Varian Medical Systems Reports Solid Growth in Net Earnings, Revenues, Net Orders, and Backlog for Fourth Quarter and Fiscal Year 2006
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Wednesday October 25, 4:00 pm ET
Company Raises Earnings Guidance for Fiscal Year 2007
PALO ALTO, Calif., Oct. 25 /PRNewswire-FirstCall/ -- Varian Medical Systems (NYSE: VAR) today is reporting solid growth in net earnings, revenues, net orders, and backlog for the fourth quarter and full fiscal year 2006 with significant gains in its Oncology Systems and X-Ray Products businesses.
Compared to the same period last fiscal year, fourth-quarter revenues grew 18 percent to $454 million and net orders rose 12 percent to $545 million. Compared to fiscal year 2005 totals, annual revenues grew 16 percent to $1.6 billion, net orders rose 14 percent to $1.8 billion, and the year-ending backlog increased 19 percent to $1.4 billion.
For the fourth quarter, net earnings were $82 million or $0.62 per diluted share. Excluding $0.05 per diluted share of expense for stock options, a $0.07 per diluted share gain from discrete tax items, and a $0.01 per diluted share gain from discontinued operations, net earnings for the fourth quarter were $79 million or $0.59 per diluted share, up 31 percent from net earnings per diluted share in the year-ago period.
For fiscal year 2006, net earnings were $245 million or $1.81 per diluted share. Excluding $0.20 per diluted share of expenses for stock options, a $0.15 per diluted share gain from discrete tax items, and the $0.01 per diluted share gain from the discontinued operations, net earnings for the fiscal year were $251 million or $1.85 per diluted share, up 23 percent from net earnings per diluted share last fiscal year.
"Robust demand for advanced products for image-guided radiotherapy (IGRT), stereotactic radiosurgery, brachytherapy, and filmless X-ray imaging contributed to our growth in net orders, revenues, and net earnings during the quarter and the fiscal year," said Tim Guertin, president and CEO of Varian Medical Systems. "We ended fiscal year 2006 on a particularly strong note that sets the stage for continued growth in fiscal year 2007 and beyond."
"Excluding stock option expenses, fourth quarter operating earnings as a percentage of revenues improved by half a point to 24 percent, even with a quarter-over-quarter decline of half a point in the gross margin due to continued high ramp-up costs for our new On-Board Imager® (OBI) device for IGRT," Guertin said. "For the year, the company sustained operating earnings at 22 percent of revenues."
The company ended the year with $366 million in cash and marketable securities, and spent $72 million during the quarter to repurchase 1.5 million shares of common stock, leaving a balance of 1.5 million shares in its existing repurchase authorization.
Oncology Systems
Oncology Systems' fourth quarter revenues totaled $383 million, up 17 percent from the same period last fiscal year. Revenues for the fiscal year were $1.3 billion, up 16 percent from the fiscal year 2005 total.
Fourth-quarter net orders were $470 million, up 13 percent from the same period last year with 25 percent growth in North America and a 4 percent decline in international markets. Fiscal year net orders were $1.5 billion, up 13 percent from fiscal year 2005 totals with 19 percent growth in North America and 6 percent growth in international markets. "Respectable gains in Europe were partially offset by softness in Asia during the fiscal year," said Guertin.
"North American cancer treatment centers are again leading a major market transition toward IGRT and image-guided radiosurgery," Guertin said. "Our OBI devices together with our linear accelerators are being used more commonly to target smaller tumors more precisely. As of the end of the fourth quarter, we had more than 325 installations of our OBI devices complete or in progress. Our versatile top-of-the-line Trilogy accelerator for both radiotherapy and radiosurgery, as well as our brachytherapy and software products, contributed significantly to the growth in net orders and revenues for this business."
X-Ray Products
Fourth quarter revenues for the X-Ray Products business were $59 million, up 15 percent from the year-ago quarter, and revenues for the full fiscal year were $228 million, up 17 percent from fiscal year 2005. Compared to corresponding periods in fiscal year 2005, X-Ray Products' fourth quarter net orders rose 21 percent to $68 million and fiscal year net orders rose 19 percent to $242 million.
"X-Ray Products had another spectacular year of growth driven in large part by our rapidly expanding business in flat-panel digital detectors for filmless X-ray imaging," Guertin said. "Both net orders and shipments of our flat-panel detector devices were roughly double their totals from last fiscal year, and these products now make up about a fourth of the X-Ray Products business." During the quarter, this business completed construction of a new flat-panel production facility at its Salt Lake City manufacturing plant.
Other
The company's Other category, including the Security and Inspection Products business and the Ginzton Technology Center, recorded combined fourth quarter net orders of $7 million, down $8 million from an exceptionally high year-ago quarter. Net orders for fiscal year 2006 were $42 million, up 33 percent from totals for fiscal year 2005. Revenues for the quarter were $12 million, up $3 million from the year-ago period. Revenues for the fiscal year totaled $34 million, up 6 percent from the fiscal year 2005 total.
"Stronger demand for port security products, including strengthening demand in the U.S., contributed to the strong annual orders growth in this emerging business," Guertin said.
Outlook
"Excluding stock option expenses, we believe that total company revenues and earnings per diluted share for the first quarter of fiscal year 2007 should increase in the mid-teens above the comparable periods in fiscal 2006," Guertin said. "For the full fiscal year, we believe that revenues should increase by about 13 percent above fiscal year 2006 levels. We expect that earnings per diluted share excluding options expensing should be in the range of $2.08 to $2.10 for the full fiscal year 2007. Option expenses for fiscal year 2007 should be in the range of $0.21 to $0.24 per diluted share." |
