[Financial Results Overview](index=1&type=section&id=Financial%20Results%20Overview) Varex reported increased Q2 FY25 revenue and profitability, improved cash flow, and plans for debt repayment, though Q3 outlook is reduced due to China tariffs [Second Quarter Fiscal Year 2025 Summary](index=1&type=section&id=2QFY25%20Summary) Varex reported a 3% year-over-year revenue increase to $213 million for the second quarter of fiscal year 2025, with growth in both its Medical and Industrial segments - The CEO stated that strong demand and productivity gains drove growth, but high tariffs imposed by China have negatively impacted the short-term outlook as some customers paused purchases[3](index=3&type=chunk) Q2 FY2025 Financial Highlights vs. Q2 FY2024 | Metric | Q2 FY2025 | Q2 FY2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $213 million | $206.2 million | +3% YoY | | Medical Segment Revenue | $154 million | $148.8 million | +3% YoY | | Industrial Segment Revenue | $59 million | $57.4 million | +3% YoY | | Non-GAAP Gross Margin | 36% | 33% | +300 bps | | Non-GAAP EPS | $0.26 | $0.16 | +62.5% YoY | [Balance Sheet & Cash Flow](index=1&type=section&id=Balance%20Sheet%20%26%20Cash%20Flow) The company generated $17 million in cash flow from operations in Q2 FY25, ending the quarter with $226 million in cash, cash equivalents, and marketable securities - Cash flow from operations was **$17 million** in the second quarter of fiscal year 2025[4](index=4&type=chunk) - Cash, cash equivalents, and marketable securities totaled **$226 million** at the end of the quarter[4](index=4&type=chunk) - The company plans to repay its Convertible Notes due June 2025 upon maturity to reduce its debt burden[5](index=5&type=chunk) [Third Quarter Fiscal Year 2025 Outlook](index=1&type=section&id=Outlook) Varex provided a reduced outlook for the third quarter of fiscal year 2025, projecting revenues between $180 million and $200 million Q3 FY2025 Guidance | Metric | Guidance Range | | :--- | :--- | | Revenues | $180 million - $200 million | | Non-GAAP Net EPS | -$0.05 - $0.10 | - The revenue guidance assumes sales in China will be approximately **$10 million**[7](index=7&type=chunk) - The earnings guidance is provided on a non-GAAP basis only, as the company is unable to provide a reconciliation to GAAP without unreasonable effort[5](index=5&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) Detailed financial statements for Q2 FY25 show increased revenues, operating income, and net income, alongside growth in total assets and liabilities [Condensed Consolidated Statements of Operations](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) For the three months ended April 4, 2025, Varex reported total revenues of $212.9 million, up from $206.2 million in the prior-year period Q2 FY2025 Income Statement Highlights (in millions, except per share amounts) | Metric | Three Months Ended Apr 4, 2025 | Three Months Ended Mar 29, 2024 | | :--- | :--- | :--- | | Total Revenues | $212.9 | $206.2 | | Total Gross Profit | $76.7 | $65.8 | | Operating Income | $22.1 | $7.7 | | Net Income Attributable to Varex | $6.9 | $1.4 | | Diluted Net Income per Share | $0.17 | $0.03 | [Condensed Consolidated Balance Sheets](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of April 4, 2025, Varex's total assets stood at $1,357.6 million, an increase from $1,217.0 million at the end of fiscal year 2024 Balance Sheet Highlights (in millions) | Metric | April 4, 2025 | September 27, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $205.1 | $168.7 | | Total Current Assets | $683.8 | $649.9 | | Total Assets | $1,357.6 | $1,217.0 | | Long-term debt, net | $565.8 | $397.1 | | Total Liabilities | $793.7 | $667.8 | | Total Stockholders' Equity | $563.9 | $549.2 | [Non-GAAP Financial Measures](index=8&type=section&id=Non-GAAP%20Financial%20Measures) The company reconciles GAAP to non-GAAP financial measures, explaining their use for assessing operational performance by excluding specific non-recurring or non-operational items [Reconciliation between GAAP and Non-GAAP Financial Measures](index=8&type=section&id=RECONCILIATION%20BETWEEN%20GAAP%20AND%20NON-GAAP%20FINANCIAL%20MEASURES) The company provided detailed reconciliations from GAAP to non-GAAP measures, with key adjustments leading to higher non-GAAP operating and net income Q2 FY2025 GAAP to Non-GAAP Reconciliation (in millions) | Metric | GAAP | Adjustments | Non-GAAP | | :--- | :--- | :--- | :--- | | Gross Profit | $76.7 | $0.6 | $77.3 | | Operating Income | $22.1 | $3.8 | $25.9 | | Net Income Attributable to Varex | $6.9 | $4.6 | $11.5 | - Adjusted EBITDA for Q2 FY25 was **$34.3 million**, a significant increase from **$24.8 million** in the prior-year quarter[20](index=20&type=chunk) [Discussion of Non-GAAP Financial Measures](index=11&type=section&id=Discussion%20of%20Non-GAAP%20Financial%20Measures) Varex management uses non-GAAP financial measures to supplement GAAP results, believing they offer greater transparency into the company's ongoing operational performance - Management believes non-GAAP measures are helpful for assessing ongoing business performance by excluding unusual and one-time costs, allowing for greater transparency and comparability[22](index=22&type=chunk) - Key items excluded from GAAP results to arrive at non-GAAP measures include: - Amortization of intangible assets[23](index=23&type=chunk) - Restructuring charges[25](index=25&type=chunk) - Acquisition and integration related costs[26](index=26&type=chunk) - Non-ordinary course litigation[28](index=28&type=chunk) - Other non-operational costs[28](index=28&type=chunk) [Other Information](index=3&type=section&id=Other%20Information) This section provides an overview of Varex's core business and highlights the inherent risks and uncertainties associated with forward-looking statements [Company Overview](index=3&type=section&id=About%20Varex) Varex Imaging Corporation is a prominent designer and manufacturer of X-ray imaging components, such as X-ray tubes and digital detectors - Varex is a leading innovator, designer, and manufacturer of X-ray imaging components, including X-ray tubes and digital detectors, for medical, industrial, and security applications[10](index=10&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward%20Looking%20Statements) This press release contains forward-looking statements concerning financial guidance and business outlook, which are subject to significant risks and uncertainties - The report includes forward-looking statements that involve risks and uncertainties which could cause actual results to differ from those anticipated[11](index=11&type=chunk) - Identified risks include the impact of tariffs and trade wars, loss of business from key OEM customers, pricing pressures, and supply chain disruptions[11](index=11&type=chunk) - All financial results described in the release are considered preliminary and are subject to change prior to the filing of the Form 10-Q[12](index=12&type=chunk)

Company Overview - VAREX IMAGING (VREX) shares increased by 16.5% to close at $8.69, following a significant volume of trading, contrasting with a 41.8% loss over the past four weeks [1] - The recent stock price increase is attributed to a relief rally in global markets due to a 90-day pause on tariff hikes announced by the United States [1] Earnings Expectations - VAREX IMAGING is expected to report quarterly earnings of $0.14 per share, reflecting a year-over-year decline of 12.5% [2] - Revenue projections stand at $206.83 million, indicating a slight increase of 0.3% compared to the same quarter last year [2] Stock Performance Insights - The consensus EPS estimate for VAREX IMAGING has remained unchanged over the last 30 days, suggesting that stock price movements may not sustain without trends in earnings estimate revisions [3] - The stock currently holds a Zacks Rank of 3 (Hold), indicating a neutral outlook [3] Industry Context - VAREX IMAGING operates within the Zacks Medical - Products industry, alongside TriSalus Life Sciences, Inc. (TLSI), which saw a minor increase of 0.2% to $5.50 in the last trading session [3] - TriSalus Life Sciences has experienced a 7.9% return over the past month, with its EPS estimate changing by -2% to -$0.20, representing a 63% improvement from the previous year [4]

Core Viewpoint - Value investing remains a preferred strategy for identifying strong stocks in various market conditions, utilizing valuation metrics to uncover potential opportunities [1] Group 1: Zacks Rank and Style Scores - The Zacks Rank system focuses on earnings estimates and revisions to identify promising stocks, while the Style Scores system helps investors find stocks with specific traits, particularly in the "Value" category [1][2] Group 2: VAREX IMAGING (VREX) Overview - VAREX IMAGING (VREX) currently holds a Zacks Rank of 2 (Buy) and a Value grade of A, indicating strong potential as a value stock [3] - VREX has a P/E ratio of 18.38, significantly lower than the industry average P/E of 22.55, suggesting it may be undervalued [3] - Over the past 12 months, VREX's Forward P/E has fluctuated between 14.78 and 26.48, with a median of 19 [3] Group 3: Price-to-Sales Ratio - The P/S ratio for VREX is 0.65, compared to the industry average P/S of 1.52, further indicating potential undervaluation [4] - The P/S ratio is favored by value investors as it is less susceptible to manipulation compared to earnings figures [4] Group 4: Earnings Outlook - The combination of VREX's favorable valuation metrics and strong earnings outlook positions it as an impressive value stock in the current market [5]

Financial Data and Key Metrics Changes - Revenue increased by 5% year over year, with medical segment revenue up 3% and industrial segment revenue up 10% [11][30] - Non-GAAP gross margin was 35%, up from 31% in the same quarter last year [11][34] - Adjusted EBITDA for the quarter was $24 million, compared to $19 million in the previous year [11][37] - Cash from operations was $10 million, with total cash, cash equivalents, and marketable securities at $219 million, up $24 million year over year [12][40] Business Line Data and Key Metrics Changes - Medical segment revenue was $145 million, constituting 72% of total revenue, while industrial segment revenue was $55 million, making up 28% [30] - In the medical segment, sales of CT tubes drove growth, while radiography, oncology, and dental modalities were below sales trends [13][15] - Industrial segment saw strong demand in security screening, particularly for baggage inspection and cargo screening [15][19] Market Data and Key Metrics Changes - Americas revenue increased by 3%, EMEA decreased by 9%, and APAC increased by 22%, driven by improved sales in China [31] - Sales in China accounted for 18% of total sales, increasing 7% year over year and 12% sequentially [31][68] Company Strategy and Development Direction - The company is optimistic about long-term growth in imaging in China and plans to begin production of radiographic components in India [22][23] - The cargo and security scanning systems are viewed as a significant long-term growth opportunity, with an estimated annual serviceable opportunity of over $1 billion [20][21] - The company is focusing on expanding its offerings in cargo and security inspection to enhance security and improve trade compliance [16][20] Management's Comments on Operating Environment and Future Outlook - Management noted solid demand trends but highlighted unscheduled absences in US facilities as a challenge in fulfilling demand [9][75] - The company is monitoring tariff announcements closely but does not expect significant direct impacts on its business at this time [24][109] - Management expressed cautious optimism regarding the recovery in China, emphasizing that the long-term outlook remains positive despite current uncertainties [48][112] Other Important Information - The company ended the quarter with $571 million in gross debt, with a net debt leverage ratio of approximately 2.4 times adjusted EBITDA [41][42] - R&D spending was $23 million, representing 12% of revenues, with SG&A expenses at $31 million [35][36] Q&A Session Summary Question: Can you provide more details on the performance in China? - Management noted an uptick in sales in China but does not expect a meaningful improvement in demand this year [47][48] Question: What is the margin profile for the cargo and vehicle inspection systems? - The margin profile for hardware is expected to be lower initially, but service revenue margins are anticipated to improve over time [50][51] Question: What percentage of the industrial segment does the cargo inspection business comprise? - Cargo inspection is a significant part of the security inspection market, which constitutes about 40% of industrial sales [61] Question: How is the destocking phenomenon affecting orders? - Management indicated that destocking is largely behind them, leading to an uptick in order rates [81][127] Question: What is the status of the new plant in India? - The plant is on track to go online by the end of the fiscal year, focusing on detectors initially [118][121] Question: How will the new administration's focus on border security impact sales? - Management believes that increased focus on security globally will raise activity levels for cargo inspection tenders [130]

Core Insights - VAREX IMAGING reported revenue of $199.8 million for the quarter ended December 2024, marking a year-over-year increase of 5.2% [1] - The earnings per share (EPS) for the same period was $0.07, compared to $0.06 a year ago, resulting in a EPS surprise of +75.00% against a consensus estimate of $0.04 [1] - The reported revenue fell short of the Zacks Consensus Estimate of $204.55 million by -2.32% [1] Revenue Breakdown - Industrial revenues were $55.20 million, below the two-analyst average estimate of $56.81 million, reflecting a year-over-year change of +10.2% [4] - Medical revenues totaled $144.60 million, also below the two-analyst average estimate of $147.75 million, with a year-over-year change of +3.4% [4] Profitability Metrics - Gross profit for Industrial was reported at $19 million, exceeding the average estimate of $18.51 million from two analysts [4] - Gross profit for Medical reached $49.50 million, surpassing the average estimate of $44.34 million from two analysts [4] Stock Performance - VAREX IMAGING shares have returned +5.2% over the past month, outperforming the Zacks S&P 500 composite's +2.1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

VAREX IMAGING (VREX) came out with quarterly earnings of $0.07 per share, beating the Zacks Consensus Estimate of $0.04 per share. This compares to earnings of $0.06 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 75%. A quarter ago, it was expected that this company would post earnings of $0.10 per share when it actually produced earnings of $0.19, delivering a surprise of 90%.Over the last four quarters, the company has surp ...

Making the Invisible Visible Q1 FY25 Earnings Presentation February 6, 2025 2/6/2025 1 Forward Looking Statements / Non-GAAP Measures Forward Looking Statements This supplement contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements concerning financial results; earnings guidance; product demand; expected future financial results or performance; supply chain and logistics challenges; cost increases and expense management; changes in U.S. a ...

Revenue Performance - Total revenues for the three months ended January 3, 2025, were $199.8 million, an increase of $9.8 million or 5.2% compared to $190.0 million for the three months ended December 29, 2023[155]. - Medical segment revenues increased by $4.7 million to $144.6 million, primarily driven by higher sales of CT and fluoroscopy products, while sales in radiographic, dental, oncology, and mammography decreased[155]. - Industrial segment revenues rose by $5.1 million to $55.2 million, reflecting a growth of 10.2% compared to the previous period[155]. - Medical segment accounted for 72.4% of total revenues, while the Industrial segment represented 27.6%[155]. Gross Profit and Expenses - Total gross profit for the three months ended January 3, 2025, was $68.5 million, a 20.0% increase from $57.1 million for the same period in 2023[157]. - Medical segment gross profit rose to $49.5 million, reflecting a 27.2% increase, primarily due to increased sales volume and favorable product mix[157]. - Research and development expenses increased to $23.5 million, representing 11.8% of total revenues, up from 10.8% in the previous year[159][160]. - Operating expenses totaled $57.3 million, an 8.3% increase from $52.9 million, with selling, general, and administrative expenses rising by $1.4 million[159][161]. Debt and Cash Flow - As of January 3, 2025, total debt outstanding was $567.0 million, an increase from $443.4 million as of September 27, 2024[168]. - Cash and cash equivalents increased to $176.0 million, up from $168.7 million, reflecting a $7.3 million increase[167]. - Net cash provided by financing activities was $124.9 million for the three months ended January 3, 2025, compared to $(1.7) million in the prior year[171]. Market and Economic Conditions - The uncertain economic environment, including supply chain challenges and geopolitical tensions, may impact future financial performance[140]. - The company has experienced supply chain disruptions but has seen improvements, although material shortages and delivery delays may still pose challenges[141]. - A significant portion of the company's customers are outside the United States, leading to potential pricing pressure due to a strong U.S. Dollar, which may result in discounted prices or delayed purchasing decisions[182]. Risk Management - The company may enter into foreign currency forward and option contracts to hedge against foreign exchange risks, typically for one to three months[183]. - The company performs ongoing credit evaluations of customers and maintains strong credit controls, including letters of credit and down payments[185]. - As of January 3, 2025, the company had no borrowings subject to floating interest rates, reducing interest rate risk exposure[186]. - The company is exposed to market risks related to volatility in raw material prices, which can affect product margins and profitability[189]. Backlog and Installed Base - The estimated total backlog was approximately $307 million as of January 3, 2025, representing orders for which revenues have not yet been recognized[178]. - The installed base includes over 160,000 X-ray tubes and 170,000 X-ray detectors, with a significant portion of revenue coming from replacement and service of existing components[146]. Research and Development - The company employs approximately 400 individuals in research and development to drive innovation in X-ray imaging products[139]. - The company is developing CT X-ray tubes for Chinese OEMs, anticipating increased opportunities due to a new stimulus program in the healthcare industry introduced in March 2024[147]. Interest and Commodity Price Impact - Interest and other expense, net, increased to $(8.7) million, compared to $(4.8) million in the prior year, primarily due to higher interest expenses[162]. - A hypothetical 10% decrease in foreign exchange rates could result in an estimated annual earnings impact of $13.5 million[191]. - A 100 basis point decrease in interest rates of marketable securities could lead to an estimated annual earnings impact of $2.9 million[191]. - A 10% increase in commodity prices could result in an estimated annual earnings impact of $3.2 million[191].

Varex's revenue of $200 million was up 5% year-over-year. Medical segment revenue of $145 million was up 3% year-over-year. Industrial segment revenue of $55 million was up 10% year-over-year. Non-GAAP gross margin was 35% in the quarter compared to 31% in the first quarter of fiscal year 2024 and non- GAAP EPS increased to $0.07 in the quarter from $0.06 in the first quarter of fiscal year 2024. Balance Sheet & Cash Flow Exhibit 99.1 VAREX ANNOUNCES FINANCIAL RESULTS FOR FIRST QUARTER FISCAL YEAR 2025 SALT ...

Financial Performance - Q4 FY24 revenues were $206 million, a 10% decrease year-over-year, with medical segment revenue at $144 million (down 12%) and industrial revenue at $61 million (down 4%) [4] - GAAP net earnings for Q4 FY24 were $(1.22) per diluted share, while non-GAAP net earnings were $0.19 per diluted share, down from $0.45 in Q4 FY23 [4] - For FY24, total revenues were $811 million, with a GAAP gross margin of 32% and a non-GAAP gross margin of 32% [4] - Revenues for the three months ended September 27, 2024, were $205.7 million, a decrease from $227.4 million in the same period last year, representing a decline of approximately 9.4% [21] - Gross profit for the same period was $67.1 million, down from $78.0 million year-over-year, resulting in a gross margin of 32.6%, compared to 34.3% in the prior year [21] - Non-GAAP operating income decreased to $14.5 million for the three months ended September 27, 2024, from $29.6 million in the same period last year, reflecting a non-GAAP operating margin of 7.0% [23] - The net loss attributable to Varex for the three months ended September 27, 2024, was $50.0 million, compared to a net income of $31.9 million in the prior year [25] - Non-GAAP diluted net loss per share was $0.19 for the three months ended September 27, 2024, down from $0.45 in the same period last year [25] Cash Flow and Assets - Cash flow from operations for Q4 FY24 was $26 million, ending the fiscal year with $213 million in cash and marketable securities [5] - Total assets as of September 27, 2024, were $1,217 million, down from $1,249.6 million as of September 29, 2023 [18] - Total liabilities were $667.8 million as of September 27, 2024, compared to $668.6 million the previous year [18] - Retained earnings decreased to $70.4 million as of September 27, 2024, down from $118.1 million the previous year [18] Operating Expenses and Margins - The company reported a GAAP operating margin of 5% for Q4 FY24 and a non-GAAP operating margin of 7% [4] - Total operating expenses for the three months ended September 27, 2024, were $56.2 million, compared to $53.7 million in the same period last year, indicating an increase of approximately 4.6% [23] - The company reported a significant increase in other non-operational costs, which rose to $2.5 million for the three months ended September 27, 2024, compared to $0.8 million in the prior year [23] Future Outlook - The company expects Q1 FY25 revenues to be between $195 million and $215 million, with non-GAAP net earnings per diluted share projected between -$0.05 and $0.10 [6] Technological Advancements - Significant technological advancements were made in FY24, particularly in photon counting and nanotubes, with initial steps taken to expand into the cargo systems vertical [5] Tax and Restructuring - The effective tax rate on non-GAAP adjustments was 1,545.7% for the three months ended September 27, 2024, compared to (149.3)% in the same period last year [25] - The company incurred restructuring charges of $0.1 million for the three months ended September 27, 2024, compared to $1.0 million in the same period last year [23]