Varex Imaging(US:VREX)2023-11-15 02:38Financial Data and Key Metrics Changes - Revenue for Q4 2023 was $227 million, a decrease of 2% both sequentially and year-over-year [9][32] - Non-GAAP gross margin was 36%, exceeding expectations and up 200 basis points from the previous quarter [9][37] - Non-GAAP earnings per share (EPS) was $0.45, also above expectations [8][32] - Adjusted EBITDA for the quarter was $38 million, with an adjusted EBITDA margin of 17% [47] Business Line Data and Key Metrics Changes - Medical segment revenue decreased 7% sequentially and 10% year-over-year, totaling $164 million [9][33] - Industrial segment revenue increased 12% sequentially and 27% year-over-year, reaching a record $64 million [9][33] - The Medical segment accounted for approximately 72% of total revenues, while the Industrial segment accounted for 28% [33] Market Data and Key Metrics Changes - Revenue from the Americas and EMEA increased by 1% sequentially, while APAC declined by 8%, primarily due to lower sales in China [34][68] - Sales to China totaled $147 million for fiscal 2023, up 5% year-over-year, but expected to decline in fiscal 2024 due to anti-corruption measures [34][35] Company Strategy and Development Direction - The company plans to invest in integrated solutions and expand its Industrial segment, targeting nearly $1 billion in addressable market within five years through new irradiation systems [20][24] - Continued focus on photon counting technology, which is gaining traction in both industrial and medical applications [26][27] - The company aims to leverage local manufacturing in India to enhance its market presence and reduce costs [27][85] Management's Comments on Operating Environment and Future Outlook - Management expects a temporary decline in sales in China due to anti-corruption measures but anticipates recovery in the second half of fiscal 2024 [35][59] - The company remains optimistic about long-term growth in China, citing government commitment to healthcare expansion [59] - Fiscal 2024 is expected to see revenues down approximately 3% to 5% compared to fiscal 2023, with continued improvement in gross margins [49][50] Other Important Information - The company ended Q4 2023 with $195 million in cash, cash equivalents, and marketable securities, an increase of $42 million from the previous quarter [10][45] - R&D spending in Q4 was $22 million, representing 10% of revenues, reflecting increased investment in industrial systems and supplier diversification [38] Q&A Session Summary Question: What was the revenue from China in Q4 2023 compared to a year ago? - Revenue in Q4 2023 from China was $31 million, down from $37 million in Q4 2022 [53] Question: What is the impact of the anti-corruption measures on sales? - The decline in sales is primarily related to anti-corruption measures, compounded by a soft economy in China [54] Question: What is the outlook for the industrial business? - The industrial segment had a strong quarter, and while a softer first quarter is expected, growth is anticipated for the full fiscal year [57] Question: How does the company plan to allocate capital? - The priority is to fund operations, followed by deleveraging, with potential for inorganic growth later [61] Question: What is the strategy for manufacturing in India? - India will serve as a local for global manufacturing hub, with plans for full capability operations [77][85]