On August 1, 2024, Varex Imaging Corp (VREX, Financial) released its 8-K filing detailing the financial results for the third quarter of fiscal year 2024. Varex Imaging Corp designs and manufactures X-ray imaging components, operating in two segments: Medical and Industrial. The Medical segment, which is the key revenue driver, designs, manufactures, sells, and services X-ray imaging components. The Industrial segment designs, manufactures, sells, and services Linatron X-ray accelerators, X-ray tubes, digital flat panel detectors, and high voltage connectors among others.
Performance Overview
Varex Imaging Corp (VREX, Financial) reported revenues of $209 million for Q3 FY2024, falling short of the analyst estimate of $211.15 million. The company's GAAP net earnings per diluted share were $0.03, while non-GAAP net earnings per diluted share were $0.14, beating the analyst estimate of $0.11. The revenue was down 10% year-over-year, with the Medical segment revenue declining by 15% to $149 million, while the Industrial segment saw a 6% increase to $60 million.
Financial Achievements and Challenges
Despite the decline in revenue, Varex Imaging Corp (VREX, Financial) maintained a GAAP gross margin of 32% and a non-GAAP gross margin of 32%. The GAAP operating margin stood at 4%, while the non-GAAP operating margin was 7%. Cash flow from operations was $8 million for the quarter. The company ended the quarter with $192 million in cash, cash equivalents, marketable securities, and CDs, compared to $195 million at the end of fiscal year 2023.
Sunny Sanyal, Chief Executive Officer, stated, "Revenue in the third quarter of fiscal 2024 came in as expected, driven primarily by continued strength in our cargo inspection business, which drove a 6% year-over-year increase in our Industrial segment."
Income Statement Highlights
| Metric | Q3 FY2024 | Q3 FY2023 |
|---|---|---|
| Total Revenues | $209.1 million | $232.2 million |
| Gross Profit | $66.9 million | $76.3 million |
| Operating Income | $9.3 million | $24.2 million |
| Net Income | $1.5 million | $9.2 million |
Balance Sheet and Cash Flow
Varex Imaging Corp (VREX, Financial) reported total assets of $1.25 billion as of June 28, 2024, compared to $1.25 billion as of September 29, 2023. The company’s current liabilities increased to $194.6 million from $162.8 million, while long-term debt decreased to $396.9 million from $441.1 million. The company generated $8 million in cash flow from operations during the quarter.
Analysis and Outlook
Varex Imaging Corp (VREX, Financial) faces challenges due to declining revenues in its Medical segment, which is a key revenue driver. However, the growth in the Industrial segment and the company's ability to maintain healthy margins are positive signs. The company’s guidance for the fourth quarter of fiscal year 2024 includes expected revenues between $190 million and $210 million and non-GAAP net earnings per diluted share between $0.00 and $0.15.
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Explore the complete 8-K earnings release (here) from Varex Imaging Corp for further details.
