On October 23, 2018 Varian (NYSE: VAR) reported its fourth quarter and full fiscal year 2018 results (Press release, Varian Medical Systems, OCT 23, 2018, View Source [SID1234530085]). All comparisons in this announcement are year-over-year, and all quarter and year references are fiscal unless noted otherwise.
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(1) Revenues, GAAP Net Earnings, GAAP Net Earnings per Diluted Share, Non-GAAP Net Earnings and Non-GAAP Net Earnings per Diluted Share refer only to continuing operations.
(2) Non-GAAP Net Earnings and Non-GAAP Net Earnings per Diluted Share are defined as GAAP Net Earnings and GAAP Net Earnings per Diluted Share adjusted to exclude the amortization of intangible assets, acquisition-related expenses and benefits, restructuring and impairment charges, significant litigation charges or benefits and legal costs, and significant non-recurring tax expense or benefit.
"We made tremendous progress this year toward our growth strategy and reinforced our industry leadership with record orders and revenue," said Dow Wilson, Chief Executive Officer of Varian. "We expanded our global footprint with the rollout of Halcyon and we enhanced our portfolio through meaningful organic investments as well as key acquisitions. Despite tariff headwinds, we are confident in our ability to continue to grow and deliver value-added products and services to cancer patients globally."
The company ended the quarter with $505 million in cash and cash equivalents and no debt. Net cash provided by operating activities was $108 million in the fourth quarter and a record $455 million for the year, representing growth of 14%. During the fourth quarter, the company invested $50 million to repurchase 440,000 shares of common stock.
Oncology Systems Segment
Continued innovation leadership and market execution drove strong growth worldwide in 2018. Oncology revenues totaled $756 million for the fourth quarter, up 13%, and $2.8 billion for the full year, up 14%. Operating earnings for the segment increased 8% for the quarter and 16% for the full year.
Gross orders for the fourth quarter were $1.1 billion, up 13%, and $3.1 billion for the full year, up 9%. Gross orders in the Americas were up 6% for the fourth quarter, driven by North America with 4% growth as well as strong double-digit growth in Latin America. Growth in North America was driven by large, multi-site orders and demand for radiosurgery and stereotactic body radiotherapy solutions. In EMEA, gross orders in the quarter rose 14%, the fifth consecutive quarter of double-digit growth for the region, driven by product tenders and robust performance across the geography. In APAC, gross orders increased 31% for the fourth quarter, driven by strong execution in China, Japan and Australia. "All three geographies grew in fiscal year 2018, led by the Americas and EMEA achieving record orders of $1.5 billion and $1.0 billion, respectively," said Dow Wilson.
Proton Solutions Segment
In the fourth quarter, Proton Solutions revenues totaled $46 million, down 12%. The company completed clinical handovers for one room each at three sites, representing an important future recurring revenue stream for our proton business. These clinical handovers took place at the Georgia Proton Treatment Center, Danish Center for Particle Therapy, and the Christie Proton Beam Therapy Center. The company did not book any new ProBeam orders in the quarter.
Guidance for Full Fiscal Year 2019
We expect the following for fiscal year 2019:
·Revenue range of $3.06 billion to $3.15 billion, representing growth of 5% to 8%
·Non-GAAP operating earnings as a percentage of revenues range of 17.0% to 18.0%
·Non-GAAP net earnings per diluted share range of $4.60 to $4.75
·Cash flows from operations range of $460 million to $510 million
The guidance assumes a Non-GAAP effective tax rate of 21% to 22% and a weighted average diluted share count of 92 million. The guidance also assumes currency rates as of the beginning of fiscal year 2019, excludes any future acquisitions, and includes the expected impact of all currently enacted tariffs.
Please refer to "Discussion of Non-GAAP Financial Measures" below for a description of items excluded from expected non-GAAP earnings.
Investor Conference Call
Varian Medical Systems is scheduled to conduct its fourth quarter fiscal year 2018 conference call at 1:30 p.m. Pacific Time today. To access the live webcast or replay of the call, visit the Investor Relations page on our website at www.varian.com/investors. To access the call via telephone, dial 1-877-869-3847 from inside the U.S. or 1-201-689-8261 from outside the U.S. The replay can be accessed by dialing 1-877-660-6853 from inside the U.S. or 1-201-612-7415 from outside the U.S. and entering conference ID 13682642. The teleconference replay will be available through 5:00 p.m. Pacific Time, Thursday, October 25, 2018.