Varex Imaging Corporation (NASDAQ:VREX) Q4 2019 Earnings Conference Call - Final Transcript

Nov 12, 2019 • 05:00 pm ET


Varex Imaging Corporation (NASDAQ:VREX) Q4 2019 Earnings Conference Call - Final Transcript


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Greetings. Welcome to the Varex Imaging Corporation Fourth Quarter and Fiscal Year 2019 Earnings Call. [Operator Instructions] A question-and-answer session will follow the formal presentation. [Operator Instructions]

I will now turn the conference over to your host, Mr. Howard Goldman, Director of Investor Relations. You may begin.

Howard Goldman

Good afternoon, and Welcome to Varex Imaging Corporation's earnings conference call for the fourth quarter and fiscal year 2019. With me today are Sunny Sanyal, our President and CEO and Clarence Verhoef, our CFO.

To simplify our discussion, unless otherwise, stated all references to annual comparisons are for fiscal year 2019 versus fiscal year 2018. Similarly, all references to the quarter are comparisons for the fourth quarter of fiscal 2019 versus the fourth quarter of fiscal 2018, unless otherwise stated. On today's call we will discuss certain non-GAAP financial measures. These adjusted measures are not presented in accordance with nor are they a substitute for GAAP financial measures. We provided a reconciliation of each adjusted financial measure to the most directly comparable GAAP financial measure in our earnings press release, which is posted on our website.

Outlook for our net earnings per diluted share is provided on an adjusted basis only. This adjusted financial measure is forward-looking and we are unable to provide a meaningful or accurate compilation of reconciling items to our outlook for GAAP net earnings per diluted share due to the uncertainty of the amount and timing of the unusual items.

Please be advised that during this call we will be making forward-looking statements, which are predictions or projections about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Additional information concerning factors that could cause actual results to materially differ from those anticipated is contained in our SEC filings, including Item 1A Risk Factors of our quarterly reports on Form 10-Q and our annual report on Form 10-K. The information in this discussion speaks as of today's date, and we assume no obligation to update or revise the forward-looking statements in this discussion.

And now, I'll turn the call over to Sunny.

Sunny Sanyal

Thank you, Howard. Good afternoon and welcome. Fiscal year 2019 was a good year for us as revenues continued to grow despite a sizable tariff-related headwind, while our margins and profitability were consistent with the prior year. For the year, revenues increased to $781 million from $773 million in the prior year.

Medical revenues declined 1% and Industrial revenues increased 7%. Industrial now represents nearly 25% of our total revenues. Gross margins were comparable with the prior year. Year-over-year, we experienced strong revenue growth from oncology, CT and dental products, as well as industrial imaging products for airport baggage screening and non-destructive testing. Direct Conversion contributed $6 million of revenue in the second half of the year. Partially offsetting these gains was a decline in digital detector sales primarily due to a tariff-related reduction in radiographic detector sales