Varex Imaging Corporation

Greetings, and welcome to the VARIC's fourth quarter fiscal year 2025 earnings conference call and webcast. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star 1 on your telephone keypad. If anyone should require operator assistance, please press star 0. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Christopher Belfiore, Director of Investor Relations. Please go ahead, sir.

Good afternoon, and welcome to Verix Imaging's earnings conference call for the fourth quarter and fiscal year 2025. With me today are Sunny Sanyal, our President and CEO, and Sam Maheshwari, our CFO. Please note that the live webcast of this conference call includes a supplemental slide presentation that can be accessed at Verix's website at veriximaging.com. The webcast and supplemental slide presentation will be archived on Barris' website. To simplify our discussion, unless otherwise stated, all references to the quarter are for the fourth quarter of fiscal year 2025 and to the year are for fiscal year 2025. In addition, unless otherwise stated, quarterly comparisons are made year over year from the fourth quarter of fiscal year 2025 to the fourth quarter of fiscal year 2024. Finally, all references to the year are to the fiscal year and not the calendar year, unless otherwise stated. Please be advised that during this call, we will be making forward-looking statements, which are predictions and projections about future events. These statements are based on current information, expectations, and assumptions that are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Risks relating to our business are described in our quarterly earnings release and our filings with the SEC. 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 10Q and our annual report on Form 10K. 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. On today's call, we will discuss certain non-GAAP financial measures. These non-GAAP measures are not presented in accordance with, nor are they a substitute for, GAAP financial measures. We provide a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure in our earnings press release, which is posted on our website. With that, I will now turn the call over to Sunny.

Thank you, Chris. Good afternoon, everyone, and thank you for joining us for our fourth quarter earnings call. We are pleased to report a strong finish to the year with fourth quarter revenue of $229 million, up 11% year over year, and at the high end of our guidance. During the quarter, we saw strong demand from our global CT customers and continue to see strength in our industrial segment which posted its highest revenue quarter ever at $77 million. Non-GAAP gross margin of 34% in the fourth quarter was above the high end of our guidance, benefiting from the higher volume and favorable product-sales mix in the quarter. Turning to the fourth quarter results, total revenue was up 11% year-over-year, with medical segment up 5% and industrial segment up 25%. Non-GAAP gross margin of 34% was 130 basis points higher than that in the same quarter last year. Non-GAAP earnings per share in the fourth quarter was 37 cents, up 21 cents compared to last year. Looking at results of the full fiscal year, total revenue of $845 million increased 4% compared to fiscal 2024. Medical revenue of $593 million increased 2% year-over-year, and industrial revenue of $252 million increased 10%. Non-GAAP gross margin of 35% was 230 basis points higher than last year. Non-GAAP EBITDA at $122 million was up $33 million from $89 million last year. Non-GAAP earnings per share for the year was 90 cents, up 35 cents. We ended the year with $155 million worth of cash, cash equivalents, and marketable securities on the balance sheet compared to $213 million last year. Recall that during the third quarter of fiscal 2025, we used approximately $75 million of our cash to retire our convertible debt. Let me give you some insights into sales detail by modality in the quarter compared to a five-quarter average, which we refer to as sales trend. Our medical segment saw strong demand in the quarter, led by global sales of CT tubes, which were above its sales trend. Sales in fluoroscopy and radiography were also above their respective sales trends in the quarter, while sales in mammography and dental modalities were in line with their respective sales trends. Sales in our oncology modality were below its sales trend. Our industrial segment posted its strongest quarter ever as demand for security screening continued to drive sales of security inspection systems and components globally. We also saw positive trends in non-destructive testing and inspection in the aerospace and defense and food inspection verticals as our customers continue to find new ways to use our technology to solve problems they were unable to address in the past. During fiscal 2025, we advanced our key growth initiatives, including the introduction of innovative new technologies like photon counting for CT, a radiographic detector for the value segment from our new facility in India, and cargo systems in industrial. In photon counting, during fiscal 2025, we worked closely with our OEM customers as they continued to advance their product development process. We also made significant progress with our photon counting CT project with the Technical University of Munich. In addition, we completed the first stage of our India expansion plans and have begun to ramp up production and shipments of radiographic detectors from this facility. In industrial, we're very pleased with how our cargo inspection systems business performed in fiscal 2025. During the year, we booked over $55 million in orders and shipped over 15 systems to several countries, including Mexico, Iraq, Brazil, and Saudi Arabia. We continue to be focused on establishing our sales channels for cargo inspection systems by building on our strong relationships and reputation for quality and innovation in this vertical. With that, let me hand over the call to Sam.