Varex Imaging Corporation Q4 FY2025 earnings call

• Strong fourth quarter finish with revenue up 11% year over year, at the high end of guidance. Non-GAAP gross margin in Q4 was 34%, above guidance. • Medical segment saw strong CT sales led by X-ray tubes, with fluoroscopy and radiography sales above trends, while oncology was below. Industrial segment had strongest quarter ever driven by security screening, nondestructive testing, etc. • Fiscal 2025 advanced growth initiatives: photon counting CT work with OEMs and TU Munich, India expansion with radiographic detector production ramp, Industrial cargo systems booked over $55M in orders and shipped over 15 systems.

For the fourth quarter of fiscal 2025, total revenue was $229 million, up 11% year over year. The Medical segment had revenue of $152 million, and the Industrial segment had revenue of $77 million, which was the highest ever for the Industrial segment. For fiscal 2025, total revenue was $845 million, with Medical revenue at $593 million (2% growth year over year) and Industrial revenue at $252 million (10% growth year over year). CT was the largest modality in the Medical segment, accounting for 40% of total medical revenue.

• First quarter guidance: revenues expected between $200 million and $215 million, non-GAAP earnings per diluted share between $0.05 and $0.25. • Expect full-year revenues to grow, with medical business expected to grow, industrial business expected to grow, medical business ex-China expected to grow, and China modeled as flattish. • Intensifying efforts to strengthen geopolitical resiliency through supply chain and manufacturing regionalization, raising prices and charging for tariffs.

• Tariff impacts on gross margin, estimated to be around 100-150 basis points. • Geopolitical risks related to trade challenges and uncertainties in the U.S.-China situation. • Supply chain uncertainties and potential impacts on production and shipments.

Q: Suraj Kalia asked about customer concentration and sustainability.

A: Sunny S. Sanyal said top 10 customers are in the 50-55% range historically, mostly medical customers, and not broken out by segment for commercial reasons.

Q: Lawrence Scott Solow asked about full-year outlook and industrial margin.

A: Sunny S. Sanyal said demand environment is solid, expecting full-year growth, and industrial gross margin was higher due to higher service revenues on Linux installed base.

Q: James Philip Sidoti asked about India operations and gross margin.

A: Sunny S. Sanyal said detectors from India are ramping, tubes factory is under construction, and India's impact on gross margin includes legacy product transfer and new business dynamics.

Q: Anderson Shock asked about cargo inspection systems orders and tariff investigations.

A: Sunny S. Sanyal said expecting growth in cargo systems, and antidumping and industry investigations in China have been paused indefinitely.

Q: Lawrence Scott Solow asked about tariff impact on gross margin.

A: Sunny S. Sanyal said tariffs are impacting gross margin by 100-150 basis points, and rerouting supply chains and India factory could help in the future.