Varex Imaging Corporation · NASDAQ:VREX
Varex Imaging — Q4 2023 Earnings Presentation
30 slides from Varex Imaging's earnings presentation, Nov 14, 2023
Slide 1: Making the Invisible Visible: Q4 FY23 Earnings Presentation
Making the Invisible Visible Q4 FY23 Earnings Presentation November 14, 2023 1
Slide 2: Forward Looking Statements / Non-GAAP Measures
Forward Looking Forward Looking Statements Statements / Non-GAAP Measures Certain statements in this supplement contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward looking statements incl
Slide 3: Q4 FY23 Results
Q4 FY23 Results Non-GAAP Non-GAAP Cash, Cash Equiv., Revenue Gross Margin1 EPS1 & Mkt. Sec.2 $227M $195M 36% $0.45 ➢ Record Industrial performance in the quarter ➢ Strong gross margin ➢ Robust cash generation continued 1Non-GAAP. For a reconciliation to the most directly comparable GAAP financial me
Slide 4: Q4 FY23 Sequential Performance
Q4 FY23 Sequential Performance Revenue Gross Margin - Non-GAAP Adjusted EBITDA $232 36% $227 $38 34% $38 -2% +200bps +2% Q3FY23 Q4FY23 Q3FY23 Q4FY23 Q3FY23 Q4FY23 Diluted EPS - Non-GAAP Cash, Cash Equiv. & Mkt. Sec. $0.45 $195 $0.37 $152 +22% +28% Q3FY23 Q4FY23 Q3FY23 Q4FY23 Note: $millions except f
Slide 5: Q4 FY23 Sales Performance
Q4 FY23 Sales Performance1 CT Mammography Radiography & Fluoroscopy Others Oncology Industrial Dental 1Sales performance is Q4FY23 sales compared to five quarter average trend 5
Slide 6: Medical Segment Overview
Medical Segment Overview FY2023 Revenue by Modality Other FY23 Revenue: $673M Mammography 75% of Varex Revenue Dental CT Oncology $673M Current Addressable Market: ~$3B Market Growth: ~2 – 3% Large, Stable & Growing Fluoroscopy Radiography FY2023 Revenue by Geography • X-ray Tubes • Digital Detector
Slide 7: Industrial Segment Overview
Industrial Segment Overview FY2023 Revenue by End Market Defense / Sterilization National Labs FY23 Revenue: $220M Oil & Gas General Mfg / 25% of Varex Revenue Automotive Other* Power $220M Generation Current Addressable Market: ~$1.3B Market Growth: ~5 – 7% Greenfield & Evolving Market Aerospace Se
Slide 8: Industrial Growth Drivers
Industrial Growth Drivers Evolving verticals driving growth for Industrial markets Security Energy Food Quality Electronics Consumer Safety Periodic X-ray inspection Foreign object Increased utilization of in- X-ray irradiation is a Improved border security for weld and structural identification and
Slide 9: Expanding our Industrial TAM
Expanding our Industrial TAM Focus on getting closer to end user by providing a more complete solution Potential Total Addressable Industrial Components + Solutions Market • Greenfield & evolving market with (~$2.5B) +$0.8B 5% -7% growth Current Total • Varex’s existing products and Addressable chan
Slide 10: Initial Application - Microbial Decontamination for Cannabis Flower
Initial Application - Microbial Decontamination for Cannabis Flower Controlling microbial growth can be difficult • Remediation methods used in food and other industries are not always appropriate for treating cannabis. • Each batch must be tested and meet state mandated limits for microbials and ot
Slide 11: Decontamination Using X-ray Energy
Decontamination Using X-ray Energy Benefits of X-ray irradiation • High penetration • Radiation beam can be turned off • Moderate size • Self contained unit • On site solution • No decrease in potency • No chemicals • No residues • No motion or tumbling • No heating or premature decarboxylation • Po
Slide 12: Growing Market Within Large Total Addressable Market
Growing Market Within Large Total Addressable Market U.S. Cannabis Retail Sales Estimates ($B) $57 $54 $50 • Over 13,000 growers in U.S. $44 • $30B U.S. Cannabis retail sales $39 market expected to grow at $34 10%+ CAGR through 2028 $30 • Cannabis decontamination market ~$225M and expected to grow a
Slide 13: FY2024 Initiatives
FY2024 Initiatives Focused execution on existing and new initiatives to drive profitable growth ➢ Industrial Applications ➢ Systems & Solutions ➢ Photon Counting Technologies ➢ India Expansion ➢ Gross Margin Improvement ➢ Inventory Reduction ➢ Cash Generation 11/13/2023 Proprietary and Confidential
Slide 14: Q4 FY23 Revenue Details
Q4 FY23 Revenue Details Segment Mix Geographic Mix ($ in millions) ($ in millions) $64 $74 $75 $164 $78 Medical Industrial Americas EMEA APAC Revenue, $M Q4 23 Q3 23 Q2 23 Q1 23 Q4 22 Revenue, $M Q4 23 Q3 23 Q2 23 Q1 231 Q4 22 Medical 164 175 174 160 181 Americas 74 73 68 67 80 Industrial 64 57 54 4
Slide 15: Quarterly Results - GAAP
Quarterly Results - GAAP $ in Millions, except per share data Q4 FY23 Q3 FY23 Q4 FY22 Revenue $227 $232 $231 Gross Margin 34% 33% 32% $54 $52 $50 Operating Expenses 24% 22% 22% $24 $24 $25 Operating Income 11% 10% 11% Net Earnings1 $32 $9 $13 EPS, diluted $0.66 $0.21 $0.32 Avg. shares, diluted2 50.5
Slide 16: Quarterly Results - Non-GAAP
Quarterly results – Non-GAAP1 $ in Millions, except per share data Q4 FY23 Q3 FY23 Q4 FY22 Revenue $227 $232 $231 Gross Margin (Non-GAAP) 36% 34% 33% $51 $49 $47 Operating Expenses (Non-GAAP) 23% 21% 20% $30 $29 $29 Operating Income (Non-GAAP) 13% 13% 13% Net Earnings (Non-GAAP)2 $21 $17 $17 EPS, di
Slide 17: Select Balance Sheet Data
Select Balance Sheet Data $ in Millions Q4 FY23 Q3 FY23 Q4 FY22 Assets Cash, Cash Equiv., Mkt. Sec. & CDs $195 $152 $113 Accounts Receivable, net $164 $163 $173 Inventories $278 $298 $303 Total Assets $1,250 $1,212 $1,184 Liabilities Accounts Payable $65 $75 $78 Debt, net1 $443 $443 $414 Total Liabi
Slide 18: Select Debt and Cash Flow Data
Select Debt and Cash Flow Data $ in Millions Q4 FY23 Q3 FY23 Q4 FY22 Debt Gross Debt1 $448 $449 $450 (Ratings: Moody’s B2 / S&P B+) Net Debt2 $253 $297 $337 Adjusted EBITDA3 Adjusted EBITDA $38 $38 $36 Adjusted EBITDA (TTM) $132 $129 $140 Net debt leverage (TTM) 1.9x 2.3x 2.4x Cash Performance Cash
Slide 19: Outlook Q1 FY24
Outlook Q1 FY24 Guidance Non-GAAP Revenues, $M $180 - $200 EPS Per Diluted Share $0.00 - $0.20 Assumptions Non-GAAP Gross Margin 33% - 34% Operating Expenses, $M $49 - $50 19
Slide 20: Q&A
Making the Invisible Visible Q&A 20
Slide 21: Non-GAAP Reconciliation
Making the Invisible Visible Non – GAAP Reconciliation 21
Slide 22: Reconciliation between GAAP and Non-GAAP Financial measures (unaudited)
Reconciliation between GAAP and Non-GAAP Financial measures (unaudited) Three Months Ended Twelve Months Ended September 29, September 30, September 29, September 30, (In millions, except per share amounts) 2023 2022 2023 2022 GROSS PROFIT RECONCILIATION Revenues, net $ 227.4 $ 231.4 $ 893.4 $ 859.4
Slide 23: Reconciliation between GAAP and Non-GAAP Financial measures (unaudited)
Reconciliation between GAAP and Non-GAAP Financial measures (unaudited) Three Months Ended Twelve Months Ended September 29, September 30, September 29, September 30, (In millions, except per share amounts) 2023 2022 2023 2022 SELLING, GENERAL AND ADMINISTRATIVE EXPENSE RECONCILIATION Selling, gener
Slide 24: Reconciliation between GAAP and Non-GAAP Financial measures (unaudited)
Reconciliation between GAAP and Non-GAAP Financial measures (unaudited) Three Months Ended Twelve Months Ended September 29, September 30, September 29, September 30, (In millions, except per share amounts) 2023 2022 2023 2022 OPERATING INCOME RECONCILIATION Operating income $ 24.3 $ 24.6 $ 77.1 $ 8
Slide 25: Reconciliation between GAAP and Non-GAAP Financial measures (unaudited)
Reconciliation between GAAP and Non-GAAP Financial measures (unaudited) Three Months Ended Twelve Months Ended September 29, September 30, September 29, September 30, (In millions, except per share amounts) 2023 2022 2023 2022 INCOME BEFORE TAXES RECONCILIATION Income before taxes $ 1.0 $ 14.1 $ 31.
Slide 26: Reconciliation between GAAP and Non-GAAP Financial measures (unaudited)
Reconciliation between GAAP and Non-GAAP Financial measures (unaudited) Three Months Ended Twelve Months Ended (In millions, except per share amounts) September 29, September 30, September 29, September 30, 2023 2022 2023 2022 DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING RECONCILIATION GAAP weighted
Slide 27: Effect of Convertible Note Hedge and Warrants on Non-GAAP Diluted Share count
Effect of Convertible Note Hedge and Warrants on Non-GAAP Diluted Share count Impact of Warrants and Convertible Note Hedge at Various Share Prices Shares added back for non- GAAP related to convertible Impact of Warrants on GAAP note hedge Share Price* Diluted Shares Non-GAAP Diluted Shares $20.00
Slide 28: Illustrative Impact of ASU 2020-06
Illustrative Impact of ASU 2020-06 Quarterly ASU 2020-06 Share Count Illustration GAAP NON-GAAP* Net Income before Incremental Dilutive Net Income before effect of Add-back of After-tax Shares for EPS effect of Add-back of After-tax Incremental Dilutive Convertible Notes ($M) Interest Expense Calcul
Slide 29: Discussion of Non-GAAP Financial Measures
Discussion of Non – GAAP Financial Measures This presentation includes non-GAAP financial measures derived from our Condensed Consolidated Statements of Operations. These measures are not presented in accordance with, nor are they a substitute for U.S. generally accepted accounting principles, or GA
Slide 30: Making the Invisible Visible
Making the Invisible Visible