Varex Imaging Corporation ((VREX)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Varex Imaging Corporation painted a mixed picture of the company’s financial health. While there was strong revenue growth and record performance in the industrial segment, these positives were tempered by a decline in cash reserves, a significant non-cash goodwill impairment charge, and a GAAP net loss for the fiscal year. This dual sentiment reflects both the achievements and challenges faced by Varex in the current fiscal landscape.
Strong Fourth Quarter Revenue
The fourth quarter of the fiscal year saw Varex Imaging Corporation achieve a revenue of $229 million, marking an 11% increase year over year. This impressive figure was at the high end of the company’s guidance, driven by robust demand from global CT customers and exceptional performance in the industrial segment.
Record Industrial Segment Performance
The industrial segment of Varex Imaging posted its highest revenue quarter ever, reaching $77 million. This represents a 25% increase from the previous year and accounted for 34% of the company’s total revenues, the highest contribution in Varex’s history.
Non-GAAP Earnings Growth
Non-GAAP earnings per share in the fourth quarter rose to $0.37, up $0.21 compared to the previous year. For the full fiscal year, non-GAAP EPS increased to $0.90, reflecting a $0.35 rise, underscoring the company’s ability to enhance profitability despite challenges.
Gross Margin Improvement
The company reported a non-GAAP gross margin of 34% for the fourth quarter, an improvement of 130 basis points from the same period last year. This indicates Varex’s effective cost management and operational efficiency.
Advancements in New Technologies
Varex made significant progress in its growth initiatives, particularly in photon counting for CT and ramping up production of radiographic detectors in India. These advancements are expected to bolster the company’s technological edge and market position.
Decline in Cash Reserves
The fiscal year ended with Varex holding $155 million in cash, cash equivalents, and marketable securities, down from $213 million the previous year. This decline was primarily due to a $75 million debt retirement, reflecting the company’s efforts to manage its financial obligations.
Non-Cash Goodwill Impairment Charge
A significant non-cash goodwill impairment charge of $94 million was recorded in the third quarter, contributing to an operating loss of $28 million for the year. This charge highlights the financial adjustments Varex had to make in response to market conditions.
GAAP Net Loss
For the full fiscal year, Varex reported a GAAP net loss of $70 million and a GAAP loss per share of $1.70. This was largely impacted by the goodwill impairment charge, underscoring the financial challenges faced by the company.
Forward-Looking Guidance
Looking ahead, Varex projects revenues between $200 million and $215 million for the first quarter of fiscal 2026, with non-GAAP earnings per share expected to range from $0.05 to $0.25. The company anticipates a non-GAAP gross margin of 32% to 34%, and continues to focus on strategic growth initiatives, including advancing photon counting CT technology and expanding manufacturing capabilities in India.
In summary, Varex Imaging Corporation’s earnings call highlighted a year of significant achievements and notable challenges. While strong revenue growth and advancements in technology paint a promising picture, the decline in cash reserves and net loss indicate areas needing attention. The company’s forward-looking guidance suggests a cautious yet optimistic outlook for the coming fiscal year.