuring charges

 

0.1

 

 

0.7

 

 

0.2

 

 

2.2

 

Acquisition related (benefit) costs

 

 

 

 

 

(2.1

)

 

 

Other non-operational costs

 

3.7

 

 

0.8

 

 

8.1

 

 

4.6

 

Adjusted EBITDA

$

22.8

 

$

37.7

 

$

66.6

 

$

93.3

 

Discussion of Non-GAAP Financial Measures

This press release includes non-GAAP financial measures derived from our Condensed Consolidated Statements of Operations. These measures are not presented in accordance with, nor are they a substitute for U.S. generally accepted accounting principles, or GAAP. These measures include: non-GAAP gross profit; non-GAAP gross margin; non-GAAP operating expense; non-GAAP operating earnings; non-GAAP operating earnings margin; non-GAAP earnings before taxes; non-GAAP net earnings; non-GAAP net earnings per diluted share, non-GAAP dilutive shares; and non-GAAP EBITDA. We are providing a reconciliation above of each non-GAAP financial measure used in this earnings release to the most directly comparable GAAP financial measure. We are unable to provide without unreasonable effort a reconciliation of non-GAAP guidance measures to the corresponding GAAP measures on a forward-looking basis due to the potential significant variability and limited visibility of the excluded items discussed.

We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of our business, in making operating decisions, and forecasting and planning for future periods. We consider the use of the non-GAAP measures to be helpful in assessing the performance of the ongoing operation of our business by excluding unusual and one-time costs. We believe that disclosing non-GAAP financial measures provides useful supplemental data that allows for greater transparency in the review of our financial and operational performance. We also believe that disclosing non-GAAP financial measures provides useful information to investors and others in understanding and evaluating our operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies.

Non-GAAP measures include the following items:

Amortization of intangible assets: We do not acquire businesses and assets on a predictable cycle. The amount of purchase price allocated to intangible assets and the term of amortization can vary significantly and are unique to each acquisition or purchase. We believe that excluding amortization of intangible assets allows the users of our financial statements to better review and understand the historic and current results of our operations, and also facilitates comparisons to peer companies.

Purchase price accounting charges to cost of revenues: We may incur charges to cost of revenues as a result of acquisitions. We believe that excluding these charges allows the users of our financial statements to better understand the historic and current cost of our products, our gross margin, and also facilitates comparisons to peer companies.

Restructuring charges: We incur restructuring charges that result from events, which arise from unforeseen circumstances and/or often occur outside of the ordinary course of our on-going business. Although these events are reflected in our GAAP financials, these unique transactions may limit the comparability of our on-going operations with prior and future periods.

Acquisition and integration related costs: We incur expenses or benefits with respect to certain items associated with our acquisitions, such as transaction costs, changes in fair value of acquisition related hedges, changes in the fair value of contingent consideration liabilities, gain or expense on settlement of pre-existing relationships, etc. We exclude such expenses or benefits as they are related to acquisitions and have no direct correlation to the operation of our on-going business. We also incur expenses or benefits with respect to certain items associated with our acquisitions, such as integration costs relating to acquisitions for any costs incurred prior to closing and up to 12 months after the closing date of the acquisition.

Impairment charges: We may incur impairment charges that result from events, which arise from unforeseen circumstances and/or often occur outside of the ordinary course of our on-going business and such charges may limit the comparability of our on-going operations with prior and future periods.

Other non-operational costs: Certain items may be non-recurring, unusual, infrequent and directly related to an event that is distinct and non-reflective of the company’s ongoing business operations. These may include such items as non-ordinary course litigation, legal settlements, inventory write-downs for discontinued products, cost of facilities no longer in use, extinguishment of debt and hedge costs, environmental settlements, governmental settlements including tax settlements, and other items of similar nature.

Non-operational tax adjustments: Certain tax items may be non-recurring, unusual, infrequent and directly related to an event that is distinct and non-reflective of the company’s normal business operations. These may include such items as the retroactive impact of significant changes in tax laws, including changes to statutory tax rates and one-time tax charges.

Tax effects of operating earnings adjustments: We apply our non-GAAP adjustments to the GAAP pretax income to calculate the non-GAAP effective tax rate. This application of our non-GAAP effective tax rate excludes any discrete items, as defined in the guidance for accounting for income taxes in interim periods, or any other non-operational tax adjustments.

Dilution offset from convertible notes hedge transaction: In connection with the issuance of the company’s Convertible Senior Unsecured Notes (the Convertible Notes) in June 2020, the company entered into convertible note hedge transactions (the Hedge Transactions) to reduce the potential dilutive effect on common shares upon the eventual conversion of the Convertible Notes. GAAP diluted shares outstanding includes the incremental dilutive shares from the company’s Convertible Notes. Under GAAP, the anti-dilutive impact of the Convertible Note Hedge Transactions is not reflected in GAAP diluted shares outstanding. In periods in which the average stock price per share exceeds $20.81 and the company has GAAP net income, the non-GAAP diluted share count includes the anti-dilutive impact of the company’s Hedge Transactions, which reduces the potential dilution that otherwise would occur upon conversion of the company’s Convertible Notes. We believe non-GAAP diluted shares is a useful non-GAAP metric because it provides insight into the offsetting economic effect of the Hedge Transactions against potential conversion of the Convertible Notes.

Christopher Belfiore

Director of Investor Relations

Varex Imaging Corporation

801.973.1566 | christopher.belfiore@vareximaging.com

Source: Varex Imaging Corporation

FAQ

What were Varex's earnings for Q3 FY2024?

Varex reported GAAP net earnings of $0.03 per diluted share and Non-GAAP net earnings of $0.14 per diluted share for Q3 FY2024.

How did Varex's revenue perform in Q3 FY2024?

Varex's revenue for Q3 FY2024 was $209 million, which represents a 10% decrease year-over-year.

What is the outlook for Varex in Q4 FY2024?

Varex expects Q4 FY2024 revenue to be between $190 million and $210 million, with non-GAAP net earnings per diluted share between $0.00 and $0.15.

How did the Industrial segment perform for Varex in Q3 FY2024?

The Industrial segment revenue increased by 6% year-over-year to $60 million in Q3 FY2024.

What was Varex's cash flow from operations in Q3 FY2024?

Varex's cash flow from operations was $8 million in Q3 FY2024.

Varex Imaging Corporation

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