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VREX Varex Imaging

Participants
Howard Goldman Director of Investor Relations
Sunny Sanyal President and Chief Executive Officer
Clarence Verhoef Chief Financial Officer
Anthony Petrone Jefferies
Larry Solow CJS Securities
Frank Faiella Sidoti & Company
Robert Hellauer Casey Capital
Call transcript
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Operator

Greetings and welcome to the Varex Imaging Corporation's Second Quarter 2018 Fiscal Year Earnings Conference 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. I would now like to turn the conference over to your host, Mr. Investor of Director Goldman, Relations. Howard Thank you, Mr. Goldman.

begin. may You

Howard Goldman

unless references are Good second of President our To comparisons our stated, are XXXX, today quarters. second fiscal are Verhoef, year afternoon welcome. With simplify XXXX all otherwise unless of and for Sunny discussion, the and Quarterly quarter otherwise. stated CFO. quarter fiscal Sanyal, our me to quarter CEO; fiscal the Clarence and the versus year

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

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

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

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

Sunny Sanyal

strong revenue Good a from second the afternoon up I'm significant growth and welcome. pleased prior XX% report with quarter. quarter year

month our offsetting grew a acquired grown the oncology consistent market. XX in the business we digital higher radiographic, for the year-over-year. in for were For by our would rate, a partially CT, markets, the of product included radiographic trailing while the was industrial the a oncology, This primarily and quarter, comparison markets with from On if had global and been driven detectors mammography products purposes, sales strongest this prior sales for was declined. decline imaging basis, have revenues by products industrial. X% CT increase market

over well emerging have to past the for markets. the systems we overall Our products has therapy an due into growth expansion performed believe for radiation oncology including market what been year, market

imaging of software and we X-ray product control, second was the in first second exceeded detectors experienced and for continued on growth connect in are quarter strong plan, slightly. year. quarter revenue its Revenues good business lines, detectors imaging down the individual levels at fiscal and the sources digital dental increased acquired current quarter. XX% plan very performance to XD over to Looking and the and historical The exhibit returned from

is projects. and first that internal of and the accelerators revenues to Chinese R&D innovation range. above in second quarter XX% the in acceleration for investment delayed linear prototype of materials quarter This OEMs were certain shipped the was CT the in quarter. of costs due of were the the primarily our most addition, target In second

last So reasons and relationships Innovation have of this world continue numerous of X-ray have R&D I'd to the extended in why spend to loyal our We clarify view into approach for why is two categories. key products. our main one imaging customer that customers of new like and around lifeblood gain we the opportunity point, decades company our to take to R&D. the we for prioritize this

customers for OEM systems. components their we imaging in to build X-ray development invest First, projects with new

generation to years, During of manufacturers. the portion on tubes significant three for has developing needs with of next CT specific last two focus Chinese R&D the committed a to the tubes been our X-ray emerging

addition, continue to products and to and growth. drive detector control and develop many to bring stay digital connect market In we and competitive new

Second, a of a investments our to of new smaller research Examples budget the our foundational foundational These driver have technologies, been key allocated is the R&D. technologies of part performance and which part differentiation products. is and X-ray in of of from new of that enhance storage bearings in digital application materials, comes of technologies In typically detector our and materials coatings chips. transfer. innovation specific new types development detectors, tubes, emitters, these and types the heat for

of that convince proven innovation develop anticipation corporate new introduced is to to products, we also maintain components contributed outsourced savings not into but to this we needed spend. to in investments certain these type us. they are to an out As customer OEM accelerator lower our product continue rate, projects. competition, In in tax of performance, from and a also programs, R&D costs. in-house This increase and to improve while have and the driven U.S. stay so reduce R&D technologies We only of life extend ahead quality foundational believe innovation

new closed X-ray agreements million These tubes the during approximately teams digital Our China second agreements included quarter. pricing $XX of for several multi-year the sales detectors and market.

with for pricing date. bringing another the quarter, tubes signed total Chinese agreements the During five to OEM the have agreement number CT to

days non-CT Chinese to imaging opportunity Two components. second to due remember ago that Revenues industrial our the the for expectations important market increased year we for is is anniversary one tubes driver detector other a this growth of it our our sales the for While primarily and for in also exceeded PerkinElmer quarter, CT China markets. several acquisition business customers the imaging provide X-ray in oncology key of marked us, business. OEM the

We are to to be our on $X our continue goal and with integration million track schedule on fiscal synergy achieve XXXX. year the for cost

the framework has Initiative our like Global first with reporting. and been pillars widely I'd to strategy, our communities Lastly, sustainability website. the filed has and highlights also with report protecting and for most people powering inspiring or posted that annual acting of four report sustainability sustainability the our completed on been adopted report It Reporting The and environment integrity. GRI, innovation,

while As responsibly, need look to what in our grow creates and over CFO, sustainably. is our about greater our and our in aligned read We cost our a it partner with priorities. I rely detail. the to with engagement out our to we to we report about grow the us drives Clarence to find customers let business, This sustainability to and more suppliers that and call efforts. invited performance on who global this for me do hand society, manner business financial talk to and value environmental Verhoef footprint. reducing that heavily do of it our our we effectively employees With

Clarence Verhoef

were summarize Thanks QX the in line found on softness financials as would year-to-date with and in results in can our lower tax rates, while the and rate focus be release. the operating everyone. gross great line the in with Sunny expectation. hello discussion I performance I'm press some the top to QX my going our expenses on margin

Including companies. revenues Additionally, privately we results acquisition, were than the second expected to had income higher held our investments XX% $XXX the million. from of up in quarter

had solid market. addition sources of point business $XXX the revenues $XX of which in Industrial second acquired the grew ago not good imaging the quarter due XX% control detector closing of increased was to entirely prior up business. a from was the segment the in from almost demand Medical with the revenues also the digits, slightly. acquired acquired for in revenues million $XX increased Digital year only quarter, imaging revenues the double by software million, while oncology second As the to reference, the connect digits, up imaging but high quarter to of acquisition. million. declined single were of and Revenues XX% the segment business addition to

to XX% For margin compared was the adjusted XX% prior second the year year a gross XX% to quarter. The in compared our quarter, gross was XX% ago. margin

adjusted first an in now were approximately revenues the revenues. $XX This lower gross full million XX.X%. year. the R&D cost We This year approximately quarter, has our detectors from now the in of margins for quarter, Based X-ray to of due projects, of expenses for which due R&D was mix higher was foundational control, revenues year primarily margins product connect and on expect XX% cost for as by unfavorable tube to ago increased for increase offset well the material for was mix to tubes. prototype were and the to expect the new we as CT higher technology quarter. full projects. for segment margin product XX% or manufacturing X% deferred rate revenues spending lower industrial half, the Gross be but the and favorable fiscal be

of stock higher million second Depreciation to the quarter, the did million the earlier. approximately quarter quarter compared implementation audit million expense which quarter, approximately costs, expenses fees accounting for Second expenses totaled to the any based of second $X million of restructuring million were additional the acquired $XX acquisition and new we $XX of compensation $X had standards. business. million approximately integration for from and $XX a and year amortization In in imaging year million SG&A prior $X include not and consulting compared $X

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

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

earnings the compared $X to $X For other in privately Interest in the prior operating million was year. due operating income second primarily million of results We earnings from second XX% quarter million year. adjusted companies. to quarter, million the was quarter. quarter, $X were to million held $XX the The had adjusted compared to ago the in the our prior second year investments $XX XX% expense in margin compared in in the

was share to year. prior or XX.X% second million rate diluted compared for earnings were quarter compared Our share $X.XX quarter year per XX% to tax prior second million Net or the in for $X.XX $XX the per the the $XX quarter. in effective diluted

ended the XXXX, million shares were the outstanding second shares were share XX.X quarter or We share to of cash $XX $X.XX $XX in equivalents million XX.X per million. second cash $XX year. shares $X.XX adjusted with million million earnings per Diluted the of compared quarter and net diluted or diluted fiscal prior For year prior the in year. versus

During reduced was second the the the million $XX from was million we cash $XX to approximately Cash approximately fiscal quarter of half second million quarter, quarter was by in was the $XX for $X operations the $XXX and net of million year. that flow Free for in and first first the $X second year. million flow million. debt half

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

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

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

Operator

At question-and-answer conducting [Operator Instructions]. this a session time, you. be we will Thank

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

Sunny Sanyal

Anthony, are you mute? on

Anthony Petrone

Hi mute. Apologies Clarence. on Hi was for that. Apologies, I Sunny.

Sunny Sanyal

Hi.

Anthony Petrone

CT, there questions them couple the and I'll back R&D to few a being with guidance on maybe a China Sunny investment. circle questions and on

sounds China customers how it side order have just So new and on you now so customer, you within this is CT recap it's on it maybe China Sunny CT, know a announced order, you know on you today, many another the newest to about similar the the sense you in is of And year prior so to the tubes, with orders the last is that quarter? prior orders it CT was lastly it's makeup then order? mostly it that a case that just, order spoke just the three like or

Sunny Sanyal

Yeah.

China in been slate Anthony, CT we OEM's there's And with we XX of the in there's, prior whole said to and systems business be we've market. a CT So in them. want of the XX bring to as as discussed who calls, working to

have where they're when them pricing to - proper there's with engage we clinical process working their point to with of ready to start that's and purchase agreements systematically we according multi-year development get signing So their the ready a when market, trials agreements they cycles, and in been to and them. go get to

up bring this as one today and market we're many that to just over will list which that product we the such and working So was well. one with I in customers that fifth there will mentioned the - the the fifth more mentioned them hopefully are I years sign that

Anthony Petrone

And in terms of…

Sunny Sanyal

of this in we much consists multi-year, other break of products million detectors products, specific there. how is actually three We new into China. year out it signed it million XX to and a a that several with was worth of about the we is different did CT versus agreement $XX that didn't I multi-year products agreements of but mentioned where Yeah, in China,

Anthony Petrone

top guidance then Okay, you bit, quarter. a know on the touch just second that helpful. on that to reiterated the strong that's so And lines

is linear on obviously a how of couple top bit are us you many a year? you know on then taken R&D in maybe the And there bit this walk that you can the investment accelerator hit the the you little know You know pipeline and maybe think side. just investments you multi-year here questions, up orders know through still line, know R&D a

on or So way of activity really sense the could today, this activity working is you're that the is geared know announcing customers. R&D for that at sort you're prototypes as that we already is funnel toward look in you developing pipeline

Clarence Verhoef

we is a of it And pipeline. first answer see it's linear - and on the little have to did always the the I and in the Anthony, it guess that So of color by business, accelerator lumpiness comment the the level can sunny Clarence. a Relative probably little more is, somewhere a we little quarter, it I'll space is on one have but we you R&D a little this give is then to a specific first range. the to that of bit so up that a delivery you but in to of of or growth from second mid this was balance on accelerators challenge in - some such. kind business get know - for that we're picked bit, that kind bit not of quantities shift to got a back order track. to shipping I quarter has QX, year linear QX happened the We as the say give outlook of shift numbers but maybe looks in digit low good, some and most don't moderate single of anticipate number it's know I'd that you now that

Sunny Sanyal

the a couple years way in last in of R&D that. year front, unusual this and are then on bit the And

side. a on of quite have number with of We OEM bit activity the CT

Now pipeline normal that's to for then projects R&D those normal our specific control, other connect with of for line but and detectors, other historical are our products China in like modalities, activity. digital with

lot bubble testing this we're OEMs of have test Chinese on a There's projects lot used for addition And tubes phase to to we're and we've some other CT. a a working for are prototypes. of purposes. for the gotten beginning our of projects in life normal activity, of into where got basically being those historical So that that ship in

on it not increase development R&D is in the and typical. product an side So that's why there's

sustain we and typically product of we things, projects the of for what have for Now we But sort platform continue would there is oriented year less have is. term there new our restricted would build are and that and would normally to more these OEMs two happened and amount to a been our with do and which products fund which oriented. that longer effort budget we governor have

work new when invest the side performing foundational side on might the chips. longer we're slow investments foundational time we R&D the of typically have on some at types money in which When the in detectors products reduced application in in specific faster those China down the down, new with decided we our and future. that the increases, so R&D. us help product in we budget fact not our for some will continuing pace of - same again or some future but So developing glass continue historical tax with support technology continuing term the projects, in the the the other we to slow given rate, to and to we on maintain on work, efforts

a So more R&D. on Anthony spending color bit that's of more little sort why we're money on

Anthony Petrone

back I'll hop you. helpful. That's queue. in Thank

Sunny Sanyal

Alright.

Operator

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

Larry Solow

Good afternoon. thanks. Great,

Sunny Sanyal

Hi Larry.

Larry Solow

trying and just from the a detectors sort a CT the they medical grew of give up more you your follow-ups down, I of with but market, revenue I Just deliveries on - just at a the you specifically on side, am little of could CT few ballpark know what ballpark realignment probably and the that line were just the on customers? they on continued in real the then to you was side guess sort down detector said least side, so color, function get just about mid-single-digits were side, the and was of of of is schedule

Clarence Verhoef

had plan. had the detectors a with that actually mid-single-digits. radiographic then were we added slow little in the bit I that a had the levels to performance on at side dental a bit say decline side. north that CT the historical of a in about the And nice medical line of uptick the tube know oncology, quarter, we we been return probably Particularly I'd single a has me a to back after with had clarify tubes Let bit levels little on bit. business space, that the where detector year it was with looking was normal We a talked CT then when on a what well but you you're on just compared ago QX little side, did nice the or

Larry Solow

QX right? And they in is right, high I'm that mistaken, think single, XX% are grew I not if

Clarence Verhoef

one I know right don't to one get you that on because I'll that back now.

Larry Solow

I on up just the QX were right. - you guidance just XX% They okay. know believe trying to And your in a back like half Right, gross the nice improvement obviously the margin, up to more implies number. in

improve been below that the a improve it, to for of stuff. You've it - know of a What row, would that, what same sort range you great? like the confidence steps you the taken be more you quarters and can in been of sort it sounds that more few are is target gives sort color

Clarence Verhoef

be. it's that think to want are of a know just at the XX% of half that being year just bit the year in now we little the for is that a north XX.X%. because a think be year and half you're range the XX.X%-XX% kind XX%, of spot on to we'd full first you I I I what But you like of we know think the

is of do second So half right in there the the the how question. get years they

tubes well. product a one little for First higher put have mix is of as business. the interesting our in half bit the you this always And that is it mix we of that's a three favorable dynamic categories, second all, know CT us into in thing I would

in-house are a that We as we've good identified. us or funnel the actually well. in favorable mix bit visibility got mix And orders and favorable those other little us a for to for the products mix have there of

factory. overhead The out bit is a absorption so little better volume, you second volume, higher a more element of get little productivity the and

second area kinds monitoring helps And here. half warranty, probably failure, job you significantly product rework where it's more very so And of first things. our an in actually of last good scrap, been the closely factor in other we've done the that's and those the us is that see we've continuing half. then a And we of know that cost the

of combination the get why so there. confidence is three those we And can have we

Larry Solow

guess a of half Okay. also And guess year? a you're I I back R&D, in bit step the assuming of little the down the

Clarence Verhoef

would of you you know Probably higher more know similar kind in a you numbers the some to little it I you if at about and CT is now of timing in the is costs rearview I the of level, expense bit R&D see factor that helps our of prototype say these because some mirror was second but keep chance of of revenue revenue get got tubes R&D half. so that talking think a more Sunny we for a that the there.

Larry Solow

the spoke throughout to accelerated that just know is within the rotating or is just you year, also year within development that higher - the mean And that number makes you of the some quarters? that sort it

Clarence Verhoef

I would year. the say into year and that's next throughout

Larry Solow

Okay.

you think going quarter last the for thought R&D now four higher So to than what year? net you

Clarence Verhoef

year going and it's fiscal said XX% XXXX, For about previously... be to I've

Larry Solow

X%, You to high XX%, that so so that's end of range. said X%

to of then Okay, go the able to higher you were part that up the range. shift range not but

Clarence Verhoef

Exactly.

Larry Solow

the that five contracts, that million China four so pending, tried brings new some five whatever nice three over, total to or Then right? you is that I guess a customers another years, Okay. XXX this know

Clarence Verhoef

signed because so careful this that's what little CT, not are about quarter Be we've bit a products okay there I mixing for and highlighted. agreements we just multiple apples the that oranges, China of just think

So be it a - on. cautious bit judge don't little you how

Larry Solow

for medical are OEM they But contracts? China doing

Clarence Verhoef

Yes, exactly. on medical All the side.

Larry Solow

modest, or beginning I bit you in contribution I But have some of it? this don't state, right could of guess little suppose to the year know, speak quarter a any there was anything not you this

Clarence Verhoef

so saying back just say year the loaded there. been nothing the that for is activity. mean We've for and a I has would end China I it while changed

what necessarily again even CT is sell a portion specific not you in not of So, also good CT know and tunes yes we tubes. today bit is little deliveries but some other detectors of and but digital that China diagnostic of a

Larry Solow

said just million other in that $X the investments, that...? is on just gains you the was some and Okay income, some that private be should

Clarence Verhoef

revaluation Yeah, ventures several have so say bit I'd joint so of would few and a name well first little That's all from in both that's that's operationally costs. impact be have their pretty know larger had sheet. them reduce minimal. - of - there's is FX, then financials. income of entity there how fixed formats those that terms they the other so that balance also we impact But joint have are got we factors Depix our go into they in some one from the entities And all has ones and you from have it. we investment we and other the ventures, an that performed of of One a of favorable is so the we

rather it rolls income that process P&L. and So accounting body for to to through the up in down us other think the I than of passed the

Larry Solow

Right.

that actually on or - investment? - So in loss gain the equity again to it's the a as in is that's opposed JV sort of

Clarence Verhoef

don't we controlling that way. don't Yes, a exactly, because them, consolidate we interest have

Larry Solow

haven't should because of...? it move if seen I don't be in and just there, I you but putting, know, you're I Depix Got maybe curious of much. it. that not it's know maybe sort know non-GAAP big since I maybe don't sort much, was JV I this quarter EPS not swing a it I haven't know, even pretty all But was seen right that the

Clarence Verhoef

this Now, this of by non-GAAP is a item. so operational is performance not them, type

Larry Solow

I it, I got got fine. I a little okay guess, but just lumpy it, that's

the cutting sort of still whatever there, a is target. that to synergy but a I initiatives about Just process, qualitatively year revenue this know just imagine see the multi-year on year not some know are you've you $X lastly longer and integration you in had side revenue you you of spoke talk term it's over horizon your much that now million advancing, you've cost about them obviously to you years? other The two opportunities talking confident to but can how on been a customers over synergies next you three for the

Clarence Verhoef

Yeah.

expect $XX start have start million to we you four. Obviously had are, by $XX then on the which And that revenues and working those to cost doing. to we'd million million in So we side, and the on savings realizing million been have $XX costs we said day $XX know year said see by you revenue one year four.

$X targeted what for this had that's on we So and million year squarely was track.

revenue lot we work teams this product at the going consolidate well. On all side, the any haven't seen of we to a get point consolidated, material. did sales the And to that's line,

one expected year much run still hitting synergies, haven't you bullish feel $XX know revenues We year million of that to about by be there would in revenue four but as goal we we're our $XX a rate.

confidence. the new So for we're introducing we're on us that on products that there give track that. The that's customer activity

Larry Solow

thanks excellent, it. I guys, appreciate great, Okay,

Operator

the Our line of proceed Company. from Sidoti question. Please with Frank & comes question your of Faiella next

Frank Faiella

to focus I widen as now maybe guys. I look of know question. kind like you opportunities? those can your maybe vertical some Hey level higher your maybe right I debt, M&A pay On that some or strategy, but the how down have a if look the or maybe you integration product get something you acquisitions wondering of portfolio was looks at at kind

Sunny Sanyal

Hey is Francisco, Sunny. this

we has do companies. looking we the companies thread to done And screening when them. to is constantly lapping and and know actively to good space one cash continue consolidation look where M&A we And like the know kind consolidation. we're active have summarize know an that priority looking there When And we've be continuously at towards anniversary the for that some to part is the active intend cash And acquired opportunities the the to our of it's we're these we're opportunities. we evaluate opportunity our as to M&A strong you this and very we that acquisition I'll continue that. point for that business during for of a apply do several have There's look of we We with now with was going integration. parts down new is year - by what paying in debt. will the years, of PerkinElmer of to You saying product of job is even lines will of M&A at one PerkinElmer flows, were and good is we've participating second this end some been our potential acquisition M&A said our that. add our and portfolio. past

having like three Clarence us to times than times. get down to would You know lower three

Clarence Verhoef

to half, so there's now a and we M&D. do If deal done, won't put times fund but to a down and it. the two it we'll get Three we'll be good

Frank Faiella

Sounds good, was the know strategy, OEMs for off wondering not appreciate. is that your do one. guys table. had for of And or another the anything then in there's of manufacturing I some if you terms it's ongoing I that quick just I outsourced but totally

Sunny Sanyal

we You know and we're not terms we develop manufacturer an outsourced our design so, OEM. business, of core in for the then products manufacture

not Historically, thing IP our contract our a core we So it. it's essentially and had it our situational that but were it's then one deal is manufacture is where manufacturer product, we just design and the ours, model. we was

get engineered we it's time. Our our IP stay a long period model that's how then we of in in engineered is, and for and

Frank Faiella

for all That's appreciate. I Thanks, me.

Sunny Sanyal

Thanks Frank.

Operator

of Please [Operator proceed have follow-up the with Jefferies. question a line Instructions] your follow-up. We of from Petrone Anthony

Anthony Petrone

be which the from sort it of lead of can like there where know sort know alternative the And to company OEMs OEMs contracting is terms some and just needs an in the perhaps then so out to on, the of smooth that of follow-up attempt Is in think if that outlook just Hey, a maybe lumpiness, with you know you how reactive kind is lumpiness. be models have just to line the you purchasing and it the any sounds one backend tends loaded looking take? long sort or improved because supply I top thanks. whether will to quick at follow-up, visibility OEMs past it's you that of of so, the the

Sunny Sanyal

will is Clarence this Sunny. in. crack chime Anthony, the Look I maybe can in

occur. around security selling security and the without way that of have shipments segment is first well. is the we smooth business that lumpiness too by a to tender deals tenders how services. when where to there active to can timing of in it's the we've But areas, visibility You we tenders said of in out. figure There But just cycle in two our been that very driven, get of is know ongoing don't choice out much the trying the doing out so going there's all and that in lumpiness we've been what so are natural a our we forecast and lumpiness

So say to take. that and approach the to well comes more products, lumpiness out are customers the as the the our short got Linux On each that's detectors, I'd year, good services is starts as going to tubes our month-to-month of The taking. line we've the from business in other we're and shipment the from from within fairly that of the revenue base and gets revenues security products and term, bigger our services. maintenance it's of quarter-to-quarter, usually contracts what smooth the but sight

and with products out that's them we us level to loaded try have loaded take way. smooth level our try And lumpiness This to and we're We to customers work the out. forecast path flatten a get in continuously give a taking. we - to do

path, hasn't be we've capital a that the them type would OEM still to kind work our your people on change do to of that back Now whatever, lead. with of there rely to the will model. to for saying to so measure, there, go on with on you pick buy them other that them sell absolutely any if per we're equipment pickup want and that OEMs if we unit of there, And is directly and open our to don't you we out model that customers take to hospital, look to go willing per of a their back and market But told we market go back it you business budgets. them. we're of there and kind down if support based gone our type also model Unfortunately, this put

Clarence Verhoef

probably to a them business And if different willing to model. do we look see push to they're at continue

Anthony Petrone

customers, just ten real on one think And then maybe would obviously top you be quick No, it's five, is the of last in top sort your know helpful. Toshiba there, I is know is again. renewal anything large or in there you Thanks for of next still young. coming so? there the But year relatively sort renewed in up Toshiba that's contract the

Sunny Sanyal

So, little the first change was agreement. yes, calling a so agreement - Canon think Canon that's of done ourselves ago a it But we're I up all, and so this. keep and correcting we as over year now through a year because was they went three name we and do a

next another so largest years the I and that got still is GE is believe to it. agreement go other, on The customer couple or

not of immediate it's be as for beyond customer large not to immediately I'm renewal. renewal, that up So aware is any for would well I of be mean that that those going one up

Anthony Petrone

thanks. Okay,

Sunny Sanyal

Sure.

Operator

of proceed comes question. with next Casey question Hellauer from Please Robert your Our of the line Capital.

Robert Hellauer

Hi, China. first My on thanks is question. my for taking question follow-up

it but when me a it Forgive have and the sounded I trial. signed misunderstood, if like prototype you said contract goes into they you

So takes you terms in the trial that a within for can of timeline China? go commercialization from length kind to of give

Sunny Sanyal

Yeah. Hey, this Sunny. is

So let me that. address

You forecast, sign going to they've them plan that. to our agreements customers, is year purchase for we we their they're and give one, our customers to so with or on and - year base tied projections on what typically ask typically know got business agreements pricing volume based us when we our pricing do, for two, year three that our are volumes what

they their the project refine They the we to on business project. some then that. projections closer before completion based and do plan get kind them pricing usually have of give then they of there's So a how and

registrations three it years a FDA let's if any thirty takes three customers generally launch and the It our to you typically the about takes agreement when usually know takes but So that's to China. market, typically their we their of to can approvals contract, time and then process that's in because a let's internal approvals, registrations a moves might start a years chain. to products. about and their a to have for conversation they to, year five sign why in get product come supply sign for FDA okay, those be year approvals ramping towards, in they the it's most faster bring up look year the apply when supply

of to half said that's year, all expect So - contracts the frame why quarter the seeing get sometime that first part registration we start this an know of second of revenues you towards coming we signed traction. last out next or in latter would that was anticipation see the after their and the time around There quarter start this year. or would they we to we

year. for signing registration that are filing agreements will next for and So revenues with are see from us, we now the pricing customers them

type So XX it's a month usually frame. about time or

Robert Hellauer

that's already? customers China, incremental your very OEM to any the maybe another taking just in how terms Thank And have of China. helpful, of much might market you. on potentially much versus you going supplied share western from into that thank an Do Great, you this as ship quick and - - you. new Chinese market how in sense in a follow-up terms you

Sunny Sanyal

new. majority market is this time, So emerging the where volume is market the Yeah Chinese think like net I a of at typical

growing, there's the net market and the XXXX is last before. them so the deployment this then sale. year movement year local volume. that year going market new going the entirely the and the I Chinese of before So markets number after between new are and That's CTs than between players, is mean people share of all are that be and higher the net with also growing China CT to in said - year players it in global - all so that said sold but is

seen we plateau and few years. anticipating the next in growth not we're the a in So sequential up that there's - of sales in haven't China

Robert Hellauer

thanks. modeling quick few just Perfect, a questions. And

of You restructuring in R&D future SG&A quarter highlighted to about from mentioned, can that? went know around the and in sequentially give you for know as in I X costs XXX,XXX like just things some that trying between million. invest like come little restructuring a Thanks. quarter you detail I that how to trying R&D to such - the the last investing up the noted for the you cost, bridge and more I'm the gap you growth are

Sunny Sanyal

Sure.

So no as you your you where you and be acquisition, footprint to done. you at global activities at that you look where located want be and want do surprise look an

of that integration is cost of so IT combination little that charge restructuring, ongoing made but so a as this restructuring And there's majority and and a like also quarter work, of we there's which bit call do that's a and choice I integration systems that consolidation to restructuring the of type charges. like a well.

Robert Hellauer

the revenue. on have last QX back quarter Okay. with year And XXXX. If fiscal at your is my a - on first last year organic look question PerkinElmer, that year-or-year might year, then from just prior down I fiscal year I think been organic slightly was revenue basis

Thank you quarter should the year organic think very year of terms two implies, revenue? your in about when think stock your I guidance how much. about I next comp fiscal what what So

Sunny Sanyal

Yeah, had business, because ago closed beginning I'll at QX months that numbers. acquired of of our take our May, a a all the business only first the of want in shot of two imaging acquisition of that. PerkinElmer year the to clarify I the

million and it dollars. So think I was $XX

acquiring last had prior so you year we'll of of with. maybe bit being believe revenue. little reference and there you're a apples what that of million comparing you be got it's careful I us of mentioned know size, so other be And prepared about a was to that's QX a I which the when $XX them their point ultimately for of doing them, something in QX was comparison. the to then remarks - oranges they that And similar

answered you a fully So on the historical I little I don't more know question but numbers the I that gave guess. color

Robert Hellauer

Okay, great, thank very you much.

Sunny Sanyal

Sure.

Operator

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

Larry Solow

thanks. Great,

and know were which on QX a you like similar on and I it's follow-up loaded that sort view margin drop obviously it trying towards down of think back whole much on seemed to gross and sort going easier the there last should guess of at of are in I any the basis? little was a of to it does should how relative it last cadence very to cost QX know for because bit loaded big just more unnecessary guys is in surprises question. combo expecting Rob's be QX as even QX you lease turned similar rebounded. year-over-year a we the sound a like help you they least revenues back and we Obvious Just and percentage to half, as How in was the How is avoid but the then remember side year Thanks. QX, QX year a year. on come a going

Sunny Sanyal

giving be would to good little to I because this quarter, comparable a would it's of be the to that. surprise put know it without north just than you right QX say is a going to - you that my is quarter tell - I'll mean know say larger low - not quarter I be going forecast that now, - specific or maybe that's bit be you we I would know of had that I and way be you I'll out QX not numbers Yeah, mean and that a going somewhere it's QX, to QX

Larry Solow

That's it. Thanks. Got helpful.

Sunny Sanyal

Okay.

Operator

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

Sunny Sanyal

good or calling or XXXX-XXX-XXXX of be conference non-U.S. earnings in website May participating much the quarter A our Thank you that of Thank our is at conference anywhere XXth bye. accessed required very could available fiscal A locations. for the from May XXXXXXXX. your this Xrd be second through is XXXX. by and XXXX-XXX-XXXX year you from call in questions and replay and from United passcode number for for States will and

Operator

your conference. you today's concludes participation. Thank This for

a disconnect wonderful of may have time rest this at day. lines your and your You