Varian Medical Systems (VAR) 24 Apr 192019 Q2 Earnings call transcript

Good day, ladies and gentlemen, and welcome to Varian's Fiscal Second Quarter 2019 Earnings Conference Call.

As a reminder, this conference call is being recorded and a replay could be accessed on the Varian Investor website at www.varian.com/investors.

Now, I'll turn the call over to Michael Bruff, Senior Vice President of Investor Relations. Please go ahead.

Thanks, Ken. everyone. afternoon, Good

and on detail. Executive today Gary are President financial our Varian's Dow cover Gary Joining operating our Dow the Wilson; Chief and results on thoughts Officer, share in Officer, strategy, and and and will will more me results his call long-term Chief Bischoping. Financial

this to to quarter are diluted to and periods to non-GAAP. day earnings earnings of presentation, per On the the of you our orders and All website, fiscal A are release quarter. on Relations call gross references perspective net can recently months share. find referred fiscal months last details. are otherwise otherwise to discussed XX non-GAAP press available intended orders. trailing provide references all periods accompanying Varian Investor All all our additional rates and XX are fiscal stated, at financial results references and reconciliations ending completed are second unless our on to growth to any EPS refer which stated, www.varian.com/investors. are trailing webcast year-over-year, any All are most and Unless the website

SEC and that update over of earnings We Dow. factors any will call all results and could call, current differ And this our events. not filings. Actual statement. turn be statements, this predictions, assumptions forward-looking said, that with because undertake projections materially discussed it and today's obligation expectations forward-looking we During statements are are risks to in do other uncertainties. and which to future conference about I'll any to release, on statements making These based are subject

achieved invest future see raising for key quarter everyone. share momentum continuing the we're to this year to in how the long-term first growth pleased contributed strategy. our in and Today, they continued XXXX revenue good of and fiscal milestones day, Thanks, while our to past the half Mike, We're and I'll opportunities. we guidance

million, Oncology negative X%, First, increased outlook on was by services. share grew was per million hardware, integrated revenues our tax $XX due X%. driven impact quarter. $XX impacts business Proton as of non-GAAP our year and increased our XX.X% fiscal results. the the X% growth. project second X% $X.XX revenue the million earnings company or $XX the Proton performance Solutions well revenue million, up declined year, orders and were and from $X.XX, $XXX of X%. our networking Based site of revenues, delays our X% X%. touch to best-in-class and by on X% me Cash share quarter per GAAP as we're Total and operations $XXX the to payments from driven software tariffs company's earnings to of business guidance to for revenues down year-to-date raising earnings down from for strong the rest Revenues with to let million. our were Operating X% and to costs flows in platform revenue capital in

quarter. the on provide color to Now additional some

software strength growth double-digit and orders trailing our December growth in basis terms therapy geographies, the a our by radiation across long-term filings, XX% grew strengthening our grew our we services. in of and during XX quarter our was across quarter driven in in XX% of progress months. XX was leadership orders in on market period. our that strong all value-creation row quarter and fourth Oncology made business, share and XX% and radiation XXXX, growth In public in the This with hardware, the the worldwide the Based X initiatives: In an growth on therapy. ending we months trailing orders strategy, in grew first, over

XXX of installed This or installed and net worldwide X%. increase base drives units units, an software revenue continued now services. recurring Our base from in is our growth X,XXX

of orders now in well months XXXX SABR-COMET control in survival, happy year. randomized in number of the We're global The therapy orders that an side, quarter, progress our greenfield standard with the associated to and Since a Halcyon double This been overall class, launch, leader made XX% studies study for have achieving incremental, XX orders in including last the of taken of the we second our by including median II launch, from compared Phase in published XXX that On of its the that worldwide hardware rollout nearly May orders protocols group patients. survival SBRT of created, the XXXX our for orders, are and have for category since side, leader leaded over was systems an XX is the research require -- competitive announce care again TrueBeam category for equipped month, trial that now treatments clinical pleased the selected outlined takeouts independent oligometastatic And and have orders hardware the a cancers. treated was study. Lancet year systems SBRT XX patients smaller since months with platforms treated report report. we're vault. as found that our for global as to Halcyon category treatment with on in improvement best-in-class radiation was the as Varian XX,XXX care. second was firm of the Also the to using

XX%, our new uptake On our the features. hardware driven customer of double software software front, by growth, revenues grew

to our Orders doubled doubled, Eclipse upgrade is that sixth treatment for a new solution fast with Eclipse our the for radiotherapy than score a were base. was all becoming average receiving standard planning planning software we planning, best-in-class Additionally, multi-criteria optimization row, last more orders year orders addition named compared year. HyperArc, SRS, overall opportunity the for highest Oncology for nearly a installed and treatment high-definition our in MCO, MCO for honored for for and significant performance.

XX% have and approximately sites than significant We MCO XXX runway have Eclipse. with orders X,XXX remaining less nearly our now among received at penetration

incurring are meet we performance, to our periods. drive software orders cost accelerate revenue future capabilities to which in deployment strong incremental growth demand, expect to we our Given

costs these incremental year. We $X this in expect million an

important In an estimated in Our rate future rooms our we grew Georgia, Particle our for and of now Danish Asia, points negative have U.K. This treatments by to XX higher announced operational growth XX value. Danish recurring an base we Particle contract completed the mix Proton achieved which system construction installed for compact revenues attach Therapy FX. in Center In the X%, the Denmark, in Proton Solutions was the in stream services milestone each Christie room region. a will we Denmark. at handovers ProBeam business. Compact Emory in at X have access Center sites, and driven in of Hospital of typically for the from revenue and also single-room for first-patient the this percentage higher opening and We for important Therapy the an with the expand Center Centre newer Therapy, proton representing Proton our Therapy Singapore. impact Aarhus, Southeast When one installation growing proton and including gantry the business, first project, clinical completed, Proton therapy machines, the at

XXX preclinical strong, remains with ProBeam the the customer Consortium. doing with footprint we're interest our research pipeline in proton FlashForward Our and driven smaller by business

this at Consortium, Cancer an QX. study Consortium In the to customer the have our with we publicly second we're which close formation the potentially groundbreaking, and American the Hospital, the institute Cancer $X in an working of occur second of we presented half close with progress, in which October, treatment this to our incremental FlashForward excited the preclinical world of this with in toxicity for fiscal reduced majority close spend of results in We organs month, with cancer the million about Research -- possible our and for treatments approximately in these million results. We're research year. China, the of that chosen additional research is back will we're the tissues research in which Earlier by rate patients the FlashForward initial prospects preclinical first Association encouraged incurred this are optimistic announced of preclinical been at vendor ultrahigh quarter. dose to year. expected the as Based meeting, around this about breakthrough we're for represent on Consortium, protons. in healthy And investing the on half this year this the this Shandong We FlashForward showed cancer deal, and the preferred could in $X deals mice.

expand growth initiative is second global our Our footprint. to

in by continued driven was performance orders X strong growth geographies. share our market global Our

advanced radiation cases has with been growth X.X to This radiation by will For as Varian cancer that this there XXXX, consecutive region. potentially quarter installation X-year treatments XXX therapy up seventh in of India. EMEA, India. a estimated increase diagnosed in in quarter agreement driven important per country. be is of was framework new across provides signing which agreement, the systems year by performance was this Trusts of supplier, to in to million the EMEA milestone for preferred the the the access the patient TATA across An double-digit It therapy strong selected

systems Africa, We expect earlier we in our Lagos, we to demand the strong beginning growth service capacity our Africa. to very we for the with half. strong that access Japan this In in Nigeria, of sales at systems momentum Halcyon market, Cancer X South in growth In this see a we'll Center we agreement Southeast region, throughout opening quarter a across in driven and framework second-largest human month continent. managers training replace orders to begin taking deploy China, in and support center continue by a China, support of to older expand radiotherapy Africa development SBRT. VitalBeam and the to announced office orders for we Asia. the local and new second will the resource from West In double-digit delivered this X And Treatment announced Asia-Pacific

resonate China over in with best-in-class resulting portfolio market, a position product the share continues XX the Our trailing months. leading to

in growth of cannot driving grow. of demand for cancer and meet localize number China the an continues important centers care care cancer areas. continued The county presents shift base, access China meet to in to the market XX% barrier in advanced had patients migrating Chinese opportunity this In at earlier for great than facilities government for the our in as current double initiative patients the We required first cities. Today, more our after orders burden product China, hospitals located X,XXX approximately year. country. centers are over Meeting also we China or estimated Users patients China current in of in to X tier LINACs, cancer in launching in installed Halcyon This demand tremendous and for following the present rural a tier treatment, cancer are XX% treated increasing in these hospitals. X received These reception either this to the to is

the of access quota yet government's Additionally, therapy to some demonstrates increase announcement this activity of provinces the to starting to advanced care. but licenses increasing booked to the radiation an haven't announcement related Chinese increase. in commitment see to quota order China's related We're cancer

month, other outcomes Lastly, into expand growth of live initiative with addressable patient implementation network new to and markets. symptoms Tennessee our management an third reported Oncology is This went platform. across our Varian and

Gary, I'll at opportunities look of more core quarter. turn to the second our and with second financial advanced providing the and patient made spectrum strengths we're leverage achieve provide the tools results. continue it outcomes to long-term that, inorganic on customers patients to also Overall, and to remain with help to improve dedicated strategy. growth growth. more context reach progress over We drive Varian's the quarter full we With pleased to who'll in long-term intelligent We

Thanks, Dow.

growth includes value-creation frame consistently long-term my and and in context profitability the which liquidity. balancing I'll comments always, strategy, of As growth, our

grew constant with million, let Orders $XXX currency. the revenues up orders and impact trailing were XX% constant in XX software on in well the XX% in up Orders billion with growth the Oncology in Taking constant XX%. with up We Oncology, quarter look results. both XX% currency. backlog, a $XXX constant as Varian dollars America replace total X growth. revenues as software X the $XXX and me across accelerators. in basis XX X% So currency. In with growth America. by XXX XX% million, XX-month systems across a HCA, quarter, a systems at basis, bringing X%. $X.X currency. solutions, start and integrated grew On XX% dollars wins X% their Companywide dollars growth in Huntsville, orders by point competitor grew closer in additional North up XX% had were XX% in our from and were our million key months in and ended and and America, to dollars constant $XXX with grew over a XX% strong XX% driven years revenues revenues the in in over in in million, Alabama trailing In dollars execution Tariffs system And past and up business Americas, North portfolio order and and Varian-ordered in Alliance hardware, rate. second to driven currency On were Oncology XX% X negative Latin basis, services. double-digit

revenues of were XX%. $XXX grew X the X%. Tariffs million, on had Asia-Pacific negative rate impact up percentage Orders a points. growth

Middle EMEA's region. grew As million, Europe's digits is consecutive quarter in growth. XX%, we This our X%. the grew $XXX discussed, were Orders Dow of outstanding Africa quarter. constant across double-digit grew Southeast in this In impact India China, significant double a and performance this up Revenues is X% Asia. Europe, revenues strong with seventh -- geography, as had orders Japan FX East, currency and

Our posted is Proton quarter, million up $XX Solutions in of business the revenues which X%.

Turning points the basis The gross our points points. to negative year-over-year. basis FX XXX tariffs, deployment This of from from and from costs margin project XX XX.X% profitability. points XXX costs to site software gross margin was was in XX related rate points included The within of our relatively basis business basis delays down revenue, company basis impacts XX Proton ramp. and from quarter. flat

tariffs from tariffs, This and from FX, rate to XX basis months deployment from of included basis Proton was basis software site basis was gross remainder margin and XX delays points. ramp of XX within negative basis XX.X%, XX This down business costs from project from from basis impacts gross basis rate Oncology mix. and costs XX points XXX trailing points XX XX.X%, Our in the our impacts quarter. the negative margin points. included points points our points XXX product related down

dollars $X as by cost well items margin breakeven Gross achieving not project Solutions. timing were delays negative operating in down reaching aspiration $X Proton $X year. the in million, orders in increased Investments for delays These site at Looking million our million as of driven will and the of the in resulted revenues. to grew quarter. which driver by key recent and $XX strategy. we Likewise, is of X.X% headcount-supporting in growth are acquisitions long-term management sales and for invested planning. to and be in a our product up for which in million continuing value-creation R&D, We investments invest X% driven our at marketing, sales treatment of XX% continue

costs On project within trailing down general Proton of XX We This compared which basis included points and in earnings from the of XX.X%, business X% X% Company XXX of quarter. a site FX. operating were basis basis modest quarter it comes basis earnings points with and is tariffs orders project the basis spend growth basis, revenue, SG&A $XXX points from rate site and basis costs delays of flat leverage compared impact are of points to million rates. a X% delays in increased XX impacts Proton XX.X% operating million, a and at XX.X% points tariffs, revenue XXX were rate from growth XX included at administrative XX and our negative points. business our last within points. with down expenses seeing of $XXX or down and negative XX-month This revenues, from the basis robust P&L when from with XX in year.

Turning tax. to

our non-GAAP $X.XX. was was was Our tax rate second rate GAAP quarter the GAAP effective XX.X%. XX.X%, effective for tax and EPS

share XX.X million Our $X.XX, the diluted was in of shares quarter. non-GAAP count EPS with

by cash growth. the Cash and quarter balance with tax quarter and to revenue DSO of XXX the million in increased equivalents debt. cash from impacts payments million, driven to and no capital working $XXX the due We liquidity. negative from ended $XX Oncology flow days were million sheet days revenue operations net down to Turning from XXX $XX growth. strong and

In our in investments to $XX $XX the repurchase million included stock. of addition CapEx to million and quarter R&D, other shares in

remaining existing As X.X repurchase will of our quarter, now end Dow. back the authorization. over shares share of it had turn million to under we the I

With respect orders with our recent tariffs, which guidance, growth, Gary. carefully we market annual momentum track. on respect to considered our to and efforts our Thanks, projected mitigation the remain

$X.XX of non-GAAP Thank effective excludes as count our any business. Q&A. FlashForward average tariff gross to costs million million, and in The site in million of go of on software capabilities, Proton quarter XX%, currency incremental investment momentum preclinical As we diluted following the such, $X are growth billion XXXX: $X.XX future fiscal costs let's revenues third fiscal $XX percentage raising guidance to year representing of of X% now billion, Previously, we in And of million And research updated and to deployment million of as are for billion project to guidance X%. share strong XXXX our a tax in assume the Consortium, flows Based XX% million a a per to in $X operations $X.XX to increase earnings X%. growth guided non-GAAP X% billion, revenue to revenue guidance of impacts of to operating earnings from $XXX of to $X.XX non-GAAP the our weighted operating will $X and reaffirming we million cash continued with increased in $X.XX from rate to of impact. the you. recent of raise continues This acquisitions. following of considers a share an delays guidance; estimated the benefit approximately $XXX investment XX%; in an rates to the of and incremental XX% reduction beginning from quarter and second to million. earnings: result $X which guidance $X.XX; $X representing

[Operator Instructions].

today Citi. from question Amit Hazan is coming first from Our

stands you're probably talk the the just positive all markets. in just us with growth seeing are interested been that growth. about lot run as obviously, of strong the EMEA regions China the with order most Let's in just in particular, for the And through and sustainability or maybe having of start us the upcoming of out than tender there. still a but expected Europe longer also

a what seeing regions. Just give you're in of us sense of sustainability those

very X continuing across orders geographies. growth We're question. all to Good see strong

we've entire APAC in said, really say the XX% orders across constant services. As we software months up up Americas, growth XX currency digit. growth strong it's of I'd got driven X%, Trailing of and execution XX%. by hardware, EMEA double the portfolio, XX-month and trailing

of I agreement from little a the maybe in So that time. I'd be Asia is more above that. sure. strong. against say for that bit of some funnel the will an very orders at this point trend will line, Tata view, that's momentum, looks There But think, we point mentioned booked EMEA, In a be

We that orders haven't this at booked point. many against

big Eastern opportunities see also Europe. We in

continue So then to I don't think I double strength to as double going know, North America. digit, see to we in I Europe's the remarks, we there. in continue mentioned be but were And digit

we're I is model second a know about conversation what I'd always We've in the market. So coming, right comps U.S. reimbursement U.S. our really now. there's scenario's delivering but seeing say half. strong very tougher got

anything we're I'd say but that we've strong. looking I did miss market very overall is So there? very, Gary, at -- the

say with kind and would see so provincial a -- happening quota we're provincial increase, reaffirm No, right. China the tightly underlying undergoing level again, I activity think level just these of progress I the to continue there not here. at the to from from reflect at results the orders do any aligned that's perspective, that's that, and

big pleased we in continues performance. than to is other just I'd very with It very in in Yes. had orders here. markets markets. quarter thing developed a had more mention Maybe Halcyon continues deal the to the the be strong, be We Halcyon developing

then and of the challenges. secondly, some Okay. you P&L And moved kind of the to

think that, thing understand profile that, about I year? more thinking don't growing to that like number starts it as look it next quite to but us a nearly gross are here. a looks year I it is curious That impact just but it usually services like and the it better, in great had past guide the -- as that's know Halcyon one when like materially not we'd is fast Obviously, was to was like contributor. and growing you didn't if part a from and software good better understand this for margin also wasn't been I'm a of looked to fast

more of you're little the how a margin elements next just on gross thinking for the So months? and XX about XX, color that

-- margin the quarter services rate tough growth that And second Yes. proton a costs. The perspective. as underlying project gross there. fine. the is the That was From the that had rates Great, Amit. that quarter, well cost rate, XX-month business revenue -- is delay Proton it of are fine relates the invest what about about services are rate. year-on-year gross business. proton in And We a thanks thinking just in kind piece of as we healthy, is fine, had compare. we'll basis that the QX to and elements along of Last for XX% moving second to site the rate the in that there is And big of question. a then in we margin just is overall, year, side the -- part then kind to that elements continue in points perspective, XX from quarter. other trailing of attach growth saw the a But was

services the So And had the XX we're orders okay on last we over months. in line. strong growth

also, rate have to XX anniversary wait, over key see to that the off months. to last those just what start for of we those trajectories so perspective one are to from growth and orders And the

side. don't steam to on roll all pick through. however, about we mitigation certainly tariff up second of a rate will As efforts would to half. talked commercial as some what the you mean guide One our that, far to we the throughout goes, in margin forward as year going be I from will perspective, the gross know That start start

we loaded to the the half. so in in second that continue more quarter still software As invested teams. of second fourth you as second half, it's deployment -- you about saw, We'll part, the think the

up, the nice, to to will margin continue we the strong be the accretive think, out software of we'll the in we as well to that half. that And delays the increase think gross the in proton as vis-a-vis with growth are quarter. it or overall So continuing second that issue to half tie just second cost, we see, site challenges we again rate business, saw which saw we the first the

that half accretive so And well. as be the in second will

good that perspective that still So investing while help from dynamics us earnings in share business. range underlying get comfortable all back to the an with holding on per

Maybe software just to underscore the point.

rate Our about our our very rate rate growth software twice is growth good. growth hardware and is hardware

us what that's for So -- of of half. both out in margin second in is mix And some and we see positive that some investment that. volume the should some kind laying

question is today from from And Matt our coming next UBS. Taylor

to said When you to were follow-up through? specifically any updated provinces. was see understand do and And there? guess wanted might what one. what Can -- Just And pace? on I'll have I with the you some wanted orders you come do you action some start insights the you think the start you I quota at seeing that in of these China to India. in opportunity

the provinces questions, seeing the Yes. seeing good that activity we're we're to yes, say I'd Matt, some starting question. engage. we're see,

their so people licenses hospitals, do but province activity to yet the action here little of together, tenders. issue We get haven't year any We fiscal of got we'll bit that going the distributed some I that signal the the -- that is initial when going. see tender start that most now be real in to the 'XX. and do to the in for a of of see would me, second issuing published be pull seen and hospitals kind activity half #X kind tender expect

you And half? on have second orders? guess kind any on the the in here Congrats agreement. we EMEA kind thoughts same potential that? start XXX Okay. question any What have pacing, if Should on Great. on that that. of they Do expect of the visibility I you

It's question. a good

booked not have this orders We any from agreement. yet

the India. We XX% talked signed second radiation to expect in year. I throughout get the will of big to a XX% have initial the their The treatment. be up agreements XX% underserved. the whereas about it'd that's to market in of in XXX language therapy, west, therapy contract -- of says with that orders patients It's XX% received multiple radiation has to as systems. Tata access half way India sits part Trust states The

call, to about cities it and, by They're we access comes treatment expect do as motivated hasn't currency bringing orders outstanding the some very as that cancer half. has to that smaller through. population we're ready Tata and not So see on in villages. the been in in in the the had Foundation in care see this. cancer a excited we to India guide of, kind here mentioned I to -- yet, of color to flowing amount see We're the falling want But second very it

this that's onetime multiyear just not not I in to will a big a performance. be So bolus. underscore, And expect flow again, QX and order the

is from Baird. question Robert coming W. next Our Jason from Bednar

just it U.S. available year. XX or could together, been and like months in seems here later for launch slated Halcyon. orders sequentially, of The a cusp of X.X availability X here nicely corner? up better with starting I a do with on start wanted January, But China to year-over-year. be start are Europe things with bit a seeing you just I wanted and we're to really I this the Halcyon X.X coming -- to having mean lot turn think the

So with if if else or we with you agree there's just that curious anything assessment should Halcyon? be considering

momentum, is starting out orders nicely. socket say the love growth we I would the

been Our have Customer are marketing efforts outstanding. working endorsements well.

excellent engagement, strong really have We our experience with customers.

said Halcyon we units, the I believe, the I of are incremental. think call in XX%

orders we launch so And the quarter beginning of handful So We have the we're in in product it the is in China. hitting. of China. just -- the quarter from did a

we as you coming expect -- some expect that So state, China. should hitting, in there good we so be to growth start

very in had reaction have customer good China. We

really it side, we're we expand and is cobalt to just our to in have of And sockets come small on customers here competitive resource number replacements there. think constraint seeing in the with I the complements going operating strategy some some We're portfolio. vaults, take-outs the Our want that. of TrueBeam top product incremental out on winning

we're with continued Halcyon. for positioned think very I well growth

I to And And as some reasonable strong conversion profile? translating start a wondering, seeing I the to order-to-revenue and lag Okay. a to see XX-month convert that do and we'll kind just an to maybe turning typical in reason? and to over see revenue Or is mean you over up -- that mean growth here when of XX some will we'll maybe. with track unprecedented growth different fiscal this lag mind should begin you have some of put then for months. it of we expect revenue past just Varian start order about some revenue growth think beginning this order accelerating talk that growth 'XX?

Yes. No, the when take from what about look we're rate grew trailing great a same a an you XX%. backlog, And of is on backlog seeing overall here question. at year-over-year And growth XX-month Oncology in basis.

think underlying will term, move orders reflect nice in our the business. convert. at revenue The turn product growth see to revenue overall, through in backlog, through rate But into mix about clip. we nuances some So that, conversion of long you revenue this the when -- still a in product Jason, the continue the our and into and we of the out

orders rate the continues growth the trajectory accelerate. to of So

door So customers' overall, product see that's the demands. lag little growth you're rate here, the happening of operating bit what's meeting, out teams in a we're the and revenue pushing the are But and and kind and business. exceeding pleased needs how with going to

Petrone from Jefferies. coming from question Our is Anthony next

a Oncology. Maybe U.S. then China on just one the momentum couple on and in

of you quoting think China, look B I'll do you order B And guess, amount far of this next As really, there's now a And Type there. we flow? I to do the momentum, sort toward starts once Type as licenses see you as out expect How XXXX, couple when of level clearly have chunkiness start of year? follow-ups. will licenses larger what a

as thing even in it's or get, is order. mean thing years or it, about going talked XX at the We X last I growing years thing much few the it's or the XX to or units we the think the hospital that small, big a at one tendered see of two other time. one like we've to of Tata some part I we a is time. companies a of call kind it's be market China had more tend or to Brazil about way linear ago not this an where Algeria X the linearly.

that think that's to well. as market think resource going way By to I it's way think we're don't the There it's the one I needs. going is to way, of uniquely the going that's the the license, They I things big happen. education. are smaller So the of that into well. county cities, the they lot need positioned just need don't these hospitals. the are training, very be rural do A more orientation, people,

localized have the We software now.

think we we're everybody position. We train and good education locally. on flight, very, We have very significant the in a resources in so ground both

that Anthony, The only thing that is and last considered we've category have in the XX we marketplace. Halcyon XX add got now both over that TrueBeam and to didn't that months would as I there,

So with on finer to just point mentioned, a in out and to Dow put and Dow -- go just it, execute these rural there we've got, Halcyon positioned well as TrueBeam. markets

on U.S. on just question be out? CMS, this the some comment just We're update year the any there the on a on would tariff in side China season on be any exemption. would just on how side. follow-up Is shakes thoughts there that. company filed there here The for maybe And proposal quick then know the reimbursement side I are for exemptions, specifically? the Yes. last the

kind Gary, year, the the on efforts of sustainable side we're track. activities But year. half our in on I And anything very kind in the why good we the engaged continue very said mean of executed I'd I no that be our on tariff Mitigation as to first, on to for the be we've is to issue. I'd biggest this second kind major I and is both Washington about second are half mitigation it's all implementing team. Maybe continue profiled there. by things really report of up, know actions tariffs? in to else of Yes. to Beijing report. the We're are executing thing say -- well be very we activities, the say mitigation feel get year.

No.

directly remaining that, but to in your no regard update fourth ramp been the with there have only ramp there, not to we the third and the application in think into the is I it'll quarter there's to importing we ramp applications quarter. into Anthony. in question, the U.S., the tariff parts also we're have the couple the of just reiterate, just And mitigation

the So we isn't profile kind of normally the referenced, year what would expect. as Dow for

July side, it CMS. as for early rumor reimbursement will we're payments We about that proposal if from bundled we're Clearly, the the product our think very, On line I'd very ever well. positions SBRT. waiting take for hearing say

radiation imaging. We with are conformality, dose our the our rate, body stereotactic global therapy our advanced leader in

of updated well think I into that. as goes positioned So that change and kind you keep if we're more effect, about we'll hear we

question Peterson is from next from Tycho Our JPMorgan. coming

at Can goes point, last that of has the talked this of you those in Maybe if through have much to of the kind if that one guys about would that how point and you on upgrade. of stuff. capabilities potentially bundling, SBRT the have upgrade to maybe catalyze systems was Dow, things some talk bundle base don't maybe installed that your could talk just older to need U.S. customers you

we we're -- nice think opportunity least a little as But out and get of TrueBeam I we've a units. my got is our That's least might there. finer. But TrueBeam mean as well at there's on U.S. our I reaction. of lot to X,XXX X,XXX say need I'd pencil installed I on SBRT gut kind that capabilities machines, mean think U.S. out seeing the configuration have in units seeing some market. on of the performance at it's of double-digit it's But you we're of X,XXX momentum America, numbers mean that quarter, and U.S. lot North the on. I mix the I saw a I now. significant the in base

you on pressure a called after touch And maybe also quarter value guys then you out Your biggest launched pricing reported. model. dynamics? new pricing have They've competitor can last

India quota, just of As in the pricing China level you're orders, seeing market. curious we funnel, kind EMEA how about think

for is look proposition us you But Tycho, and seen and in Elekta in think value of compete services. That the we've if order enabling price the solution what pretty hold takes we'll full differentiated for level, known kind software on at us, there. that. I we to and and continue puts about historically here pricing But really with is changes, to feel level -- check overall, and to country so dynamics because price. are that at of no we are customers looking our hardware, value country good major sell

guidance quarter? this of So gets assuming Or on year there I down just year. based And quarters? maintained follow-up talk was kind just you seen what one because for know maybe then, you you maybe Gary, you full to kind to you that are NWC two we've last again the Can flow. reverses? the it flow cash cash on of what how get in

Yes.

to the the trajectory chain. what we've billings continue half -- kind flow the with about in The and as second supply And talked in the of quarter we've inventory here We'll of thought about for second about, talked year. see cash to progress regard inventory. is the we what for

that the time. catch revenue revenue has revenue -- the the You an through. you quarter in how And that quarter, strong its but the over flows can and here, will in the work see side, growth so impact way of the kind on

So us some collections the this increase in of kind year. growth revenue you'll in of nice the see with second catch half

nicely as chain. to teams in working increase operating directly But well. half-over-half answer net earnings through your the think it I So out question, yes, there in an supply coming back as well see the are executing we capital as

Our is from Evercore from next Kumar Vijay coming ISI. question

to question, Maybe margin going the Dow. back

QX? You moving have the when software FlashForward, And in QX cadence to When Q. impact but investments weighted like the looks I or gave the right, it savings, tariffs, expected maybe the You to $XX And the right? XX savings cost parts there's cetera. that this efforts, is about those number here, about in from out can million the more bps back the incremental of of think benefits tariff mean that come more of half? a in we back talk mitigation of Proton, there you in piece, going some et on hit? is are is

his Relative as proton QX single the biggest the let to me the margin, section, that piece kind Maybe of right, just on in piece. in start said QX, therapy. Gary was

tariff first driver do the point? our biggest you in pick that up want the was to on half. so And Gary,

and the $XX Yes. down a year, QX of out million million first referencing timing quarter Vijay, half quarter. all, million. fourth more in the terms of of -- the of talked loaded. the -- into second than all higher benefit were to in as half, And referenced efforts, It tariff is about right? mitigation And tariffs, $XX was it's timing $XX continue the I the mitigation, of of we ramp even we the in third will inside and second QX in to

Teams about field. out there we well it. think that's the are executing in So how

second back quarter. in about second how that get cost won't contained the part that's year don't think half, we half. repeating We think second the we in that but to site the to delays no and it full in guidance proton, clawing relates second in I quarter. largely So that's half, the of it the second see half, As repeat right? it but we in won't second back is, don't the the us the see

Maybe the coming guidance baked modest That's the on worse. little worse. FX was helpful, Gary. -- in update Any a a it I think like FX? And as last some follow-up. guidance it's FX. Any in just on looks

you underlying level the comfort that I that And the growth the $XX million be can just here with visibility think talk about coming I on So the in maybe number? may your mitigation, of and better? guess tariff savings, drivers

a guided to From currency from we originally. Yes. impact, change no what material

we look material versus kind start really a we when third quarter, There's but of at called out change. there's no from you nothing If of material the guided year-over-year the to that note guidance. rates impact to

they're see say there. the I to would are as our productivity, commercialization, and that efforts, in G&A we the side. they're invoicing the into our right? those how get of ability forward. track, U.S., G&A the to to think supply moving we coming some second about ability back to talked things things relates As duties out started reroute mitigation are was on chain, tariff quarter, it about: on things in are you commercial the year-on-year, only continue redeploy rate. to scale see started reface the From the about that's some drive that in against line. capability, you software help continue the to an investments, of We'll and will talked our out nothing that continue a R&D and to growth deployment We to up that investment X% the half. G&A programs so major software think to second incremental perspective, out we of

in software the QX, saw growth the QX grew of You first revenue both quarters. and in half our year, XX% both in

investment so for like business to a that that grow from in perspective. the to us we we are software And which continue help second looking margin half,

deliver we're guidance. how in are to efforts tracking So flight, teams and the all and those to mitigation are this operating

question Our a follow-up from next is Petrone from Jefferies. Anthony

as margin to and on expansion of what Maybe operating look the get margin, some potentially on just side. faster in bookings year. are unchanged a again But a next revenue, couple acceleration over margin obviously years? of from multiyear, and we then couple you here start out Halcyon proton there's benefits mix And thoughts of just to headwinds years, software, this perhaps on follow-up time, next your

Yes. Anthony. Sure,

to lot running 'XX. the here. the that margin. year in march north hit them are us being tailwinds impact on haven't us a Clearly, is already. are of continuing what that of outlined operating towards software of We're tariffs You our aspiration mix. fiscal helped We said, for That here XX%

certainly growth to mitigation. quarter, execute the see operating well. now. basis. Proton the about, to the experienced side. that They're back work but continuing improving We in And starting upgrade to we saw profitability, talked the like to will tariff year-over-year around continue put the help. not Continue we what while the on accelerated becoming twice see breakeven still in a that the there, We're the can hardware Halcyon on visible then work second through we'll tale globe. mix You to we've of through in cycles, place P&L. upgrade teams rates

of would the will services think you that increasing up as well. couple nice is on of operating earnings. make us a to continue kind the as XX points I point installed certainly will tailwind of years, So accrete about next help base to Last that be

over reached for turn floor We've end session. to management of our the any further the to or question-and-answer back I'd like closing comments.

in my Per concert related Consortium, you. business, the targets. achieve to reinvest to we innovation XXXX to momentum with in And raised we've Thank our previous primarily the given revenue revenue our FlashForward the and we guidance. comments, that decided remain in raise, track on

continue without to remain we'll committed and initiatives our cancer. new on world a drive Thanks victory: the for fear forward, the today. of innovation Looking joining to execute growth investing in us and to technologies toward ultimate

conclude does That you. teleconference. Thank today's

We wonderful you disconnect participation this and at for time, have day. You a your may line today. thank your