Varex Imaging(US:VREX)2022-02-08 21:22Revenue Performance - Total revenues for the three months ended December 31, 2021, were $198.8 million, an increase of $21.7 million or 12.3% compared to $177.1 million for the same period in 2021[135]. - Medical segment revenues increased by $16.5 million to $155.7 million, primarily driven by higher sales of digital detectors and CT X-ray tubes, with strong growth in CT, Oncology, and Dental modalities[135]. - Industrial segment revenues rose by $5.2 million to $43.1 million, reflecting a 13.7% increase compared to the prior year[135]. - Industrial revenues increased by $5.2 million, driven by higher sales of digital detectors, X-ray tubes, and service revenues[136]. Supply Chain and Operational Challenges - The company continues to face supply chain challenges, particularly shortages of micro-controller chips and other electronic components, which may impact product delivery in the upcoming quarters[118]. - The ongoing COVID-19 pandemic has led to increased demand for imaging equipment used to diagnose respiratory diseases, partially offsetting declines in elective procedures[125]. - The company is expanding manufacturing capabilities in China, Germany, and the Philippines to mitigate the impact of tariffs and enhance local sourcing strategies[127]. - The company anticipates continued pricing adjustments throughout fiscal year 2022 due to rising costs and supply chain disruptions[118]. Research and Development - Approximately 500 employees are dedicated to research and development, focusing on innovation and product performance to maintain competitive advantage in the X-ray imaging market[115]. - Research and development expenses were $17.7 million, accounting for 8.9% of total revenues, down from 9.4% in the prior year[139][140]. Financial Performance - Total gross profit increased to $64.8 million, reflecting a 13.3% growth compared to $57.2 million in the previous year[138]. - Gross profit for the Industrial segment rose to $18.8 million, a 43.5% increase from $13.1 million in the prior year[138]. - Selling, general and administrative expenses decreased by $1.3 million to 16.6% of total revenues, down from 19.4%[141]. - Net cash provided by operating activities was $10.8 million, up from $7.1 million in the prior year[147]. - Cash and cash equivalents increased to $157.8 million, up by $13.2 million from $144.6 million[145]. - Total debt outstanding, net, was $436.5 million, an increase of $2.0 million from the previous quarter[146]. - Interest expense decreased to $9.9 million, down from $10.3 million, due to partial redemption of Senior Secured Notes[142]. Market and Risk Management - The company aims to become the partner of choice for OEMs in the growing Chinese market for diagnostic X-ray imaging systems[126]. - The industrial segment benefits from economies of scale and research investments from the medical side, allowing for higher gross profit margins[128]. - The company may enter into foreign currency forward and option contracts to hedge against foreign exchange risks associated with existing assets and liabilities[161]. - A cross-currency swap between the Euro and U.S. Dollar is held as a Net Investment Hedge for the acquisition of Direct Conversion[161]. - The company performs ongoing credit evaluations of customers and maintains strong credit controls, including letters of credit and down payments for certain industrial customers[163]. - Borrowings under the ABL Facility bear interest at floating rates, with no borrowings subject to floating rates as of December 31, 2021[164]. - The company is exposed to market risks related to volatility in raw material prices, which can affect product margins and profitability[165]. - No commodity derivative instruments were in place to manage exposure to price changes during the three months ended December 31, 2021[165]. Backlog - Total backlog as of December 31, 2021, was approximately $289 million[156].