VREX Varex Imaging

Howard Goldman Director of Investor Relations
Sunny Sanyal President and Chief Executive Officer
Clarence Verhoef Chief Financial Officer
Anthony Petrone Jefferies
Paul Coster JPMorgan
Scott Marx Samlyn Capital
John Koller Oppenheimer and Close
Larry Solow CJS Securities
Anthony Petrone Jefferies
Call transcript
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Greetings. And welcome to the Varex Imaging Corporation’s First Quarter Fiscal Year 2018 Earnings Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation [Operator Instructions].

As a reminder, this conference is being recorded. to conference like host, to now Mr. would turn over the your I of Relations. Goldman, Investor Howard Director Thank you, Mr. Goldman.

begin. may You

Howard Goldman

simplify Thank our references you stated, a Sanyal, Imaging year of quarters. financial CEO the and Corporation's Comparable XXXX, otherwise reflect good the XXXX are business year quarter quarter celebrated Quarterly afternoon. And welcome year Sunny anniversary comparisons to year for stated. fiscal company. CFO. call This we Clarence Medical our since the Varian of versus all the and With of statements our XXXX. to operating results are today one for earnings and discussion, to and are Systems first for XXXX first public unless Components year our first quarter fiscal becoming To prior President fiscal otherwise spin-off fiscal quarter week, the Verhoef, of for also new the our first conference the unless Varex of Imaging fiscal separation. me quarter

financial quarter year results including operating X, business of the on for first imaging Additionally, XXXX, for XXXX. we fiscal acquired the statements May

a adjusted just or on supplement the in comparable of provided measure of a our earnings release, adjusted diluted We generally statements These with adjusted earnings of financial our earnings, financial accepted site. for, posted of presented adjusted nor net our we financial each adjusted financial the is substitute operating elements margin, operating they adjusted certain earnings adjusted include GAAP measures and with financial GAAP per most measures prepared accordance earnings net which in margin, not to accounting accordance adjusted Web in adjusted share. addition, press In or are consolidated non-GAAP measures directly measure reconciliation measures. gross principles, GAAP, use U.S. financial These are performance. with,

to excluded the net items Exchange limited of of the of Please not a on forward-looking contains visibility of XXE corresponding statements the Securities reconciliation forward-looking to the of the XXXX. of effort to GAAP that basis Act advised and earnings discussion without XXXX be provide a unreasonable variability able discussed. within due measures and are of Section We adjusted significant Act meaning the Section XXA Securities this potential

use of Our and phrases guidance expect, or are could, other intended judgment estimate, performance future as matters. words to current similar expressions and statements, those anticipate, outlook, other such identify represent future believe, our on which will,

believe no revise to and new information, events assume risks in are currently we are the based from forward-looking turn with I'll today's that differ discussion these speaks Risks subject obligation our over And in business our materially anticipated. information While the Sunny. actual filings now, The SEC. are could results described date that in them available information be as to future statements discussions or to to the to this on those statements to us, we update to forward-looking reasonable and or call relating uncertainties of this because cause of otherwise.

Sunny Sanyal

first expectations. and decline detector had and increase a imaging quarterly business of detector change Acquired a in time but to better afternoon fluctuations we led year to their time, anticipated. customers than digital business timing somewhat match in in inventory also welcome. reasons. shipments Good We of Howard. well certain unusual as the year, time margin to later rate. of manage fiscal with digital exceeded a is we XX% had the you, levels sales as our softer quarter which Thank variety This for a to sales not lowering they to the in see from began revenues for performed XXXX was we customers same our gain this revenues, At from

expectation year. more Looking provided prior remain forward, year orders XX% over for in of than forecast, XX% and customers, the our to to parent identified full we anticipated confident customer our XX% year with for the by revenues revenues grow

benefit changes. the the law Historically, recent to rate tax was near from tax significantly expect our U.S. maximum We rate.

new items for lower for currently tax question to these investments outcome we that business, provide year a that plan Now range rates is, do is from proceeds of us the our what shareholders. with specific be deploy XX% based gains along to rate? returns. This long will The XX%. next on and do XXXX great Our on our us effective term our with tax that to the estimate rate is we fiscal in a

we’re me what Let outline thinking.

The First, industry. will maybe we leader that enhance should portfolio in CT innovation, and particularly areas plan role to opportunity technologies organic detectors. tubes to imaging as digital and our inorganic further innovation increase accelerate X-ray or in investments expand our the an the of and

well demand to increasing meet China Second, expand plan enhance products the as we as equipment automation to increase to on for markets and capacity capital productivity, and improve and in other to quality around investment world. our

still has us Third, to us of these initiatives believe returns. other we long but benefits programs, the in which preferences. to tailored we in provide changes term that invest will pleased could employees. Overall, the investments regional to and reduction tax through compensation investments, we’re our enabled improve and health local here plan in programs be make working to and We're wellness details form the

X-ray global imaging global global factors disease our increased of by Major comprised and systems imaging in Next, medical market, I sector, MRI our contribute systems scanners is would look CT China as also and India, an exited by worldwide market driving developing far to such advancement $XX is of ultra-sound that largest growth like aging annual coupled demand reach expected includes not systems growth imaging countries products $X.X to in are the replacement by diagnostic systems. and we The for highlight medical The stage periodic by also of early grow the to CT followed to systems investments to near-term and especially only the global expect higher, representing opportunities but XXXX, and population. we diagnosis growth quarter. some expected at for an governments, imaging emerging Technological for tubes for talk growth. rate expected billion by market to with the market supportive billion in for of our be X%. is install level, growth imaging XXXX. new because for about the base. approximately CT approximately X% At sell component chronic to

late we in of imaging their discussed where are demand systems moving for see into markets of new such global CT components, the and continue As new stages China and we development to ahead CT regulatory related with is agreements of prior to around this year previously, launch OEM customers approval stage particularly were systems. customers reaching CT the emerging as increasing quarter. the look tubes local phase. new their tubes Typically, In when supply our first consistent us it as quarter, the of with into sales enter

we added year year during an $XXX two in lives. $XX new tubes optimized help the accelerate for tubes, value a Two three of Additionally, integration CT market. launched these and respective for agreements incorporates nearly year. million three heat China of and time to CT over within last generator, high us multi-year integrated combined CT aggregate that performance at rapid we our the CT exchanger, that connectors customers’ control their agreements solution our million. valued packages agreements are This to new to brings to-date quarter, voltage include software four This

on to some of other products. Moving our

veterinary surgery several such and are as We imaging. dental, XD imaging a X-ray mammography, key player specialties in

CT me billion imaging Let of of on The give implant projected you the has utilizes technology been one $X and dental is color XXXX. segments fastest digital global growing that by approximately couple reach XD in these. to market imaging

sizable following sector quarter dental innovation driven approximately quarterly leader a OEMs during adoption XXXX for earlier. by this in rely digital market programs and amount We a quarter, that is This dental global screening dynamic customers and we reach growing revenues and our first software. very are fluctuations strong expected systems. fourth The detector of which, new to our example discussed $X In of billion the our of is launched refresh market mammography by XXXX, detectors the of on an globally. declined imaging

of mammography Switching now year. X-ray and the software. digital broad In quarter, integration tubes, computer detection the detectors have the imaging components including revenues our increased imaging offering acquired prior for over mammography, We to by first aided a of digits double business.

regulatory outlined of to track which goal to fiscal We scenes million we our as continue Varex and have lastly, past. we And announce Quality year we cost that and Affairs the overseeing has Assurance. progress I'm a on follow accomplishments to quality synergies, proud to what We're Vice in processes as accomplished to remain Regulatory make in joined Garcia report far. cost synergy pleased the team that XXXX. manufacturer. compliance that the and much their have President He's revenue behind of required all $X device is I'm and and medical Victor to achieve pleased of related we are thus

talk in numerous over regulated me our about performance Victor us, to hand financial greater that, joining companies senior CFO, advisory and environments. Verhoef, our held With leadership Before with highly positions Clarence detail. in to the let call

Clarence Verhoef

Thanks, Sunny and hello everyone.

revenues outlook of for acquisition, tax through summarize go which the for the up Including XX% first will quarter quarter law our impact U.S. the me financials of changes, and million. were results $XXX the our I'll the change Let key first the then also to XXXX.

segment the were revenues prior their As acquisition. customers $XXX due acquired the but $XX saw quarter, manage of imaging closing declines quarter in of double Medical changes a were tubes levels. the imaging which acquired $XX they to quarter reference, dates business with delivery in increased of first year. stable ago up lower have addition customer the several imaging the point addition revenues of the later digits. increased to first markets to connected screening million. the by Shipments Industrial in XX% the of expected systems and million almost to entirely detector Digital year revenues of X% to of fiscal we quarter the while to the and were the X-ray business. solid than acquired due the in was from this revenues inventory business cargo software grew control for as million, in radiographic dental segment

prior the to X-ray year a margin software ago. in products. was gross margin year margin connected For XX% the to improved quarter. tubes, quarter, control first compared XX% XX% rates compared gross was Gross and adjusted The XX% for our

increase declined products. and million the XX%. or first between we expect R&D XX% rate This spending CT of XX% detector margin margin due quarter. be X% ago we the now margin due expect prototype tube material increased Including be a XX.X% said the to has gross to detector lower which projects. for rates new and of was Sunny costs mix digital adjusted just $XX of the quarter, lower However, to from that less revenues R&D in were full year than margins investments our for quarter, for revenues of of fiscal revenues the year. to the expenses Based on in year projects earlier, some the

expenses quarter a compared to compared million amortization the SG&A year $XX and quarter to for totaled million $X $X Depreciation million in ago. were first First quarter. year million $XX prior the

operating Our the from year first in a million, same $XX quarter were the for down ago. earnings million $XX quarter

X% in higher ago acquisition from Our decline XX% R&D reflecting the in a spending. operating rate and quarter, quarter, was margin cost year related the first

to in prior year. margin the to compared For earnings million the The the earnings quarter, Interest quarter. in million $X compared first year operating the ago $XX million $X million to in XX% adjusted the expense quarter first prior was XX% $XX compared our in year. was operating adjusted were

a the the tax of tax included the new For to offset recorded benefit of full benefit by million partially of This net one-time revaluation net the liabilities, $X.X the of cost we a $X.X repatriation tax. quarter, million. tax due of deferred recording

the Excluding expense million tax the first tax $X.X rate with tax XX.X%. one-time we quarter effective of benefit, recorded of for an

effective year be analyze the XX%. SEC the these changes XX% accounting rate and continue in in and on now for law expect We our to changes. tax guidance of full to range the tax We

year fiscal plan a the of couple expect points year beyond the that make impact get statement these to Looking we XXXX, A Net investments of effective with benefits. the employee million. tax the expense the quarter gains with year were tax lower. changes. of we additional both Sunny this for that and rate explained to be first earnings investments from we last law and $XX income will the portion R&D

diluted compared versus or diluted For outstanding in million to share million shares $XX share $X.XX Diluted the earnings the fiscal shares were in year adjusted XX.X per million first or prior shares quarter year. XX.X XXXX per net $X year. the of million $X.XX prior

quarter and We cash balance million. the the $XX equivalents with first sheet. to of ended turning Now, cash

million operations Cash During the estimated cash first $XX and by was flow we $XXX fee million. million. $XX quarter, $XX approximately reduced was to debt million flow from

during of share adjusted we to items. is reconciling a provided due days Looking GAAP amount quarter. increased amount unusual compared are for at Inventory $XX provide basis adjusted items meaningful million our $XX per to in is to by the share the decreased due on diluted accurate was sales guidance earnings diluted and per of XX invoicing. the or of working Day during uncertainty and lower financial compilation capital. timing net an quarter to our This XX million only. the to the by Accounts days the a outstanding quarter. unable prior Guidance net for forward-looking receivable measure of earnings

year to the For expectations revenues a revenues that XX% year fiscal year imaging XX% reiterate by we full the from will XXXX, acquired business. additional XXXX, over our grow fiscal including of

net and additional the tax lower expect rate, higher that partially in gross employees development. than our rate earnings We be a our by investments due will lower and guidance margin previous to offset product adjusted

At call we XXXX, to be year of for $X.XX diluted to earnings per adjusted fiscal in this your For range open now share. net expect the $X.XX up like we'd questions. time, to the


Instructions] proceed Our first question. of comes question Jefferies. Petrone your of line from the Please [Operator with Anthony

Anthony Petrone

be clear up item. may one and contract May on and mostly any it OEM losses, B, the the the reiterated. then so guidance top-line start slippage, on And A. Was there sounds the side, to like detector be quarter to is

does that future ups. you’re that just So strong follow then few have or I And is underlying business assume in back I wondering, elsewhere? getting Thanks. am a demand quarters

Sunny Sanyal

normal fourth August, which fourth we a through wasn’t detectors. to from September purchase no products segments managing that was our that So components from the There their early we their they’re several their to quarter, the planned detectors Essentially, And slippage your and reiterating This customers the for couple who underlined -- where to expect bounce to for We're anything the customers to losses. quarter transition answer was or customer due in due largely was well, launched levels. inventory the of have And year-end big of right -- volumes. have back, it guidance have had large built that they with in in products, first big year of in with launch going come the end tubes a to quarter, fourth we we're and half our top And they new our timeframe, quarter. the with that, the they in December. expecting -- that’s a a tend their several just particularly it that that CT they new and the saw our year, sides softness. to anticipation of customers will line so second China as performance of combined year. back strong

Clarence Verhoef

me just other is one help I couple that there to the a quarter. of the the middle adjustments happened a think add clarify in because that little came just that And the bit, comments of let things

that particular came bottoms in And preferred few points that than to be was And would like. And very so those a that well up, looking have of we have comfortable business happen, wanted and that sure up we're we we're the or have have like year may later to in pushing But at look a that, we with have of that what but transition react and discussions pretty make we to thing went one will happen. to we what is year little year through of aware the in a it the the strong lot can some of certainly it key that it that for really full what we roll out quarter, still track have was that make customers bit we time was balance to is would adjustments. just in so. once whole and other trying detailed on first timing didn’t the pulling try other to and would some the be terms really

Sunny Sanyal

We and shipments One the a that. have more timing will moved come to that’s it loss units. will security add few larger did there to quick it These item purely nothing is back. right that side, -- dollar are there,

quite them. they move So with when of revenue move, they bit a

Anthony Petrone

to core stay down just $X.XX guidance, earnings the math, the to the or just guidance. And number number then $X.XX. core By earnings on our

you the earnings on in So back reiteration line miss number first have again, you top the get of the may be that a quarter. that reconciling quite that’s down some But is bit. certainly tax, just core

bit. may us little a just GAAP that bridge So help be

Clarence Verhoef

Let what me were. a number walk of a just of little do bit basically the EPS

up end at that’s of offset math away, So the area previous that in the the to as some fundamentally gone is quarter level. making midpoint and adjusted impact a take utilization of related to as gross where by that think and I X.X margin and new was is touched $X.XX that it’s with in is a the of a is little that little The the so so investments margin the that the up as XXX, to bit impact down end gross we from $X.XX. on well -- so $XX. we of the of bit and that's Fundamentally, portion to have down I the of and lower we the QX additional $X.XX The let’s tax that guidance and rate tax gain in we one By the which gain account have on just given margin. XX.X% that number midpoints. was gross that's use was as R&D already $X.XX, XXX then was I which in $X.XX midpoint range are

Anthony Petrone

for me, I'll get last And back in.

Just looking all that tax range the have here you into Does ahead is 'XX? 'XX, month. looking it the change a shift or would that been you to this that expect much January fiscal

Clarence Verhoef

takes it's quarters, state a tax, XX% out the R&D tax math Then you have to rate have offsetting XX% other rate of QX say, that some the formula tax kinds and are that to credits XX.X%. few three pure it. we other in puts averages then things if and So are that those of foreign taxes, for a is

So where net pretty fundamentally that's the am each I -- I'm those why in other. and well

the of XX% So we're in XX%. range to

for year would XX% goes I think a goes That for that that that that we of one year, down next Next which so manufacturing away, production. away gain away. say is is I the production get -- called favorable couple benefit and you're that this that goes there for there. year addition points you we domestic item get exemption

that's an So bit offset. a of little

a tax and beyond. but long in points going I 'XX feel rate we're lower of basically like on So story, to the couple be


line Paul Please next with your question. proceed question Coster the Our from JPMorgan. of comes of

Paul Coster

the think the to questions are more exceeded just from specific know So was a anything said decline around trying figure Perkin people out or I contribution growth Is what few this it there in say? quarter? XQ, can you organic expectations. you your I

Clarence Verhoef

I'll explanation. shot just of a that, take at which first little a is all,

color revenues identify year did million business get the can't much They the is systems, how merging the for we in to -- schedule that was is also to that's lines we a much but that well. that for $XX they comparison a that say it well mentioned, that impact IP and than so good we prior going I the well. together, business very new bit it's little such them. a And of a as purposes for not about better merge on are just R&D that core higher than year supply you more can process was and little the comparable was. would so So only I the bit what that, I've other is But terms as as just core integration story have really things product The give higher that challenge have than expectations of started it's our that. chains around is specific teams. Maybe ago,

I think very of are going all well. three those

Paul Coster

revenues guidance And can then cadence throughout say as know you year. But progress you anything we give about is the I don't quarterly. guys there the of

people think a the to of trying how should Just about -- second should be? model significant half how ramp

Sunny Sanyal

factors is, downs, one I the QX a looking business whether quarter and been how We of of and second for and little to the would anticipated are So had then little good a be. very at we and mercy had into a year it we've them, the then and how product and before. then Those play. for they that the what into large an an expecting had what manage we okay that QX had things we're little of more their we’re is events level that much OEMs in we okay say is the going at we where their or visibility a of it say, though -- all inventory were it. would business timing the QX of come year. normal our we already mean they than than in say are also we ends I'd ups that’s really And have and what that the pretty balance I that also manage bit we say introductions. that bit get levels, their would at month and had

in China, think definitely the in not the of we’re back half for some up that’s year. That to would us. be have QX. about talking And growth when the going I business that’s that is a challenge significantly also would of at that we is from that expect So the say to passed don’t I


Samlyn comes of Marx of line question next Our Scott Please your proceed from question. the Capital. with

Scott Marx

on Anthony’s before. question follow-up just to I from wanted

a XX%, that R&D like are. as I percentage looks the street that’s below said think revenue where on and remarks that prepared of models guiding the just it to you’re you

an guidance. difference doesn’t much Is than expense there’s it’s make just it like of to that be was. it you sound a higher So bit? consensus that, can like to and that revenues, you offset is potentially where explain the XX% But look versus additional Thanks. that earnings little of going a

Clarence Verhoef

little is baseline, we And XX% which more end then were indication these X% given X.X%. of to that year of last bit towards a going of year the lower the for into I’ve and this year. be May the was

we’ve some little as on see intent of we the a closer to that anticipate so to things see little at range, Now, there XX%, more we we was range the got that little number over a bit time, growing about give the That the the here, to just to but in we’re in talked going of movement somewhere $X of the million. end At the of was don’t that about bit same point a bit it. X.X XX%. of kind higher boundaries

color. the would us number you XX% not to than that So at it’s gives be higher more going I an lower for of closer of rather end little it’s the X% insignificant to end. say, so a bit the to


Our Oppenheimer. question. Please of proceed the question Koller of from next with your John line comes

John Koller

on to CapEx $X number, back the the Is based million comments. guess I that quarter, for right… the

Clarence Verhoef

that’s right shy of that, the number. A but little bit

about in XX-Q a see will number. week giving exact a You

John Koller

some the savings of increase And to on you the that? tax full it’s do ballpark year will run a for okay rate, expect that normalized or

Clarence Verhoef

million as you of X.X% somewhere the little which latter will previously of And little half now in is. $XX No, doing the around revenues, CapEx X.X% that. I or that additional will far some doing, would as we more the as there that the little where we’d got number a X% as be more around that I be said some with We’ve revenues, color bit would investments closer we’re of that in north goes. say CapEx be I’d give put to bit in projects a to that,

John Koller

you’re this this. And too, you expecting? there a more would to guess, of you Is you then into to whether that quantify quantify return rate this and might or then driven like the just return be topic be way back what to on that of capacity cost type expecting expect I around

Clarence Verhoef

So still… you're talking about the capital

John Koller

Yes, exactly.

Clarence Verhoef

that two is capacity that product in terms we is there’s to clearly going that spending. out we just elements element to when have replacement of spending capital our products, and the there typically be capital level can look we of is of element what cycles the additional There also is at maintenance capacity. always certain some door. an that’s is One There it around on expansion but get is

those. come like big or chunks when Don’t of equipment, facility do expansion And anticipate things, like those piece type a sometimes those will major you something clearing in that of as or a a any of such chuck. be

So allow I some augmenting more the factory. think it’s about adding and additional equipment to more throughput through

those not -- do sure be things, process stuff, the we that it that automation talking so of might changes the or for those kinds I'm little because may we’d now. it’s of Those more outsourcing I to about that kinds measure things particularly before this lot we of productivity, long-term on working great that quantify were source to in be be how part in about second around returns difficult you the you’re have is are The capacity a focusing would put answer a of when things on on. a also those.

John Koller

but component, dollar To I that of flat, the your But revenue is revenue down, we above normal, and expect was speak. higher it to so keep somewhat I'm the to in picks is up, just X% of just guess it thinking XX% X% curious, terms. or to you R&D I to part or so this as needs is too still are X%-ish going an forward that low number guess a escalation

Clarence Verhoef

in think things can come It’s things, I steady the activity we’ve are that’s that’s on a you do leverage specifically in -- that. time, the going to process this for the Those that of they us efficiencies an some times that because always that for putting to at at of have there I that going in some X% point growth is on we the when think get key kinds R&D of have a higher end XX%. still so that range. be in like us At very China, -- nice good feel all I smooth got end they uptick supporting the the driver in question, and long-term and not is lower that

that We’re product also continue side, that at at time. we the think now, revenue I prototype though point And I factor the believe in at a lot have the a to comes don’t portfolio you the play space. as you still is rate. stage have that grow we in particularly that line doing expand that as to get detector as material leverage into on right grows number then R&D of same do that the

John Koller

out are again reasonably fair? just dollars, to have not hit on taking working to correctly. go it are They this speak. then so a budget a not couple if Is try run, you million extra I These a to sure to to the And ascertain you're make are R&D and moon shots as that -- just because can understand things home where that where attachment. you quantify are you that revenue

Sunny Sanyal

to new and These investments. introductions like then the speculative or new tube launch. product not are drive new streams tied are typically revenue that These are we’ll a launch ongoing detector

products the used with small that’s but XX% dollars. forecasted. goes our amount. the -- the our build money our that there So R&D, of the that in of of then a small gets of R&D part into is And ongoing we've which technologies, those R&D put about A we ongoing to portion R&D, it's growth all our other rest our fundamental drive into business very it part the of but we and very spend

moon So R&D. that plans no shots large there are with

Clarence Verhoef

is John for research there technologies clarification one that going make enhancements cables software that Maybe into we today. that voltage or even and high tubes is new detector, X-ray

So on different that's don't a it's into I a not charter. not going there think space.

John Koller

then then or and And years. the in you've invested at know received of I historically in just three R&D looked kind revenue you've some

should we years be revenue return few new something this if return it's this at your that And it's too, a So to fair look on point assume on fair right? investment. it's going to like value spend That's that to at a a out.

Sunny Sanyal

products years Yes, see R&D we customers our start of ship. some time out when usually a three to into fame four those is turn that to


Securities. Our next CJS proceed with of your the questions. Solow question of Larry from line comes Please

Larry Solow

few joined follow I little late. A a ups,

Just like purely the in so it lower the summary, panel timing. detector flat sounds sales is

you the say the you lose R&D? Although, may full is a basis, offset then add the that to a now might there? so quite up higher fair cents. on tax for And few Is rate year

Clarence Verhoef

a because XX% I few which Let XX% me than our held sure is at not first growth. address if the the guidance am rather cents, lose to we saying, one, revenue

revenue So same I agree losing don't with level. a because we're few the that we're at holding cents that

Larry Solow

midpoint but $X.XX to raise you said quite the but your of not Well then would getting EPS, up you $X.XX lost you're that.

saying So only about the and lowering you’re basically else? you're really R&D nothing

Clarence Verhoef

the the on quarter but that think other margin low the is first side. the little part because was of a that I No, gross in

assume not of up or extract I that think I all that margin… that we would So gross make

Larry Solow

an right, you is R&D side, term of bunch few like a some this it to this And know Is of of short Is in products And the to typically R&D, will so last months that R&D is new over so impacted investments. that lower the years? XX this lag nature that. detector next continue panel a something of going out rates? And or I new sounds this lower this acceleration is related that? the in out launched guys piece there. this is tax level extension on of over have And flat that's the opportunistic because

Sunny Sanyal

stab our using that gains the to I'll is already tax doing R&D add efforts rate accelerate initiatives let underway, the Essentially some some first we’re and it. take from the that to we’re of to what essentially to some work add de-risk doing. Clarence then are

of instead -- probably the And three be to sure be XXXX of taking three still put revenue those we all will pull years taking it let’s won’t want make in. sure some workings, additional show to areas can that out, kind so horsepower will technology years that products about some successful it will those out but we and we’re side faster. key the or we we XXXX, pull in, and this four market out new of to to those to of But say we’re adding make get so the in up can where those bring products

Larry Solow

that fair then R&D the for will continue of years? just say to it’s rate run So higher next several

Clarence Verhoef

at grow then for guidance anticipate but now don’t we years, continuing closer around range few XX% a Yes, we’re XX% least X% anticipating between it. that’s to say. why I to given We’ve to

‘XX you here. at as go we’re ’XX, of we’ve that the So planned R&D comfortable levels and into

little I So But down it XX% will be as X% revenue, bit. a it the of will a to still think in range. percent come

Larry Solow

switched flat And and still that Obviously, some opportunity may the on and may realized then end with of follow there is the that side up, be on side think sticking of if [contingency] real what for inning have just I more how true high. some be one on lower won’t but there the side. in profitability over, you profit that the not panel on I just detector a digitalization we’re as much there. markets I the

I Do a where the of that. a then digitalization two you tailwind being the specifically higher to we questions and for opportunity, see the the opportunity Thanks. retrofit secondly, panel So And pieces? detector that retrofit is stand on much still side margin on other than there do flat you? guess

Sunny Sanyal

combination new digital the is digital. runway a So to the is converting detectors the characterize of there we that would way shipments are for

are there. quite rather still XX% the that systems being And globally of in shipped bit detectors are shipped digital with being are is grow so being about are shipped Only room detectors. there a that to of

from next also So years. XX% grow addition very that, expect years, is three two percentage few the to XX% over may But the install to there be next we that, that over in base. to large

So maybe think some about the we is given going at XX% retrofit space. around, into had JPM stats we

converting to So for long XX there about a eight runway is that. years

that as the end. and this, within end mostly low Now, radiographic high those are there’s and characterize we --

pressure margin the So is on the low end.

there So quite are high. that all our volumes

newer Now which with in in the are very and we’re There performance. the systems digitalization the second the is seeing out that pricing to margins areas dynamic held capabilities, of generation that good. where early, dental, is improved addition the come those is started

already on forward, So go as see as balance we’re seeing say price would we I stabilization. we --

price -- erosions are So single-digits the the side. in on there’s much detector not that mid range the

they So at the this point, end dynamic we’re example for is high use the beginning also margin just not detectors, to Surgery surgical the the detectors of end, structure anticipating the any strong. is major be the digital detectors, shift mammography, or which in those dental, includes dynamic the high pricing structure space pretty to an the and long. continuing mix to -- and there's where are systems convert the runway

So and a our business mix margin see we we that detector margin as anticipation forward. go will is high low continue of


Petrone from [Operator question proceed next Our Instructions] comes with Jefferies. line Please of the of your question. Anthony

Anthony Petrone

level operating see Maybe to be just And will a an years to ultimate follow-up the Day, the Analyst organic some year-over-year on this still just the or margins over some think the so, I higher get had. There's growth next goal X% was point X%, with a XX%. outlook company. at messaging acquisitions three cadence at November tuck-in is

about in as then particular, beyond? assumption we fair look 'XX debt thinking schedule. should just interest And as a you move still and out? expense into one be How pay-down the that is So we

Sunny Sanyal

take Clarence little and Let talk can me crack a bit on then first that.

and by The expecting the way, is that's X% long our current our to of products. Our mix sticking we're we're rate expectation being is -- business, The X% growth going XX% be X% term driven is rate. that. expectation. to that by portfolio forecast we the expect with growth current is the the -- that That and

next be As a years. the three the next over get already China, over we've traction of that'll picked three delivered in we quite orders up bit years and

and orders contribute to China, we delivery line we towards rate the we're with to the of expect or X%. that's in business penetration those of and growth those market book As traction get that to expecting when top get

term, So in to coming X% XX% get from will to our that growth the XX% and from we is operating still get margins. XX.X% rate longer to still we're expectation

Clarence Verhoef

around let then capital structure, on guess. the questions I And touch the me

impact net cash So if the million the I the trailing $XX three quarter debt, probably from hand, a because debt of to is was that of perspective, is EBITDA. cash in we net at million expectation million from that of revenue the is range of of we're flow basically I of and/or about minus EBITDA had anticipation we the million, year is million for somewhat which the times the as very lower strong which at on the think of $XXX now at somewhere flow of think first today, range cash little And is. awesome. a million $XX which debt, on But AR. operations, same time, is generated we what the $XX $XX be the more end The number would $XX cash is that higher

that next sizeable down So range. get under EBITDA, excluding acquisitions, somewhere impact of have debt to over the pretty reduction a to times couple any in acquisitions, from any years X tuck-in us we'll probably

So line. the perspective. from sure fall of we doing that have through I spending it's adjustments is capital think I the that not EBITDA little that top think on making it's because the more a good And from to bit positive story material we're don't from perspective, the about


from comes proceed your question Please of of Solow CJS next Larry Our Securities. the questions. line with

Larry Solow

of color stuff? any of that us products? a Or R&D of of it that'll products into on type in be the the Thanks. maybe obviously markets you is the Can than little type bit it you can give Is a subsystem potentially give way in this better just more more more of Is getting side? but but a is what great. just same little same color positive on the course it more tangent

Sunny Sanyal

few But and towards. largely little working speaking, a products that of bit we're applications a these acceleration would things. It's different be of

for tubes; so go and said going in a to that technologies. detectors China to differentiation investment create for additional generation example, our that’s and tubes invest lower for that as other in of There we new in additional are there additional both going, that bearing into things technologies do detectors. next that products, in in bringing foundational for we so detectors will some then that detector us. is earlier, that and going help cost And like There the market the markets to the potentially go chunk filament

to at to our products. aid for Hard some of contribute with and term we should growth which in what we'll to us is this that think we quantify done will expecting and the point And is additional done, it sooner get we're longer will products adding R&D you ensuring we're these products, more I of the those contribute market that to have, investments. additional the insurance already can it if that way you to will but products to competitiveness So doing this it those are likely it you, X%. to get get model to probably improving say


and proceed Our next Koller of the John question comes your Please with Close. Oppenheimer from questions.

John Koller

my around part? fair question that That Just a to tires to you're on Is assume serious smaller acquisition mischaracterization yet look maybe kicking least not you're would be in it front. or out quick way on that things? for a any at starting

Sunny Sanyal

kicking not it We're put this way. But tires differently. maybe any I'll

the We sense space, have we evaluate that players have fairly continuously in we we in the pipeline BD we're continuously the in and that and a active the know review -- assess. market fairly are a

continuing activity. we're to So do there has difference that, been just no in our

Clarence Verhoef

is as time all of last transaction here the sizable one working the it's our further And little actually a in at one because of going thing had of -- that, I things. starts along addition as mentioned that these up bandwidth is Maybe along a of integration obviously to bit to business. kinds the John to management year well, very let’s we call it lines in those we look start is with that which all of that's get free

that fair mean closed a amount in I of so And that by, May. gone time

not far outlook. so it from away that And we’re now the here that, of starts change so anniversary to the

John Koller

you constrained if front, capital something a this you feel don’t liked, you modestly saw from And at priced? assuming it’s point

Clarence Verhoef

valuation is right price. just structure, the tuck-ins. the for we’re get in our we’re the Yes think key, in starting opportunity yes I terms mean and But I okay mean, I of always right? capital So doing


audio remarks. questions further over of management portion no to are now the for concluding like the turn would I over There conference back to the conference.

Howard Goldman

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