Varex Imaging(US:VREX)2020-11-18 02:00Financial Data and Key Metrics Changes - In Q4 2020, total revenues were $170 million, comparable to Q3 2020, but a 16% decline year-over-year due to COVID impacts [12][26][31] - GAAP gross margin for Q4 was 27%, while non-GAAP gross margin improved to 28%, up two percentage points from Q3 2020 [27][28] - GAAP net loss for Q4 was $26 million or $0.66 per diluted share, compared to a non-GAAP net loss of $2 million or $0.04 per diluted share [31] Business Line Data and Key Metrics Changes - Medical segment revenues in Q4 were $136 million, while Industrial segment revenues were $34 million [25] - Strong sales in the Medical segment were noted for CT tubes, while other medical imaging products continued to decline [14] - Industrial segment sales were down year-over-year, but early signs of recovery were observed in nondestructive testing verticals [21] Market Data and Key Metrics Changes - Q4 revenues were geographically distributed as follows: $64 million in the Americas, $55 million in EMEA, and $51 million in APAC [26] - The China market represented 11% of total revenues in FY 2020, with strong sales of CT systems by local manufacturers [22][23] Company Strategy and Development Direction - The company aims to accelerate organic growth and improve operating margins through operational transformation, referred to as Varex 2.0 [43][44] - Focus on innovation with investments in R&D, particularly in Photon counting detectors and Nanotube x-ray sources [45] - A new capital structure has been established to enhance liquidity and flexibility [10][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in future growth as the economy recovers from COVID impacts, with expectations for increased demand for X-ray imaging equipment [43][44] - The company is shifting to quarterly guidance to better reflect business performance in the current uncertain environment [41] Other Important Information - The company completed the closure of its Santa Clara facility ahead of schedule, expected to yield $28 million in annual cost savings [10][37] - Cash flow from operations was negative $12 million for Q4 but positive $13 million for the full fiscal year [33] Q&A Session Summary Question: Trends in Industrial business amid COVID resurgence - Management noted that the Industrial business is recovering at different rates across various verticals, with strength in electronics and battery inspection [50][53] Question: Status of the China market - Management confirmed that the China market has returned to pre-COVID levels, with ongoing investments in healthcare [54][55] Question: Operating expenses and guidance for Q1 - Management indicated a reduction in operating expenses to $44 million to $45 million for Q1, down from $48 million in Q4 [58] Question: Revenue guidance range for Q1 - The company provided a revenue guidance range of $160 million to $180 million for Q1, reflecting uncertainties due to COVID [42][62] Question: Nanotube technology commercialization timeline - Management expects it will take 2-3 years for the new Nanotube technology to reach the market [100] Question: Cash flow expectations for next year - Management anticipates being cash flow breakeven after the next quarter, contingent on cost reductions and recovery [102]