Varian Medical’s First-Quarter Revenues Rise 4 Percent

Varian Medical Systems certainly is starting its fiscal year off right.

Net revenues rose 4 percent to $738 million during the fiscal first quarter (ended Jan. 2), compared with $711.5 million in the first quarter of fiscal 2014. Net earnings slipped to $93.3 million, compared with $98 million in the same quarter last year.

Despite the decrease in net earnings, Varian said the results were “significantly ahead of its earnings target … with the help of favorable geographic and product mix, as well as successful cost containment initiatives” that improved gross margins.

In addition, revenue in the company’s Oncology Systems segment increased 4 percent in the first quarter to $563 million. First-quarter oncology gross orders were $562 million, up 5 percent versus the year-ago quarter.  Oncology gross orders rose 17 percent in Asia-Pacific, gained 12 percent in Europe, the Middle East and Africa, and declined 2 percent in the Americas.  Gross orders in North America fell by 3 percent versus strong growth of 13 percent in the prior-year quarter.

“Oncology revenues and gross margins were strong with the help of good performance in North America as well as robust gains in our software and service product lines,” said Varian CEO Dow R. Wilson.  “International gross order growth in this business was driven by strong performance in emerging markets, particularly in China.”

The company’s Imaging Components unit had a 3 percent revenue gain, reaching $166 million for the quarter. First-quarter gross orders increased by 34 percent to $163 million versus a weak year-ago quarter when orders declined.

“Demand for our flat panels and tubes drove the strong order growth in Imaging Components and kept the business on track to achieve long-term high single-digit order growth,” said Wilson.

The Palo Alto, Calif.-based company’s Other category, including the Varian Particle Therapy business and the Ginzton Technology Center, recorded revenues of $9 million and gross orders of $1 million in the quarter.

 

The company finished the first quarter of fiscal year 2015 with $904 million in cash and cash equivalents and $525 million of debt.  Cash flow from operations for the first quarter was $79 million.  During the first quarter of fiscal year 2015, the company spent $126 million to repurchase approximately 1.5 million shares of common stock.

“The company got off to a good start in the first quarter of fiscal 2015 with revenues and earnings coming in ahead of expectations,” said Wilson. “Our outlook for the full fiscal year is heavily impacted by the recent dramatic swing in currency exchange rates which we believe will significantly reduce revenues and earnings in the balance of the year.  We now believe that total company revenues for fiscal year 2015 could increase by about 5 percent.  With the earnings momentum of the first quarter, we believe that we can maintain our prior guidance of $4.16 to $4.26 per diluted share for the fiscal year. Given current exchange rates and the expected timing of shipments in the year, we believe total company revenues for the second quarter should increase by about 2 percent versus the year-ago period.  Net earnings per diluted share for the second quarter could be in the range of $0.98 to $1.02.”

The guidance excludes contracted proton projects that are not yet financed or booked into backlog.