Accuray(US:ARAY)2025-05-02 20:05Orders and Backlog - Gross orders for the three months ended March 31, 2025, were $71.167 million, a decrease of $17.9 million compared to the same period in 2024[117] - Net orders for the three months ended March 31, 2025, were $46.656 million, down from $60.795 million in the same period in 2024[117] - The order backlog at the end of March 31, 2025, was $452.392 million, compared to $503.220 million at the end of March 31, 2024[117] - The book-to-bill ratio for the three months ended March 31, 2025, was 1.2, down from 1.8 in the same period in 2024, indicating a decline in demand[120] - CyberKnife System gross orders decreased by $21.9 million during the three months ended March 31, 2025, compared to the same period in the prior fiscal year[119] - Gross orders primarily decreased in the EIMEA region, the Americas region, and Japan during the three months ended March 31, 2025[119] Financial Performance - Net revenue increased by 12% to $113.2 million for the three months ended March 31, 2025, and by 6% to $331.0 million for the nine months ended March 31, 2025, compared to the prior fiscal year[122] - Products net revenue increased by $7.7 million (16%) and $12.4 million (8%) during the three and nine months ended March 31, 2025, respectively, driven by higher shipments of TomoTherapy and CyberKnife Systems[123] - Services net revenue increased by $4.4 million (9%) and $6.3 million (4%) during the three and nine months ended March 31, 2025, respectively, primarily due to increased sales of spare parts and higher contract revenues[124] - Gross profit increased by $2.6 million (9%) and $3.5 million (3%) during the three and nine months ended March 31, 2025, respectively, due to higher net revenues[125] - Total operating expenses decreased by 9% to $30.6 million for the three months ended March 31, 2025, and by 6% to $104.4 million for the nine months ended March 31, 2025, compared to the prior fiscal year[127] Cash Flow and Investments - Net cash provided by operating activities for the nine months ended March 31, 2025, was $12,568,000, a significant improvement from a net cash used of $21,786,000 in the same period of 2024[141] - The company incurred $5.1 million in net cash used in investing activities during the nine months ended March 31, 2025, primarily due to $2.9 million for property and equipment and $2.2 million for capitalized software investments[143] - Net cash provided by financing activities was $1.6 million for the nine months ended March 31, 2025, driven by $7.0 million in net borrowings on the Revolving Credit Facility[144] Challenges and Risks - The company expects inflation and ongoing supply chain challenges to adversely impact gross margins and net income through calendar year 2025[107] - The company is navigating significant geopolitical and macroeconomic risks, including inflation and foreign currency exchange rate fluctuations, which negatively impact operations[106] - The company anticipates a decrease in product sales volume in China due to uncertainties surrounding tariffs and trade relations with the United States[114] - The company expects gross margins and net income to continue to be adversely affected by increased material costs and logistics expenses throughout calendar year 2025[147] Debt and Financing - As of March 31, 2025, the company had an outstanding balance of $58.0 million under the Term Loan Facility and $17.0 million under the Revolving Credit Facility[138] - The company anticipates needing to refinance $50.0 million on the Term Loan Facility and $100.0 million on the Notes by their respective maturity dates in 2026[139] - The company issued approximately $100.0 million in 3.75% Convertible Senior Notes due June 1, 2026, with an initial conversion rate of 170.5611 shares per $1,000 principal amount[160] - The conversion price for the 3.75% Convertible Senior Notes is approximately $5.86 per share, with no equity price risk if the share price is below this amount upon conversion[160] - For every $1 increase in the share price above $5.86, the company expects to issue an additional $17.1 million in cash or shares if all Convertible Senior Notes are converted[160] Tax and Other Income - The provision for income taxes for the three months ended March 31, 2025, was $457,444, unchanged from the same period in the prior fiscal year, while it decreased by 45% to $1,777,000 for the nine months ended March 31, 2025, compared to $3,254,000 in the prior year[134] - Total other income (expense), net decreased by $1.8 million during the three months ended March 31, 2025, primarily due to unfavorable changes in foreign currency forward contracts[133] - Interest expense remained flat at $(2.9) million for the three months ended March 31, 2025, compared to the same period in the prior fiscal year[131] Inventory and Cash Reserves - As of March 31, 2025, the company had $77.8 million in cash and cash equivalents, with expectations that inflation and supply chain challenges will impact cash from operations through calendar year 2025[135] - The company reported a $14.6 million increase in inventories during the nine months ended March 31, 2025, primarily due to increased purchases to meet expected demand[142] - As of March 31, 2025, the company had $11.5 million in cash and cash equivalents at foreign subsidiaries, which are considered indefinitely reinvested and may incur additional foreign tax withholdings if repatriated[140] - As of March 31, 2025, the company has borrowings of $58.0 million under the Term Loan Facility and $17.0 million under the Revolving Credit Facility, both subject to a variable interest rate tied to SOFR[159] - A 50 basis point change in interest rates would result in an annual interest expense increase or decrease of approximately $0.4 million if the outstanding amount remains constant for the next 12 months[159]