Varex Imaging(US:VREX)2022-08-03 20:19Financial Performance - Total revenues for the three months ended July 1, 2022, were $214.5 million, an increase of $3.3 million or 1.6% compared to $211.2 million for the same period in 2021[157]. - Medical revenues decreased by $0.2 million to $167.1 million, primarily due to decreased sales of digital detectors, while Industrial revenues increased by $3.5 million to $47.4 million[158]. - Gross profit for the three months ended July 1, 2022, was $73.4 million, a decrease of $0.7 million or 0.9% compared to $74.1 million in the prior year[160]. - Operating expenses increased to $50.4 million, up $2.0 million or 4.1% from $48.4 million, representing 23.5% of total revenues[162]. - Research and development expenses for the three months ended July 1, 2022, were $20.2 million, or 9.4% of total revenues, reflecting a 5.2% increase from the prior year[162]. - Total revenues for the nine months ended July 1, 2022, were $628.0 million, an increase of $36.2 million or 6.1% compared to $591.8 million for the same period in 2021[168]. - Medical revenues for the nine months increased by $30.1 million to $493.2 million, driven by higher sales of CT X-ray tubes[168]. - Total gross profit for the nine months ended July 1, 2022, was $209.0 million, an increase of $13.1 million or 6.7% compared to $195.9 million in the prior year[170]. Cash Flow and Debt - The company had total debt of $412.6 million as of July 1, 2022, net of discounts and deferred issuance costs[178]. - Cash and cash equivalents decreased by $45.0 million to $99.6 million compared to $144.6 million as of October 1, 2021[179]. - Total debt outstanding decreased by $21.9 million to $412.6 million as of July 1, 2022, compared to $434.5 million on October 1, 2021[180]. - Net cash used in operating activities was $(0.2) million for the nine months ended July 1, 2022, a significant decrease from $42.0 million for the same period in 2021[181]. - Net cash used in investing activities increased to $20.9 million for the nine months ended July 1, 2022, compared to $12.9 million in the prior year[182]. - Net cash used in financing activities rose to $24.0 million for the nine months ended July 1, 2022, primarily due to the redemption of $27 million of Senior Secured Notes[183]. Market and Demand - Varex Imaging Corporation reported a recovery in demand for products during fiscal year 2021, returning to pre-pandemic levels, with continued growth into fiscal year 2022[138]. - The company is experiencing ongoing supply chain challenges, particularly shortages of micro-controller chips and raw materials, which are expected to impact product delivery for several quarters[139]. - Inflationary pressures have led to increased costs for raw materials, logistics, and labor, prompting the company to raise prices on certain products while managing expenses[140]. - In China, the government is expanding healthcare services, leading to increased demand for diagnostic X-ray imaging systems, with Varex developing CT X-ray tubes for local OEMs[148]. - The Industrial segment is benefiting from research and development investments, with a focus on security applications and non-destructive testing markets, which present significant growth opportunities[150]. - The company has seen improved conditions in the non-destructive testing market following the economic downturn caused by the COVID-19 pandemic[153]. Operational Strategies - Varex employs approximately 500 individuals in product development, emphasizing innovation and collaboration with customers to enhance product performance[136]. - The company has implemented local sourcing strategies to mitigate the impact of tariffs and supply chain disruptions, expanding manufacturing capabilities in China, Germany, and the Philippines[149]. Backlog and Commitments - Estimated total backlog was approximately $456 million as of July 1, 2022[190]. - Fixed cost commitments related to the amended agreement with dpiX are estimated at $6.6 million through the remainder of calendar year 2022[184]. Corporate Governance and Legal Matters - The Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of July 1, 2022[202]. - There were no changes in internal control over financial reporting that materially affected the company during the quarter ended July 1, 2022[203]. - The company is subject to various claims and legal actions but is not aware of any pending litigation that could materially affect operations or financial position[205].