VREX Varex Imaging

Howard Goldman Director, IR
Sunny Sanyal President and CEO
Clarence Verhoef CFO
Anthony Petrone Jefferies
Larry Solow CJS Securities
John Koller Oppenheimer & Co.
Francesco Faiella Sidoti & Company
Call transcript
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Greetings and welcome to the Varex Imaging Corporation Third Quarter Fiscal Year 2018 Earnings Call. At this time all participants are in listen only mode. A brief question and answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Howard Goldman, Director of Investor Relations. Mr. you, Thank Goldman.

begin. You may

Howard Goldman

future These non-GAAP measures our directly financial assumptions advised those of These on release, risks with, is the call measure that presented nor for, in during about be are anticipated. which from Clarence and for the quarter earnings can to will the the forward-looking of of welcome me We've of third to conference afternoon, comparisons statements and which stated, that stated CEO; X our they are cause our first for To not discussion, and are unless are to quarter of fiscal be that each quarter provided website. for accordance on fiscal otherwise and Year-to-date we XXXX are call, are GAAP measure comparisons a subject or the posted in the a and otherwise. the third President discuss On GAAP reconciliation otherwise. With references fiscal financial Sanyal, substitute current financial measures. materially uncertainties financial are XXXX, fiscal call our fiscal of fiscal certain projections are third first CFO. we Sunny expectations statements, based our unless quarters unless press simplify predictions to measures. versus Good all year stated results are versus differ Please making this our today's earnings events. will adjusted Verhoef, year quarter to XXXX XXXX, comparable year today Quarterly quarters XXXX. adjusted X actual quarters. most

fiscal Item that quarterly and I'll could the we today's for Risk materially actual assume on XA, XXXX, discussion SEC Additional Factors the information Sunny. including filings, in differ and now update is information Form to on or revise reports over speaks to statements our XX-K of no in contained year report forward-looking turn subsequent The as in to call our annual this concerning results factors And Form obligation date, of XX-Q. discussion. cause this

Sunny Sanyal

strong and Thank afternoon, prior for year the mammography across With $XXX lines. all And solid million, performance fiscal were cargo digits. months, oncology the from were and from offerings XXXX quarter double product Good XX% in third for of control trailing high end our you, connect up our up everyone. year. security, We radiographic, platforms. of revenues and XX Revenues Howard. software the product growth had our

to Our lower Medical $XXX than our segment grew X% was million, which expectations.

we tubes. the and end from had During for detector, saw high digital demand our our quarter, increased radiographic new mammography growth strong X-ray

quarter, the in we some demand. experienced in late unexpected However, softness

customers of over is Our our initial uncertainty some caused that assessment delay tariffs shipments. the to

tariff some related applications, demands by We industrial quarter Japanese quarter third $XX of apparent in CT a the driven our for China revenues for our year Industrial primarily also revenues to headwinds, million. higher compared accelerator lower in nondestructive a the increased to ago. light growth area testing detectors used saw remains a growth and was key Despite customers revenues linear This business. quarter. from from additional segment XX%

such CT We surgery, QX, CT fiscal for the ramp-up growth year to the will have regulatory that approvals of much fiscal we factors, we and business. XXX tubes China uncertainty and in you shipped with now fiscal tariffs with our end We're will half by working investments China, are to are to towards tubes saw Chinese tube that X% now in year. the happen more say Besides R&D in When associated also second will China with of launches. other for revenue than continued that Our And OEM the innovate to and have different range of is of areas be OEMs of in year of combine believe the the expect XXXX, the seeing XX%. stages which I'm rather than progress as nice that in to their in shipments a customers obtaining product of the XXXX. global helps we happy lifeblood make and in our continue our mammography growth. paying in drive Innovation off. our that increase

we this a X-ray tubes launched in systems their of multiyear system's of Let and the various number FDA third we our that older me a flat include supply flat full to have quarter, have key panel image detector. manufacturer high recent by for definition, successes some modalities. with received a recently agreement another will In the technology, panel size, in of briefly clearance In one X-ray and large detectors already our customers surgical review detector, intensifier include replacing the a customer CR newer market, global system.

tube to continue launched mammography mammography in markets leadership expand a our a interventional high-end Global CMOS OEM and in using system. recently cardiology, new In manufacturer technology emerging detector leading We at cardiology technology. our our tubes, a a targeted system position using

as Our their base. but offered be not in upgrades systems, only to detector the could will also new used up be install

imaging a signed full detectors, of with QX, multiyear size, leading industrial manufacturer supply we a for side, high-energy the flat On systems. industrial Japanese panel agreement in

Globally, addition, single that industrial expand security approximately technology on the linear and technology. this In security have a X,XXX our in base recently we dose accelerators applications. believe of an entire utilizing can new use of adaptive image at continuous truck and X-ray scan can checkpoints We a introduced highways. in install we accelerator imaging an applications linear

strategic concluded for the next During years. our X this planning quarter, we

which discussions, on innovation lines. cost focused of are each the our customer and reducing by in energized are we ownership of We retention, growth total and product

outcome planning resulted to opportunities addition a Industrial in key China, segment. focus in an on the In expansion of our in increased

the double-digit expanding and on well health China, support capabilities sourcing our position and local supplier long-term strengthen in is country. imaging growth we manufacturing where in government the expect increasing focus CT for modernizing plan mentioned before, as to care. by service and As we the expanding demand have We as as as systems

the industrial within significant. growth existing opportunity market, hear $XXX the Varex We of at here for potential the X-ray opportunity line. market is Looking product million our imaging for

We and expect inspections. for this a product to increased analog segment to need conversion Due speed segment. at to rate and digital -- automated than Medical grow faster disc increased

computer-aided Over identification this going into difference is imaging growth well the Varex assist and few automated to and we speed are years, making in with that a material area. new software algorithms drive XD defect look inspections in XD in last that software and to believe as automation applications space. manufacturing. industrial detection analysis, We is who sales quality technologies our address opportunities. of Manager. these that many leverage positioned To as Carl lead industrial team these Vice we four General we Industrial and led putting are on now aggressively Senior for have that global applications our and ensure President LaCasce, last we focus developed imaging additional opportunities, the will for new medical segment marketing leadership years,

leaders of focus market Joining records, sales Carl to existing capable bringing who on with Varex track proven and a products is will expansion. senior highly team

to to as of experience innovation, Global responsibilities in XX roles forward. President announce quality we're pleased the increasing our Senior Medical We segment. sales We ramping for the on segment glass Carestream our Marketing general announced operations integration General these including for detectors in will solutions. amorphous at Andrew continues Andrew in ahead roles production our sales acquired medical and that delivery for has focus OEM Switching and leadership imaging and several in each move of he in in the down that earlier joined worked Sales years changes opportunities Most that and side. and management at we now business, excited recently, Andrew Clara Health, at management Vice X-ray to Santa serve, positions of general digital silicon also Siemens served our of management. imaging today us. facility. the on I'm Medical believe of sharpen Manager side, about On Hartman I'm has Varex over

We transfer we performing advantage Claymount as the and complete prospects. cost Varex's available is at in detector digital will manufacturing that by we're for Santa will business to Other a simulator to to fabrication This effective facility. Clara more happy of expected, believe is assembly and the Medical production and and larger better production major future that intention very by good end acquisitions PerkinElmer platform X-ray remain the inorganic of calendar in of such processing, Our year. the facility. are say at allow capacity the Imaging, take have to done MeVis of the the encouraged a Colorado growth. dpiX us I'm detector than recent that

let opportunities. Verhoef talk to the of acquired new integration nearing the are had me we're seeking call greater over growth to our business, that completion in that, out Clarence CFO, inorganic actively Now performance detail. of imaging financial we With about our

Clarence Verhoef

Thanks, this growth summarize due challenges having our were a financials Sunny. contracted QX QX going operational top as tax to product in I in would the favorable which be the partially offset while margins mix, I'm year-to-date on can results, while by press discussion our focus to release. good line found benefit. gross some

not our Our expectations. met year-to-date have operating margins

highest R&D SG&A return our We as of the doing expenses projects reducing cost on and cost business structure of sold review on investment. those focusing well are with are towards a and prioritizing the and detailed goods as

Let forward. with of restructuring will me charges start going an the and we the explanation incur benefits

a the impairment associated the by Santa expected by million, costs related million sale million the recorded time. Decommission is due in the of and charges costs, a employee depreciation restructuring over be the of cash-based in equipment the charges ramp restructuring of XXXX million proceeds various accelerated calendar amount with charges expect first The assets. of Less sell $X book total fab offset of restructuring due are $XX $X Clara the down and $XX partial expenses, the quarter. third to half of We of to assets. to year. operations from We primarily than and the of the to and net to end severance that

quarter, reminder, second million of calendar charges will of we recorded which R&D by the the end closing the restructuring site, year. $X London in be As for the our of a completed

those will $XX savings The margin, take cost and the we gain the annual majority second of to expect million $XX expect XXXX. year to million to quarter in savings gross from We of fiscal of effect these improve restructurings.

the We R&D expense also months. in see XX spread will savings over next

margins. are tariffs, of X, with they our have gross our as in the initial The a that addition imports U.S. July tariffs points U.S. impact from uncertainty top on the and basis well on XX steel took for As small aluminum as line, of about imports direct China, also starting the tariffs to on on to margin. effect gross impact our

getting our are took we hints products they July any deal costs. that China increased with of Xth, of addition, from list cost chain In their U.S. on products. to tariffs not does our inflation on The also as of include supply subject effect exports,

We effect understand the well to by China will continue tariffs the being the proposed monitor to our and as U.S. by administration EU, as the additional potential on business.

been OEM develop to working challenging to have customers our solutions closely We problem. with this

revenues Now the financials. imaging Including one third benefit third the acquired from the in the million. to business quarter for $XXX were up of year, our quarter revenues XX% of additional current month

purposes, comparative quarter, the X%. included acquired the in the revenue imaging of of been if grown would revenues our had have month business For year prior additional

gross prior product for gross prior due year segment points lower was to third XX% the the was mix in X the XX% manufacturing Industrial higher costs. ago. margin margin unfavorable compared Gross year year to quarter, For adjusted margins XX% our quarter. to were and the The compared a than XX%

unfavorable a in the first and now amount Clara quarters year the Santa and cost quarter, with XX%. XX.X% year-ago expenses expect was we over were gross had approximately of for the addition, to manufacturing site, Clara the a adjusted quarter. increase which slight margins Santa the manufacturing of at variances the high-end tubes. $XX revenues fab shipped lower R&D margin Based variances the be our or In rate full lower-than-expected aging CT site operations, associated we on X million

integration were compared million costs, SG&A acquisition million integration million expenses of $XX $XX restructuring costs In had $X and quarter $X the third of the to quarter, Third in prior to $X Depreciation SG&A compared higher we quarter. quarter approximately fees. quarter. $XX million expenses the year compensation in to earlier. and for million to stock-based increased Also totaled the consulting year the prior expense were and a amortization third million compared contributing

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

year the quarter, and margin third rate. from operating the in and decline in Our rate from costs lower X% quarter, reflecting X% restructuring ago margin related a was the gross acquisition

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

the $XX in million to third the tax $X prior $X the million the quarter, to tax quarter. tax quarter $X.XX expense third a were $X.XX for diluted $X benefit accounting to diluted to which share year During accelerate per per of compared in of prior a million earnings we share compared contributed adopted change third method or quarter. million for deductions, or quarter year the Net

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

During million debt and million. to for the by third Cash $XX flow $XX quarter, for year-to-date. approximately quarter was the operations from third million fiscal we $XX was the million reduced $XXX

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

the result XXXX year outlook fiscal year-to-date are of a our guidance. As and our performance fourth we the quarter, financial company's for revising

XXX XXXX. lowering We revenues million now XXXX, XX% and our in range to be XXX to in to of million of are previous XX% fiscal expect for the year revenue growth year guidance fiscal

now of open questions. we'd time, We guidance At per adjusted in are to previous call to in the be $X.XX. share $X.XX diluted earnings the XXXX of our also revising range $X.XX for net year $X.XX your to to up this fiscal for like


[Operator sir. Instructions] first question Anthony The from Petrone, Please Jefferies. is go ahead

Anthony Petrone

that push between debate have on a also to is up. And little So follow tariffs? the there potential goes wondering, in the here. maybe talked on just jump right call a into on the order then the seems about as just a flows. just just aspect a here absorb of the of renegotiate bit it timing impact order you there's sort I I'm two timing maybe price tariff the on, OEMs for and on to in back like And administrations,

Sunny Sanyal

is Sunny. this Anthony,

the Let Timing. take first half. me

But say -- always I midpoint our business just midpoint the seasonal before there have in are major of that's in of roughly there, our We the the if were about revenues. we three revenues there. of normal our take factors where impacted the that guidance, current and I'd difference fluctuations

see, timing. pause due normal is business. that third of We've The we've That's they lots their was strategies would late We're look by many First of mostly for there in time, in with didn't what we they take going Japanese would react. seen. plans. changes hear a strategy trying just what one their on? we out will -- to second their sort I anecdotal. seasonally, pause And It's tariff their softness process course customers. delays figure of they're just revenues, to the Japanese the what to be? anything change This had see is they're discussions concerns; a softness a to softness the The to how assess So out just pure the us and would really the adjust quarter no due delays is didn't at happens needs. as ascribe one -- the tariffs, actions they was any the of demand, we trying in to like about and in CT; didn't is in one customers, figure what some China customers. was they of It's while

So there, a is I think there timing issue.

to things things up. But XX XX We will expect that cleared at looking modeling of they've kind days them this of probably for around. down a once we're settle

going what haven't we their Although be. to out strategies are exactly figured

product their a development to the process. normal in delay, attributed On China delays that's it's --

We plans launches. haven't seen the in their any shift for

our specific that RSNA, a during tradeshows the year and and fall. their happens launch conferences products you biggest in the in once one example, year. that in for November. is to launch the As tied of customers dates are of know, in a China in are one occur spring There couple

And products so moved. are dates the and haven't those when launch customers their those times

miss and our think launches. their with ramp-up be expectation in the happen we within velocity nothing China just -- when that's of cycles in -- their do development should for would So product and CT to have we what

answer, timing. but So see our little timing perspective impact. on that's how a that's It's the long we

nominal, XX order to so XX are our those of said, different -- magnitude would lot the hey, basis the suppliers -- any pricing. from materials see Clarence points. many signals, reaching that, basis those are out the points-ish, suppliers. where we we're Those in costs, I'll customers far XX We're a get discussions changes seen -- or haven't what are, for regarding we our would for we initial is of to of we've discussions. terms getting In of we they're be -- say, Frankly, getting had from buy be indication that out again, those whether in feeling reaction us

We when those duties. will import can't about also back no, -- back pass and reaction our are suppliers will push to being our you to is our This subject against our and not those be, products to that us.

implemented that this of have If customers the by products and look or wave tariffs U.S. at -- issue they're China, that impacted were in importing This own you in -- customers a selling that. into of X, -- the is versa. products our manufacturing July on vice weren't

this So problem. is their

there. they to off pressures do take to -- really no normal them. we us to they ask us would I'm basis what other ask there's than So would brunt how sure for not from any even get that them price

Anthony Petrone


So -- from tariffs. just and OEMs stay is, clearly standpoint? play impact Varex, queue. that The again, into sold How the steels. facing are by in input just materials on also just there components last back one U.S. for a an impact, but me other that China in get does I'll is from metals, end one products, tariffs

Clarence Verhoef

Clarence. is Anthony, Sure. this

on from -- directly in in bit there impact China. that steel gross product impact, points. impact on some And our that included additional that -- in which from that tariff was XX a has and coming the basis that group that's of have that from we basis done was China imports another direct of an countries. So margin, X, various XX and were And then July where in and import aluminum, we tariffs is points, coming

discussion -- what's at causing on some as U.S. next we that of as there's round, about a this be been it direct group us as and of the medical bit impact round, by part in be uncertainty I of And forward group a actions. to items think, tariffs large will of -- little response part is lot that includes starts the look going that's I a to the -- in there's components. more important China to go the you because have proposed that think more as there next

that applicable subject lot now So all understand some that are long be through -- you a of we're -- codes CT list The would one China right whether these not we is part components different your under thing still there code understand far, of to that also the tariff. a work would a say every be I though, code. the list. importing need for products if on because tubes HTC into -- going our that that are specifically to part different there's to this, or would is so of The

significant we that going into for terms So what get is with which the point we're that and about realm not the so the of market we of thing talk OEMs not as that's going -- has outlook -- -- very is going a in this developing forward is is far risk. when to fallen to where XXXX


a We Please from have Mr. question Securities. Solow, ahead. Larry CJS go

Larry Solow

be reasons, like your direct other minimal? sounds you pause. impacts there's you're have the if some good -- drop from to Just connect may sort these left how mentioned get on that's has to a in pretty of -- directions, supposedly the quarter year. business no that, But a dots maybe are sort -- bit you that that visibility but tariff other are in -- a anecdotal. one OEMs only so sort sort little guess, from trying to there's taking they impact the it one, annual products have -- of I of, the pre-material can I the of of -- or

is So on much quarter. I'm it, are but out, you're X% -- to be may cutting this impacting just figure trying certainly one as tariffs

So much that's material more impact. a a

year, some the in did reaching and trailing know And we analysis year-end. were that seems and from stuff and detector supposedly had your you the on of anecdotal, comfort bottoms-up this early by significantly in piece huge on customers

So I'm tariffs say, hate convenient it a the is, to just seems confused. I bit excuse, like a little almost

Clarence Verhoef


I didn't mean, see touched a recovery important which But had -- you QX in catch the a a growth. not So XX% to good what and we quarter think is about a with soft ability in -- in $XX at is And first the is this I put what nice part, is midpoints say this had And -- drop very $XX million up into I and can QX QX. look when just categories. in Larry, a is we on we recovery -- forward it anymore. terms we simplistically, look we is of mean, had a very of quarter. guidance as our missed the I let's that I I'll if it what because then, said before versus now, million. that had take use the three for in it And I year the -- it's we at shot

very Third, third, third simplistically.

of we're market. very Third the with tied seeing the just directly tariffs, and impact what is the uncertainty in

one XXXX. elements just was help And to not hasn't And with other then having going that whatsoever. optimistic, Third just is the not going to going it CT just that It's from that the last timing gone catch happened. the is up aggressive the us the And was just any and little of in that QX. third, is in I were business offsets. a bit about happen of shipments. we mean, the of away as to our It's way, of be matter timing. a

the little in business years. get as QX. the seen us going that we bit catch softness the flattening to think with the business that little a a that's -- don't not I in large it's of bit the of And gone seen another is And dental a help number. from So haven't same that's have where of we that item little and in bit of up growth then was rate and Japanese prior OEMs.

about guess, happened lot wanted granular, now. just a from I what understand I mean, So you explaining. to But in of pretty QX terms I till

Larry Solow

It's a just follow-up. And this then in quarter, just -- a to on particular.

didn't But in you hit Medical little refer but can't So that of and The it's this number, maybe of confident hitting can little revenue side. overcome it. you of this just less on back operational a gives what you public, think, caused the -- you year. is is since you back slightly actually sounded And you've mean, number little a terms sort quarter? you expectations meet of would you the get of the part this in gone of challenges I hit still different, it's my aspiration -- what bit less. the that and you number. that a had sort confidence to, -- actually impact I your eventually but The what margin, that more or what mix in haven't business something pretty the the gross XX% your And half just those? to industrial up -- that you

your I just your hasn't outlook planning, X-year had gross You assume changed. margin is probably

So how do that you bridge gap?

Clarence Verhoef


think, good -- question, Larry. a it's your I very

different Our this year say, And XX% we When of it's we're goal there. still to a at years couple is though, a of were why XX% XX%. look to to ago XX%. path see I okay, a get I and do are couple at things. at when And get

a So in significant of Industrial the the has actually in segment, particularly, cargo mix space, what there we sell impact.

right terms better margin lower selling, now kinds of of we're the cargo at the are of end and little applications more range what NDT security mix in little the we less the of stuff. So of

I bit Clara team are year. bit ongoing points. a of factor, of some kinds is been not fair are of the really down bigger that X Medical And say, occurred disappointment, part Santa of industrial but things there, is would guess, in have us that on And addition, that's that that they a a this why right I fab I to this costing of money a side, we then, the now. the by and costs amount in manufacturing mean, margins So there's in have been a operation surprise then

about the just we and just I we're for fab, do point a that of I lose overall restructuring we the margin look okay, with of of north company, closing fab. benefit we mean, get the we close that talking so impact improvement that. And bit when from as because forward, of the down a that what's margin and say

of because -- forward. go times mix the is going said, wants, at bit wants little that is at it we've higher-margin would and in to that we I our that and build and the a doesn't we sell, we going will just out. okay, at of perspective almost us end of the I the one what sometimes market of think a bit But -- that which wants and will the couple have the variables those I've there on want product -- structure have to variations actions this mix looked had sometimes last manage I get it's is from a it So the the pull matter because lower business as market margin stuff day, on help to you're little of what deeper here, over stuff. one costs years to cost the

to of the kinds of volumes design -- engineering mix do the the then in pull I operations -- out such. design would say, consolidation and we of are us lastly, the costs, the product at to we manage factory and So are cost help now things. and are for projects as business, chain, improve warranty additions those that the the productivity cost that Those products us. things -- to scrap to our PerkinElmer our the to get to with offset with And leveraging look we have as any of quality opportunities -- and the supply

be see to I opportunities in continue I And range. to XX% will we forward. focus have So will we still confidence that. that going that on XX%

Larry Solow

couple next that a is [indiscernible]... the what Over of went -- or years

Clarence Verhoef

FY you I'm guidance. not going Yes, 'XX to give

point. I to ask quarter to a that wait get going I’m you to So, before


from go question Co. John a Please Oppenheimer have Mr. Koller, sir. ahead & We

John Koller

quick questions. of couple a So

detector can on out side. digital help the you If

end radiographic line. sort about and of to volumes? can I and you to seeing you're lower and pricing get a talk also Just that I'm mix, earlier idea. it alluded better dental on If the was curious of product business, Where about think, the

Sunny Sanyal


things. three So

radiographic this time. the mix introduced So say, the low-end. let's had And the lot resold And favorable high-end our radiographic. the the newly a better start detector we of than are radiographic We very there in did margins well.

where in more added property. to So push there's we and continue electoral more value the ourselves high-end

There year. see sell consistent. radiographic the more when volumes dental high-end us for a there. favorable flat we And so are The there margins detectors, this we mix the have been will detectors,

a expecting we're much of haven't So flat growth, year. year seen that this we a

helped dental these detectors. with either. hurt better So because high-end the are sell margins it that mix. end a hasn't gross much The we are We hasn't in more, good, dental It margin. necessarily up

detector did the this overall, quarter. on well So we a perspective from side, mixed

that. you with let me think, I leave

John Koller

mean, do is, assume the back of, [indiscernible] not kind you I and And that's spend think and Clara, you also margins was also steps the Santa I'm gotten and you curious like R&D away. complete curious, back I planned just from timing stable, to it I'm for what don't the But OEMs SG&A structure seems, struggling And So that talking to know margins can guess, supply I'm great. for applaud like it somewhat and example? making to silicon, realistically beginning. targets and in the I'm expense take talking here timing and investments it stuff. that because you're get seems have and R&D control, seems and the line? to I XX%, then get think and I you I'm long-term, some but is cost I about just about I

Clarence Verhoef

now, operating I'll kind to like R&D in there just step investing Because R&D. go the of China. with be further for are tubes or and That think walk one on we're here, going targeted at I time where a and question, as of we XX%, period profile. that to -- the And well mean projects We'll operating long-term, were of finish XX% of somewhere Yes, doing profit. understand through bit range doesn't we're year-to-date, range, John. our I XX% even around kind number is XX% at that kind where goes a a is it our do we've X% ago. maybe, in in what you're I for little you we're profit CT mean, that's the now, right that XX.X% around to between significant between That's being up very of a range. And that years so year we probably XX%. about be something which ramping few right talked in south XX% the

coming be now will and forward. off we forward, the somewhat that at XX.X% that look we we're be As of going right reducing

one is much on in control that's is our but as R&D factors, talked invest our I think, under mean, gross the I is obviously about SG&A this we think, other where well. then of under little the our as the then margin to one and going of how a be I one items SG&A bit -- well. -- profile, I control,

to your So I adjustments for think plans, we of make that of building we end we when spending going look ourselves got a and you that we're had up little bit ahead corrections of accordingly. some And make some and the some that at revenue, of that. expectations

and closely the when we're operations do this consulting are very as those to well. spending of we'll like in but some and how services to that, you look at opportunities the like look Now start consolidating at much

we still So that have back those get formula believe to to XX% level. a the -- I are do

happen it very to I I 'XX. that is will have But opposite we tell one quarters. in it's that that level do know Now direction going I in and all in -- where it direction couple get went confidence can -- back to definitely you FY the the last not the head


next The Sidoti Francesco Company. from & is Faiella, question

Francesco Faiella

Just uncertainty. that's the delayed going tariff stuff pipeline there to I that on more maybe been back and to award was pull wondering back combinations? if That's some to that's an the the after impact stuff to or getting getting you've was maybe awarded. was or push an trigger of in go

Sunny Sanyal


a not more clear which timing small mentioned, us, softness that's in importing is it's that it's from it's there's does our to indirect not volume to impact, as into the through us impact relate us to -- amount, -- our is OEMs. our clarify, whether just is to that's the And The a products -- Clarence So suppliers. from or components a our direct of problem. China. me, to impact impact It's not

what pipeline, So in us. what agreed our buy to we from have the have customers

Our of, going the products more is are of they're that out they're their the of This they -- forward. to trying their and to way. to us whether just -- -- actions going will because switch their figure are ability how these engineered manage routing not going are expectation be, this buy, products. don't switch have products, into that they their out is They to production what

timing an it's inventory adjustment. of more So

Francesco Faiella

if want just anything it -- the can you general a Or as helpful. have change we -- acquisitions I industrial And side? plans, seems diversifying like Got but That's to just there? kind focus? if the that know maybe more And another strategy keep you. wondering about think then for one. into there's more about then been it and of I'm you do quick guys was always wondering,

Sunny Sanyal

But in changed is Yes. past. described nothing there, we've as the

process. will have integration, active our two Mavis I consolidation. or the There the of claim that many is pretty the are mostly integration us. active PerkinElmer components completed. pipeline, manufacturers, Our very for business Consult of out an management And has consolidation. the significant integration manufacturers be We'll for we've sets they And an is and acquisition us in those. quickly consumed companies. operational much operationally December, be looking is Like end private We've one example opportunities. adjacencies. we the by all competitive The One pretty second bandwidth, of but behind was used. bulk been getting small --

as side, the to times and Just be well opens us a in I from we're the debt Clarence perspective X.Xx bandwidth management as on up, rapidly. know there range, getting both like X would to us

to increasing. So our more appetite do is


Jefferies. We have a follow-on question from Mr. Anthony Petrone,

Anthony Petrone

compound your stronger on local tubes dollars currencies from kind Obviously, forced of X-ray they're here. sort order of So currency also just to that customers? in purchase detectors convert their dollar's a and and to and the headwinds question like. for into Is

in you XXXX? wondering how the the out as just strength into dollar head So plays

Clarence Verhoef

is, customers. take it My big becomes before significant that, do is a our it Anthony, has to that, pretty on move a event with

years a about pricing. lot it it we conversation, enough a of just not where And triggered it of not then it event. make far, point hasn't it three saw was topic to been a ago discussions so that triggered And conversations. so an has moved it where But to has any


follow-up go Oppenheimer a of Koller John We have & question ahead. from Close. Mr. Please

John Koller

you guidance, about replacing talk business that would've CT in comes the the do a you when and delays but you you up words, pushing can winks? Or XXXX the back? talking few I'm about for Or this double this you In tubes, whole XXXX? not we in chain When are see seen think other do additive? asking as back,

Sunny Sanyal

their off in engineering -- they progress consume year consume to they more. in pilots through little a it's trials amounts two until timeframe. and within occurs. No. their as if next look the this -- -- is few launch, to chain start the the And then the time-to-revenue bit then for when And first start the their development clinical back. the certain and they they get you sharp of it development think hold they three This work, And cycle will they stages, at peak usually they buy We ramp-up us milestone, they don't when volume when prototypes. that's tubes. so of kind year, push customers when in modest are a customers the the When hits

fact in -- of volume a than there's doesn't but anything type smaller tied little of delay launch bit more the timing, timeframe in activities slight the necessarily early with imply So -- in engineering some activities. their that that mind, a to

impact moves We've a on material think this. our of much out in not from back nothing out, XXXX. there's either plans. we XXXX end the So don't And seen moves customer's this of

continue their dates the many to for shifts see low working high We launch don't mid-tier, We end. in different the CT models different they their customer review our plans. have we're end, with, tiers: any major And customers multiple that programs. or products,

at many a So they're projects time. juggling

John Koller

derogatory out not in extent kind more spend utmost comment the I I'm a this be to any respect, some -- to then with money. to And on and of the earn have acquisitions. go Okay. but in ability you way, shareholder And trying the mean to money

important. top to still to Even I'm are returns to if have if lists this before out I see I they're albeit think, that acquisitions, and existing comfortable get or at you I'm acquisitions. of up shareholder, a of to business, And continue the here, And do the you As do. can that if whatever tuck-ins or you understand the feel drive curious, tuck-ins. you if sort of go you that think what trying things and on

Sunny Sanyal

let that, John, comment to comment small to on ask me pick I'll one it. just Clarence So and

have their on done, returns those X that exceeded our Just expectations. the we've

acquisitions, you in use general, to on whether whether Clarence ask returns to with this call very it and terms superior of perspective so PerkinElmer investments Claymount, from comment well see risky, returned or it organic So you said, in we but compared I X really at we've how that cash. organic as well in of on versus deliver to organic all investment even whether this look -- continues an realize do With I'll case we well. are inorganic on done the both return

Clarence Verhoef

opportunities your John, think certainly, there question Well, level a are a at large tuck-in are hear on of time, and and house of same I management bandwidth. is at is I time to what you're At which look, energy those. management and the can me, And to -- that you take think the management that fundamental I integration order big want about saying types management deliver acquisitions a got saying little of of it's very somewhat actually and will and business part well and not distraction acquisition. you And a I'm in looking lot we time. working of you're significantly. energy there, to of distraction sure lot the of hearing is, out everything And that be -- before and of part what you a doing spend on what is make your

John Koller

I X.Xx a... coverage, EBIT what Adjusted think, on it's

Clarence Verhoef

we're just barely Yes, little bit now, under EBITDA. of about right Xx,

John Koller

think you comfortable that can there? do you start some level out and go what mean, money to I So you get spend

Clarence Verhoef

$XX free flow. million of $XX we to Well, generate cash million

it's an annual on basis. mean, I So

perspective. from a acquisitions that's tuck-in And that mean, be anything about so a mean of be substance -- that sizable different -- discussion. can I I more today, It's and size a -- done would


further for time. this no over at comments. are the questions turn there to you I'd like Gentlemen, back closing floor to

Sunny Sanyal

company's Thank third you, quarter call quarterly access and accessed is be August at through or from The be website earnings replay Thank of can in the the and everyone, for will anywhere or fiscal goodbye. A year conference call call conference in XXXXXXXX. participating for of code our the available U.S. from X-XXX-XXX-XXXX your non-U.S. XXth questions XXXX. you X-XXX-XXX-XXXX and from this locations. by calling conference today


teleconference. concludes This today's

you You for Thank participation. your this may time. lines at disconnect your