Shares of Varian Medical Systems (NYSE:VAR) sank in after-hours trading yesterday as Wall Street reacted to shrinking profits during the company’s 1st quarter for fiscal 2012.
The Palo Alto, Calif.-based oncology and X-ray products maker posted $625 million in sales during the three months ended Dec. 30, 2011, up 7.8% from $580 million sold in the same period in 2010.
Profits slid to $90.2 million, or 79 cents per diluted share, 6.5% less than the $96.5 million, or 80 cents diluted EPS, reported in Q1 of 2011.
While the most recent quarter’s EPS slid slightly, Varian still beat analysts’ forecasts by 4 cents per share.
The company ended the quarter with a $2.5 billion backlog, up 14% from the same time last year.
The news came in just as markets closed and VAR shares landed 1% ahead at $69.24. However, shares sank 4.3%, to $66.25, in after-hours trading as of about 6:30 p.m. yesterday.
"While we met our guidance for net earnings and revenues, this was a challenging quarter for the company in a variety of ways," president & CEO Tim Guertin said in prepared remarks. "We experienced order push outs in our North American oncology business and X-Ray Product orders and sales were hurt by inventory adjustments by our customers in Japan. "
Revenues in the company’s oncology systems rose 8% to $488 million, driven by a 22% increase in international sales which was partially offset by an 11% decline in U.S. sales.
“Net orders in all international regions were up in solid double digits, comprising nearly 60 percent of the net orders received by this business during the quarter,” Guertin said. “Several orders that we were aiming for in North America during the quarter were pushed out, but we fully expect that we will book them in this fiscal year.”
Sales in the X-ray division were up a more modest 1% to $113 million, but orders were down 2% to $110 million for the quarter.
Varian reiterated its outlook for the year and projected healthy growth moving forward.
“We remain confident in our growth outlook for fiscal 2012 and expect our businesses to strengthen as the year progresses with annual revenues growing by about 10 percent and earnings per diluted share rising by about 15 percent,” said Guertin. “For the second quarter of fiscal 2012, we believe that revenues could increase by about 8 percent over the second quarter of fiscal 2011 total and that net earnings per diluted share could rise by 12 to 13 percent.”
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