ARAY - Earnings call transcript Q3 2020

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Operator

Good day, and welcome to the Accuray Reports Fiscal 2020 Third Quarter Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded.

I would now like to turn the conference over to Joe Diaz with Lytham Partners. ahead. go Please

Joseph Diaz

XXXX. and conference Alyssa, third to Welcome March everyone. of Thank to good review Accuray's XX, ended which call year the financial to fiscal you, XXXX, afternoon results quarter for

developments. During our call afternoon, management recent will review this corporate

today President Chief Joining and are Executive and President Levine, Senior Accuray's Hamamatsu, Vice Josh Chief Officer; Accuray's us and Shig Financial Officer.

our statements statements. implied from would like any with today's Factors cause our we date, the a these statements not includes available applicable set just should afternoon, forward-looking market call The and based are Commission. required issued that you extent filings those statements. update information and result securities to of call materially after forth on put except we new the differ or Securities by or you laws. reliance to I closed this Actual remind begin, to forward-looking statements. well Exchange that as may Accordingly, obligation we undue as these in forward-looking future on this by differ Before forward-looking results events, us in contemplated information results materially any to the release as today could the of no press to forward-looking are as assume on

items for housekeeping Two today's call.

and two First, any during the Q&A themselves that then re-queue questions with participants session, to we request limit follow-ups.

in are the Second, all our remarks quarter year make prepared specific we quarters. references a to fiscal to

ended quarter to For March example, our quarter XX, fiscal statements XXXX. regarding third refer our third

Officer, call Chief Josh over Josh? like to I'd Accuray's Executive the Now, and turn Levine. to President

Joshua Levine

Chain, also Head Vice joining Suzanne our to our quarter and Hoge, of you release Chief Global Supply and Commercial earnings third for Senior I Joe, thank joining thank and everyone Winter, of and our us webcast. R&D, Mike Operations Officer President to Thanks, want today.

information in it potential prepared afternoon forefront because areas answer company of of to three would we is COVID-XX remarks address questions COVID-XX, in roles at mobilize available my mind, of thought that Clearly, the on focus them across responsibility I areas. to respective efforts have topics. related to primary and both Given resources will their their as be critical leadership to specific the this our are everyone's helpful

impact having clinical pandemic the the and First, our is customers' that practices on workflow.

doing lastly, Second, of our And them focus we both what to continuity, our safe. are business to employees key keeping areas support and related operational while financial.

direct has is the practice and Coronavirus with the fighting taxed world, that industry are workflow. is radiotherapy although Although based care feedback reality on treatments the customers, and health modified from treatment worldwide, continuing protocols around clinical delivery managed the being

between Radixact and equipment have non-urgent an limit times is use lower example, and cases been support we disinfection and the pushed both of been has fractionation and fractionation in patients. out, patient Systems. for of and which of hyper volumes. also in resulted treatment treatment This risk uniquely increase For has believe overall decreased bunkers for scheduled extended exposure are being and with allow our the to treatment treatment ultra-hyper risk starts patients staff, Accuray to COVID-XX positioned CyberKnife department and to There

installed support our practice employees. customers. who Almost to areas are are for service department frontline impacts third global activities our our the entire installation, maintenance, importance, team radiotherapy One preventative COVID-XX of population paramount protocols, hospital safety environment the the overall personnel that employee and and and of of given break health base clinical fix a other of responsible is

critical. continue these, and During our ability provide effectively and that service to to can safely treating is moments critical like our support ensure application patients customers

and by to thank patients, and customers I and dedication their inspired tireless them frontline incredibly supporting publicly. I'm these want heroes to

safety day-to-day protocols their the support are proud involved safety protective defined world the I'm of the around and on-site are institution to customer of locations, at are personal customer when efforts teams team equipment. providing we our collective ensure in Accuray service customers. they Our by the following extremely specific helping ad of

of magnitude of the efforts, these the face. customers we our should not challenges all Despite underestimate currently that

As critical hospitals back proactively service have medicine been many and focus majority nature. elective non-essential to areas forced lines of in all their or resources support deemed have clinical to clinical procedures been intensive patients, the and and pulling care COVID-XX from

have issues, profitability stress. an facilities quarter. suggest extremely The For of We associated many growing emerged, lower conversion factors the third in access that bunker believe along installations under the fiscal in resulting in delays and resources significant finding of clinical associated projects impact that hospitals, financial challenges re-prioritization with restricted of flows, customer the facility and cash and these rapid been number expect has loss created revenue are should term. a our we travel modification that timelines and, near and or themselves

management we've operational actions taking across help both business. focus, an financial to business of array In of areas the ensure continuity and terms internal been of our our

logistics to schedule chain On production of ensure the both operational partners product terms critical support with aggressively side, we've that our been or up down in and activities related service we flexing maximum help and while to have build our maintaining to globally, changes. working supply flexibility adequate supply

across in service limited purchases, but are CapEx except hiring travel functions, materials personnel. preserve manufacturing activities management, operating side payables are not are financial commercial reducing aggressive flow management, and innovation. These reducing spending, focused of actions include, spend taking compromising our and maximize continuity reductions, discretionary raw and account we and expense our freezing to designed future actions we global liquidity all without all the on aggressive to, cash efforts, for business activity, On cash through reductions

that are essentially can potential contribute all options cash preservation. evaluating We to

year. we seven will myself, We 'XX navigate temporary fiscal reduction bonus Additionally, Accuray actions through taken Accuray's that been salaries of payment have the out in might any the help direct effectively course waived to believe agreed and that discretionary executive team, my pandemic. take consisting of to a our have this and paid otherwise the base reports annual have

quarter quarter. solid Despite million by quarter. for third from year the Gross a orders Accuray COVID-XX to in $XX prior fiscal environment the challenging million, operational caused increased to the $XXX standpoint, an XX% compared third had reasonably

On below expectations, side, QX as construction and and travel when of and which downs reported revenue to was as affected saw markets lock our at both schedules distributor into before, certain we which end our into of impact logistics timing due bunker went we month March the million, revenue $XX.X levels. mentioned deeper effect, the COVID-XX restrictions user in

Accuray which service for as of been to rate has to systems an Although base upgrades patients. our we contract the recurring by equipment excess run has million, annualized our installed to timing revenue, impacted rely remain treat and $XXX pandemic, in revenue continue expect conversion our customers on stable,

of From accounted led approximately contributed XX% a consecutive for delivered perspective, year-over-year perspective, approximately during the by From Americas mix double-digit quarter gross while XX% performance the total of TomoTherapy of order the platform product in third order a quarter. its Radixact gross orders CyberKnife orders the the region QX, regional growth.

region improving grew in in ahead based our region. progress, work of that the Our on the our basis. throughout the in of a Americas still with the are AMS first growing a continued has pleased on gross we over Gross a region has commercial been momentum the on focus on But internal EMEA made orders half and in team commercial year-over-year. year-over-year QX achievement sales year, the fiscal is orders very expectations our year-to-date execution In pipeline declined in Japan, basis. of XX% actually consistency

Type remains network, A distributor, China which with quarter, orders from strong, Roughly remaining received came through of gross our Transitioning Type these Knife. five to sub-dealer and orders came XX% China, the of through the during new which orders venture and of were joint were B. legacy Tomo XX our XX% six

licenses of in We are for believe Type for begin of likely of waiting systems will awarded the of revenue the the China October now batch in first first tender quarter XXXX, fiscal the for conversion and completion our XXXX. process that beginning most XX still A of

and recent Medtronic, Vice aware executives, of team might that Commercial Mike You including Officer, additions Senior been of from experience this and challenging through who executives have and with at us Chief companies these success Winter, their experienced President management highly provide Suzanne our us Operations we previous also joined depth environment. Chain, Global be that who achieved Accuray The navigate the of with our as extensive the expanding operating Hoge, Healthcare. from joined GE impressive strength the Supply we've bench

an guidance. update lastly, financial And regarding

ensuring and uncertainty Given In and believe and on activities health those current significant our it near-term introduces, safety ensuring we support continued the Coronavirus the business conditions our and decision are we closing, have our made economic we reinstate financially, Once do market we of guidance, Accuray's the on fiscal XXXX drive we have focusing elements, focused to nature limit aggressively can and to our that and sufficient visibility customers will employees, continuity. control, their guidance. operationally that that patients, will withdraw the both the the we visibility, unprecedented so. for those while actions of pandemic

me call Shig? for Shig With the review his that, turn details. let to of over financial the

Shigeyuki Hamamatsu

our begin Thank additional highlights good details for on then and everyone. for with the I you, the some order will focus afternoon, quarter, period. on third Josh, and certain performance

during prior increased line have On were million XX% Gross $XXX was year. prior in was age-in orders quarter We gross million, approximately same expectations. $X with basis, prior of period, for which third approximately for activities were year. quarter our Net over the age-outs $XX orders which the up XX% quarter. the the from year-to-date a million, the did

of cancellations and During had other approximately the adjustments we third $X quarter, million.

we quarter, over a on As a the result, a XX% in for third year. $XX prior generated the represented increase orders net million which basis,

representing with an XXXX. $XXX of backlog the from of ended XX, We March million, XX% quarter increase

earlier, impact anticipate of near revenue to the COVID-XX disruption As in the we our term. Josh conversion pace the will adversely backlog discussed

see vary to depth of will to disruption. impact and based number higher markets Although age-outs in quarters on the coming factors, individual of the could a this normal could due the which we level extent than COVID-XX

China A eventually them previously convert already already for licenses out. believe systems continue systems aged XX number we out, that to As meaningful orders for a Accuray several to aged awarded included Type the The were of revenue. that will

X% a revenue to for from year. down the $XX.X Turning statement. quarter down the basis, million million, revenue the in income our $XXX.X Total On prior was third from was prior year. year-to-date now

a upgrades XX%, of most lower mix which TomoTherapy our CyberKnife the service for approximately platform Radixact. The while contracts. of compared was third revenue $XX.X Our the prior $XX year. revenue X% to X% in revenue was million down to from the service million, quarter's quarter due the driven volume, XX% was Service during revenue perspective, through prior remaining of product the year. product unit From for in the purchased primarily decline quarter accounted declined accounted by

at now gross Turning the margin.

margin Our margin was quarter in the included to gross product year. the an Service compared was prior XX.X% XX.X% gross reversal, of to in margin fiscal in the reflect to year. of as quarter payout, the Service current XX.X% the XXXX described compared XX.X% bonus prior executive to accrual impact which, environment. earlier, as bonus Josh general pool business to waiver for employee well as adjustments bonus related

impact line was in prior for the historical to bonus accrual Excluding our gross year. was Overall gross the adjustment, margin the service compared which in quarter for was norm. of with the quarter XX.X% third our margin this XX.X% XX%,

the gross our was bonus described, overall for of I the accrual XX%. impact the just adjustment quarter Excluding margin

approximately driven certain by employee activities in year. or $XX.X as million. decrease expenses The XX% $X.X the million reversal such down COVID-XX. of of accrual were primarily quarter given reductions travel, driven year-over-year the restricted remaining from for decline The spend, were decrease in by expenses income bonus that was operating was operating the million, discretionary Moving $X.X prior statement, the a by

operating compared quarter was year. GAAP to million income the in for $X $X.X prior million the

gain the was This on for quarter, as the reported income of on operating of it the item Excluding single adjustments, income item the third our line statement reporting being $X.X GAAP China bonus the impact quarter. We operating equity JV was million. is in and our a impact called began of investment. accrual $X.X our income million an

operational a reported we JV its loss quarter, income we expect see next activities. the commercial to the quarters as small While the startup on in continues this few JV small to from China and a ramp

was Adjusted to prior the the EBITDA compared for quarter year. million in million $X.X $XX.X

adjustment, for of impact adjusted the was bonus accrual $X.X quarter EBITDA the million. Excluding

restricted debt the of balance sheet of of about the $XXX of We revolver today position. and years. with term in in a loan as quarter the at word of consisted mature an million both $XX of XXXX. and short-term $XX $XX as our a debt In carried ended million aggregate none next and approximately quarter, million convertible mature Now, due our We of summary, outstanding well which is liquidity scheduled July $XX million the cash of cash. notes which from end million XXXX, asset-backed to lender, one in two

addition From Japan. maintain perspective, liquidity capital of facilities facility, factoring we $XX to a working the revolving receivable over in access million accounts asset-backed in to

access to preserve credit cash our the as are Beyond mentioned Josh actions we focused to spend control these earlier, facilities, liquidity position. taking

chain adjust the closely our our our conditions working supply level, to very closely current addition, is team to business as we In environment. inventory with monitor position suppliers in appropriate

like the Josh. to hand And back to with call I'd that,

Joshua Levine

challenging for energy time. and Shig. up all of that, to I the supporting want you, Thank to patients customers the with the their for ready are Accuray's open thank throughout questions. our and world operator, tremendous we're And work to their call this employees they during bringing

Operator

now comes from question The O'Neil Lake the ahead. will Please [Operator We session. of go today question-and-answer first Brooks Street. begin Instructions]

Brooks O'Neil

Good hear afternoon, guys. me okay? Can you

Joshua Levine

Brooks. Yes. Doing good,

Brooks O'Neil

Great. Tomo from might Knife, in you or credible us partners, from joint you China, else I whatever was either anyone color from the venture your offer there. on of hoping is you're think in could ground hearing give what you terms

Joshua Levine

Yes.

normal that couple and back the the side, signs week a about and in of it of the on is I activity it some is Isotope points. capital data Corp more in a actually ago a necessarily hospitals return Chairman are not equipment on. call but to sit. life and is starting business effort they're color in business market. primary get They've pilot than today. There you'll new China There radioisotope Chairman Their call China of the call they Brooks, to had where I'll question. a to remember So no I'll They're radioisotope seeing kind yet, with a an the and from try Radiation order light, little -- confirmed of state. Vice big

is being I on bit that the JV, in in come But made the their cover the process that may would terms back. to of belief think our there's which that starting obviously of on and and side tendering longer little a progress equipment as the that, that well. situation ramp world, see be advanced

tendering the has been has mean, again, I control been about end. of there. when I process the pretty that would made So, think having timing we've But progress over been straightforward obviously feedback the not that

They've with earlier fiscal tendering to I'm year. And might of I we we this where end the last conservative on luck, back little thinking think -- a this the if all view, for were we time possibility bit yet, thinking there at at expect been Commission revenue are still you before has quarter, and maybe A We're some tranche the we and But deeper also, were licenses. have complete it's we we probably quarter. get the That Health QX go our National reviewed waiting, been point, the reported, applications activity into a has announcement that At attached from the fiscal had stage. in announcement to no round and of feeling understanding. seen Type from fourth of would as that of in. second have that to perhaps activity an that our

tranche second licenses of cycle, well. Towards on we as something Type fiscal hear the that this end might of A

Brooks O'Neil

great, That's great. that's

there you more the codes, from what movement Let there's us regard tell high question we the you most see I'll hear your Can likelihood me out and point? with implementation I are that you and expectations hear likely at one just January back. X. what new this ask in industry people reimbursement just beginning anecdotally to for a jump positive

Joshua Levine

Yes.

the general I So -- wisdom belief implementation. was the July that kind us, of and general was that until think that probably belief looking were pandemic our we height of at X was the up a the upon

that standpoint to folks both had from COVID-XX taken with And that's believe a an at impact right an And that You the communicated place has AdvaMed, may AdvaMed have and CMS for both provider and now taken pushing, probably press. hoping be be readiness -- aware the July that side they or hold on I between impact clinically implementation. the CMS ASTRO January hot X weeks so. a with CMS that and focus ready market's ASTRO, that recommendation inside until off and off they're or that suggesting of mean, the X. kind has of within last the communication three

Brooks O'Neil

to Great. that I terrible. me doesn't seem mean,

So I much. work, very you. you and for Brooks. say I'm the up excited Thanks, Thank keep all great

Joshua Levine

Brooks. Thanks,

Shigeyuki Hamamatsu

Brooks. Thanks,

Operator

ahead. Jennings next of go Josh Please Cowen. The today from comes question

Joshua Jennings

navigating Hi, variables anything here, this we of I if into quarter Middle if that of April that some COVID good maybe on you maybe of in -- the as geographies, we and East from expand afternoon, and just could Europe, you're see Western to China; lot can of storm. it's could just trends you on congrats little the piece a wanted know different solid initial disclose pot Americas but bit the heard hear around just on the the terms I going seeing well. in

Joshua Levine

Josh, quarter, as of we probably expected. as there of two prepared and biggest say March. slowdown said the the remarks I'd hoped is we we we into got slowdown third as saw or months where general deeper the piece the quarter and of impact the we're in first answer proceeding

the rest know the recognition As the delays next this of again same the that in weeks I look across deals push of push region. definitive the counting if quarter, couple that you the couple on every in talked March of revenue on of highly a earlier don't them we on of about was It's end to there going were phase the impact towards we recovery the a QX. timing last or will is that of probably variable will situation into world. that

a that two doesn't. and reasonably is are the There with primary around are matter I As probably factors relates it non-essential the in is sustaining be elective to financial of cash and would being fact, this. now flow impact the that One it impacted. that procedure of dealing certain elimination driving activity as hospitals

expectations -- we're AR and pushing out assuming collection. We're DSO around

out. where some that and side to we've I the we piece part patients and and the on that service push the it treated on devices less in a our leverage confidence exposure timing visibility ensuring different that think I think around fact that to a given from our of got how revenue business to Again, Then discussion the have more reinvest CapEx are is being regards have aspect with going of we're on going that wise service that But from hospitals collectability side. end happening difficult revenue world probably be to system look paid given we're of it stress a expectation is has the financial out. I get a plays when, to at going going in That's would demand to and with the certainty. a there parts think service hospital just what's around just standpoint? the see to to different it's much standpoint

Joshua Jennings

lot unknowns there. out A of Understood.

us fiscal and and be earlier you Thanks then the I your assume and taking for the year out disregard years. should just thinking to and in COVID questions. fiscal then on of to about question. try the spending in and prior XXXX Just into the CapEx the leads this different really for quarter beyond? geographies duration fourth and outlook about guidance U.S. the into fiscal that of Based we X% our Europe XX% own some similar period long-term next this impact being to guidance projections talked long-term on advise and you crisis in of growth revenue still the would that XXXX -- the time in and kicking

Joshua Levine

still in for I I in China current about caveat a a know simple that-- business big of I there very I is us environment. very, forward. When demand the the now characteristics our underlying think don't the aren't think would simple answer that I think that to lot going saying catalyst answers right and growth by

that first that, and still to come dealing they of into market as a pandemic back the life starts the aspects China big is if us. the in demand in of I for very under-capacity were think pandemic again, the think think they're I to terms of the first in the growth out underlying with what driver radiotherapy I there that

introductions and I in again think for commercial on interest even regards the other our put been the full the by haven't discussion of region there seeing products that it's more results we've our important the we really capability we of the which been lot excited up talking the think demand parts about innovation of we've we've but QX, with Radixact. to been upgraded some a is on impact to imaging We the and there be in in Radixact suggest as strong gotten to seeing world platform, Synchrony variable area products and by about.

at I the in we intermediate let's is the and think reasonable expectations something say, to down tempering and the were, that, longer-term the to the momentum. that is ranges this year where impacts question calendar from but a little recovery maybe term, a think again, landing the timelines the to bit that XX% how I spot of X% beginning from where

I think it's the reason we've suspended guidance.

focused imagine ground. can our we're to this, on You the ears that

on high and confidence that a managing front point. the focus tell approach a right very of liquidity to the of of through be to we this I We the and be the think that other are can right Again, Shig able at compete side. it's have we degree things point. navigating you on aspects I We have active we're the on at that our prudent to basis doing company in this this control. customers can

Operator

go Petrone Please Our comes today from ahead. question Anthony next of Jefferies.

Anthony Petrone

print is and at signs staying encouraging see the least here healthy good Thanks. there some in today. I out to hope everyone

how and playing have questions Coronavirus Let follow-ups me out. like few you on I cycle dig couple in on then of the housekeeping specific see a a

orders with much returning you that of the or those orders in aged how out follow-up. quarter, and I'll have orders what China coming Just orders specifically regionally in gross previously and U.S. in was of to backlog those back actually orders? quantify Then European triggered overall a can the with terms

Shigeyuki Hamamatsu

that quarter, orders. there; those want be to the new gross Anthony, have the question so make to to $XXX we out just you. which answer I They are reported clear, your that was for do to nothing this first previous million aged orders just orders clear with

Anthony Petrone

backlog was for that. I Rather talking. Apologies

Shigeyuki Hamamatsu

No problem.

I as million backlog of order net added out and had $XX orders said gross the to of $XX So we we million. backlog net so million aged $XXX a had

million. The $X other of a roll-forward adjustments revenue Also $X aged backlog. back so of aged and helpful. that's items cancellations the the about the million out previously That's in

Anthony Petrone

came million $X so in. Okay, back

Shigeyuki Hamamatsu

net-zero Anthony, Correct. $X say out-- I really in what it clear, I confusing very go didn't but the impact can into pool. million had to out so backlog a per get Net aged se. this just mean means backlog It out aged know to is you just revenue I it just be when back on aged went reported of straight item know. age out

Anthony Petrone

the on but Maybe things. in and and helpful. be order U.S. of would the trends a terms March That's bit side in of more April little the installation maybe follow-ups more

Thanks. are have comments on understanding that specifically. the been trending U.S. last your in even late one just an to I this in is installations specifically quarter order guess In China. on beginning pushed Josh one guess of hospital out to terms Then the I'll mid-March. extent quarter and Then CapEx, how I regulations, specific, early our have

Joshua Levine

to the region. Anthony, and the I know. is -- or I Americas U.S. situation don't the specific This think

phenomenon. I installation access of and think those customer a countries, became timing, such we in question. U.S.-only third relative that basic facility it Again, It's discussion impacts. got deeper this certainly, the that has guidelines acceptance those between elements different timing bigger this markets reality no lockdown looks things absolutely the as in facilities into access places travel impacted quarter, not is access, but and to different as

from it back Going come into, and CapEx falls predict forward to again, activity to where where standpoint. our starts prioritization how difficult

view our CapEx several looking reduced at think a minimum I is that we're quarters moderated at or of spending.

to not lot lockdown of this a are a as elective essential relative how or a one recovery cause terms on and timeline mode linked; long considering stay or shutdown they two in hospital of of are effect in another Those think on I they're depends what the procedures. drivers estimate.

Anthony Petrone

Fair enough.

them -- we of follow-up there. terms quick want In

therapy just just the Thanks up? you Just that even even course obviously those specifically the there radiation actually perhaps capital of To pent-up maybe just in anything on a tender-driven put other procedures just underlying tailwind Are hospitals China this least terms of gets In in orders does noticeable there. China, orders drive a therapy just that small essential. words, of are pressured? Is seeing on there therapy radiation up? longer at is volumes, quarter, decisions? though you backed versus how scenarios? Then demand some at of that again. CapEx terms clarify budgets you follow-up demand, many of orders How the commented in delays be that could were

Joshua Levine

volumes. treatment a note Just on or a word

seen relative as I would our percent we're had We it we tell treatment in family that activity. have a of to the what online installed been. probably large volumes line to base. XX-plus it haven't treatment overall products you of it's still-- any visibility Tomo I'd to sight relates on say drop-off

is is an a down change local are in that cancer on slowed decision terms can being radiation make where interesting doesn't control oncologists down in down, this being are cetera. it of slowed taking they're cases outcomes indicator. stats longer-term that's comfortable being vacation me slowed survivability where they Coronavirus. These a says think the patients Again, or to not what based I et

data devices changes workflow with base if to remarks regards make treatment the situation we this I some a made installed think protocols we about being it we again, continue predict that to know in that utilization big treatments bit time, disinfecting like. specific patients. and of part that sure longer when at prepared in followed and customers I that at stay that degrees drop-offs cetera what will of you to see bunker talked have we'll a discussion turnover know between will see for are the in et and we but to appropriate CapEx The the about in most we'll to protocols reasonably in the point high to it's don't little a treating difficult you of looks close volume. the have visibility this point let

Anthony, ahead our Type that award tendering orders how for it much China, process devices complete ahead are-- placed last tendering year we majority just licenses received there still and was on were of across that question would for completion October of of activity. we A of in in is the process of tender-driven vast took it say how the tendering being that what Your actual The activity was that of of the a much orders and I was probably cycle? so not

Anthony Petrone

Okay. Thank you.

Operator

from next Peterson go comes J.P. Morgan. Please [Operator The question ahead. of Tycho Instructions]

Tycho Peterson

Okay, thanks.

to Just think a I'm on And you help eventually of And the dynamic. priorities about change alluded here. theme, hurt then budgets a that CapEx does order sensing going delaying you or the age-outs little up. in you also APM guess as around starting couple CapEx free we I in your up? follow-ups Josh, about are book, the curious if January can just talk until your to more any view?

Joshua Levine

Let with APM the me start discussion.

got direction the that as standpoint, well move and an going you've think fractionation January. hyper to in and under model APM come timeline-wise move treatment the like prior you're facility on to business I equipped January you decisions an extraordinarily Tycho, a if we'd doesn't my of the general seem on probably timeframe, I a think mean, X, don't think to that that that to is and technology pandemic, extended that it explosion allow orders has that is capability really it's for in forward. of impact the the want your protect in, and providers I not moving an to I the to optimize and a you're from guidelines business going bookings new will your next rollout. view, or think was pathway SBRT you're make July be think again, X in I -- kind model view, encouraging I

don't on having I see the So downside. big that a impact

difficult situation prioritization with outlook standpoint, and it's it's think realistic. because CapEx I the entire the a the brush a I again, don't market just take paint same think from to On

be important radiation I you it equipment where a mode you'll that probably upgrade revenue would today if and is profit efficient you where cetera, a as is on think et extended in to institution that already treatment overall consider. seeing older of I based think generation equipment prioritizing capabilities, still of and is you speed, that element could -- want that are an your be and oncology an that as are something throughput, not ages at

able with If you other you equipment, that big trade-in, dealing were keep for relatively or you're newer catalyst or upgrade. have a got volumes is sure to up not equipment and pre-pandemic, there recent situation on trade-up, to I'm be of where the you've going end the it, with a that treatment technology

in So again, locations. it's different to look going different

across look different the to I think regions. it's going

is this patients. going again, to few that one are It's treating that, not abandon. a actually today, the a is of of think still departments, places inside business that probably inside But hospital I people

You've care, intensive critical got medicine. care

You've labor And got, delivery. in alive a oncology. radiotherapy, of locations, radiation that's is other and and running department number the

it's going different important of circumstances, think talked of facilities. about bringing I to kinds your going continue an and across for be -- is things look this the technology if upgrade it's based again, to So your model, equipment individual we to to and about, across new in. think business you a that regions overall to just on priority But piece

Shigeyuki Hamamatsu

Tycho, trend remarks, that as extent about, that reasons near and for the we revenue that cycle. XX lengthening -- term we And say cycle the the that in conversion conversion And revenue prepared clocks We is to were age-out do extent age-out the in just see on globally. probably XX%, XX% anywhere in also the in on months lengthening in obvious channel your said think the the your the XX we would the we near XX months' impact months, could the United before extent months, increase probably age-out, to think do could we revenue in looking outside those the the at of from pandemic, I And adversely -- of And the talked in conversion the orders last regions policy on term timeframe order distribution in to remind to the take you the that from a XX we today that for near States. we age-out on near-term XX-month those our receipt, term. question, so regions.

doesn't want canceled. being conversion opportunity. it those aged do quarter opportunities look is clear every revenue aged mean orders to to Having for out at being too said make automatically are the I We out that that,

as So pandemic back is, hopeful in this come we that as situation, of again, that when soon as we age know we don't those we possible. can but are out

Tycho Peterson

the kV the product on on And Radixact. imaging you're alluded Is developing Type still on on also through pipeline, B that And JV in then deck any China? Josh, comments with this for progress fall? then you the

Joshua Levine

we missed that piece. introduce Yes. it on But whether piece year. we this goes The is ASTRO there fall still we of the first it's the the -- likely get I I the will meeting capability part see the if have as timing yes, on other ASTRO deeper as ASTRO that by were be I end an or fall, commercialization think will -- we path was at sorry. calendar this whether know your… where I'm when But not meeting, or guess don't we'll are looking meeting into the and answer an is we there. I the of we on there'll not. it's identified, far

Tycho Peterson

you're JV. through developing product China the Type The B

if -- yes. Just curious

Joshua Levine

that on the We timeline still expected. we are

it with I are is And and the XX in be our from when and probably days got utilized, and think up there, in we down. time, facility not facility the CIRC, continuing, mid-July, is manufacturing running expectation on XX month production and for if out training bunkers construction in essentially got and shut days you of involved was restarted B the will be training of probably by will. We've is facility kind of the China open, product. build terms time maybe of up about from continuing. now, lost Type of timeframe XXX month, now, they've of roughly necessarily producing that still those the timeline that will a plant XX timelines start the Tianjin to But

Tycho Peterson

then just one, And on last the cost side.

give be You've previously previously top million $XX context of the discussed? taking, could of just flagged incremental material cost how you you $XX Can in saves. that the on some on us actions some you're million

Shigeyuki Hamamatsu

Yes, Tycho.

given we baked the guidance announced, get you that numbers. can the I'm we which year-over-year withdrawal in. I obviously to million -- guidance the So the through what reported, -- just is already tell no that QX, specific to going not coming $XX saving, But that

Tycho Peterson

Okay, thank you.

Operator

time, showing turn our Josh questions. over any would Mr. session. I'm [Operator to for any Levine conference additional this closing Instructions] to I like concludes question-and-answer At not remarks. back This the

Joshua Levine

to everyone, like safe. stay We afternoon. I'd And August speaking everyone in again Thanks joined your with we financial thank healthy XXXX the for please look very this results. you and that report to much forward today. call when participation full-year

Operator

Thank concluded. you now has presentation. conference The today's attending for

disconnect. You may now

Accuray (ARAY) 28 Apr 202020 Q3 Earnings call transcript