Varian Medical Systems (NYSE:VAR) posted first-quarter sales of $540.9 million, up 6.3 percent compared with $508.7 million during the same period last year. Net earnings rose 14.5 percent to $78.8 million, compared with $68.8 million during Q1:
Varian Medical Systems Reports Results for First Quarter of Fiscal Year 2010
Net earnings per diluted share from continuing operations rise 13 percent to $0.63; revenues rise 6 percent to $541 million; company raises guidance for fiscal year
PALO ALTO, Calif., Jan. 27 /PRNewswire-FirstCall/ — Varian Medical Systems (NYSE: VAR) today is reporting net earnings of $0.63 per diluted share in the first quarter of fiscal year 2010, up 13 percent from earnings of $0.56 per diluted share from continuing operations in the year-ago quarter. Revenues for the quarter were $541 million, up 6 percent from the prior-year period and up 3 percent on a constant currency basis.
Varian’s first quarter net orders, including a $62 million reversal of a previously announced proton therapy order, totaled $496 million, down 10 percent from the year-ago period and down 14 percent on a constant currency basis. Excluding the proton order reversal, net orders would have totaled $558 million, up 1 percent from the prior year period. The quarter-ending backlog was $2 billion, up 4 percent versus the year-ago quarter.
“Stronger than expected revenue growth and product mix shifts together with successful cost control initiatives contributed to healthy gains in margins and net earnings for the company during the first quarter,” said Tim Guertin, president and CEO of Varian Medical Systems. ”In a positive sign for the economy and our company, net orders increased in both our Oncology Systems and X-Ray Products businesses. Despite net orders declines for our particle therapy and security and inspection products businesses, we remain confident in their long-term growth prospects.”
The company ended the quarter with a record $625 million in cash and cash equivalents and $37 million of debt. During the first quarter, the company spent $55 million to repurchase 1.3 million shares of common stock which helped to reduce average diluted shares outstanding by 100,000 from the prior-year quarter to 125.1 million. Compared to the same point last year, accounts receivable days sales outstanding was 84, up 1 day.
Oncology Systems’ first quarter revenues from sales of products and services for radiotherapy, radiosurgery, and brachytherapy totaled $430 million, up 8 percent from the same period last fiscal year. First quarter net orders totaled $437 million, up 2 percent versus the year-ago period and down 3 percent on a constant currency basis. Reported net orders were up 19 percent in international markets, more than offsetting a 13 percent decline in North America.
“Our Oncology Systems business achieved solid double-digit orders growth in Asia and Europe,” Guertin said. ”Net orders for both hospital and free standing clinics in North America were down from the year-ago quarter, but we are seeing signs of renewed interest, particularly among free-standing clinics.”
X-Ray Products first quarter revenues from sales of X-ray tubes and digital detectors for filmless imaging were $91 million, up 6 percent from the year-ago quarter. Compared to the same period in fiscal year 2009, X-Ray Products’ first quarter net orders rose 9 percent to a record $99 million.
“Demand for our digital detectors from several new customers in Asia and Europe helped to drive the growth in our X-ray business, and detector orders topped tube orders for the first time,” Guertin said. ”Strong international demand offset weakness in the North American market for both tubes and detectors.”
The company’s Other category, which is comprised of the Security and Inspection Products (SIP) business, the Varian Particle Therapy business, and the Ginzton Technology Center, recorded first quarter revenues of $19 million, down 20 percent from the year-ago period. Net orders in the Other category were a negative $40 million, down $73 million from the year-ago period. This included the reversal of a $62 million proton order following a Swedish court directing Skandion Kliniken to commence a new public tender in response to a competitor’s challenge to the bid process. First-quarter SIP orders declined $10 million from a record level in the year-ago quarter.
“We are prepared to compete in a new tender process to win back the proton therapy business at Skandion Kliniken and we are continuing to hit important milestones in the development and commercialization of this technology,” Guertin said. “Our SIP business had tough comparisons with very strong revenues and orders in the year-ago quarter and we continue to see significant growth opportunities for this business.”
“Given our revenue growth, improved margins, and the strength of our earnings in the first quarter, we now believe that revenues for fiscal year 2010 can grow by about
6 percent over the fiscal 2009 total and that annual net earnings per diluted share could be in the range of $2.76 to $2.83,” Guertin said. ”We believe that for the second quarter of fiscal year 2010 total company revenues could increase by about 4 percent over the prior year period and that net earnings per diluted share could be in the range of $0.66 to $0.68.
Varian Medical Systems, Inc., of Palo Alto, California, is the world’s leading manufacturer of medical devices and software for treating cancer and other medical conditions with radiotherapy, radiosurgery, proton therapy, and brachytherapy. The company supplies informatics software for managing comprehensive cancer clinics, radiotherapy centers and medical oncology practices. Varian is a premier supplier of tubes and digital detectors for X-ray imaging in medical, scientific, and industrial applications and also supplies X-ray imaging products for cargo screening and industrial inspection. Varian Medical Systems employs approximately 5,000 people who are located at manufacturing sites in North America, Europe, and China and approximately 79 sales and support offices around the world. For more information, visit http://www.varian.com.