Varex Imaging(VREX)2024-08-03 18:46Financial Data and Key Metrics Changes - Revenue in Q3 2024 was 23 million, with non-GAAP EPS at 0.37 in the previous year [8][10] - Cash, cash equivalents, and marketable securities at the end of the quarter totaled 40 million year-over-year [14] Business Line Data and Key Metrics Changes - Medical segment revenue was 60 million, making up 29% [10] - Sales in the Medical segment were impacted by inventory adjustments from customers and lower sales in China, while the Industrial segment benefited from strong demand in cargo inspection products [6][9] - Global sales of CT tubes improved slightly, while sales in fluoroscopy, oncology, mammography, and dental modalities were below their respective sales trends [8] Market Data and Key Metrics Changes - Revenue from the Americas decreased 4%, EMEA decreased 8%, and APAC decreased 17%, with the decline in APAC primarily due to lower sales in China [10] - China accounted for 14% of overall revenues in Q3 2024, down from 18% in the same quarter of the prior year [11] Company Strategy and Development Direction - The company is focused on long-term priorities in innovation, particularly in photon counting technology and cost leadership, while expanding its presence in India [9] - Management expects inventory adjustments in the Medical segment to subside in early calendar 2025, which may lead to improved sales [6][21] Management Comments on Operating Environment and Future Outlook - Management noted ongoing softness in the Chinese market due to anticorruption actions, with no significant improvement expected in the near term [7][19] - The company anticipates a gradual improvement in fiscal 2025, contingent on the resolution of inventory normalization and the overall market conditions in China [21][24] Other Important Information - R&D spending was 15 million, down from $29 million in Q3 2023, with operating margin at 7% [12] Q&A Session Summary Question: Insights on the situation in China - Management observed a slight sequential improvement in orders from China but does not expect a durable pattern due to ongoing anticorruption campaigns [17][19] Question: Qualitative thoughts for fiscal 2025 - Management expects fiscal 2025 to be slightly better than fiscal 2024, with gradual improvements anticipated as inventory pressures ease [20][21] Question: Update on new products with photon counting technology - Management confirmed progress in photon counting technology as part of their long-term strategy, with optimism about regaining market share in various modalities [29] Question: Capital allocation priorities post-refinancing - The company plans to focus on funding business needs, capital expenditures, and deleveraging, with potential growth opportunities considered after achieving an optimal debt structure [32][33]