Varex Imaging(US:VREX)2026-01-14 21:52Varex Imaging FY Conference Summary Company Overview - Company: Varex Imaging (NasdaqGS: VREX) - Industry: X-ray imaging systems for medical and industrial applications - Headquarters: Salt Lake City - Revenue Breakdown: 70% medical segment, 30% industrial segment [4][5] - Workforce: Approximately 2,300 employees [4] Key Financial Highlights - Revenue Growth: Expected double-digit sales growth in the industrial segment, driven by new security screening systems [2] - Market Size: Medical X-ray market is approximately $3 billion, growing at 2%-3% annually; industrial segment is between $1-$1.5 billion, growing at 5%-7% [6][7] - Customer Base: Major customers include GE, Siemens, Canon, and Philips [5] Market Dynamics - Medical Segment: - Dominated by CT imaging, accounting for 40% of medical sales [5] - Growth driven by population increases, aging demographics, and new applications [6] - Industrial Segment: - Security business constitutes about 40% of industrial revenue, approximately $100 million in FY 2025 [9] - Non-destructive testing (NDT) also represents 40% of industrial revenue [9] Investment Highlights - Market Leadership: Varex is a market leader with a comprehensive product portfolio and high barriers to entry due to intellectual property and regulatory requirements [10][13] - Customer Relationships: Long-standing relationships with high switching costs; Canon accounts for 15%-17% of revenues [15] - R&D Investment: Significant investments in R&D, with 660 patents and 210 pending [11] Challenges and Strategic Initiatives - Sales Flatness: Revenue has been flat since fiscal 2022 due to supply chain issues and competition in the RAD detector market [23][26] - New Factories: Two factories in India are being established to produce lower-cost products to regain market share in the RAD segment [26][28] - Photon Counting Technology: Targeting $100 million in incremental business by fiscal 2029 through photon counting technology in CT detectors [34] Future Outlook - Cargo Systems: Targeting $100 million in revenue from cargo inspection systems within three to four years [31] - RAD Segment Recovery: Anticipating a recovery in the RAD segment with new low-cost products [35] - AI Utilization: Currently using AI for manufacturing and quality control, but not a primary focus for product development [22] Financial Management - Debt Management: Net leverage is around 2.5 times EBITDA; focus on refinancing high-yield bonds due in October 2026 [44] - M&A Opportunities: Potential for small acquisitions in the fragmented industrial segment, but current focus is on deleveraging [46] Conclusion - Positive Outlook: Management expresses optimism about future growth opportunities and the strategic initiatives in place to address current challenges [48]