- Earnings call transcript Q4 2022

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Operator

Hello and welcome to the Varex Fourth Quarter Fiscal Year 2022 Earnings Call. At this time, all participants are in listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Christopher Belfiore, Director of Investor Relations. Please, go ahead.

Christopher Belfiore

to Quarter Corporation's of welcome for conference and Fourth the Fiscal afternoon Varex earnings Imaging call Good year XXXX. are our today and me Sunny President our With and Sam Maheshwari, CFO. Sanyal, CEO; webcast Please note supplemental presentation at can that this website call accessed Varex’s includes slide at of be vareximaging.com/news. that a conference live the and supplemental be The presentation webcast archived on will slide Varex’s website. fourth unless to the for the To references quarter XXXX. year all simplify quarter otherwise our fiscal stated, discussion, of are

sequentially XXXX, from stated, year quarter otherwise quarterly to made year. of third comparisons unless the prior fourth addition, fiscal the are XXXX quarter In quarter of rather same the to the fiscal of year than

subject references could our materially Forward-Looking future based anticipated. described events. not this predictions that all that the expectations fiscal and during our about business and the quarterly unless Statements, the are assumptions in differ or we projections be to SEC. to year calendar with be will risks results which advised are Finally, call, our that on and are earnings making year otherwise and from to relating These are year, actual stated. to release to uncertainties are filings Risks statements Please current those cause

this to information this assume our in revise call speaks is now and forward-looking release, no or to Form our each most Sunny. could reports website. a in information are update in accordance in of On those financial earnings on discussion to are non-GAAP the financial financial of today’s discussion. non-GAAP with, measure anticipated measures. posted we on over of financial will XA, on to provided our Item turn cause is The call, certain GAAP they will directly XX-K. Form SEC which factors the Additional our and comparable GAAP quarterly concerning the our obligation presented in annual as date, materially measure today’s that Factors for We Risk contained results XX-Q actual differ we reconciliation report measures measures. from not a filings, nor press I These discuss substitute non-GAAP including statements

Sunny Sanyal

Thank you, in to finish demand supplier solid reaching a and quarterly quarter, Global Chris, during a announce convert another were pleased strong efforts revenues improving to I'm and with record afternoon, more $XXX our for to quarter fiscal sales. year products good chain supply allowed the for and everyone. million to the us a slowly new our diversification orders Varex.

high good end X% increased Medical to X% grow, increased at a was X% Varex's low fiscal start procurement about in and the $XX in due to sequentially, non-GAAP million Industrial year-over-year. EPS Revenue we and X%. year, semiconductor sequentially despite Non-GAAP the new year. prospects quarter the uncertainty feel while our the gross quarter I primarily Adjusted $X.XX. XX%, costs. As fourth a high expectations, degree upcoming Revenue in in revenue margin increased of was was EBITDA of

up quarter, including the million the million was $X position, $XXX cash at end securities marketable solid at Our sequentially. of

in but increased primarily in the year-over-year. other year-over-year. market on their revenues segment give X% Industrial fluoroscopy, X% across Asia of quarter. me quarter, in X% demand based modalities into suppliers. other solid, modalities experienced and by our mammography. qualitative timing one Oncology Let solid, and increased shipments to medical remained were Demand different as customers saw shipments delays our high-level Revenues led sequentially soft dental of with due we the to Medical some and some applications radiography, was segment sequentially customer. you CT Pacific, the were for some during demand and insights environment flat for tubes assessment Global softness

that high including saw and industrial we these quarter other products as for system on CT borders. our expect This made significant growing I medical various as applications, progress cargo some market screening our from have time sources growth. well In tubes over new for across our sales energy base. the wanted the drive Global Today, we segments non-destructive and across inspection demand we moving highlighted reflect we ports last to the the installed fronts remains The products of replacement past, to take During have for broad-based that on driver year as includes at forward. and installations demand a to expectations as well various future Varex.

local as design well future of including OEMs fiscal CT to with as in wins new new our we replacement During wins tubes. subsequent These XX for XX demand had China. customers, design represent XXXX, several opportunities sales years

We expect growth share. both a partners key to local continue as CT market for driver Varex, and continue to gain be China our OEM of to

based used This future believes nanotube cathode markets. field in X-ray and diversify our highlighted cardiovascular position to we tubes. in Earlier Turning to in of medical technology in our systems nanotubes, for X-ray Micro-X, license multi-beam applications. X-ray importance to sources to this technology additional cold in the to with security nanotubes, year, invest we Micro-X's and exclusive of high-performance X-ray includes the for global Varex we're product excited tubes portfolio. expand enabling September Varex a leader further our use entered nanotube in collaboration carbon an Technology into

new the Metal samples of continued based for potential Liquid to by cardiovascular year, customers. our During ship CT tubes we evaluation Bearing and

certain the throughput and future quarters, upcoming receive additional noise-free we and to designs. feedback applications. offer their in included These system expect towards long-life, products the being tubes a on increased move for Over operation

were we feedback. from our Azure a began design interest In to customers. Moving number of customers called their high into receive continue and to to our receive platform systems to fiscal positive to Azure Detector continues XXXX, Dynamic detectors we see that detectors, happy

their see to offerings. adoption launch expect of customers as platform, Azure our We further our product

had targeted radiographic share. the of the converted our historically where LUMEN radiographic at platform lower the of highly low-end is market detectors. detector have majority a market We our to customers we have This competitive

our as showcasing advanced detectors this applications, as well detector for be radiographic will November. current at new LUMEN later RSNA a We

on Counting Medical used to working side. Counting our various progress progress technology with closely making We with are Medical, up our their them into design for CT also in being Industrial continue we're Photon both, to are and customers applications. our systems. detectors firm Further, integration make Photon and with specifications In

As noted this Varex. have not we an for in do have making space market today, CT past, detector entirely in the market incremental we the an offering

XXXX. working India. Asia Finally, million along India Varex region, highlighting will $XXX took attending will been product with the Southeast presence believe, of India portfolio we and this in establish grow establish will region. the revenue today. local will in be have have its our including trajectory fiscal this on similar talked many a America, nearly Later similar be products in growth a Radiological in seen approach we new month, We have we a China, to where to our be a some we the investment in and Conference We Society of Chicago. of customers, local presence RSNA North about in

and Varex to end to the Turning continue cargo to for Industrial. Industrial, we security market borders market be strong for expect ports

screening as a systems for this result of security worldwide business growth increased space. in is Our cargo OEMs with and established experiencing our partnership demand

we saw this see continued XXXX, past We we fiscal as into success growth expect year. building here, the to head on

growth frame result to Last Counting other industries. and discrimination we to imaging Our rate compared various electronics, capability inspection better of a across highlighted quality through, image within as continued battery are faster technologies industrial increased adoption applications seeing rates and enable material praise thus enhanced high enable Photon an detectors detectors in meet area non-destructive factories our These these exciting to industrial demand and such the market. and quarter, Counting food we inspection inspection. as customers increased Photon

had one X-ray exposure outside I'm is that a technologies of to to historically products. sterilize referring or Varex, consumer-facing to. Specifically, the we of have market use not new e-beam limited This but

We XXXX, from expect backlog are demand partners consumer-facing systems have fiscal be in the products. food expect solutions a growing irradiation we market to defense we aerospace, sources but and our irradiate details Nondestructive American introduction markets. and held used Society during future in more Conference, solutions automotive Nashville which recent for feedback These strong development high-power the their in inspection in as other our receive can integration to and be X-ray stages for early ASNT OEM our in customers. indicated and At Testing to November,

customers in software value our new inspection. Detectors, like acquisition capabilities Our image Counting Photon see ability technologies components, supporting to automated for AI and integrate workflow system

to of providing prospect the integrated solutions industrial about more excited customers. be our to continue We

driver We be to expect a for Varex several new this key verticals. approach industrial growth across

beyond. and to and move that into fiscal with progress the we're to supply the our in XXXX prospects call year, we a with over new that me made let have we initiatives fiscal happy forward look chain As hand Sam. With

Sam Maheshwari

hello, everyone. and Sunny Thanks,

a fourth quarter sequential unless year fiscal third the will I comparison of our our of otherwise for those fiscal XXXX. reminder, quarter XXXX of As indicated, with provide results of

Adjusted and We X% margins. sales our pressure both chain and grow raw inflationary ability year, are constrained compressed to supply year-over-year $XXX the year to X% with finished EPS and million of non-GAAP X% year. year-over-year grew to cash million for million. pleased that revenues gross earnings that the EBITDA and year our we our logistics challenges $XXX and and $X.XX to securities with this from grew Revenues $XXX the despite materials increased for

quarter. Turning now to fourth the

Industrial to leading guidance. of total to of and EPS the increased the initiatives enabled and revenues near million Fourth increased to were our sales of third X%, Medical chain top midpoint million. the revenues revenues XX% gross revenues above in guidance quarter were Industrial was Industrial Sequentially, $XXX compared the was Medical revenues $XX at revenues sales Non-GAAP $X.XX. and quarter ship supply XX% Our $XXX increased for margin the were XX%. Non-GAAP of X%. quarter. us were million quarter. Medical more our sales X%

of sales decline sequentially, to region. increased fluoro in XX% other at declined million by in Looking revenue in Americas into sales. Americas result approximately increased or increase the delays X% primarily was with of customers strong X%. by the their $XXX the China the finished APAC radiographic and XX% total at Sales CT softness as some revenue and year markets The EMEA saw in Varex driven primarily while was our while APAC suppliers.

quarter. Operating results and now $XX was fully XXX Let million, basis. a from gross were $X earnings expenses Fourth at and held $XX the $XX was points sequentially. our on million previous GAAP on XX%, income margin million million operating was GAAP steady EPS XX down up quarter based shares. Net million $X.XX basis cover me diluted

quarter. basis two drivers primary Moving for of end points of margin from to was of margin. the results previous There lower at the the quarter the XX% were Gross low non-GAAP and down guidance. on XXX our gross

industrial compared our unfavorable. second, revenue. material we fiscal which quarter of compared was to the was in million quarter and higher First, represented spending costs And mix fourth million semiconductor-related to X% was $XX also and prior continue flat business represented quarter somewhat expect XX% $XX prior of the revenue. the through XXXX. flat, SG&A to R&D

effective $XX and for that million for the to $XX diluted up the quarter. quarter basis accounting was represented rate diluted income convertible tax were from Average or the hedge XXXX fiscal quarter favorable shares interest onwards. outstanding. and after-tax, or line in back valuation pretax to was Operating convertible $X.XX of compared were US the As to was a XXXX-XX, result with the operating The tax million XX% quarter. of a the third for shares diluted expenses notes of calculation earnings loan million. lower million items note of non-GAAP million our the Net expense on Under ASU allowances. $X quarter to expense income related fourth became quarter $X.XX result, XX% bond to of accounting the EPS fourth previous underlying prior and quarter. was previous were and $X primarily per international shares the or million QX from margin us revenue. operating XX% the convertible and instruments the in XX% revenue, in adds Please $XX share, net similar this standard, Tax the $XX add in income associated

outstanding basis, an $X approximately otherwise Varex, add to annual we shares. expense approximately diluted on million to net of income For million after-tax back and interest eight shares

view deck. illustrative scenarios, potential see slide the an of our earnings please For on QX appendix

second receivable XX $XX sales the balance half to day Now, to turning million the DSO increased inventory by Inventory million to the Accounts chain modestly increased quarter, and the by due $X quarter. one days increased primarily higher turns, risk. in sheet. as target while we supply of balancing in improve to

$X by inventory million. to of payable Accounts days days. As result, a XXX decreased decreased

to of and debt with quarter cash million the net million, end $XXX $X ended flow the was $XX and sales. and moving of quarter was cash and Gross the increase quarter. an at cash was $XX Now, $XXX of was $XXX outstanding the million of securities and the we flow operations EBITDA from securities quarter million was $XXX Adjusted in debt from million. adjusted quarter Cash XX% information. prior debt, million of million margin EBITDA and for of the fourth

debt ratio net leverage X.X quarter Our end. at was times

Now, moving of see months but what levels, to higher outlook 'XX. for than patterns running ago. pre-COVID QX demand six We we lower experienced than

our chain grow to initiatives, supply strong and XXXX 'XX. backlog sales expect Given over fiscal we in

margin higher the labor However, XX% expect around level. material inflation driven we our keep to gross and costs

Moving to for the of guidance quarter 'XX. first fiscal

between is the At midpoint non-GAAP per shipments us. generally quarter of fiscal QX the are quarter this first expected that from first a is With As fiscal $X.XX. share as $X.XX for up seasonally for million, 'XX; diluted guidance earnings expected our a and million between low and quarter and follows. for $XXX the X% Revenues of $XXX reminder, mind, million. in is $XXX are

tax Our about that, share XX% non-GAAP XX of shares. the more will earnings accounting title in margin scenarios of illustrative million, this QX gross non-GAAP expenses now slide expectations XX%, operating diluted your our questions. rate Please XX fiscal call count XXXX-XX diluted the for are range million and to million of standard. open to non-GAAP shares for on on XXXX XX% non-GAAP $XX for With see in of of we the the about about based with various under impact for details presentation ASU $XX

Operator

Thank you.

question session. coming [Operator We question-and-answer from will Our today Instructions] now first be a Solow conducting Larry from is CJS.

Your live. now line is

Larry Solow

Great. Thanks.

the clarify, you guidance the you're convertible -- accounting shares. the fast tax I guidance million in new for quarter know for just Just QX, of rules. give It's still on real assuming one the only – flow to light XX essentially

So, of it's correct QX? just only non-cash that add-back right, interest of the that essentially Is lack interest that expense. for expense,

Sam Maheshwari

Yeah.

a $X.XX, shares moderately diluted So net Larry, bit about happens this calculation more interest of you. than makes works, this complicated. say say share $X.XX million to EPS if million what you're in add still it then million are after less which is than $X.XX on and back for add the Sam. non-GAAP you at But you'll using more talk way then $X.XX, denominator. But count. standard Good interest basis, a expense, $X.X $X you're The saying or to expense the numerator, looking little is XX accounting eight shares non-GAAP income to more than million tax to the if

diluted of as $X.XX converted. mentally assuming, if $X.XX, beyond essentially non-GAAP So, convertible you EPS, has the are

million. pay then to goes So And you interest have expense. count no longer by the up $X the share

you So, clears – that's the for way or that, I to think hope about it.

Larry Solow

Yeah.

trying I don't to So how I'm just does it – kind up. of some looked it, I simplify get, guess. charts, no, your skews And of it at I because

taking kind guidance – it's those scenarios. of kind then of a of in is your range So

Sam Maheshwari

Yeah.

to So guided. just our guidance $X.XX, is as $X.XX we

between So, higher are towards where the end it we expense $X.XX, the shares add below scenario, and $X.XX $X.XX guidance, add back the go we the of $X.XX would and say dilutive interest not. that and towards

Larry Solow

XX%, your of would the quarter-to-quarter operating high EPS, at hypothetically, operating theory, of an So, actually yourself just end you – like And put adding right? $X.XX expense, end you operating you're assuming reach sequential impacting that's changes, that's $X.XX is interest So $X.XX $X.XX a the on you're basis right? theory of in nothing share which the basis right, – your on in that's on else count math. you're – adding like like if profit and increasing your $X.XX That's then high simple back right? an difference, $X.XX, Because of

Sam Maheshwari

Yeah, basis Larry annual an – on

Larry Solow

you there, I'm numbers. – I just it – up to simple. make look they just charge just These but – them there's many trying make They're I'm can to anything. know it so trying you do simple. don't at put

high-end right $X.XX, So, your have that isn't been scenario, on $X.XX? a could guidance

Sam Maheshwari

little yeah, – This Larry a high, bit that's high, little bit guidance… Larry. a That's

Larry Solow

But close – this it I feel Directionally, right? to ask right, like that's that, or let's mean I right? way.

eight have impact you interest QX this you $X.XX If shares of correct? $X.XX in and have – you add expense, would the done had done $X.XX. $X.XX you back million the couldn't would or

Sam Maheshwari

No, $X.XX numerator the about denominator thing the is a and impact is a thing Larry, quarter, that. a because negative positive the is

Larry Solow

Okay.

taking, you're – the away taking you're So yeah.

Okay.

Sam Maheshwari

that range. $X.XX, Yeah, $X.XX, is in $X.XX so impact annualized

So it's for quarter, to given about $X.XX. $X.XX a

Larry Solow

Okay.

Okay, I got you.

That's Understood. Okay. fair.

was more it pretty chain, some for semiconductor talked realize But just just you? things is I people budget Okay. gears. costs And for maybe and and but as stuff. – issues like I switching kind in that, the reported specifically higher economy issues, maybe ago, macro are about capital Obviously, supply you, a your Sunny, and looking question look, some impacting good. budgets that some a then general, concern there think just supply just thought. to great, and I else trying sounds weeks of not Omnicell somebody sounds hospital think concerns maybe spending general, these good see – macro just have are I some know, good. you not how Everything semi-cap are what they but as headwinds hospital Is you customers the in macro pretty it not a macro few

I is out you on trying – kind what a So, sort mentioned you? of figure of us environment But just – tough brush concerns to some Thanks. broad get specifically macro and tough. barrack can you give just a the

Sunny Sanyal

Yeah.

and XXXX fiscal So, Larry XXXX. in our strong bookings very fiscal customers both our had

year quite in that bit So, and they've a sitting their are orders of that very taken on they strong all they're backlog. had a

we the have to us, get for call-offs the that that that you as this year. extent represents know would deliveries in So then they

I So quite good We've supply as bit we from forward made a at supply chain and about I look where with perspective, a progress are chain that. our just looking initiatives. feel of

You We might on lot qualified going recall, got fast. We early. we a really of suppliers. them jumped

ability good and our year about I to So a feel have progressively good forward. going

in risk they'd to the supply is might and as customers products out fully want able our I think the here understanding sitting to. not their that be chains get whether quite be for them situation the me would we with

and that's we're be that's at So the to here that risk the unknown fair. looking

Larry Solow

Okay.

So your from you you or whether sounds lot customers, that Industrial Industrial think would concern for better necessarily Does is over the slow a Does it a maybe doing concerns on that until it bit? great revenue like would sequentially little the be side even Medical side, up you? guys now spending than economy the few last curb quarters. or a

Sunny Sanyal

Yeah, their cycles. makes believe customers our that pharmacy it of different But that. example products I cabinets used you then to situation and directly does. signed longer sense Omnicell. have Omnicell the ours in from users like and is end They're the shipment

And of we're the in place. already a I backlog, so given their feel like business volume in different that's

Our the economy softens, the orders likely or customers and by intake at end be of the down year year. slow to then uncertainty that is tail next our if starts to impact is

this we at know the we're year. they Sam our need QX model for bought so already year-end lot how don't least This the we us about soft that in as be things because of -- tends mentioned And quarter. this position. that fiscal of for quite customers, to to the a current historically feel QX -- they've is good quarter a year of

as well. during have as the you and a -- little QX the had from we then would QX year soft improved that it year a better cyclically We then but got progressively, QX is year. And seen So by. goes soft, is last

Larry Solow

concern but that's issue, of bigger chain that's And does CT of growth also that a your supply most a little more your I you and drivers. that the kind obviously guess like in assume supply you make the Do year, -- are It sounds issues? a issue. one you chain timing of back up of bit holding guidance through because of continuing or that

Sunny Sanyal

what to of up a make to But perspective our from type lower-end else expecting year. as be you might in move CT So the we're minds of products. mix the the more during the asked this our could on that -- an thing risk environment

what during As it people recessionary going look a buy that the happen. that they're to year tough is tends at environment in to

the exactly in quite mix not we're like CT. half So the of the year what look will sure second for

Larry Solow

it. Got

appreciate I all that Great. Thanks, Okay. color. Sunny.

Operator

Thank you.

question coming is from Kalia Oppenheimer. from Next Suraj

line is Your now live.

Sunny Sanyal

Hello, Suraj.

Suraj Kalia

u can hear right? Hi, Sunny, Sam, all Chris, me

Sunny Sanyal

Yes, do. we

Sam Maheshwari

Yeah.

Suraj Kalia

everyone Hey, and Hope Perfect. healthy. safe two Sunny question you for one for Sam. is

talk with gap the are especially us Micro-X partnership you Micro-X, the fill about And their Sunny. Let offers your with me this partnership? with you out What Maybe start implications? trying what to complementarity could carbon platform, the multi-beam. that the nanotube to with are

Sunny Sanyal

first the of -- progress. Suraj made has so work our Yeah. all good technology

and know -- you lot in cold of believe And talked feel that. a we've about -- technology. are we As that, cathode very good prospects we fairly future the

So strong to I and sure clearly. our pretty make conviction comes that wanted remains there across that

there are technologies to and there these Now are technologies these know ways you and different different as are kinds emitters. cold of cathode many make new

do different we what emitter things sure we two wanted make we a were make to technologies. here. so one was access wanted there had couple of to -- to were we that that sure One, And to

venture it as we wanted to well. make through joint And One had VC. our is one, of them sure the we second ourselves that

for was technology this also long-term joint have also nanotube-based could emitter to that different technology continue we in to slightly carbon evolve wanted on with we and make multi-beam of sure we So making the we addition the to to venture emitter having own. that our that a type our technology access tubes

the own addition through partner. ourselves for mostly So we our to and a in JV where to play this was technology diversification us get

Suraj Kalia

Sam, could. your post these it. both a I'll I throw things if of together Okay. couple Got I'll of and And way

compartmentalize? these a inflationary supply XX-ish they Are I'm Sam many many position seem gross the in Okay, here FX, of of a gross to specifically stuck mix. GAAP and costs, sort bps these XX-ish margins, margins, -- bps or right, product chain to in be impact we referring is to of So range. sort

which mitigate -- -- And And us us acute what any it efforts through the impact more help color Gentlemen, to through would costs there, maybe that? taking I currently great. shaping if if throw is you us you Just cargo could your also are how embedded could thank be presumably walk are Sam just in my you're seeing? for Any walk OpEx? up, in questions.

Sam Maheshwari

Yes. Thanks, Suraj.

yes, -- impacts So, terms well. and margin the actually pretty of GAAP non-GAAP the in on specifically answering from apply to perspective much these as gross gross margin results

So and it's the the is -- effect non-GAAP. for same GAAP

high. basis would pre-COVID compared to even -- XXX I running So freight points. margin time, freight higher our are say impacting is by freight our XXX, The costs costs gross

quite In of they are X% to up is bit. up terms costs, XX%. a Cost

you we cost ago are look say where or versus quarters at three four now. If

are So, points impacting basis the we essentially, increases, XXX which XXX cost gross looking to is at margin.

to also So able prices this. we've to realization. margin, we've price and have been we there. these cost increased and increasing slow, offset freight But not percentage were But not that been been so increase then through gets because increases or efforts say the fully slowly if mitigate prices the improvement have you to been price gross XX, the XX realizing far

So that, have are and somewhat defray that but been fully. to we not successful slowly trying we in

XXX at higher end perspective, the back towards we So to gross the improvement points of basis looking from margin. XXX are price a

price and of plowing terms freight So back how working is through it cost, that then materials is and increases. bridge in the

we I then basis freight supply And see situation things six, the very beginning Currently, are to in it to are as to question second I points. we given tight. last that. would say, not still mouth but months, freight, -- chain that said, to of is still freight. related improvement we Lately, many impacting XXX terms nine say. areas, But in for been are would tight three, has current some your way that's So XXX in anymore, I hand are

are And modes. so we oriented cost utilizing higher or freight leveraging

in to quarters or to on will one two normalize begin to us So freight its quarter another probably terms maybe gross take having of margin. show for effect up

Suraj Kalia

color. you Thank the for additional

Sam Maheshwari

Suraj. Thanks,

Operator

is Instructions] [Operator Petrone Our coming today question Anthony Mizuho next Group. from from

now Your live. line is

Anthony Petrone

United the good linked Thanks, dental the to demand traded China? here that that's that Sunny, some more just you, neutral as of a gentlemen demand mean, just quarter. geographically mixed that some at with Europe, questions how is being of impacted backdrop when linked backdrop in sort dental to and the still on CT And the the publicly as a We're XQ. of labor look States, start and data from much in I then you the how in listed few execution of dental. is much have sort the environment. congrats I'll quarter Sam, of of other points of, from shortages actually volumes in hearing tailwind in have companies on solutions

follow-ups. quarters? next see have you do the couple So in And few any I'll risk Thanks. to down a slowing dental of

Sam Maheshwari

and back on our Thank welcome Thanks, voice you. and call. your hear good to Anthony back

terms The this a side really what us we quite versus here. CT last been would growing compared yes, CT, how provide quarter. the in say few is for business of the has I still quarter for demand is graphic color high. number of business that see a So, CT we quarters of

or still -- from still as And so not it's line the that quarter it a what perspective the historical was last what running end. It's high quarter. we as this is prior is it higher just towards

feel good business. we So CT about the

been new we've As -- we've about qualified a OEMs talked number China. in we've of

is strong. et our CT Japan And China, cetera from for so demand quite

our to Sunny the on bit to of terms customers pressure recessionary it's forces quarter we year good, dollars in the forward but little compared ship CT the as of mentioning a any think need saving mix was we the of whether in is remain overall prior down. about quantities product good. look into And terms So the down as quarters product mix the remaining to yet

to for dental. on out you need good comes next to we Maybe But CT. your in Sunny overall on that watch want pretty we So question going just forward And add CT. dental? feel about

Sunny Sanyal

labor by that... Anthony clear -- wasn't or Were you your calls I hearing been wasn't meant pressures. that to in you've it Yes. what you other saying me

Anthony Petrone

due due labor of -- side labor pressures So continued at yes pressure to the to carry…

Sunny Sanyal

For the clinic?

Anthony Petrone

Correct.

exposure about current I'm a Some procedures have wondering through the quarter. companies dental of this slowdown they that to talked that if translates..

Sunny Sanyal

-- across fairly our share in market We're we geographies. have good have See many we dental. diversified -- strong

specifically. we we're yet. in not any strong for I seeing us I in out to that any that way continues can felt So be specific mean haven't dental. softness call Europe

So or There's... way any saying? of verifying I you're what really don't have validating

Anthony Petrone

is year-over-year follow-ups strong of No would on worries. A to in It six any months. No couple elevated dollar Solutions. worries. one now The hasn't for obviously be impact demand here appeared almost Varex on have currency.

wondering the we're on latest elevated currency Just discussion as dealing is just dollar with an what here? the

Sam Maheshwari

Yes.

provide So that color let some me Anthony. on

about an business in and annual in is US XX% XX% Our currencies sales in comes dollars. is foreign on as basis

so we've or year fiscal to $XX impact yuan, at looked the every has top-line it dollar million. XXXX. it's $XX Obviously, And euro. last It's currency Japanese been we strengthened whether million about compared this to yen and how the across started major

production operations you R&D as well terms us $XX facilities impact time top-line the on perspective have to we has million. in and do same in and bottom-line But been margin we do also of our China. a from know facilities about in as have that the production Europe as So at the

million, what say little bit somewhat but up impacted we less also along about down go -- more becomes the margin the because revenue are us for ends would the us. the costs $XX full I is a that So with by difficult impact. say has more year million, compressed for gross our by been $XX happening for top-line

full points impact. for basis or points, good is not are probably that that you that. were you're more points on XX for XX probably to margin top have or that. reasonably I accuracy. year of than So you dollar or guess gross is the different basis not -- do were from a really due would do exactly what around basis perspective. clarity questioning But Don't probably buffered. percentage towards looking I the I if have know I looking level line say, it It's would, would less XX strengthening. we say Whether impact than I

Anthony Petrone

last then a past seen in in capital just markets although on me private haven't here And years several anything activity public for the has have clear. and done The that's prices M&A, the allocation. tuck-in bit. one front, we on shifted No company

So, latest just thoughts on activity? the M&A again. Thanks tuck-in

Sunny Sanyal

and our paying on to levels. to strengthening to we continue to get down our still balance been do we've that debt sheet expect Anthony, focused target leverage

this fiscal direction. we plans time. need for moving that to that and specific So that in budget XXXX deployed the continue investments we'll India track trajectory make our supporting for factories of in No that in the at off of capital particular down

Sam Maheshwari

forward year, R&D funding as the to time more at we what than traditionally in we we and CapEx same priorities. priority in the look we -- Anthony to just little past. other bit and this to investing little I Sunny just bit through business us is working would which add investing Yeah. keep said more that for our But need capital upcoming color would organically, would be first invest on in what a fully to are done a have

high at tubes We for here City. Salt capacity factory Lake in are our looking utilization

So the bit Lake, well we tubes investing here are as as in world. in in elsewhere more little Salt factory a

CapEx expect for in run So we to for us. XXXX bit higher was fiscal little it fiscal XXXX a what than

Sunny Sanyal

fairly always in visibility we've And a opportunities. had Anthony and opportunities organic to prospects good

lot this you space. with stay the as know -- have in we companies We touch a of in

M&A at to for wait touch – actively continue with we’re but no So in stay this time, and it, opportunities. connected not pursuing any we'll particular

Anthony Petrone

Thanks.

Operator

Thank you.

from today from Sidoti is Sidoti question Next coming Jim Company. &

live. is now Your line

Jim Sidoti

a the earlier XXXX taking do your in increase if fiscal in be you for pricing to questions. price to to about the they're seem bit continue Can pricing talk ticking, -- year little and again costs Thanks put you rise? you that think this afternoon. Good going increases more

Sunny Sanyal

Hi, Jim.

we rolled have increases. rolled or -- we cost So price the effect of have they out out offset some they've increases. some And had

a outpaced part the place orders some fully have -- during However, contracts of us. the that price increase we've realized our the seen many And offset that realize and also reason multiyear we've that them material the customers our our for -- ability with input of of increases cost to year. is the cost -- have large to increases frame

to point, the get So benefit a not out we to those increases. price run those we're and realize until of renewal able

we timing when to price So out of into realize. roll well the we will much effect they increases in and as can fiscal continue XXXX how impact go will

Jim Sidoti

couple the sheet a questions. of on balance And then

is in investments else one, capacity, the Is from is up First June or million that PP&E $X increase the about what quarter. to there?

Sam Maheshwari

Jim it was the mostly go lumpiness of when payments in that. terms out stuff and like

we around came completed, throughout But around fiscal was million, at bit we ended little are that through last this we just it CapEx but quarter fiscal you year, with XXXX. million. overall, of you a remember not looking every -- $XX we to fiscal $XX $XX XXXX straight we line of out -- If XXXX, million year highlighted had that in

to, we spend supply -- we So partly much and continued did of were as because from equipment hoped as providers. not delays chain CapEx had we

make to we a to make have So higher execute in our of of -- adding initiatives million. machines in complete planned initiatives us. machines plans In able of we not factory. around number had all number see just these how to we we will for of were that -- and we able Mostly, productivity growth higher adding progress, $XX the tube that XXXX. in be in than have CapEx XXXX, terms to or kind are a terms We mostly new of are what

Jim Sidoti

All right. one, a on cash. And then just quick

reported and in You $XXX equivalents. in your presentation cash million

$XX You're always the on sheet. million balance showing

$XX other assets? other that in is million So

Sam Maheshwari

that lot for asking question. a thanks Jim, Yes. Yes.

rules is XX the we more So sheet in other for balance do, is which of but presenting or our the or securities the need days any balance to CDs fixed that investments $XXX deposits cash is say that than sheet. present GAAP then elsewhere it cash one really million, in we on

we generate Given from want the cash environment interest our interest portfolio. rate obviously, some income to

commercial cash million. $XX fixed or and up, and all is So call have $XXX deposits like we added sheet that's presented all the securities balance that stuff that that other the paper you million. invested once But it of in add,

it, look million. my at perspective as I from $XXX So

Jim Sidoti

you. Thank Understood.

Sam Maheshwari

Jim. Thanks,

Operator

I'd you. Thank closing to the to We reached for comments. session. the like end over turn floor Chris, of further our back or any question-and-answer

Christopher Belfiore

Great. Thank final Sunny, any comments? for you questions. your

Sunny Sanyal

in top line solid results, earnings year, Yes. Thank and you, Chris. both for closing, a the have with we with growth. we're consecutive happy posted which very Look

and supply effort I'm Our a very X,XXX key internal our possible. proud a on employees make our results for that results daily efforts was globally these of chain to basis, the diversify enabler these to make

to expected environment. Varex. end, I be we a Thank Going what's are in very positioned line your interest in continued that you again, dynamic for feel to XXXX, grow top well to in fiscal our that

Christopher Belfiore

website on Thank A for for you, call quarter you participating fourth archived and the of non-US accessed conference through calling available company's you XXXXXXXX. be the replay The Thank call conference webcast our replay Sunny. XXXX. in will in from locations. November or access at all supplemental XX of the earnings anywhere quarterly goodbye. be will code conference XXX-XXX-XXXX XXX-XXX-XXXX call Thank Varex' US website. be the presentation year by The can fiscal is and slide or and from

Operator

you. Thank

may now You your lines. disconnect

Varex Imaging (VREX) 16 Nov 222022 Q4 Earnings call transcript