VREX Varex Imaging

Howard Goldman Director, Investor Relations
Sunny Sanyal President and CEO
Sam Maheshwari Chief Financial Officer
Chris Belfiore Director, Investor Relations
Anthony Petrone Jefferies
Larry Solow CJS Securities
Suraj Kalia Oppenheimer
Jim Sidoti Sidoti & Company
Call transcript
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Greetings. Welcome to the Varex Third Quarter Fiscal Year 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. the to turn Goldman. host, now will call your over Howard I go Please ahead.

Howard Goldman

welcome Corporation’s new With Varex for afternoon. and and to Good And our Maheshwari, Imaging Investor Sunny our quarter CFO; Relations. fiscal CEO; Sam are Belfiore, the of earnings of year today XXXX. our me Chris Sanyal, President Director third calls conference

team as from Before work Chris? turning you. the for be know, retiring Varex. I our mission want you opportunity Investor Varex the honor our of call months that the leadership It’s many over Head to began to will of been all an to prior thank I Chris, spin-off. to Relations with soon to several

Chris Belfiore

a supplemental presentation be quarter Please all Varex’s at website. year from references to be can Howard. website unless third slide our quarter that our fiscal accessed for Varex’s on stated, you, will The To slide webcast presentation note simplify XXXX. the supplemental of includes discussion, are webcasts of archived and live that Thank call the this the conference otherwise

the stated, and the assumptions described materially earnings comparisons relating the year. In actual subject Risks of projections events. are cause our from business otherwise based are call, this the making predictions current These filings that Please and statements, year advised future our our are anticipated. be quarter forward-looking about the expectations than risks year XXXX are to those or differ quarterly with of which release of unless are that to quarterly second and from SEC. made statements fiscal rather to to that during results XXXX could third in same uncertainties on addition, quarter quarter to sequentially fiscal be prior we will

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

Sunny Sanyal

execution in four you. on much best in last in your profitability your that strong you me afternoon, continued led retirement. all continued sales everyone. I’m Chris margin $XXX and Howard Higher fiscal expense Belfiore with in by Thank wish And reaching the all the management both million, for driven Industrial XXXX, sales Good volume and welcoming and segments. very Medical quarter team to We years. of quarter. demand thank expansion join report third revenues the the in momentum and over contributions you to to please pleased the

applications. for medical except sales for demand globally strong returned quarter, all medical modalities quarter, the detector see as both the levels sales better. to continue In well robust to We dental pre-COVID industrial as CT tubes third or during and

Medical gains Our Industrial increased in year-over-year, the driven by segments. sequentially, in segment. the mainly in by third X% improvement quarter and revenues both Revenues XX% increased Medical

unfavorable productivity, product offset due by higher to and partially XX%, gross Our non-GAAP margin increased mix. to volume

margin improved to Our XX% non-GAAP operating revenues. of

was result, EPS our range. end top guidance exceeded the a of and $X.XX non-GAAP As

well past We year, was during of trended insight of our Industrial the services third level high and during markets sequentially already demand CT and base replacement driven X% adoption to applications and segment revenues as Industrial were across continued of in quarter. timing by XX% increased several for and We our grow sales verticals, medical industrial the expansion segments some year-over-year. over installed quarter, deferred attribute increased further. growth been tubes. Medical Since part battery in sales had bodes back systems, healthcare some XX% in as you give Revenues our new our decline in in and levels. for inter-quarter demand it and are strong X% In me or for tubes oil modalities, The how decreased segments detectors above modalities In gas. posted QX to trend for to Medical some enabling believe that Let related potential inspection future our the of many sequentially other increased of mammography non-destructive in into sales. including well tubes oncology, the large new sequential and fluoroscopy and inspection of different technologies. year-over-year. the growth, pre-COVID segment to digital healthy

update for However, baggage China. a airports screening minutes as to at to at like for on screening imaging as continued products few security be soft. take well demand borders, ports provide to I’d and an

systems represents the demand at This fever continued installations by CT significant have has past, a opportunity is This cities self-reliant and in we for Varex. strong a base China. focus CTs increased growth installed systems, are the of for for in replacement As driven generate been on talked making to clinics growing rural tubes. mainly need expected about demand for expanding more health China

establishing Our three drives of eight that are working with the strategy to And recently we have been with nine momentum. OEMs, market brought have said process. on have relationships initial projects XX as still and continued growth we China projects CT local been local OEMs in of in

to XXX of installed to in systems. new In self slice system healthcare another These addition story. current cardiac already expected expect that we should CT and building advanced China China’s the XX can are upgrade be system systems CT an generation handle XX cycle adoption be rural the continued including layer to by to growth driven reliant to base applications. of strong a systems, diagnostic add previous of This procedures CT goal of upgraded upgrades the more

exceed million growth We China revenues XXXX, year last XX% by fiscal year-over-year two our which from the $XXX to for XX% end expect would years. represent to

demand in part represented is While digital contribute story significant of in see think tubes CT CT a medical growth detectors in key replacement We of the is the systems, to had year-to-date for this to China. Outside the we been medical the story in half growth business for avenues tubes. of our region. the China, China. future of majority revenues over potential tubes of new other future market, installations which The will our of early growth

Wuxi have detectors we in per strong the broad manufactured war tariffs. sales, of levels the detector XXXX in our This to several local trade various detectors radiographic, pointed set now enabled past, the associated X,XXX China fluoroscopy. modalities, prior of China reach sales detector have the of previously manufacturing year. offerings, As our and including onset dental, The out to span with facility Wuxi is plant in industrial and capable in oncology and XXXX, achieved

a China to OEM relationships grow modalities. our other into platform provide in addition, local In

targeting We are currently therapy. cardiology, radiation into dental and

on to opportunities partners forward region. to improvement in expansion delivering system China delivery work with for the look about represents. excited the We that OEM our in are continuing and the healthcare very I

Let on me update you give now brief efforts. a development product

which capabilities, in new the First, liquids, these to well of offers which LUMEN rating can XXXXW continuing and healthcare by be This help and detectors advanced part will which -- be disinfection. a launched platform, ease-of-use well allows received other we OEMs With recently a be detector users. detector and believe as the detector immersed to globally end problem cleaning increased we IPXX with will with as providers. is durability for COVID

digit Second, are first they’re Z detectors, our for traction contracts. formal product OEMs more getting few with on multiyear a two Platform the three following dynamic All after. is approaching customer models covered front launch, product soon with and new by digital

working nanotube of of progress has joint Conversion, Direct the minority belief reflecting during in outstanding our to continued technology. the our good life detector make technology, acquisition lastly, quarter now venture product the completed customer And testing in the in is continued counting stake on we Third, with results the and potential area photon with prototypes. for

call over the issues that turn want to minute talking aware Sam, I I a spend supply global to all of. Before just you chain about are

Supply pronounced logistics. of quarter, supply the and During third more in is materials quarter became constraints the availability we and chain freight the second semiconductors. and some challenges largely chain raw impacting around highlighted the

constraints in potential and the able We so QX challenges beyond. through and to supply have far, for been disruptions shipping chain but we see work

to and the to let supply the chain with by output With mitigate potential are become that, impacts. very call current and Our suppliers closely over our hand working challenged may constraints we ultimate Sam. me

Sam Maheshwari

and Thanks, Sunny, everyone. hello,

As the a saw XXXX of indicated, and fiscal third our Varex continued XXXX. reminder, results fiscal I’ll those unless provide sequential deliver quarter quarter year modalities. to results otherwise for with second our solid of of quarter the all of strong comparison in demand we across

top and For was was above the the non-GAAP guidance guidance the EPS end midpoint above the range. quarter revenue of

total of both overall revenue sales Revenue Americas APAC medical X%, all million, quarter, But medical revenues $XX revenues Third second XX% and industrial sales in level X%. was levels three this million timing X% increase and the while the decline industrial XXX more quarter quarter-to-quarter X% remained grew in highest shipments, three the were sales. an due of a X% for regions translated the down $XXX This industrial aberration. and grew were declined medical revenues were of $X was EMEA to from medical million. which is to is segment, in while industrial XX% and years. sales The grew Sequentially strong. sequentially, X%. in Varex

now GAAP results me basis. our a on Let cover

the previous was share increased gross compared quarter to points diluted million margin from to second quarter. $XX $X increased quarter in XXX income million XXX were points earnings earnings to per to over Operating margin $X.XX the up $X.XX increased sequentially quarter. second and compared XX%. compared basis and basis Net the Third operating XX% previous sequentially quarter the and

by non-GAAP from unfavorable by quarter, to areas, XXX volume partially higher and the gross driven basis service the quarter, for sequential XX%, offset results improvement second sales improved on and mix. points product manufacturing was in Moving margin of productivity a

from and QX. margin has XXXX to in XX% now fiscal QX, XX% the XX% in year to quarter last in in sequentially gross improved of Our XX% QX

slightly new Operating up QX, over R&D. related sales we reduction increase volume, or chain that $XX XX in through than and percentage of mix to in comes operating due to last initiatives prioritization towards timely that supply and margin pleased XX% are servicing continued the end a performance for activities. innovation to product this to been X% of challenges, gross the development. the X% efficiencies gross As million approximately are sales. in $XX and -- a sequentially increase year spending target spending expenses and margin SG&A third an of our earlier middle improve down but This is of product in which due very the revenues, prior points four as achieving manufacturing sequentially we our in R&D freight cost in R&D. was favorable we was qX, possible ongoing to the of target XX% set to basis performance. year. continued XX% the was quarter, approximately the has our $X in range completion million as R&D quarters million XX $XX in expenses goals, were our QX, with million compared reflecting the in quarter Despite we and higher

two we in to helping through working well. increased Operating while in We earnings improved and to in and share earnings QX a million range the to associated compared expenses share, leverage less Overall, per on million, to or non one-time $X.XX to there as favorable tax to for difference $X low trading for related resulted convertible than GAAP to diluted million Net a the second between or due of of revenue, benefit million GAAP bond per $X.XX note of XX%, tax is items to million the demand, compared the earnings during our $X.XX third Recall, and quarterly an higher to the purposes. as drove Please XX% control, quarter. by $XX and in the successfully $XX $X XX% compared previous million continue taxes $X higher hedge income diluted to profitability grow recently was improve quarter. and previous operating rate shares, quarter. in Despite revenue or notes strategy keep the increase customer that $XX is our QX achieved expense able QX. in in compared million GAAP our quarter deliver operating shares track Tax diluted QX. profitability. unusually $XX very in of or increased meeting EPS were expense

reconciliation provided a the two earnings of press have between We our at release. end the

the to million, partially higher by $XX sheet, to receivables turning sales. increased Now balance accounts due

result, in six mainly by to demand. raw DSO to days. days and Accounts XXX declined payables $X due a days by $XX increased inventory days. support increase to XX Inventory procurement material increased declined As higher million, million

As a days. result, XX increase to days payable

outstanding in an balance information, We quarter and cash $XX ended cash cash of the the to $XXX cash basis. the to $XX net our priority on $XXX down debt $XXX reflecting sheet, million quarter debt of million, at of the to debt on third a million and from to continue million. moving end flow with came debt was Now to Gross flow improved quarter. net the increase operations of million deliver

their months on in you our solid over in I’m debt $XXX that take summary, the strategy financial basis. will Adjusted portion leverage expected QX improvement basis, expected our between of quarter, early very working the improving debt. was cash On the quarter. expense the fourth diluted previously our quarter. six In senior and of secured to analyze performance, be a million $XX to announced down in per I our last of to well. to net achieving million tremendous for end would that, us are $XX X earnings ratio we in prior thank we debt $XX at look to a lower these non leverage million leverage stated approximately With go-forward XXth, efforts at million moment and worldwide of million pleased of and want colleagues pay annualized Revenues generation are redeemed let’s our notes. results. times. be July, to an million interest a GAAP enabled capital $XXX is and million, $XXX below the a from Varex expectation operating for if July our by note Due were reduction share $X.X EBITDA third $X.XX between $X.XX. on As

gross XX% question. in with now the of on to expenses and open $XX the based of non-GAAP Our non-GAAP range expectations to your operating for margin in million. million range a XX% $XX will And that, call we


comes Anthony Thank you. Your question Please [Operator Instructions] first Petrone Jefferies. ahead. with from go

Anthony Petrone

recapture do supply to CT of there’s Thanks we still have of dynamic start backlog and Maybe out seems on your uncertainties perhaps well. underlying the just China everyone the level is supply hand, we that’s that’s chain. sort the the level on pandemic, and of maybe demand demand on just linked or of some it strong on and quarter. Sunny doing chain, can on one an that mostly congratulations some in with the Sam the while side elevated Hope comments between just the

and So CT next on the you maybe Thanks. specific a and trends see it of bottlenecks how little details underlying in do component supply months? you the And over demand? bit sort think chain XX more tube where

Sunny Sanyal

Hey, Anthony. This Sunny. is

supply you feel And it we issues, quarter good we fourth mean, we to what into with year, and a into the supply hearing strong the we and side. this -- They looking dates about some been head we’re to quite of an there’s that’s our cetera. [ph] making Q have the that. feel categories And other for demand issue. all similar with is about, two And there So environment et doing chain or suppliers a find times, has placing at chain good we’ve demand placing it’s furgo of semiconductor sure been point, appropriate in good next coppers sometimes side on from delivery also doing and and a would we’re and just shortage But they’re copper -- with -- discussion the side handle right were things, have where orders one, lately, battling understand as aluminum lead demand and issues a what we’re become and their that been shortage what commodities. there’s time. And daily it dealing of I a are doing. you have and we’re castings. and fairly companies

now So summarize are and the that we commodities, would a materials more with more maybe what delinquent And with we into shipments. their there -- couple chain issues I that. quarters we’re going -- to every deal tried broader this more but are and of have the are faced we is, accounted way ago than suppliers that for have then supply and that and becoming quarter, we fourth

at supplies, we a visibility our are So the were we risks have we out, broader to just further that quarter forward we than look least sense next quarter. as as look But the to ago. they

We’re managing our it. through way

We’re all can. we the doing that things

qualifying demand aligning will are strength that to the demand sources. point, we’re right I this up side, We of chain alternate constrained suppliers, work and continue now the we’re But just -- given near-term alternate supply we the to in wanted at not highlight side. the

Anthony Petrone

in the follow-ups of versus that R&D was it just adjusted with additional the on side, gross Thanks is again. trend. of a for the last It’s sales on in, to pull-forward helpful. the X% benefit having margin How recent linked other just Sam, of initiatives? tenders was quarter. can of would get issues, ahead R&D it And was the on chain sales supply impact just that related even Santa be if cost savings XX%, for then the And much wondering a basis or couple we the me Clara? higher one an I’m volume

Sam Maheshwari

Yeah. Thanks, Anthony.

taking definitely higher is margin. continued few to benefiting we sales sales from your related So margin volume gross every are increasing gross benefit first to question it quarters over the has as Yes, quarter. and last

So that definitely is beneficial.

annualized is Santa point reduction Lake. million Clara and are from of an basis. cost say, to that benefiting, all of million, is update, at terms completed migration Santa In done much, manufacturing the have this we That we or Clara Salt of and $XX all migration fully that $XX on around pretty

million a that’s $X.X to So around comes quarter.

So say XXX points. basis

So at would say the is margin fully have and fiscal gross we I that, that committed the P&L this that year. towards benefiting flowing of time. improvement we through this are previously XXX-basis-point end

So pleased around are I related sooner. QX FY say to XXXX, for and And a to we our have would streamlining servicing say that, manufacturing that we achieved that, bit activities.

achieved QX. have that We in

points. basis margin things the run about the was very improvements freight a So plan or margin or high. productivity gross would that are to of And freight-related is in items, and benefiting initial it call that bit that that gross a terms to XXX continuing gross commit headwinds was clearly margin than initial so what sooner big so hurting is I factor it’s

uncertainty to either those those air As bit timeliness gets there and ocean more you using that related definitely uncertainties, of know are what all and is of delays our and out, expensive. I freight too related call much we of sorted a freight until

and negatives, So, overall, headwind is they and talked are very those are the currently, basis takes puts points as and pleased to performance we of with gross ongoing. overall, XX margin but positive are freight basis XX But, about about. I points a the

we $X around your spending and X% Yes, percentage R&D Now order, middle target our in A terms R&D cetera. came the as We engineers right of next that the by that in related when lot to million. is delivered, XX%. materials et driven moving of of of to so the is when a sales. on question

there be by we is spending cetera. innovative more bit little in et need But, groups investing the So from we There of a and R&D quarter-to-quarter. investing can are products. a in for are pipeline, of fluctuation accelerating actually overall, lot R&D, delivering

at to I So think we anything we will of it. fully as R&D sales at will this or say, closer come XX% right to But don’t would least funding are you be time. now, guide close I we we that like and

So good I about good right teams. we new now on all is releasing feel our and I about feel products going the that and with work think X%

Anthony Petrone

you. Thank


Your next Solow question Larry Securities. CJS with

Larry Solow

to -- two Chris, up Thanks you, questions. taking welcome supply just Good just constraints and question for had aboard. best afternoon. the on on Howard, whatnot. I or Anthony’s to chain follow on luck the

QX of that Just in down. a is terms or bit headwind of a little little guidance, a the you mentioned mix bit

trying look from or QX match seems the less get concerns guidance chain like Just issues it and with the level, sequentially the at there the just would level out for your great? of to QX, trade you to EPS just high supply QX, to as parse of need sales high kind concerns any is more that with QX other or just to we

Sam Maheshwari


here. unfavorable take me of QX, prior that an to industrial this little question. so Hey less a sales let So terms an by really of compared bit was the of -- there driven in as is mix Sam -- quarter. yeah, and

is to. that related what So that

you as is industrial a for us. margin higher segment So, know,

So that is…

Larry Solow


Sam Maheshwari

different $XXX can million, percentage can… concentration, we a from customer year … when shared maybe one with ago, margins mix a have revenue, in of three, then okay. with levels of have to XX and that gross or not expecting million even unfavorable of -- move things, because say, terms maybe gross something margin, and different like in pre-COVID back gross in product another, that to I customer margin points, we range, shared X we minus, our are concentration that, I $XXX that other things And or two you you plus quarter terms there, number get percentage

Larry Solow


Sam Maheshwari

push out … shipments.

still range. are that within we So

Larry Solow


Sam Maheshwari

came guiding XX. XX we X, XX and guiding minus around plus we instead are at XX of to QX out In we

else higher are to what bit on, on this I beyond isn’t set we Larry. and there expectations really we little nothing the time, compared that So think, had a side there at

Larry Solow

Fair enough. right. Okay. All

of questions or spoken Just meeting guys you’ve for years. exceeding obviously China, maybe expectations couple in terms are you just about that a of

sort you’re more Just year, is obviously, this of any is figure that without of getting there of XXX out, trying terms specifics, XX% clarity, tubes. in than doing into from to sounds like

terms between speak it more mix share guys Siemens know want their the are color of enjoying other numbers and any and just you give us But or serving sort in GE, Phillips, the OEMs, there if are, I how or I Varex of you that kind who clarity -- In to and that. I players guys that Phillips, local to don’t you you not, think market gains and mean, are same is Any the there they would great? of greater visibility enough. be can

Sam Maheshwari

were today combined, versus vis-à-vis few the where they OEMs share. local a OEMs, gained So, they ago -- gaining Larry, mean, are all local in take it have are local local to China, in the be, OEMs right? local years in frame one I would you can aggregate, OEMs the CTs versus OEMs frame If global it way where share versus the -- we

consumption We of a those large very have OEMs share tubes. of local

our that. we’re share nice gaining China in I good about from way So perspective, very in a and feel in tubes

a and path, going good trend are good So new that’s into on all sockets. very these

market we’re that. about bullish the to growing and share position keep So

-- we’ve pulled there we with were in and we the some mentioned with there Radiographic where were hit particularly some actions both just then dental, war particular one I to broad-based. a be back am But has areas say On and in come modality. the tariffs levels, by markets Since has then to happy hit end. have on we as allowed we hasn’t compete couple in that -- the with that, we trade war extra because any those the then costs. been -- the China But ago years detectors detector couldn’t sides to us continues about remember It pre-trade of increase. that, low challenged business oncology… side, to I our our are pricing talked the back been is

Larry Solow


Sam Maheshwari

broad-based. the and been in and … growth in China strength has our fluoroscopy detectors so

this overall the specifically. would made doing was others share, we’re am growth But that versus how in I keeping market Now call I’d out I we’ve of doing -- versus up -- terms to a happy say in my I am I rates at with really we’re how not point with with better. say to going we’re progress market and… detectors point,

Larry Solow


Sam Maheshwari

also particularly, growth we’ve detectors seen in China. a industrial …and in

Larry Solow

still You new but to providing way this right? market you name, tell -- yeah? should whole, China are any OEMs home outside mostly, to They -- or have there equipment, other and global or local GE there global has have providing other neither still the or China. growing equipment Is mentioned of OEMs Siemens

Sam Maheshwari

selling OEMs global are their They’re Absolutely. OEMs other The have established, global still in China. modalities. systems still and selling CT

sales also still… Our yeah, global mostly China come our are get of the But from some local in revenues China players also of There there. share through we there. these OEMs. But, they are

Larry Solow


Sam Maheshwari

market. in a that .. significant player

Larry Solow

while you platform question for took Okay. up last here. you the maybe And Sunny

China the XXXX, multiple certainly and back look of to I outlook a on the different the savings investment newer in got see you points you certainly hopefully still kind are have feel from we and I some and did ago, revenue yet that new of in out years, business machines of couple look I years out. start think tax back this should price these you in and the last new you about, had continue an should and detectors, basis, you calls further multiple was prototype remember CT, products product look calling next CT that qualitative it you into take certainly to a get on into that coming maturing lot science. some Just been out sort three -- the growth And find of of new you it in spoken now, and should acceleration early from guys commercialization. in as reduced revenue exact I think product and the of we I if realize over couple of of three COVID be, acceleration of sort contributions? we But years reinvest

Sunny Sanyal


we said of recall, we from if took invest reduced and -- we rates would some So benefits the you in R&D. tax

to So talk Platform, Platform, There platforms. work with put a longer seeing I products additional our counting. it otherwise, development doing about those the And we’re Platform, work. money new Z upon be R&D in would mean bring been have number new the us to what photon to currently to you’re the been LUMEN with have some we accelerated some accelerate would the -- market. Detector of we that

products to out that of and validation we There high -- also that CT by So our seeing products slices were China are mid-tier the growth into set qualification of end. of think in of supply across those XX in investments. our went chain up investments in The the China. future pulled play tiers, we launch in expecting those I those in growth and form a China growth we taking the presence out was multiple some earlier you’re

to we OEMs and for we that got and served And the to so mass new CT early forward, been systems see play our going has CT, ongoing out was China. And begun invested -- of feature the spot thought replaced from we’re there our as we us the to wave has we segments and slices in get and the that more local heavily slice be input going XX it’s hitting to of, -- going the by that tremendous well happy say sweet It growth would XX best CT said, how there be is and I’m ones. in expecting that’s adoption in feedback sales assessments and we’ll the the of rich slice XX, addition XXX are already in been, is has I there. socket penetration market.

the us a that, by would at the otherwise time being with at of that’s Larry, muted products have place probably and has success in all where right the we enabled right China. so been say, And I’d more had

Larry Solow

Great. Fair enough. Thanks it. color. for appreciate the I

Sunny Sanyal

Operator? her her She back lost connection. She Yeah, hey, loss getting is our connection. operator on.

There please hang a in additional So questions, second. hold for just there. is


Please difficulty. question, apologize Ladies coming technical I’ll and with Suraj line with is do move next Oppenheimer. this of gentlemen the we which for Kalia from proceed question. your our onto

Sunny Sanyal

Suraj. Hi,

Suraj Kalia

the Good quarter. afternoon, well. Sunny, Hope on Sam. you’re Congrats

Sunny Sanyal

Thank you.

Sam Maheshwari

Thank you.

Suraj Kalia


that I and if Maybe is questions have of lot the Sunny can you asked. demand obviously, there it if talked just a issues supply Sunny, differently. the phrase So, been about. demand,

is like any nature moving or into side, talking more demand would seems the up of you mean, I’m the that Is durable, so multiple structural demand talking gear? multiple, to just I pick pickup, more I’m changes next are be two more catch is the and up quarters? it seeing On quarters, the in Varex about sort speak, not

Sunny Sanyal


different it’s that There little there catch-up of a vectors. was three -- pause. function where So a modalities bit in some was is there of a

not give -- for our see CT -- their as our months We the we to catch different buying an being give it annual had where We in expansion pile and see for are continue were to six is For hence to in that modalities, is global. strong customers based time, CTs been on forward-looking -- at was we’re from levels estimates. the and able there than not to demand on up recovery has just extended product. -- an higher at People care views demand just of and plan, and customers. there demand has different or health up. points at us and that like in sales a velocities, a up you it deliver other catch-up, it’s backlog services our fair CT us time. of is in lower and catch different catch-up was rate in know getting CT, In dental, expected that a no this the trying there continues example, strong us oncology there the was some But not been quarter and be and different

still in been some catch-up So markets. ongoing, dental just has

right? I so slowing has And COVID. during modality down its story, every up. back uptake then has it’s bit had tremendous There go, Rad picking could There mean, gap little is so a of a I was and there.

is to this what a continue aggregate, one lot nine thing that So at months. they also taken but during taken and our going of expectation who customers six carry deliver are it’s hard next on to months they in to down, have backlog orders to see they’ve we is over time to that have look side the as demand our strong pinpoint we it and that the

And to products launched lastly, forward, and about feel then the strong the we new to should side. those we product new we So uptick that launched technology there as feel some demand year expect you good look we will -- -- in about for of --we it. some as continue some get and of We’ve was an see anytime side demand next products into continue well.

Sam Maheshwari

six us here of that, if spending on we the and and result that. that a or communities’ response pandemic our months and that add be health six, nine as might so ago would through infrastructure hence -- added to be Suraj, also benefit you to I would that imaging care remember country’s would is like

It’s country not and feel it’s say one we have to strong, et just region situation. strong one to seems There that it. country is legs that cetera. and across no modalities broad-based So can

health new just that that strength think us. for new is is China broad-based, is by, So I then which product strength had response, obviously in Sunny said. care the The say, the somewhat driven and aiding

altogether makes So me… added and different, let that the

Sunny Sanyal


Sam Maheshwari


Sunny Sanyal

take And you also industrial the look inspections side additional we of security seen activity I and expansion, has inspection, that still market, volumes. haven’t that electronics lot market side, inspection, in and soft. has the And on demand like, semiconductor expanded the has mean, inspection we’ve airports that been if caught driven from battery up the at the, come the a yet realize

headroom more there. some is there So

and some, momentum. there at look is that we driven market as real there good profile, demand we So feel overall is the there momentum

Suraj Kalia

Got it.

Some the of concerned equation? Delta you variant industrial the the on side

Sam Maheshwari

our any all been is it’s still for that of travel significant as it’s for is, you waiting security-related Not that and the we’re an impacted particularly if for side and area there. still has first mean I business slow. -- gets reason at us, know, the recovery

So, status and quo if security the cargo at will all, side. us it on be for

initial and been all quarters people when a slowdown the saw just whole of were when then in -- there the frozen almost was COVID of since the industrial factories despite pretty side, the the demand sort initially shock couple industrial, a we recovery after sharp COVID. and where despite to industrial, been it’s of stop has but the blip, initial the hit, COVID, strong has On system and

Suraj Kalia

Got it.

Sam Maheshwari

particularly think pin peak COVID. demand this oil to -- than be side will we COVID of experience inspections the a hard that the but and don’t be because same, slow prices with would was so oil related, of gas down, inspection more industrial I but to that battery on So did inspections, that semiconductor it it down, doesn’t seem

Suraj Kalia

and them just put asked. RSNA, are an core Sam the Please we final it. redundant. through maybe The if already forgive do and of Medical get components how million to Sam is me at Got the once million And $XXX thing my for Sunny status together. this congrats segments. taking I’ll both you two, you thank Gentlemen, $XXX of on the guide, again. update all this questions to going cathode Industrial been has and

Sunny Sanyal

and we first the the Let cathode with me We of cold continuing is the answer now one. technology saw we’re meters. the of on are development past we on are meters strength the the status technologies. and What validation that our foundational

mode we of prototypes mean, tube products testing the our and product our there like of next start introduction now but we mode, new We’re in I building for sample, are phase into more the and customers. and validation development

really We’re so couple Obviously, different. not a -- to hear in two months that months away, you’re significantly of going mode. anything

engaged customer agreements second, of customers. we’re customers on hear looking working prototypes and You’ll with at but development the more getting

Sam Maheshwari

of coming Industrial breakdown your Suraj, the as guide. you somewhere back and Generally, know, question is for around overall or industrial XX% revenues that to terms medical in the of And us. of

around is but stuff And so there still I our here and from that quarter-to-quarter. expectation, would moves say

the of be X% normal So I would that say XX% would industrial plus-minus expectation.

see demand but both will that would medical it wise, exactly through pretty growing and you quarters, industrial good forward necessarily one from or both have good supply look expect of pegged both is growing just to we grow looked It we So demand we about may can are the come down factory quarter and we the guide and segment. of to both for on both and what the would want us only, you the to But have, not and growth only to another. we go them at sides. to is as not feel multiple


[Operator go from Instructions] Your Jim Sidoti next & Sidoti question ahead. Company. comes Please with

Jim Sidoti

Hi. Good afternoon. Oh!

Sunny Sanyal

Good afternoon.

Jim Sidoti

and I Yeah. of the try asked to ask it times little I’m and different. ask it’s think a going a couple been question, bit

over that strong million two had quarters $XXX just mark. You

per quarter. Is that there out so to would you’re over as million that of such or you the like million headwind You’re below guiding kind other for cause is anything that off? that constraints or over quarter or there one incurred the supply there $XXX fourth are you mark dip anything about mark year concerned for $XXX aware any that next

Sam Maheshwari

Let try to Jim. me address that,

QX terms about side, guide on So visibility when of are feel now. so we based QX, it supply the and the we good of -- to in have. QX, comes to we the only And guiding the that we on right course on demand the

know, you So But can there how QX. balanced be we or happen. as for over that is something guidance are can event XXX-year

say completely a of business terms that. would is dipped in can would below say that But balancing us we can like balancing $XXX or we happens, the that’s numbers that which that are assured and and never is that happen there the it be to chance unforeseen XXX% guidance guidance, never So million we anything how something providing to overall, any for the QX. we

happen, add, know and guidance issues from the a business and as the to go, of supply add to on in operating all QX feel good we opposed much there. forward good we well farther like visibility -- supply as Beyond environment we our our about something out don’t is that else. guess that where as the visibility our I about of doesn’t you are there to and there less unknown environment. as may about I lower. Sunny you constrained a would mean that if constrained I position, that this with be so chain those thing highlighted. as situation share or that’s today, will going but us tells when we it But hey, It coming, as and which million may isn’t significant and thing happens sit good that may kind not we demand be far But can anything $XXX as the is it feel that, us you. Currently, of And a happen. and watermark

Sunny Sanyal


to I think more add there, Jim. nothing

-- trajectories demand just it at leave and are We right in direction let that. the me so

Jim Sidoti

color detail quarter. then last Is your up that? the you the the balance picked a receivables on timing to shipments? And just one due little to sheet in Can of add Okay. cash that

Sam Maheshwari

you. Yes. can little question. color to I Jim. Good that, bit a Thank Yeah. add more

sales just pay growing, for customer week their normal of That’s cash, There ours the the so a to one amount one grow of So, obviously, AR that is decided us balance sheet own is purpose that’s large the up. working capital significant there. when the is after quarter ended. sales picks just

higher the a terms stuff have just little was I of bit So that liked. it’s in DSO than But AR happens. would

So there else nothing that, is there beyond that, to is there.

Jim Sidoti

All right. That’s it from me.

Sunny Sanyal

Thank you.


remarks. turn you. floor to like Chris for Thank the would closing to I over

Chris Belfiore

by accessed third the Thank in website non-U.S. or XXX-XXX-XXXX be States quarterly XXX-XXX-XXXX United The the and replay quarter conference archived of supplemental in at from call anywhere from website. company’s can our locations. replay good-bye. presentation participating the A is earnings call Varex or calling XXXX. code the questions you conference call and XXth webcast August access The through available year and be XXXXXXXX fiscal your for and you on Thank conference be of for will slide will


This teleconference. concludes today’s

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