VREX - Earnings call transcript Q1 2025 | Varex Imaging Corporation

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Operator

Greetings and welcome to the Varex First Quarter Fiscal 2025 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to your host, Chris Belfiore, Director of Investor Relations. Please go ahead, Chris.

Christopher Belfiore

Good afternoon and welcome to Varex Imaging Corporation's Earnings Conference Call for the First Quarter of Fiscal Year 2025. With me today are Sunny Sanyal, our President and CEO; and Sam Maheshwari, our CFO. live presentation this at that at the a call Varex's that vareximaging.com. slide supplemental can note webcast conference of includes website Please be accessed website. To will and references all year quarter first archived slide XXXX. webcast the the discussion, presentation for of The on otherwise supplemental to Varex's quarter simplify are stated, our unless be fiscal

quarter XXXX. fiscal In from the year made year year to addition, XXXX over unless year otherwise stated, quarterly of the first quarter are of fiscal comparisons first

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

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

Sunny Sanyal

you for you, solid. in first Thank the earnings quarter Chris. call. was quarter Good our for us everyone, joining thank and Demand afternoon, first

in during facilities us the grew Industrial quarter. both unscheduled the Revenue the However, year holidays from U.S. and Medical in fulfilling the for over segments absences prevented demand year. all our

sales quarter, and the to Gross begin primarily sequentially. Gross also we in million from from to year management. capital taxes approximately over and and in the Cash the with orders both also gains realized started China, German higher favorable improve, the an was This During anticipated. we margin customer see than was in paid. in product working generation was by customs result This quarter. mix of basis by sales very solid, strong segments. and margin quarter year XX% in improvement good XXX benefited driven points operations of cash and both productivity refunds was of previously duties of $XX

million cash ended the was XX%, which the increased quarter Turning EBITDA $X.XX year, and million $X balance XX% year. per quarter over XXXX Non-GAAP last earnings quarter marketable XX revenue gross and worth in fiscal $XX the million and $X.XX Industrial on compared up same and million up compared equivalents, quarter year of year cash, first sheet, first the non-GAAP X% over $XX year from $XXX segment in segment the end, to increased up to was margin last up Revenue the were respectively. We Medical year. to the Revenue X%, weeks. results, and year. share while with $XX XX%. million in first included Adjusted securities

our of million offering we restricted also senior cash debt from addition, raised secured in In $XXX have December.

trend. to refer a insights give some X-quarter quarter, quarter, modality to trend. the as above segment were quarter, in segment, below trends. In primarily compared in Fluoroscopy detail of Now and were sales sales by global the by the which dental sales strength oncology, their in our we solid into continued screening tubes, sales inspection driven sales me trend. sales sales Radiography, you average, all CT global were products. the stable up were Medical their and respective modalities modalities security drove will our let to Sales which of compared cargo mammography Industrial in in

the also automotive. year our tube screening at line, inspection increased as in in for such well this demand industrial experienced x-ray airports, strong start service saw in revenues vertical. an product as driven in and baggage increase as We by We a nondestructive verticals cargo our checked and inspection for aerospace

cargo quarter, the inspection yet not offerings inspection. inspection quarter, announced the previous stabilization levels demand have verticals, but we we years. electronics, also in returned had security to they Last battery we semiconductor, in our in saw and solutions high-energy in During the and that comprehensive seen service expanded system cargo to and include

compliance, Our security, combat smuggling. trade to enhance and state-of-the-art designed are improve systems

Our stationary large can portfolio of portal, per of a as drive hour, an customs as serve it. enables essential vehicles containers the through inspection border products seamless throughput agencies. currently a which they With over of it available security tool and vehicles includes for and cargo-carrying XXX

forth which and also cargo. move vehicles stationary can called portal image a We back inspect similar rail-mounted is a Gantry, offer to application palletized and and a that

orders system security and system truck-mounted locations rapid various for for on-demand consists can to arrival, flexible, inspection the months vehicle imaging components, With which and passenger borders on proprietary industrial offerings contents expected built used installed systems system, customers designated needed. of and next systems as be provide an compact systems and from XX of portal, lastly, of be their $XX mentioned foundation at XX successfully And had include we our to installed in approximately are several accelerators million. with minutes week, to additional linear worldwide, are systems. completed to efficient received have certain of cargo be we inspection X-ray secure Last expertise also industry-leading control checkpoints. Each Earlier will installation up collapsible combination deliver can deployments a inspection X,XXX it will sources, received and security of we of that Our inspection at detectors, over a more solutions portals of deployment, it temporary these X high-energy include ports orders The that and base inspection providing announce this such were is checkpoints. the world. our in parts ideal that of be to These vehicle advanced vehicles over software, XX we Designed a cargo expect and as systems. different mobile scanning our decades current events to customer quarter, valued additional happy systems, of of and and set acceptance operational at a our cargo a customers. to making scanning mobile than underway. we imaging

As quality to security on directly remain about we fiscal goods and is for our security to reputation transported By in we're being the have China. start X% and across China, for view experience servicing we to the years. and long-term cargo components provide continue opportunity estimate sector, Varex. year we need in with last billion key of manufacturing leadership, we India long-term We X China trends capabilities, expertise, believe improving, next a global we're geographies production continued vertically components is service growth CAGR radiographic driven footing leveraging annual during declaration can highlighted unique solid supplying begin fiscal our of and R&D integrated over screening worldwide. We're quarter, end-users correct of the to and grow and that and demand as we Demand threats seeing the demand trends encouraged OEMs value scanning built optimistic In decades imaging $X that security serviceable opportunity We're growth pleased a and security over we positive by systems for the our and and to in system across strong and at approximately on this what the to technology remain imaging potentially for significant are year. excellence. outside inspection borders. With seeing business by international ports this in businesses. ensure expected of track off

Before are direct we monitoring we comment China, tariff Mexico. the on between At and the to situation, announcements our carefully. changing do call the significant Canada, U.S., business. time, me which hand current rapidly very expect Sam, based knowledge, let impact to any This I our this is a on not

could or hand actions to to changes tariffs our announced to the the currently let However, me business. With anticipated or Sam. that, call impact change additional over retaliatory tariffs

Shubham Maheshwari

everyone. Thanks, hello, Sunny, and

sales. this nearly segments. the information We providing Medical Total Let breakdown a CT, medical me largest segment, segment Of which $XXX XXXX across imaging nearly for modality, all and helpful $XXX fiscal Medical to an modalities. be were participate start provide it revenue tubes, across with to CT split do XXXX, standpoint, is regions, are globe. our predominantly sales geographic reflects we the exposure grew detectors sell our top imaging evenly note, balanced Industrial modality. From in this of in basis. In by Medical annual that our X-ray not would OEMs the in we as total X-ray currently million. the thought Industrial representing fiscal with the of our both a XX% million, In relatively our on segment off X Medical sales revenues

with our XX% vertical sell security we approximately a at total Here, base being inspection sales. of highly-fragmented customer largest, Industrial into the

this a going can EMEA, business customers included As to in proportion from drives year equipment. current be And our security higher vertical. location and a newly of forward, of security reminder, year. the security sales the The vertical will to volatile systems given be launched vertical our

to results turning for quarter. the Now,

guidance. $X.XX constituted the $XXX compared X%, revenues our XX% EPS increase to period within million, Comparing saw was region, increased and in first revenues revenues total APAC. total, increased the expectation, the by due 'XX. increased million. midpoint EMEA first decreased for regions XXXX, while revenues segment of and fiscal This X% margin of other in the into and the Non-GAAP $XXX and in above to XX% quarter Medical to our increase revenues sales million revenues first Medical revenues solid our and of sales gross same driven CT a XX% non-GAAP industrial APAC the segment. Medical of revenues Our $XX to quarter Industrial was quarter was in our were China Americas above Industrial a increase X% by increase revenues XX% guidance quarter. were our X%. of were midpoint. were Analyzing fiscal XX% an below

were XX% of China the to year-over-year, China During compared increased quarter. total sales. prior quarter, XX% the X% and sales sales

to equipment investments have capital major to continued our slightly, made. in While sales being have see improve yet China we

our cover now me Let GAAP a basis. results on

$XX were expenses loss $X.XX an $X million income margin XX%, an represented QX EPS GAAP $X and First was of increase the million, quarter $XX loss basis XXX Operating shares. gross points million based Operating diluted share of first million, approximately per to on 'XX. fiscal quarter compared 'XX. from a was increase XX fiscal up of year-over-year. Net million fully a was $XXX,XXX, of of

$X SG&A benefited segments. Now note, 'XX, productivity gains in had Gross final representing Of of moving also for Micro-X. SG&A XX% quarter milestone Gross from fifth previously mainly XXX of representing to duties $X million the operating in representing margin the Net to $X.XX XX% for an 'XX, fiscal revenue, of was 'XX. Tax was quarter to an of payment increase first diluted in million, income Average on refunds associated earnings primarily revenue. to revenues. million first in million, the year with the of to million, customs of of XX% the an per the quarter. ago $X foreign points first previous or $X due paid. to one technology quarter. the was increase basis quarter the compared non-GAAP in increase an sales the XX%, increase $XX transfer XX% XX% by were to or million, year, $X The Operating XX expense approximately rate of from an the of $X.XX due X% million spending and million, of were $X totaled margin $XX expenses increase R&D fiscal included XXX both or quarter Consequently, was an the $X due of first the to fiscal for losses compared we compared was X% of our on diluted was points million, year-over-year, $XX for basis a compared quarter non-GAAP of expense operating shares and margin revenues. ventures. to expense first up in quarter. million. $XX share, income, was and quarter taxes in joint $X the compared German from for of 'XX. favorable and fiscal of primarily in of R&D product in results basis tax pretax first quarter Higher-than-expected million, quarter increase was certain increase jurisdictions of the the million, mix million

the days outstanding days Accounts days million to increased and to to sales increased million in increased days large primarily days. to the days and sheet. $XX increased was Inventory days. by the by to payable some an sequential by in quarter. demand The payable inventory by to outlook. $XX days and quarter of turning balance is inventory Now XX in X due receivable $X Accounts XX XX by customers. increase XX from due declined days quarter first million the decline primarily XXX year-end by payments declined The increased in

cash $XXX $XX to and to million from marketable the flow cash of the compared the million, Please securities. marketable of We first of cash information. equivalents, million Now quarter the XXXX. million of that cash quarter and up moving $XXX securities fourth million equivalents quarter Net was debt and year, to fiscal $XX $XX and ended of cash, up operations includes $X flow and cash with $XXX compared note prior million million.

million XXXX. secured debt The through also this which million. the June from was add-on $XXX or was restricted restricted for Gross held million in net million, to of In outstanding XX% XX, account are $XX on debt, offering of $XXX cash quarter quarter EBITDA marketable sales. our closed currently convertible raised in and year. addition, $XXX cash, December debt have cash restricted we funds $XXX reduce an interest-bearing this offering, our debt million and $XXX end senior of at million the the of securities raised of Adjusted of and was due of

Our million, adjusted approximately was our trailing leverage basis. and EBITDA XX-month XX-month ratio $XX adjusted trailing was EBITDA debt net on a X.Xx

second on the to moving Now for quarter. outlook

in that we encouraged is $X.XX $XXX expected trends China backdrop, $XXX between as are improving and are by as million and demand seeing geographies in well With per expected diluted for sales second of a as quarter We are and non-GAAP our million what as the between revenues outside $X.XX. with are guidance China. follows: earnings share

other million $X based now non-GAAP to share open margin are and range XX% net operating gross approximately about quarter, second call on count to XX tax in we'll $XX XX%, of of non-GAAP XX% non-GAAP expectations shares. With the questions. of Our of $XX the expenses million, expense million for for rate million, interest a of diluted your and about that,

Operator

Young first coming Our from from today Instructions] [Operator question is Li Jefferies.

Young Li

quarters start, to of the you seems few there talk and additional where Seems market bit guess if couple I stimulus wondering a well? potential talk guess, can bit like any from to I the I China. little that be on about as we quarter performance was better a just to, some similar was past there impacts maybe the sequential more about color improvement. there Can little

Sunny Sanyal

in Yes, Hey, demand rebound time, sales that. we a call there not encouraged this expecting is an or this Young, it meaningful in uptick, improvement don't and was this a to Sunny. look, we're see year. China, at we're But

going However, backwards. said, not as had we see we did it

and is for really on not encouraging translated of it will the into this clarity there's There and any has no So orders uptick. further do, us. to stimulus been has been indication what no an see it,

stimulus any time not at our impact this in we're on projections. So of counting

the on continue. think also of expectation change to We commitment will government's Chinese that healthcare. been our in position no there's Now,

is we So just the have past. the long-term prognosis discussed as in

Young Li

and I to business, to needed would level on guess that hear they second I curious that be little maybe was a inspection for direct. what margins? wanted the products bit my can level question, scale, if comment and cargo up more to I maybe revenue the you're those systems about of the at profiles margin selling of vehicle you at investments accretive stand

Sunny Sanyal

I'll years, be equipment, followed from tends margin get revenue consists good and The in me this ask to This chime goes which also a to first, couple lower service you get then for profile started us business Let hardware of of service stream the Sam equipment after in. very then the on business. hardware typically side. then the by, and

this us, the will as margin for that the business, So we for run, profile we're the in ramping levels. up gross below be our equipment short margin company expect

term, and However, margin equipment longer transitioning as this improve start we expect this we service shipping better. into profile streams we the and as revenue keep get to

In included be investments, then which for this we made we've the so in additional that do year, But scale deployment. which there need we and the our includes will R&D up, investments already the are plan that terms for. far, of as those will work for we plans

Shubham Maheshwari

the Yes. that, funding are I business, you that of just We organically this already mentioned as like business. component would side are add in Sunny we this know.

So Yes, investments. well. we this know there very be will area

billion mostly said, and I this funded more the are as stages, in it we However, $X this a organic, in be market, than through P&L. early size. large would is point, At

also So revenue, a up pick should on years decent to of we to up the pick and X are margins. amount allow in next X that us expecting to

we our our and is terms Industrial yes, it current In margin to margin. of corporate and right generating, overall segment revenues the also of decretive that to situation, amount our are now investments

a $XX rate, type us. is of run be for accretive it more once However, margin a than to million it quarter should $XX million

XX also scale. to the service So service is more But as Sunny the scale XX this service the The One is been would at full second after be, looking one would effort our is to much months is ratio. the in business. shipped. One say, at which equipment investment accretive. channel. And is that we business area to develop of ratio aspect this system mentioned, development aspect has is what look be the generally, we

we would the area or can but for one global in as we be I we grows, this exposure sufficiently We R&D. more side think the broader cover that be expanding covered on the channel so sales market. are presence expanding would is

Operator

coming B. is from from Kyle question Bauser Riley Next Securities.

Kyle Bauser

I'll cargo A business inspection of Maybe here. the questions. with stick couple

cargo what's just how appreciate the the that. the on market analysis what's And it What's inspection order the looks. the of that comprises? for know curious curious, reasonable So inventory? being percentage that But that total together $XX time segment you just size? then I run billion, what's total big the on some got you put over business a reasonable of current is Industrial size now? so rate? $X there And big Is million? just how a I'm turnaround

Shubham Maheshwari

Sure.

overall So just vast security today, is in also the market. market. inspection of -- of from generated market, the in are meaningfully areas to reported, in quite component fiscal inspection market year. we A market. some inspection comes the inspection The cargo XX% is side are we airport other of revenues our Industrial as inspection and Keep last participate majority mind, about in security that cargo sales we it this when

was from inspection. I week, market release XX% just would mostly last security XX%, very full It also in say through was those contribution components. of that systems earlier revenues announced would a this of we I inspection press systems, its the minimal. cargo So contribution cargo was say that to year that generated

So to the components now to this as continue revenues business. as revenues the systems expecting cargo on add well we with are

Sunny Sanyal

had a also we timeframe. the XX-month deliver we that about within a expect about, it timeframe. talked $XX question to million The And you

Shubham Maheshwari

even working in from be could to quasi-government Yes, turnaround quite shipping this agencies, situation. as or much little vary upon X bit. months Kyle, system the time just the the mind the keep because are government XX can receiving months, to we business, months, depending XX order as a with in or as or sometimes X as It

to country, it we So a one we and next the are the ship expecting XX months. in specific the But upon specific number announced, other factors. just the order, depends that of

Kyle Bauser

China. to back shifting maybe And

extent $XX missed a near- still I ago this $XX think expectations, Did was up couple your Is range call provide that medium-term? good stepped to out And on the million. amount million think revenues of where you I if can the to can Sorry then China specifically? baseline? to this. of color the quarters you a we $XX go do the from million, in

Shubham Maheshwari

Kyle. Yes,

for So we the reported, prepared China contributed XX% remarks, I of mentioned sales my in our overall quarter.

quarter. that $XX about to the for comes So million

not In terms providing more color country to of by guidance tend that. do specific, or we

Sunny prior is its full not mentioned all potential the for still China at as us. question, operating at However, for

closer from remember, should $XX $XX So we higher happens, business quarters this to recovery to happens, million. as a the tubes, tubes high perspective. to is our than one we million, and time, X, were rate level. At in But X of service lot expect $XX whenever grow a very it China from ago, attach $XX operating million, a million, related have

as from So sockets would what passes time revenues from new for and be percentage China opposed to call as we it. simply is by, purposes, more tubes replacement of more

Operator

Next CJS. coming Solow Larry is from question from

Lawrence Solow

guess question I -- question, I guess. first X-part

even was us of in a you a and supply like you're up on on sounds first you mentioned question. the There back. sounds color could forward. Just in little mentioned. -- that give held I like good, they're Could that if demand little the of sales, are bit I would a that this going quantify maybe be issue I the making impact orders quarter don't more my most that? better was on like you the it you assume guess quarter. know Sounds and --

Shubham Maheshwari

had quarter, weeks as by below quarter, was Christmas and Larry, was timeframe, holiday issues, by Sure, expectations, last is and the the me spanning side try XX in address the Year this revenue the this timeframe. mostly New it issues, That last supply Remember, the well supply let for as labor we aspects. the to primarily side our impacted The true. quarter that.

we as a bit expectations. what more that we what miss complete expecting. able to us the not caused is for And product was little result, absenteeism were were a And and than to slated shipment, were which there so our

QX, our QX. So shipment fiscal rolled over that into

that's happened. So really what

Lawrence Solow

was And of because one it was I'm out? particular just or one curious, order? large isolated that it spread order, was just

Shubham Maheshwari

would one No, a were all it no, it large maybe trying was able order, what also And little We get of sub-$X impact few, also those X, say forward X. once out million, I million those to were X, the happened. not that. that's bit $X maybe to then a $X asked get was but really many. worked to not was tubes. we because logistics shipped, freight complete was late, not the amount, and The And you impact I remember impact. the million, the of

Lawrence Solow

Okay. be fully to quarter, that And What China normalize like in guess, last about by of that guidance. outlook, China, quarters I where couple terms Curious know this QX certainly quarter. the you this China, almost now a your better. we and of sounds maybe -- incorporated would things outside visibility was QX, starting stand of getting we better and had -- we're normalized. I little the spoken outside that's how year, in some into had that are the in you how

Shubham Maheshwari

Yes.

expecting issue color had fiscal year, subsided Larry, effect, actually, as the since that we expectation provided last of of and as as Outside we is we the now, experiencing remembering you're February all now, is you well, we've had in X, X the fact, largely phenomena, we last what to was pretty of begin in to timeframe, be said. ago. are that been we or with the by dealing January, all right there in So and we to absolutely out And us. destocking measure, all are guided of provided that experience much China months subside that would and as the we that panning behind we calendar destocking year or anticorruption be current had speak,

a months. shipment, we seeing to know, rates. So takes But it as from few order order in are you improvement

So benefit the that outside we experiencing mostly we the of of but kind QX of as goes window, that speak. are

Lawrence Solow

up take Can on even just operating color? payment. give you we So just bit that new in guess, JV, line. if line, You you your the has Micro-X little a going expenses, that's higher SG&A mentioned bit. around more mentioned for What to not QX, like a I at coming little maybe a little JV because bit that it least And the coming side? that's guidance, bounce a about your the but expense sounds down it's in out a little

Shubham Maheshwari

that away. Yes, was of $XX that's correct, the was Larry. which We last Micro-X, million, quarter. just in million by since to remember, last payment $X weeks it which also driven XX this reported payment, goes But we had

expense. also drove that higher So a little bit

our weeks, So the then to quarterly XX joint between Micro-X of already one back span had bit ventures. we going away, between going and existing also a little higher in expense

a but JV, venture bit this one is a our had expense. new little joint higher of not So

in we expense consolidate little manner, there. So them a also since proportional higher had we a bit

say, should the that things $XX those are quarter. we OpEx should going So benefit and come expecting to, X forward, us million down for

Lawrence Solow

If more could squeeze one just in. I

the you some orders. getting this security that a mentioned obviously, And side-by-side on -- are ones, more Maybe one-off? too. they there know was with report see to one borders. than some customer? orders smaller customers some but are a it's a large of one orders larger other government, much your you more customer? it's Was Are selling I bigger, imagine just the locations, Just it's side. don't like on it Exciting are we to Curious, curious You if border. the themselves I'm come?

that, can they a now little then to you Or you if of your get try machines exclusive? you actually landscape So now, where they're give are. Just the more is trying little a maybe any. feel just time? where in get like Are a spots new grow you're for bit trying that lay to it they us over little and entrant, a more

Sunny Sanyal

That was Larry. question, a complicated pretty

mainly Let X multiple second, I are, disclose can't And tease portal, it as said, where was scanners. mobile and orders. but it products. orders the see they some the can I we included me if was apart. the One

profile. the that's So

We And with depending on be was these in be been question sure be exactly works, bidding not there how tenders, civil can tends and can tenders. have things where the which But -- to country I'm there on other tender. your actively associated going. there

the go we country partner the in who prime a through plays role. Sometimes

this scanning, Our that the in it, imaging, the all systems the follow-up everything, do maintenance go implementation, that the is do and services with then play and services.

the we're the from are else model will there's gap, what another fairly if if partner. And where we in needed, that's bidding X perspective -- way. presentation have that it's about then a a that there's don't something actively. in bring we talked typically simplistic So And products we

Operator

coming Instructions] [Operator Kalia Our Oppenheimer. from question next is from Suraj

Suraj Kalia

of a Sam, belaboring already Sunny, for this. details have provided, me forgive been So and lot

Sam, versus what you Sunny, million in was was there. contribution If Let's And quarter. of ask, local for could Industrial? China local? mentioned the what Medical $XX I split off the So percent between it, start

Shubham Maheshwari

Sure.

in Let XXX%, from all me Medical. majority, revenues of you. nearly that, are nearly not all, or our for China try to address Vast but Suraj,

is the split significantly is very, very tubes. Medical. tilted and towards So Industrial it significantly And towards between Medical within tilted Medical,

the for needed profile exported revenue local for from quarter, OEMs in into your for expanding are are out over that of global volatile quarter into but products of Chinese quarter versus other specific your the local one then that China, customer customers those customers specific versus are of terms China in quarter, was very China of whether there, by question, or or local particular be countries So those to exported can question for that's us. And OEMs. our upon given depending kind any upon whether local for

conclusion. into into But are global XX-XX, on local a for I I you might QX for local it But versus product lead of into quarter exports wrong over and it is more right local would right. only Hope now, focusing we increasing answered operating from to say, understood around local. China question your So global China. Varex time

Let me know.

Suraj Kalia

ask the I'll great. and just No, And queue. back question that ask Sam, in -- hop was last Sunny, I'll just I'll

more that question 'XX right, lay or is are you'll new to how the China walk Just stimulus? get higher? so macro right? independent new provided are very it it checks But think whatever stimulus? bogey? to go guide, we can your roadmap, Is start whole per you is It's coming numbers stimulus, your if the QX is, Could doing thing XX% As you'll quarter the happens we should we out sensitivity and about where business. level of up to kind think obviously, right you from. at guess excluding Chinese headed. the thinking, on because out Is should of I us And FY sort have into China look the sensitivity plan 'XX my I you're extrapolate how difficult XX% Sunny, your As a admittedly, a stimulus? uncertain. down -- where on of FY about our through own we how is we

Sunny Sanyal

from coming Suraj, driven uptick the to Yes, that how to don't But as is our respect the can seen issues in is the China uptick, And I XX%. is that I have normal their what destocking they Chinese which business. with know we've just quantify customers also course any. say that who you that for had sales by extent to to of gotten then the hospitals, their past

what tie-in if seen spots, happens versus that haven't stimulus-related a significant in have we're is any different own customers, stimulus one-off to that stimulus. Typically, tends different sales pattern buying, momentum. see there's have through versus places, of its starting to to across tends some many We right, a the

guidance cannot point, what China. of down of rest around stimulus So to year effect might any really any at for you this pin give the do I or the

of forecasting, it lot a this, look, thing. it's one but make a quarter, a real it's as doesn't trend, positive Now, we're

situation. the changes remind still the tariffs and everyone impact of to there's have you to just potential any that and trade I However,

As of happen retaliatory tariffs situation. now, we've far being while to careful about tariff from meaningful not in the what changes seen so China, either impact ahead, not U.S. looking might we're knowing too the the with to or tariff perspective any us,

Shubham Maheshwari

than few a in to Chinese QX, QX, we just have said, Yes. more Sunny our QX Suraj, Year. because add higher in And what like would typically points that China, remember, revenues are I the New to

China-based say, bit So QX to, a customers the QX in little more compared timeframe. buy

or any the in little in our outside Year full of same a that so not recovery, Chinese and way. China, the business still mind. At of New keep bit time, So

in So China of And got phenomenon. still particularly Medical, impacted destocking be little turned business outside a to the by out China, bit stronger. the

So revenue bit percentage of higher yields that a little China. to

$XX China, mind. Also, So for we ago of in per in years that million or XX reported keep mid-XXs quarter doing revenues but just our X from we months ago, China. were terms

out also grow And here keeping the have feel we grow our percentage that teens. they to But or I wherever of impact the China. grow China is, while same to time, this which And we within potential then land. and don't more Sunny sales outside tariffs, at from way, in of in to what potential we is of changes of all will China. have we know the subject can we said all So still

it now. very right is uncertain a And macroenvironment so,

So I provide wanted perspective. to just that

Operator

from James Sidoti from & Company. coming is question Next Sidoti

James Sidoti

on Is talked to call the year? track that you end about plant of by Last the India. new still online in this get

Shubham Maheshwari

Jim, plans our proceeding well. are Yes,

where goods investments and and cost and that through very making I are go to of not highlight good CapEx and end year. impacting to of area. currently, financial expectation whole operations We online still progress, our India through the have of sold also funding do are lot by through and is performance want really is OpEx we our fiscal this India that overall we our a It do our revenues.

making plans. now, investing are -- our are per progress are So right we in plans India as and we our

James Sidoti

plant, CT that is for tubes plan the it for is Asia And primarily?

Shubham Maheshwari

would We year, fiscal on at this are right Tubes year. the following be Jim. least focused detectors now, for

James Sidoti

in the Asia? All right. customers to primarily But

Sunny Sanyal

No, is global. for these customers. are India global for Initially,

products those are So radiographic it be needed. Yes. would where anywhere

James Sidoti

on in Do to that's Okay. $XXX that that's down? mid the this pay And then you due plan convert, year, million. about entire balance

Shubham Maheshwari

So use has million pay remaining then been so a convertible. that or have The down yet, by account plan stated that already why we Jim, to restricted of proceeds that's put and we $XX in that not we our million. Board raised bank amount officially have those $XXX the anything. to is stated made we decision because And entire principal, no

cash indicated situation. excess that have we we an you are in However, to

I to our pay would is that intention fully. say So down

has $XX using be the of million convertible that made of the the the $XXX yet However, so down or would regarding decision been principal paying of no left million proceeds. the after

James Sidoti

right. But expect among primarily for come that complete want OEMs, to Medical And orders make levels? customers, quarters. clear. that a I the those to has I I just bit All uncertain you did next more and to destocking then hear the that the you come to know the China back still say little is few back historical

Sunny Sanyal

of and We when is That typically, correct. they have order China. intake an in outside saw inventory, place orders. And both uptick don't in China customers

-- uptick and widespread. we're positive seeing trend, fairly an is so it And a

So we us. this of believe most is behind phenomenon that

James Sidoti

you the help on then security? last in at of the And Okay. maybe one, next all with you'll cargo benefit think focus this the inspection, year, on from sales, years? those couple push that administration the border Could do new increased the but not

Sunny Sanyal

Absolutely.

matches scan at transported and to as globally the globally, not of accurate That's becoming now being with tariffs, documentation fact, for ensure And has also In the security just now what's also see on need that the just we borders. across time, assessment taxes to cargo U.S., increased. tariffs pressure the the important. equally in same

always -- and was equally for but are also about to and now X guns, the parts tariffs right? there's it, Security it cetera, inspection contraband So et important.

inspection to and raise of the happy level of does participate it in we're So cargo tenders, activity those.

Operator

follow-up Jefferies. is question from a Li from Young Next

Young Li

I are be differences scale. wanted similar photon adopters detector that photon detectors started the little out some bit fiscal it development plans hear to could pathway the 'XX guess the major versus digital counting, about perspective, provided as you and counting how counting digital From gained and your between I of maybe for gain adoption, or planning a different of traction? as how you're photon out guidance. What and

Sunny Sanyal

Yes.

if for is happened look question panel photon counting what So the correctly, detectors I like what detectors. flat understand with the trajectory versus

for trend flat accelerated also I medical, digitization, are afterwards, seeing and by are high-speed industrial much industrial in detectors happening. mainly panel detectors. conducive then think frame we XD and reasons, adoption the rates fast detectors, the started imaging high in very, very is was what of Versus several of medical started the rates at here, more imaging, for photon it, these very being counting driven because

seeing a and lot So industrial. excitement of we're in enthusiasm

from time, the equipment midterm our trajectory for it, as now characterizing in between we is not near-term, products driven -- industrial. In to in these those flat have [ went meantime, this to medical have laid just medical with retrofit planning their this new not takes They the much detector and go a They initial, customers stick versus systems in largely by adoption and so, the ] but change. had to systems are longer And detectors. bring and existing out being just begun panel XXXX, X-ray see, the technology there. during into

of to in photon counting and here, always work capabilities, on detectors the side However, takes there's medical the longer. medical little more take order a involved advantage

in following OEMs is minds all conversation with is had the viability, is in medical conversations of uptake well had understood. that say was value and we're America, the that's fairly about there stay. counting. that The doubt photon was fairly I'll one At see our to technology, the customers customers, counting, it we've difference. We're allows with it. booth, lot North in going broad-based technology which every and industrial, of There photon about our with technical is very to that it that that is with here this a included conversation the the all no scale we main interest Society fast of So RSNA, then Radiological which and last our us is thing up, to happy the in

Young Li

Yes, definitely ] We well. as the [ felt agree RSNA. with those same

Operator

Thank you.

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

Christopher Belfiore

through our today. participating call and and our on be in presentation be XX replay you, The conference call Thank at vareximaging.com/investorrelations. be can and of you your and archived accessed will will webcast earnings Thank conference February for slide A quarterly the website. questions available goodbye. supplemental

Operator

today's Thank webcast. teleconference you. That does conclude and

participation day. time, today. at line thank your have wonderful you We disconnect a your may for You and this

Varex Imaging (VREX) 6 Feb 252025 Q1 Earnings call transcript