Varex Imaging(VREX) - 2025 Q2 - Quarterly Results

Financial Results Overview 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 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] 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 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] - Cash, cash equivalents, and marketable securities totaled $226 million at the end of the quarter[4] - The company plans to repay its Convertible Notes due June 2025 upon maturity to reduce its debt burden[5] Third Quarter Fiscal Year 2025 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] - 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] Financial Statements 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 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 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 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 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] Discussion of Non-GAAP Financial Measures 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] - Key items excluded from GAAP results to arrive at non-GAAP measures include: - Amortization of intangible assets[23] - Restructuring charges[25] - Acquisition and integration related costs[26] - Non-ordinary course litigation[28] - Other non-operational costs[28] Other Information This section provides an overview of Varex's core business and highlights the inherent risks and uncertainties associated with forward-looking statements Company Overview 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] Forward-Looking Statements 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] - Identified risks include the impact of tariffs and trade wars, loss of business from key OEM customers, pricing pressures, and supply chain disruptions[11] - 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]