Varian Medical Systems, Inc. (NYSE:VAR) Q4 2018 Earnings Conference Call Transcript

Oct 23, 2018 • 04:30 pm ET


Varian Medical Systems, Inc. (NYSE:VAR) Q4 2018 Earnings Conference Call Transcript


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Ladies and gentlemen, greetings and welcome to the Varian Medical Systems Inc. Fourth Quarter Fiscal Year 2018 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. (Operator Instructions) As a reminder, this program is being recorded. It is now my pleasure to introduce your host, Michael Bruff. Thank you. You may begin.

J. Michael Bruff

Thank you, operator. Good afternoon, everyone. Joining me today on the call are Varian's President and CEO, Dow Wilson; and CFO, Gary Bischoping. Dow will share his thoughts on our results and long-term strategy, and Gary will cover our operating and financial results in more detail.

On the Varian IR website, you can find our fiscal fourth quarter press release and Web deck, which are intended to provide additional perspective and details. A webcast of this call and any accompanying non-GAAP reconciliations are available on our website at Unless otherwise stated, all financial results discussed are non-GAAP and from continuing operations.

All references to EPS are to net earnings per diluted share. All growth rates are year-over-year and any references to orders are gross orders. All periods referred to are fiscal periods unless otherwise stated.

(Forward-Looking Cautionary Statements)

And with all that said, I'll turn it over to Dow.

Dow R. Wilson

Thanks, Mike and good afternoon, everyone. Today I'll share the key milestones we achieved this past quarter and year and how they contributed to our long-term strategy as well as provide our outlook for the upcoming fiscal year.

First, let me touch on our fiscal fourth quarter performance, which was the result of strong execution both from a growth and operational perspective. Total revenues of $802 million increased 11%. Oncology revenues grew 13% driven by our integrated platform with best-in-class hardware, software and services.

Revenues for our Proton Solutions business were $46 million. On a full year basis, total revenues were $2.9 billion, a growth of 11%. Operating earnings of $142 million or 17.8% of revenues grew 14%. For the full year, operating earnings of $517 million or 17.7% of revenues grew 31%. GAAP EPS of $1.26 grew 49% and non-GAAP EPS of $1.16 grew 11%.

For the full year GAAP EPS of $1.62 declined 33% due to the one-time impact of the Tax Cuts and Jobs Act and non-GAAP EPS of $4.42 grew 36%. Cash flows from operations were $108 million, down 17%. For the full year, cash flows from operations were $455 million up 14%. The U.S. China tariffs impacted our Q4 results, which Gary will discuss in more detail in his section. The situation continues to be dynamic, but Varian remains committed to ensuring that our customers and the patients they treat are able to achieve new victories against cancer without any disruption in access to our leading-edge technologies.

Our long-term growth strategy is working. We believe it is the right focus and that we have the capabilities to grow our leadership position. We continue to leverage our scale and financial strength to selectively broaden our portfolio as we transform our