Varex Imaging (VREX) 14 Nov 232023 Q4 Earnings call transcript

Greetings and welcome to the Varex Fourth Quarter and Fiscal Year 2023 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.It is now my pleasure to introduce Christopher Belfiore, Director of Investor Relations. Thank you.

You may begin.

Good afternoon and welcome to Varex Imaging Corporation's earnings conference call for the fourth quarter of fiscal year 2023. Sunny CFO. President are Sam CEO, today our Maheshwari, me Sanyal, and our and With that live be note supplemental website Please the vareximaging.com/news. slide includes conference at presentation a call that can accessed Varex's webcast at of this be quarter The website.To on XXXX. of stated, references fiscal simplify presentation are quarter otherwise Varex's to unless year archived the webcast discussion, for slide and all supplemental will our the fourth

are the made fiscal In quarter sequentially the year. addition, quarterly unless XXXX of to otherwise fourth the of year year fiscal comparisons XXXX to same third stated, of quarter than the from rather quarter prior

forward-looking that all calendar which projections are risks or are materially future year, to expectations subject year to filings are that events. business our to anticipated. stated.Please about not current These uncertainties on SEC. those otherwise earnings quarterly making with and results from advised be are assumptions actual year the we could statements, Finally, differ and release that unless described our call, and our in references during predictions the to are the based cause statements relating this fiscal to and be will Risks

posted financial could the those results to nor over financial We not our assume Risk this measures our most obligation Sunny. information financial financial discussion in non-GAAP substitute speaks provided a cause this no factors measures. for XX-K. or on to as materially forward-looking differ in XX-Q date call our presented release, to non-GAAP website.I quarterly GAAP is discussion.On measure which non-GAAP measure from our The measures. of GAAP today's each on call, today's and of now will report and Factors the certain we a concerning earnings Form our information annual press revise turn of filings, in including Additional comparable discuss directly in to Form with accordance anticipated they that in contained XA, is actual SEC Item reports on we are statements update the reconciliation are will These

fiscal gross quarter high our year-over-year. year $XX and quarter non-GAAP This to ended was higher led the as remained million $XXX the by of primarily compared remained of of of million remained quarter.Dental of in soft sales equivalents was sales which were fourth in initiatives.Adjusted We and the our in proportion below was revenue by while sales of margin quarter of saw due beneficial of a improved the Non-GAAP sales was the and above the end XX% sales Fluoroscopy solid sales $XX refer XX% in world. which as further fourth the results as Good and X% well and gross realization flat, inventory in rest in also China in higher Varex. year-over-year, the with afternoon, was fourth the the China for trend the by was Chris. $XXX was quarter some performance for trend. radiographic above margin remained the fourth I'm quarter another me its quarter Oncology $X.XX Revenue and you primarily lower tubes in in global XX% non-GAAP strong year.Let strong the Medical segment trend joining quarter. quarter. while performance and to and due a us of of XX% reduction Thanks, year-end. below Mammography result CT per revenue trend trend flat for specifically above and the sequentially quarter, for was decreased offset Revenue in by spot both we inspection, a Non-GAAP decreased compared pleased in Similar from we segment earnings to of record modality offset our and in to electronics earnings solid segment. and segment, share quarter our Nondestructive sales Industrial in revenue million and was see segment expectations. sales mix, industrial as was strength the with Industrial Industrial in in of pricing and the XX% $XX our X-quarter everyone, profitability with our the last into marketable announce also call. lower and increased thank quarter. bright detectors year-over-year. the was the expectations.Revenue million in Medical various sequentially in the continued food, detail quarter to X% battery, give across industrial insights to inspection. higher exceeded the increased our a the EPS of quarter segment in the fourth cash Industrial Medical the segment, $X.XX. The verticals, fiscal sequentially segment. the strong adoption balance securities in average, cargo photon $XX million sequentially increase the counting cash, of XXXX We you of to our to the on In sales and the trend. sheet, and EBITDA quarter including million screening, product quarter

XX% sales million market approximately Medical global and the medical for year-over-year year was total XXXX. revenue, a Our represented of of CT sales, nearly significant revenues in the which be in finished fiscal $XXX to segment of XX% accounting fiscal for driver The Varex overall continues year. at flat

expect and and be medical to continue their sold for to upgrades, solid provide tube sales. installed tubes base our growing driver countries developing to key We expand health expect to CT we our new baseline addition of CT as care extensive services.In replacement sales a future into the installations

OEM interest contrast we counting where make customers of speed photon and and our for to counting, with working a photon can applications high gain technologies of medical Our potential continues several a are imaging range on particularly difference.

is in strong. a at of couple and at our Show to counting we photon RSNA the a technologies focal be expect main believe We once again weeks very table point position

we majority-owned medical to technology, software medical their accelerators, assessment. in business. highlight evaluation.Let software surgery detailed the many Medical physicians post-procedure significant Chicago CT potential grew is and treatment now XX% up innovative to photon our million segment me and Solutions, turn The both for of in and counting CT look daily for engaged recent an Industrial the XD in revenue, visualization-driven Industrial I'm segment. technology for applicable XXXX, liver can in Suite. Varex. In are enable forward their imaging.Moving and fiscal software customers, clearance full for as of that we industrial how happy product approximately for are In post-procedure in MR and new to a Liver discuss $XXX surgery software evaluation to quarters, systems, innovation actively to with solutions, various by detectors. has imaging expressed tubes, there of been across approach named and at RSNA MeVis for well a customers to workflow Varex say strength in colleagues AI-based verticals, applications discussions. our radiologists to help meeting which our and has of provide counting segment use our strategies, liver recently subsidiary, more our to for our U.S. strength is our can photon detectors our broad-based Industrial enables volumetric due our to accounted non-destructive visualizations driven total MeVis While We XXX(k) growth focus design is photon linear AI-based follow-up application, and various the intention inspection This and quantification FDA counting including In to and create an as revenue. to integrated received This verticals. planning in innovative past, year-over-year customers XX% investment been X-ray we our

will was customers irradiation foods verticals offer application a is or the highlighted goods products. irradiation of our new plant technology. consumer-facing I'm that packaged a excited directly we to end system X-ray novel industrial to of that of One Today, announce like we

is X-ray products.One addressable of limits This health safety. reduce methods growers as to critical estimated team chemical for years. microbial cannabis make by the failing legal, be is in be revenues per state XRPURE XRPURE and million XX,XXX at microbial reputational various at This public subscription over X-ray digits.With the other technology safety the With within on to product the as or issues, of established annual the Cannabis technology a in coming is X-ray where microbes model X subsidiaries heat-based contamination our and legal potentially in We player irradiation a cannabis expect concerns.There States billion year use benefits many million we for largest an an well U.S. cannabis, organic we has rate cannabis Annual and can required irradiation patients' can approximately the growing irradiation $XXX years. health In in this product. run expo killing a and the to loads our addressable $XX are of a degrade cannabis sample financial cultivation load can several conference market weeks, our States the potentially product. XRPURE, the be agricultural XXth $X efficacy new Cannabis sold. will in add system and of and market United which technologies, lot expect solutions next significant to reach our which years. by to the system end product and We decontaminates interest for for used to submit is batch in market decontaminate without the believe of of one United process may system Show, million offered as the decontamination last growers can regulators both MJBizCon the In to have irradiation decontaminating space. significant the the a each users is $XX becoming applications to are able in is growers lead X-ray advanced nationwide, types significantly grown and be commercially this of world. using double the to therefore a which to before launch the using Traditional Across microbial pathogens contrast, the the recreational to tested XRPURE in grown from product for can of compromising X medical product. believe nearly

is this system utilized. applications believe where the just We new X-ray excited can one potential this are of be irradiation many of the of and very

at to we made like strengthened solid innovation, cash please visit XXXX, more you'd position, generated and learn financial fiscal with our progress XRPURE, the about If website solid www.xrpure.com.In flow.

continued counting photon can to focused be As in where new much profitable adoption we we pace. Much more we growth a rapid flow Industrial believe from new of drive initiatives new executing the remain our more on investment to to what our we we cash segment at feedback and medical. XXXX fiscal and rapid our on Varex, the products development technology future generation.We're have look of free existing and to industrial with and expanding technologies, like customers adopted accelerate done in tends leverage

many decontamination of across landscape we are earlier, our As applications organic products. highlighted X-ray to from the there industrial inspection technologies nondestructive of

for the a and Our potentially traction is leverage taking Indian with market continue India. modality counting progress to of India our engage a in this playbook an China make where per page use an government of build industrial and is in in medical across intention efforts gross systems we in applications.Photon We technology, solutions. manufacture share our for expect is from is India. to technologies. to pricing is low. our new nondestructive meaningful counting in to local-for-local create device an and our it tubes invest very in them.We differentiated CT public and improved million footprint and imaging, to our attractive with in become out in in commitment intend you can applications will to the verticals We inspection emerging OEMs local to progress to that Similarly, due care on OEMs to driver that making gain a detectors intend emerging the course, expand invest photon We select application example XX Industrial we detectors more workflow future the large in OEMs with has health invest to in future. investing next medical end seek initiative. with fiscal our solid growth full independence diagnostic in local approach and presence and initiatives. for gaining expand continue our population our market The margins In grow in we're a its which XXXX services We're us can in in made user new us segment months. see penetration in India India, very as making to

the XXXX gross as to are improve continue actions select full for see to pricing margins expect We implemented. fiscal

inventory across efficient to generation. efforts in Our introductions.Finally, our year fiscal remain pleased continue focused on freight-related fiscal a XXXX. manufacturing to expect Varex efficiencies new product further associated continued was With of goal are Ultimately, demand in to maintain record we platform margins.We tailwind our going levels and cash expenses, well forward gross as in as initiatives be inventory margin see overall XXXX with to a our for management, around expansion inventory and reduction fiscal we reducing XXXX. into fiscal is levels inventory with cash generation terms and XXXX

positioned will touch the to well in to these some support our are CFO, our growth to there call that, bit, continuing let while challenges are me fiscal in hand customers.With navigate we While China uncertainties which over Sam. we on a in XXXX, to

everyone. Thanks, hello, Sunny, and

indicated, provide of quarter fourth for of As a for sequential XXXX.The fiscal another fourth third comparison quarter was fiscal our our reminder, quarter us. unless those otherwise I'll of quarter results XXXX of solid with the year

revenue and high the gross midpoint, above was non-GAAP were While end guidance. of EPS the guidance our margin below

the Continued segment in primary of strength was our in strength the quarter. Industrial driver

there. were the and of of of which $XX revenues generation a was tax of increased non-GAAP third sales of X%. lower business which year-over-year by increased total unusually operating Medical revenues and XX% sales cash Cash reported region. declined $XXX for of totaled and $XX were revenues represents XXXX, China million, by fourth strong China decreased gross decreased The of sales due to compared quarter. $X.XX, Sequentially, the Industrial total anti-corruption Varex revenues XX% was also year sales increased Fourth million revenues $XXX in Medical revenues margin quarter the As in primarily Americas fiscal our remained were quarter. decline an in quarter XX% sales. X% quarter.Looking APAC to quarter.Medical of $XXX campaign sales at rate result, we sequentially, flow to million the while and non-GAAP with X% result were low EMEA revenues.For helped Industrial X% Industrial XX% full and China and X% revenue million. in APAC the up sales X% were XX% XX%. EPS the million, is

increased to and temporary from currently remain fiscal Given the duration the sales year XXXX fiscal to expect expect we XXXX. to health improve We to be anti-corruption China Operating may margin to XXXX. expenses million results but $X this campaign, our quarter on GAAP second overall now quarter. points market me from its long-term our compared campaign Visibility gross the believe the down magnitude care Fourth basis. $XX fiscal cover in in was in on infrastructure.Let non-GAAP operating support $XX up on we executing basis XXX and sequentially. improve quarter. the $X.XX efforts XX%, our the previous a the shares.Moving this was unclear, of was and million fully-diluted results million, of million the were impact GAAP and strategy China focused based Net be to on and half EPS earnings for million is flat to $XX XX income sequentially

XXX high well of industrial initiative. guidance. up primarily of the beneficial proportion are further was end higher basis our margin mix above by This margin quarter. led The to XX% with higher the gross due We sales, pleased as previous in our quarter the realization as gross and the our of pricing from points was of

productivity. margin customer concentration, segment mix, fluctuate gross mix, product can depending Our factory upon and quarterly

gross XXXX. XXXX, approximately to $XX to and prior quarter due margin down fiscal revenues.The represented $X fiscal of R&D systems, million, XX% revenue. in was XX%, $X our $XX was higher was represented well materials spending was Industrial in efforts. quarter the million, up up slightly supplier higher R&D of expense and prior compared fourth the quarter the to SG&A on diversification for compared million million spending R&D as as the to XX% For compared

operating up million $XX XX% result, were prior revenue. represented a expenses from of quarter and the million, As $X

$XX as $XX from XXXX, turning increased day $X the book-to-tax foreign increased the days and million, compared operating operating was income $XX XX% revenues.Operating of of XX% days and year Net of in XXXX, to basis per Tax was income XX% expense a the expenses compared expense revenue. Act.For were in to fourth Accounts were X XX% million the margin days similar margin quarter. favorable the million XX lower million in to XXX XX% million a related of decreased $X quarter. XX% the was at was represented of for income low by fourth quarter days the quarter fiscal third The Full For to to in tax million quarter $X.XX result was to the and pre-tax diluted $XX XXXX, fourth days. $X.XX inventory the in outstanding $XX operating the quarter. by $XXX on non-GAAP up Inventory previous the million pre-tax quarter. quarter fiscal revenue, fiscal Average $X was Reform million.Now differences million of and $XX R&D result previous income. X decreased operating of balance tax diluted or up or X% million of primarily taxes favorable rate share, Tax shares a receivable sheet. of credits and were earnings was sales and and or to by

information. by efficient maintaining XX inventory reduced and are inventory of days result to in days million from by of million, X the incoming securities, management. payable million focused million our XXXX reduction Accounts and reduction a $X the $XXX shown and fiscal XXXX. an on $XX cash from sheet, million debt flow with increase note, million and the includes $XXX We and balance equivalents of $XXX efforts Please of cash, inventory Net to on million. prior decreased million $XX to million $XXX due to payable ended primarily We quarter $XX adjusted cash securities days of marketable year-end with a the decreased the million quarter inventory. remain the quarter of of expect $XX certificates happy in and and and moving fiscal end marketable the quarter from cash operations million flow of robust and the receipts.Now million margin of to million, the profitability quarter, $XX securities for fourth in EBITDA Adjusted of was $XX equivalents Gross cash $XXX cash debt was net $XX at XX% was deposit. outstanding million was debt and of the was EBITDA $XXX due sales. and cash

adjusted moving year. the year and the XXXX $XXX campaign X.Xx EBITDA XXXX debt China, ratio fiscal in on anti-corruption to million and quarter basis.Now a outlook on following. full fiscal trailing the Under we the Our of of backdrop was net the our XX-month was expect leverage for first fiscal

First, Medical are XXXX fiscal This expected sales X% largely China approximately to at of first fiscal compared XXXX. business. quarter of result is down be our revenues to quarter of for in the the first lower the midpoint the

half of fiscal to fiscal This full in the X% the compared of fiscal full the second We year to China revenues XXXX, XXXX. expectation with first fiscal improves down assumes business XXXX. half X% of improve to approximately fiscal expect half second over XXXX in

made to expect improving XXXX our Second, this and significant progress gross in margin fiscal XXXX. in we on continue fiscal we

targeting fiscal and improve see fiscal gross second of in to margin are half expect XXXX We XXXX. XX% we the in

XX% we to full fiscal rate Third, for a tax approximately XX% year. expect of

our generate Lastly, cash expect we to continue while in investing flow future. to

above CapEx first the moving of we of of For generation million $XX cash fiscal and free guidance million to fiscal non-GAAP income.Now XXXX. to on net $XX expect XXXX, XX% flow for quarter

$XXX low share our us. for million for that As million quarter and are China expected quarter $X.XX earnings generally a first non-GAAP follows. and is shipments and between $X.XX. for our quarter in as guidance first mind, reminder, Revenues in fiscal With in a addition the between $XXX to sales is expected business, diluted seasonally is lower per Medical

quarter, $XX gross Our XX% non-GAAP call of that, are tax your to of now XX% to a the open based for $XX questions. about will in expectations million on expenses the million, we range the range in margin count non-GAAP of non-GAAP for shares.With diluted million first XX%, of about share operating XX rate

from [Operator the Instructions] of Sidoti Company. Our first comes James with & line question Sidoti

Can you hear me?

Yes.

that's the going out most. the it start $XX million sales, with are sounds in revenue of at to thing focus was let's think quarter. around Well, It China, on like because people XX% I

what if Sorry said a year it was you it, but ago?

$XX here, $XX give revenue not And in 'XX, just ago Jim. ago million. The $XX a year me it X was was in a -- -- It million, year was was -- second million. China it QX QX 'XX, about

$XX million.

Okay.

Yes.

was decline the related anti-corruption to can primarily And break that or you the out?

Jim, X connected. talking the on is over anti-corruption see, there. China measures They in it say related is to anti-corruption we To mostly what us same hearing have channel also time, would what we parse for very out to it it are we through measures, economy the But the might difficult who know been is sales our we at soft, issues. mostly, customers but to but based be is

China past back X X when rebound relatively and Or anti-corruption think declined. implemented or long have these sales on initiatives quickly takes how the historical? a based the for And you quarters? it in do you to has seen in come Have sales

in business bounced quickly, we also nothing fairly, think back. small felt at -- And amount saw I somewhere as have we to our back. that fairly It time, today. time time time a 'XX But frame. last bounce have revenues last what from at it the like around China, was had seemed we this very we look XXXX 'XX, of So we to

detection? are projects? from like for if you move some AI, of you then, those like the approved breast it liver prostate we How on And an for or sounds application things What applications surgery. far cancer right. got to cancer All Okay. detection about

Yes.

channels. software through go So where One, we OEMs. business has our X

our sold through OEMs. prostate, those breast, So are

a go tenders that we're And liver is and Our workstation cetera. the workstation, stand-alone -- to also previously. and lung full support described on transplants, surgery solution workflow another screening et that solution new we've is direct, continues as stand-alone we this bidding for on

for direct-to-market And So channel. we for it's that's this. XXX(k) went full why a the

Okay.

applications, the the will FDA the other OEMs submissions? do for So

Correct. Correct.

sell also modules through and channel, full we lung We screening but applications OEM workstation. stand-alone a the have

business, through So in has parts. diagnostics. the selling tubes, acquisition sell full-blown years. and Those few And channel. then our X the acquisition mostly [ acquisition There's directly to platform. is -- through system directly -- with is OEMs software sold historically what software our call Nexus summary, ] and a we of the systems detectors, It's pure our the that integration It's we through also generators. a are going over directly last We've OEM the bidding tenders hospitals. integrators. to And on was started AI combination

that sustainable? and then, rates What's driving business, quarter. very growth mean, Industrial these And are another Right. strong I the

was bright of spot So what we more inspection was it was as many exceptionally for quarter. based. saw in strong actually broad We than a as an we had was verticals, -- as strength we which this said, well it the nondestructive fourth cargo quarter Industrial, The forecasted. had

expect We the to Industrial expect we -- for grow. year still

in that quarter Industrial, fourth additional the down, down the pushed be actually is some monthly growth we're some here which to us there going but first is -- will And and of and up tends a So puts we quarter.So have it be products, a takes. did quarter. deadlines strength had very customers against be because the ship lot we will what were in fourth for to to of some and hard

see But overall, growth for expecting to first quarter. a industrial, full going to -- going And growth. so we're of we're softer we're the our have year, fiscal a out year-over-year

right. All

that Industrial you? like picture, for still grow getting But market long growing a China. the China and So have a term, be you short-term better. to it correct? The margins think are you going in hiccup to Is is business continues seems big

We continues absolutely. their so. government We're Chinese health believe positioned commitment well of Yeah, assert to The to very there. expansion care.

and keeps large is base installed Our growing.

a some are and of products additional -- modalities in making customers dental, Chinese with OEM We like advances of cardiovascular with lot et the cetera. our some

-- We half So to when market a for China well to anticipating where be get malaise will of We're recovery begin. hearing, us. for just the this so that's past we're next what XXXX. we're and need year positioned second continues that good current the is

up then, balance the for balance capital sheet. allocation? paydowns more What's on you'll do Or the you you some me for down can next to debt? And of know some pay last your plan that I to so on coming or have cash think X the you be question going debt you quarters? build up. continue acquisition active X the front in Are

is the balance be you I to remind that overall Jim, at it's just sheet, end so lines, Yes. million. And may not you get distributed XXXX. amongst but excess are supposed that June in yes a our cash would cash balance 'XX, clearly we to essentially the rightly debt go looking it to an as but and total upcoming the of because million, for able of June preparing at of because QX cash in in are was to $XXX of situation. mature $XXX the was said, But refinancing couple we current want

same fully by from then a and -- and be followed and cash -- that to strength deployment time, fund the the of are capital is So operations we take and priority building of beyond is balance excess this then At at cash care with essentially, the deleveraging priority lastly situation. to the approach refinancing time up any perspective, some would to inorganic the growth.

of Solow CJS. with next Our Larry the question from comes line

environment weakness -- guys just feel the Medical anti-corruption the having lot on I on like rate a hospitals in mostly bit I with whether economic good side In just of companies the were guys But -- it's bit the increased a question, anything -- -- being more just QX, things I scrutiny related 'XX, first either. know, guess I've of it well I in and issues hospital-based sounds you doing it? we revenue. a it budget, out a conservative, just or tight.Obviously, mostly like spending, it's U.S. more little China, we started on the high-interest And little environment. lot the a then Is left. seen little think got then aren't you hospital know a in better.

So there, dots. like I'm to connect feels haven't it much you negatives any spoken too those -- trying about just but but

make comment in. ask Sam me Let I'll a to chime and

So Larry. there and are takes, many puts

seasonally on lower quarter first is quarter. secondly, additional China all, of the puts burden seasonally Medical -- side. a First in situation And the

there.In on So driving of that Industrial quarter. quarter, seeing then the and and Medical just the issue of controls. expenses seeing better general course, perception then, and fact that fourth strong of is health pressure that a compounding had -- hospital a market, improving. month-to-month hospitals and we're the operating the the hearing the hospitals we're our the of first kind terms the is They're is what's what And U.S. in reporting

we -- deployment. forward So think next in capital to year into that position better they're a for going

around. there. trying real is real no -- will concerns What to the around situation get we when and how were no head turn So, our Chinese

EMEA And the a you our about then at third over results, in improved where talked sequentially declined see fourth APAC. driving it place Larry, want that quarter. third was you the QX look And also I would revenues that. over we improved China quarter, would add Americas The in but if to typically growth, quarter.

and grew growth is we both into impact there they then reflected is And seasonality from through we've somewhat EMEA, a from this in and from cetera. that in and QX, QX dependent a coming the grow we and resume the that expect to Americas China region. when there in was APAC. already anti-corruption about, to And to situation then is as et hope EMEAs, Americas, there talked So it over, and campaign in gets as begin China, of the

I longer-term out. to specifically change shakes the I It out of know of outlook get Anything normalization the we it's significance? hard China, build-out to in level? it And not -- for at CT feels been but as 'XX, lower any that like this guiding that sort feels look of to -- and I when that to But back mid the next exactly as quarters, time there a concern there we're you're has any in mean China? few you like know

nothing Larry, particular.

several all, the think significant been of happening based customer the new if we last on anecdotal First on based is over the in months -- what's -- system reduction placements. a feedback, you and

volume the we're tubes getting means that -- So from of is has business mostly CT for China and that us tubes. mostly been China primarily

of tubes has So been care that seeing volume been keep that their the health replacement -- and business hospitals running. systems we've to business the

for us. that is a So baseline we good think

which we've business at So -- to there.Now, back, per is as amount some before there from expect adjust the don't grown XX% grow to said from sustainable. business And on, back of is grown pent-up will we and not China has going plus we've it here back demand, up. then that We be year. comes China levels that --

type in of X% We the what expect China, kind to which would XX% levels is to come a range. to growth be for secular of

back happen. It the will of go that's little think will a baseline then traditional a demand, bit bit So be little will to There'll bounce raise more what pent-up growth back. and rates. which we

Right.

I guiding... are you Okay. know not

Larry?

here. I'm yes Yes, Yes.

Sorry.

No, please. go ahead, ahead Go Larry.

a I you level, just the the X% to sorry right, works just guiding if to -- and know revenue is your not out, declined know a of is No, midpoint, if rest the I on math not say, declined T you're going flat guiding business the line the at specifically, yield way to [ like ]. XX%, X%. you're That's from down I interrupt, was but China high just almost

So it like up. your business rest actually the I again, sounds be -- of might am

right? than So year. in of more the about beginning thinking like Am and be bigger kind that down the actually could I XX% it feels of China

Larry, we're not by guiding some are But geography thinking or you in in way. the right anything. ways

to We year year full are a China 'XX. for expecting down be

guiding. In et it we cetera, thinking percentages, you're terms of broadly, not about But right. Yes. are

about that. interrupted don't fit something I I And Okay. trying before I'm you, sorry to were know that. you

say question Larry, but trying was forgot now to something, I what was. your I

the That's okay. someone else I'll get right. into I'll queue. move All on. let

Our with line Kalia the next Suraj of question comes from Oppenheimer.

you hear can Sunny, all Sam, me right?

Yes.

I that to wrong? I roughly So, did X of the wave around that Sunny, quarters? the abate correctly hear get expectation Or did anti-corruption is you

quarter. to see third pick will things -- beginning we that our expecting of We're in up again start our

again fluid. that's So -- the is situation

QX know of months, expectation we We beginning back that will onwards the start up. is better -- pick it current QX in but in would to the upcoming see

be a Got looking should necessarily there Appreciate start an there parts. we margin, now it are should -- be at it. of Sam, I there moving soft, lot extent that China know to uptick? gross the that. should But contribution does the is

Yes.

But effect also So China actually in the keep revenues -- the of that's it. lack revenues proportion China or is to tailwind volume of for margin. a gross we China mind need less Suraj. of right,

margin because went aspects mix higher So But QX the beginning of lower the is were reason of part quarter. than the what X at our gross than China we were the expecting intersect. much expectation

China is extent So does the -- volume driving that becoming intuition to not margin, only your not of help but less there the is is revenue the volume gross right that lack factor.

India, in detector in for strategy tubes it. local this for local or terms Got and international? is of Sunny, local manufacturing

is later for first local. and be global, to going local for then India also local

So the -- as this operating center. India case, is of China. setting an is In strategy capability full India from different we're up a slightly that extent

functions, from to for extending our Lake et manufacturing cetera. also So India, and business full capacity then R&D, Salt

to So going South a become full-blown hub us, India for for is Asia.

Sam, in Got and hop back Final it. Got it. question, I'll queue.

Obviously, it, in I contribution almost almost think, the ago time from it's years there ball contribution, okay, let's Varex rates right, has up to these picked growth are respective overall to since sales. just XX% XX% Industrial now I've around gone X Sam, parking that buckets. So, to, say, X

is this say, malaise, As how some Or ]? should increasing you about industrials quarters, really back [ over, the and X next we continue business? we expect, but that a contribution then to forward to should think XX/XX Sunny's do the to trajectory like look start thinking that's it let's revert i.e., temporary that words steal of the X, should overall we

rate Suraj, Yes, us higher business very good rate. growth question. for In Medical is than growth general, Industrial the business

years, contribution the XX%. X segment So, I expect it Industrial might to the X next our And cross climb. to continue to revenues to overall of in

just successfully the business. of the X-ray There applied is way applications are right industrial that technology a that lot seeing about that can in we it. very think So are be to for

So overall go of now that or we XX% right eventually are Industrial could the that proportion. somewhat revenue in thinking even terms higher than

Our of next the question Anthony line comes Petrone with Mizuho. from

Maybe third trending a capital actually been back down of slowed anti-corruption, you through the procedures just confirm quarter but purchases also it's but mentioned just due the the on But quarter, Sunny, still front. were to are heard throughout sort capital headwinds slowdown I well to want tubes to both to segue that here, China. we've the meaning down.

well. mentioned can you next a been you X I tubes slowdown know have also still actually into do I catch-up were So in and And trending any things tubes there see normalize year? once Has follow-up. tubes expect

Tubes Let me has been clarify. down.

So sales that's -- the led China for to what's in decline us.

ask However, are are sensing going, when placement our we strong these systems. not we customers new of where

than been wherever going mostly is have a of this new smaller there and is replacement normal into understanding might percentage our those So systems. for

down -- have new placements as a But us have for down general business result. new systems been overall and that apart, but the So to sense replacements tubes is this hard our continued. tease is

that only over exclusively and helpful. Will Wuxi? about become Is manufacturing going you India to footprint, supply the What or larger India new just Wuxi think Salt That's hubs? -- you tonight to Lake India, global global with India? to will time supply disclosure And do on just then, maybe happens Wuxi play when China? to how does

Yes.

footprint for Wuxi So, and in set was up -- our Wuxi China. China was

it China, that for we been extent, shipping needed also in other were to where lower-cost the that the And products detectors. to detectors in China. detectors, So we've for we needed optimized the specific places particularly we make

is from that is the actually high production out some is some Salt perspective, to that India for India, capacity at Salt capacity -- products. very the up running capacity other for Lake, running mainly we're Lake from at moves frees levels. So Wuxi China. Lake adding tubes Lake Salt Salt

diversifying intended years lower supply over with cost space the global the So X of is sales.And our supplier And up phase. this during And qualified will COVID in then the And since last base. one lower-cost was of Phase a frees is lot India we for X the chain -- these initially a production at here. we in suppliers did be have India. then, things been intended

use competitive. and tubes, and that. innovation, the That's us we gives -- for the of Salt up is lower supply capacity manufacturing lower-cost the freed in And up this this to intention. for access newer the So high-end chain, many costs, the us then more makes will Lake some tubes, of

no like management call closing for are hand I'd remarks. queue. There the the further questions to to in back

have questions. for you Thank final comments? Great. your do Sunny, any you

Yes.

Just a short comment. Thanks, Chris.

with I'd our pleased achieved for closing, fiscal always, all world during in employees So to like results we're in we And really the XXXX. really thank as their the efforts over continued interest really year. to you for in the taking our worked today your join to for results. -- the time and thank Varex. contribute during this hard us And to Everyone

fiscal evening. November XX at archived for participating quarterly Thank website. vareximaging.com/investorrelations. presentation A of conference webcast will earnings replay all supplemental on quarter slide our will call Sunny, through The conference accessed XXXX. the for available of be year in be call have a can Thank you, thank you and fourth you be and this and and great our

does Thank Ladies gentlemen, this participation. your conclude teleconference. today's you for and

You may wonderful have disconnect and time day. this your lines at a