PALO ALTO, Calif., April 26, 2017 /PRNewswire/ -- Varian Medical
Systems (NYSE:VAR) today is reporting GAAP net earnings from
continuing operations of $0.74 per
diluted share and non-GAAP net earnings from continuing operations
of $0.89 per diluted share for the
second quarter of fiscal year 2017. Varian's second quarter
revenues from continuing operations totaled $655 million, up 6 percent from the year-ago
quarter in dollars and 7 percent in constant currency. The company
ended the quarter with a $3.1 billion
backlog, up 4 percent from the same point in fiscal year 2016, with
a 6 percent gain in the Oncology Systems backlog.
"Varian's second-quarter EPS performance was at the high end of
our expectations," said Dow Wilson, CEO of Varian Medical Systems.
"Gross orders for our Oncology business grew in mid-single digits
and we booked a new proton order during the quarter. We
achieved healthy revenue growth and a nearly one-point gain in our
Oncology gross margin rate while also stepping up our investment in
the introduction and commercialization of new
products."
Varian finished its second quarter of fiscal year 2017 with
$706 million in cash and cash
equivalents and $547 million of
debt. Cash flow from operations was $32 million for the second quarter and
$114 million for the fiscal year to
date, including discontinued operations. During the quarter,
the company spent $173 million to
repurchase 2 million shares of common stock.
Oncology Systems
Oncology Systems' second quarter revenues totaled $624 million, up from the year-ago quarter by 7
percent in dollars and in constant currency. Second-quarter
Oncology gross orders were $648
million, up from the year-ago quarter by 5 percent in
dollars and 6 percent in constant currency. For the quarter,
Oncology gross orders in the Americas increased by 3 percent in
dollars and in constant currency, including 3 percent growth in
North America. In EMEA gross
orders rose 6 percent in dollars and 10 percent in constant
currency and APAC, gross orders rose 8 percent in dollars and by 7
percent in constant currency.
"This was a good quarter for the Oncology business with orders
growth in every region, and particular strength in emerging
markets," said Wilson. "We had solid performance in our
Oncology software and service business."
Particle Therapy
During the quarter, the company booked orders totaling $28 million, including an order for a new
single-room ProBeam Compact system in Delray, Florida. Second quarter revenues for Varian's
Particle Therapy business were $31
million, up 1 percent from the corresponding year-ago
period.
"In addition to the order in Florida, Varian has been selected to provide a
single-room ProBeam Compact system for a center in Thailand and we expect to book that order in
the third quarter when the requisite paperwork is completed," said
Wilson. "The sales funnel continues to look healthy."
Varian Outlook
"We now believe that for the second through fourth quarters of
fiscal 2017, total company revenues from continuing operations will
grow in the range of 3 to 5 percent depending on the timing of
proton orders," Wilson said. "For the full fiscal year, total
company revenues from continuing operations should grow in the
range of 2 to 4 percent.
"For the second through fourth quarters, we expect that earnings
per diluted share from continuing operations will be in the range
of $2.98 to $3.06. For the full
fiscal year, earnings per share from continuing operations should
be in the range of $3.56 to $3.64,
including the $0.34 impairment of
proton account receivables in the first quarter.
"For the third fiscal quarter, we believe Varian revenues from
continuing operations will grow by about 3 percent, and we expect
that non-GAAP earnings per diluted share will be in the range of
$0.92 to $0.96."
Please refer to "Discussion of Non-GAAP Financial Measures"
below for a description of items excluded from expected non-GAAP
earnings.
Investor Conference Call
Varian Medical Systems is scheduled to conduct its first quarter
fiscal year 2017 conference call at 2 p.m.
PT today. To hear a live webcast or replay of the
call, visit the investor relations page on the company's web site
at www.varian.com/investor where it will be archived for a
year. To access the call via telephone, dial 1-877-869-3847
from inside the U.S. or 1-201-689-8261 from outside the U.S.
The replay can be accessed by dialing 1-877-660-6853 from
inside the U.S. or 1-201-612-7415 from outside the U.S. and
entering confirmation code 13658758. The telephone replay
will be available through 5 p.m. PT,
Friday, April 28, 2017.
About Varian Medical Systems
Varian Medical Systems
focuses energy on saving lives and is the world's leading
manufacturer of medical devices and software for treating and
managing cancer. Headquartered in Palo
Alto, California, Varian employs approximately 6,400 people
at sites around the world. For more information, visit
http://www.varian.com and follow @VarianMedSys on Twitter.
Forward-Looking Statements
Except for historical information, this news release contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Statements concerning
industry or market outlook, including growth drivers; the company's
future orders, revenues, or earnings growth or other financial
results; and any statements using the terms "believe," "expect,"
"promising," "outlook," "should," "will" or similar statements are
forward-looking statements that involve risks and uncertainties
that could cause the company's actual results to differ materially
from those anticipated. Such risks and uncertainties include global
economic conditions; currency exchange rates and tax rates; the
impact of the Affordable Health Care for America Act
(including excise taxes on medical devices) and any further
healthcare reforms (including changes to Medicare and Medicaid),
and/or changes in third-party reimbursement levels; demand for and
delays in delivery of the company's products; the company's ability
to develop, commercialize and deploy new products; the company's
ability to meet Food and Drug Administration (FDA) and other
regulatory requirements, regulations or procedures; changes in
regulatory environments; the impact of reduced or limited demand by
purchasers of certain X-ray products; challenges associated with
commercializing the company's particle therapy business; challenges
to public tender awards and the loss of such awards or other
orders; the effect of adverse publicity; the company's reliance on
sole or limited-source suppliers; the company's ability to maintain
or increase margins; the impact of competitive products and
pricing; the company's assessment of the goodwill associated with
its particle therapy business; the potential loss of key
distributors or key personnel; and the other risks listed from time
to time in the company's filings with the Securities and Exchange
Commission, which by this reference are incorporated herein. The
company assumes no obligation to update or revise the
forward-looking statements in this release because of new
information, future events, or otherwise.
FOR INFORMATION CONTACT:
Elisha Finney (650) 424-6803
elisha.finney@varian.com
Spencer Sias (650) 424-5782
spencer.sias@varian.com
Varian Medical
Systems, Inc. and Subsidiaries
Condensed
Consolidated Statements of Earnings
(Unaudited)
|
(Dollars and
shares in millions, except per share amounts)
|
|
Q2
QTR
2017
|
|
Q2
QTR
2016
|
|
Q2
YTD
2017
|
|
Q2
YTD
2016
|
|
Gross
orders
|
|
$
|
675.7
|
|
|
$
|
620.7
|
|
|
$
|
1,266.1
|
|
|
$
|
1,165.7
|
|
|
Oncology
Systems
|
|
647.7
|
|
|
618.0
|
|
|
1,233.8
|
|
|
1,150.7
|
|
|
Other
|
|
28.0
|
|
|
2.7
|
|
|
32.3
|
|
|
15.0
|
|
|
Order
Backlog
|
|
3,135.7
|
|
|
3,026.5
|
|
|
3,135.7
|
|
|
3,026.5
|
|
|
Revenues
|
|
655.0
|
|
|
615.2
|
|
|
1,266.8
|
|
|
1,231.0
|
|
|
Oncology
Systems
|
|
623.7
|
|
|
584.2
|
|
|
1,205.2
|
|
|
1,173.6
|
|
|
Other
|
|
31.3
|
|
|
31.0
|
|
|
61.6
|
|
|
57.4
|
|
|
Cost of
revenues
|
|
379.7
|
|
|
357.1
|
|
|
715.8
|
|
|
720.4
|
|
|
Gross
margin
|
|
275.3
|
|
|
258.1
|
|
|
551.0
|
|
|
510.6
|
|
|
As a percent of
revenues
|
|
42.0
|
%
|
|
42.0
|
%
|
|
43.5
|
%
|
|
41.5
|
%
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
53.3
|
|
|
49.0
|
|
|
103.2
|
|
|
96.6
|
|
|
Selling, general and
administrative
|
|
132.2
|
|
|
106.1
|
|
|
293.6
|
|
|
222.7
|
|
|
Impairment
charges
|
|
—
|
|
|
—
|
|
|
38.3
|
|
|
—
|
|
|
Operating
earnings
|
|
89.8
|
|
|
103.0
|
|
|
115.9
|
|
|
191.3
|
|
|
As a percent of
revenues
|
|
13.7
|
%
|
|
16.7
|
%
|
|
9.2
|
%
|
|
15.5
|
%
|
|
Interest income,
net
|
|
0.3
|
|
|
1.0
|
|
|
2.2
|
|
|
2.7
|
|
|
Earnings from
continuing operations before taxes
|
|
90.1
|
|
|
104.0
|
|
|
118.1
|
|
|
194.0
|
|
|
Taxes on
earnings
|
|
20.8
|
|
|
26.8
|
|
|
34.3
|
|
|
44.9
|
|
|
Net earnings from
continuing operations
|
|
69.3
|
|
|
77.2
|
|
|
83.8
|
|
|
149.1
|
|
|
Net (loss) earnings
from discontinued operations
|
|
(13.3)
|
|
|
19.8
|
|
|
(6.8)
|
|
|
36.9
|
|
|
Net
earnings
|
|
56.0
|
|
|
97.0
|
|
|
77.0
|
|
|
186.0
|
|
|
Less: Net earnings
attributable to noncontrolling interests
|
|
(0.1)
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
|
Net earnings
attributable to Varian
|
|
$
|
56.1
|
|
|
$
|
97.0
|
|
|
$
|
76.5
|
|
|
$
|
186.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
per share - basic
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
0.75
|
|
|
$
|
0.81
|
|
|
$
|
0.90
|
|
|
$
|
1.55
|
|
|
Discontinued
operations
|
|
(0.15)
|
|
|
0.20
|
|
|
(0.08)
|
|
|
0.38
|
|
|
Net earnings per
share - basic
|
|
$
|
0.60
|
|
|
$
|
1.01
|
|
|
$
|
0.82
|
|
|
$
|
1.93
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
per share - diluted
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
0.74
|
|
|
$
|
0.80
|
|
|
$
|
0.89
|
|
|
$
|
1.54
|
|
|
Discontinued
operations
|
|
(0.14)
|
|
|
0.21
|
|
|
(0.08)
|
|
|
0.38
|
|
|
Net earnings per
share - diluted
|
|
$
|
0.60
|
|
|
$
|
1.01
|
|
|
$
|
0.81
|
|
|
$
|
1.92
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in the
calculation of net earnings per share:
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding - basic
|
|
93.0
|
|
|
95.7
|
|
|
93.2
|
|
|
96.5
|
|
|
Weighted average
shares outstanding - diluted
|
|
93.7
|
|
|
96.2
|
|
|
93.9
|
|
|
97.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Varian Medical
Systems, Inc. and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
|
|
|
|
|
(In
millions)
|
|
March
31,
|
|
September
30,
|
2017
|
2016
|
(Unaudited)
|
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
705.5
|
|
|
$
|
811.4
|
|
Short-term
investments
|
|
—
|
|
|
95.3
|
|
Accounts receivable,
net
|
|
761.5
|
|
|
769.6
|
|
Inventories
|
|
453.7
|
|
|
442.4
|
|
Prepaid expenses and
other current assets
|
|
206.9
|
|
|
141.1
|
|
Current assets of
discontinued operations
|
|
13.9
|
|
|
355.6
|
|
Total current
assets
|
|
2,141.5
|
|
|
2,615.4
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
252.6
|
|
|
258.6
|
|
Goodwill
|
|
217.6
|
|
|
220.1
|
|
Intangible
assets
|
|
76.6
|
|
|
84.1
|
|
Deferred tax
assets
|
|
138.0
|
|
|
136.8
|
|
Other
assets
|
|
287.2
|
|
|
226.9
|
|
Non-current assets of
discontinued operations
|
|
5.3
|
|
|
272.9
|
|
Total
assets
|
|
$
|
3,118.8
|
|
|
$
|
3,814.8
|
|
|
|
|
|
|
Liabilities,
Redeemable Noncontrolling Interests and Equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
|
144.0
|
|
|
$
|
159.2
|
|
Accrued
liabilities
|
|
345.8
|
|
|
383.6
|
|
Deferred
revenues
|
|
642.5
|
|
|
608.6
|
|
Short-term
borrowings
|
|
219.9
|
|
|
329.6
|
|
Current maturities of
long-term debt
|
|
49.4
|
|
|
49.4
|
|
Current liabilities
of discontinued operations
|
|
3.8
|
|
|
83.0
|
|
Total current
liabilities
|
|
1,405.4
|
|
|
1,613.4
|
|
Long-term
debt
|
|
277.2
|
|
|
286.9
|
|
Other long-term
liabilities
|
|
143.6
|
|
|
155.8
|
|
Non-current
liabilities of discontinued operations
|
|
—
|
|
|
4.2
|
|
Total
liabilities
|
|
1,826.2
|
|
|
2,060.3
|
|
|
|
|
|
|
Redeemable
noncontrolling interests of discontinued operations
|
|
—
|
|
|
10.3
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
Varian stockholders'
equity:
|
|
|
|
|
Common
stock
|
|
91.8
|
|
|
93.7
|
|
Capital in excess of
par value
|
|
667.5
|
|
|
678.6
|
|
Retained
earnings
|
|
638.6
|
|
|
1,069.0
|
|
Accumulated other
comprehensive loss
|
|
(109.4)
|
|
|
(100.8)
|
|
Total Varian
stockholders' equity
|
|
1,288.5
|
|
|
1,740.5
|
|
Noncontrolling
interests
|
|
4.1
|
|
|
3.7
|
|
Total
equity
|
|
1,292.6
|
|
|
1,744.2
|
|
Total liabilities,
redeemable noncontrolling interests and equity
|
|
$
|
3,118.8
|
|
|
$
|
3,814.8
|
|
|
|
|
|
|
Discussion of Non-GAAP Financial Measures
This press release includes the following non-GAAP financial
measures derived from our Condensed Consolidated Statements of
Earnings: non-GAAP operating earnings, non-GAAP net earnings and
non-GAAP diluted net earnings per share. These measures are not
presented in accordance with, nor are they a substitute for U.S.
generally accepted accounting principles, or GAAP. In addition,
these measures may be different from non-GAAP measures used by
other companies, limiting their usefulness for comparison purposes.
The non-GAAP financial measures should not be considered in
isolation from measures of financial performance prepared in
accordance with GAAP. Investors are cautioned that there are
material limitations associated with the use of non-GAAP financial
measures as an analytical tool. We have provided a reconciliation
of each non-GAAP financial measure used in this earnings release to
the most directly comparable GAAP financial measure. We have
not provided a reconciliation of non-GAAP guidance measures to the
corresponding GAAP measures on a forward-looking basis due to the
potential significant variability and limited visibility of the
excluded items discussed below.
We utilize a number of different financial measures, both GAAP
and non-GAAP, in analyzing and assessing the overall performance of
our business, in making operating decisions, forecasting and
planning for future periods, and determining payments under
compensation programs. We consider the use of the non-GAAP measures
to be helpful in assessing the performance of the ongoing operation
of our business. We believe that disclosing non-GAAP financial
measures provides useful supplemental data that, while not a
substitute for financial measures prepared in accordance with GAAP,
allows for greater transparency in the review of our financial and
operational performance. We also believe that disclosing non-GAAP
financial measures provides useful information to investors and
others in understanding and evaluating our operating results and
future prospects in the same manner as management and in comparing
financial results across accounting periods and to those of peer
companies. Non-GAAP operating earnings and non-GAAP net earnings
exclude the following items:
Amortization of intangible assets: We do not
acquire businesses and assets on a predictable cycle. The amount of
purchase price allocated to intangible assets and the term of
amortization can vary significantly and are unique to each
acquisition or purchase. We believe that excluding amortization of
intangible assets allows the users of our financial statements to
better review and understand the historic and current results of
our operations, and also facilitates comparisons to peer
companies.
Acquisition-related expenses and benefits: We incur
expenses or benefits with respect to certain items associated with
our acquisitions, such as transaction costs, changes in the fair
value of contingent consideration liabilities, gain or expense on
settlement of pre-existing relationships, etc. We exclude such
expenses or benefits as they are related to acquisitions and have
no direct correlation to the operation of our on-going
business.
Restructuring and impairment charges: We incur
restructuring and impairment charges that result from events, which
arise from unforeseen circumstances and/or often occur outside of
the ordinary course of our on-going business. Although these events
are reflected in our GAAP financials, these unique transactions may
limit the comparability of our on-going operations with prior and
future periods.
Significant litigation charges or benefits and legal
costs: We may incur charges or benefits as well as legal costs
from time to time related to litigation and other contingencies. We
exclude these charges or benefits, when significant, as well as
legal costs associated with significant legal matters, because we
do not believe they are reflective of on-going business and
operating results.
We apply our GAAP consolidated effective tax rate to our
non-GAAP financial measures, other than when the underlying item
has a materially different tax treatment.
From time to time in the future, there may be other items that
we may exclude if we believe that doing so is consistent with the
goal of providing useful information to investors and
management. Non-GAAP items are generally included in selling,
general and administrative expenses, unless otherwise
specified.
The following table reconciles GAAP and non-GAAP financial
measures for Varian's continuing operations:
Varian Medical
Systems, Inc. and Subsidiaries
|
Reconciliation
between GAAP and Non-GAAP Financial Measures
|
(Unaudited)
|
|
(Dollars and
shares in millions, except per share amounts)
|
|
Q2
QTR
2017
|
|
Q2
QTR
2016
|
|
Q2
YTD
2017
|
|
Q2
YTD
2016
|
|
Non-GAAP
adjustments
|
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets (1)
|
|
$
|
2.8
|
|
|
$
|
1.5
|
|
|
$
|
5.6
|
|
|
$
|
3.0
|
|
|
Restructuring
charges
|
|
2.4
|
|
|
—
|
|
|
6.0
|
|
|
2.9
|
|
|
Legal
costs
|
|
10.0
|
|
|
6.4
|
|
|
16.2
|
|
|
9.3
|
|
|
Impairment
charges
|
|
—
|
|
|
—
|
|
|
38.3
|
|
|
—
|
|
|
Other
(2)
|
|
0.6
|
|
|
1.2
|
|
|
0.9
|
|
|
1.3
|
|
|
Total Non-GAAP
adjustments
|
|
15.8
|
|
|
9.1
|
|
|
67.0
|
|
|
16.5
|
|
|
Tax effects of
Non-GAAP adjustments
|
|
(2.1)
|
|
|
(2.3)
|
|
|
(12.1)
|
|
|
(3.8)
|
|
|
Total net earnings
from continuing operations impact from non-GAAP
adjustments
|
|
$
|
13.7
|
|
|
$
|
6.8
|
|
|
$
|
54.9
|
|
|
$
|
12.7
|
|
|
Operating earnings
reconciliation
|
|
|
|
|
|
|
|
|
|
GAAP operating
earnings from continuing operations
|
|
$
|
89.8
|
|
|
$
|
103.0
|
|
|
$
|
115.9
|
|
|
$
|
191.3
|
|
|
Total operating
earnings from continuing operations impact from non-GAAP
adjustments
|
|
15.8
|
|
|
9.1
|
|
|
67.0
|
|
|
16.5
|
|
|
Non-GAAP operating
earnings from continuing operations
|
|
$
|
105.6
|
|
|
$
|
112.1
|
|
|
$
|
182.9
|
|
|
$
|
207.8
|
|
|
Net earnings and
diluted net earnings per share reconciliation
|
|
|
|
|
|
|
|
|
|
GAAP net earnings
from continuing operations attributable to
Varian(3)
|
|
$
|
69.3
|
|
|
$
|
77.3
|
|
|
$
|
83.4
|
|
|
$
|
149.1
|
|
|
Total net earnings
from continuing operations impact from non-GAAP
adjustments
|
|
13.7
|
|
|
6.8
|
|
|
54.9
|
|
|
12.7
|
|
|
Non-GAAP net earnings
from continuing operations attributable to Varian
|
|
$
|
83.0
|
|
|
$
|
84.1
|
|
|
$
|
138.3
|
|
|
$
|
161.8
|
|
|
GAAP diluted net
earnings per share from continuing operations
|
|
$
|
0.74
|
|
|
$
|
0.80
|
|
|
$
|
0.89
|
|
|
$
|
1.54
|
|
|
Non-GAAP diluted net
earnings per share from continuing operations
|
|
$
|
0.89
|
|
|
$
|
0.87
|
|
|
$
|
1.47
|
|
|
$
|
1.67
|
|
|
Shares used in GAAP
and non-GAAP diluted net earnings per share calculation
|
|
93.7
|
|
|
96.2
|
|
|
93.9
|
|
|
97.1
|
|
|
|
|
(1)
|
Includes $1.2
million, $1.1 million, $2.5 million and $2.3 million, respectively,
in cost of revenues for the periods presented.
|
(2)
|
Other includes
acquisition-related expenses and benefits.
|
(3)
|
Excludes
immaterial net earnings (loss) from continuing operations
attributable to noncontrolling interests for the periods
presented.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/varian-medical-systems-reports-results-for-second-quarter-of-fiscal-year-2017-300446559.html
SOURCE Varian Medical Systems