Accuray(US:ARAY)2026-02-17 11:20Orders and Backlog - Gross orders for the three months ended December 31, 2025, were $66.064 million, a decrease of $10.7 million compared to the same period in the prior fiscal year [130]. - Net orders for the three months ended December 31, 2025, were $32.611 million, down from $55.639 million in the same period of 2024 [130]. - The order backlog at the end of December 31, 2025, was $383.332 million, compared to $463.056 million at the end of December 31, 2024 [130]. - Gross orders decreased by $26.5 million for the six months ended December 31, 2025, primarily due to timing issues in the EIMEA and China regions [131]. - Net orders decreased by $23.0 million and $46.8 million during the three and six months ended December 31, 2025, primarily due to a decrease in gross orders and an increase in age-outs [134]. - The book-to-bill ratio was 1.5 and 1.3 for the three and six months ended December 31, 2025, compared to 1.3 and 1.2 for the same periods in 2024, indicating strong demand for products [132]. Financial Performance - Net revenue for the three months ended December 31, 2025, was $102.241 million, a decrease of 12% compared to $116.174 million in 2024; for the six months, it was $196.183 million, down 10% from $217.719 million [135]. - Products net revenue decreased by $16.2 million and $27.4 million during the three and six months ended December 31, 2025, primarily due to lower shipments to China [137]. - Services net revenue increased by $2.2 million and $5.8 million during the three and six months ended December 31, 2025, due to higher contract revenues from an increased installed base [138]. - Gross profit for the three months ended December 31, 2025, was $24.072 million, a decrease of 43% from $41.892 million in 2024; for the six months, it was $51.083 million, down 33% from $76.361 million [140]. - Total operating expenses for the three months ended December 31, 2025, were $35.638 million, a decrease of 4% from $37.185 million in 2024; for the six months, they were $73.962 million, nearly unchanged from $73.803 million [141]. - The company reported a net loss of $35.4 million for the six months ended December 31, 2025 [161]. Restructuring and Charges - Restructuring charges for the fiscal year 2026 are expected to be approximately $13 million, with total restructuring charges during the three and six months ended December 31, 2025, amounting to $6.1 million and $8.9 million respectively [127]. - Restructuring charges totaled $6.075 million for the three months ended December 31, 2025, and $8.886 million for the six months, reflecting costs related to severance and employee-related expenses [145]. Cash Flow and Financing - As of December 31, 2025, the company had $41.3 million in cash and cash equivalents, excluding restricted cash, and expects to have sufficient cash resources for at least the next 12 months [153]. - Net cash used in operating activities was $3.8 million for the six months ended December 31, 2025, compared to $5.5 million in the same period of 2024 [160]. - The company used $9.4 million in investing activities during the six months ended December 31, 2025, primarily for property and equipment purchases and capitalized software investments [162]. - The company entered into a Financing Agreement providing for a $150 million term loan facility and a $20 million revolving credit facility, with amendments made in December 2025 [155]. - The company has $150.0 million in borrowings under the Financing Agreement, with interest rates tied to variable rates, which could lead to an annual interest expense change of approximately $0.8 million for a 50 basis point change [177]. - As of December 31, 2025, $18.0 million of the 2026 Notes remain outstanding, due on June 1, 2026 [158]. Market and Economic Conditions - The company expects gross margins and net income (loss) to continue to be adversely affected by increased material costs and logistics expenses through at least fiscal year 2026 [119]. - The company anticipates that ongoing supply chain challenges and inflation will impact cash from operations through at least fiscal year 2026 [119]. - The company is navigating significant tariff uncertainties related to U.S.-China trade, which are expected to have incremental costs and adversely impact sales to China [126]. - The geographic revenue breakdown showed a significant decline in China, with net revenue of $17.669 million for the three months ended December 31, 2025, down 51% from $35.974 million in 2024 [139]. - The economic uncertainty may limit the company's ability to accurately make and evaluate estimates and judgments regarding financial statements [168]. Risk Management - The company has developed a foreign exchange risk management policy and entered into foreign currency forward contracts to mitigate currency exchange rate fluctuation risk [176]. - The company maintains reserves for potential credit losses and performs ongoing credit evaluations of customers [173]. - Single-source suppliers currently provide several components, but alternative sources are believed to be available if needed [174]. - The company has not experienced significant risk of loss on cash and cash equivalents deposited with major financial institutions [171]. Joint Ventures - The joint venture in China aims to manufacture and sell radiation oncology systems, with the Tomo C radiation therapy system receiving NMPA approval in September 2023 [125]. - Revenue from joint ventures represented approximately 17% of total net revenue for the three months ended December 31, 2025, and 30% for the same period in 2024 [172].