Varian Medical Systems — Q1 FY2021 Earnings Presentation
29 slides from Varian Medical Systems's earnings presentation, Jan 26, 2021
Slide 1: First Quarter Fiscal Year 2021 Investor Relations
Investor Relations January 26, 2021 First Quarter Fiscal Year 2021
Slide 2: Forward-Looking Statements
This presentation is intended exclusively for investors. It is not intended for use in Sales or Marketing. Forward-Looking Statements Except for historical information, this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. S
Slide 3: Agenda
VARIAN CONFIDENTIAL/ PROPRIETARY: DISCLOSED SOLELY FOR IMMEDIATE RECIPIENT ONLY 1. First Quarter Overview 2. Segment Performance 3. Appendix Q1 FY 2021 earnings Agenda
Slide 4: First Quarter Overview
First Quarter Overview varian
Slide 5: Q1 FY 2021 key financial metrics
Q1 FY 2021 key financial metrics $M Q1 Y/Y Oncology Orders $789 2% Revenues $779 (6%) Oncology $744 (5%) Proton Solutions $26 (7%) Other $9 (54%) GAAP Operating Earnings $117 7% % of Revenues 15.1% Non-GAAP Operating Earnings $136 1% % of Revenues 17.5% GAAP EPS $1.05 9% Non-GAAP EPS $1.14 (2%) Cash
Slide 6: Total company results (GAAP)
Total company results (GAAP) Key P&L financial metrics 6 Note: Unless noted otherwise, all ‘Orders’ reflect Gross Orders, all growth rates are in dollars and year on year, and basis points (bps) are rounded to the nearest tens. VARIAN $M Q1 FY21 Y/Y TTM Y/Y Gross Orders $854 4% $3,470 (5%) Revenues
Slide 7: Total company results (non-GAAP)
Total company results (non-GAAP) Key P&L financial metrics 7 Note: Unless noted otherwise, all ‘Orders’ reflect Gross Orders, all growth rates are in dollars and year on year, and basis points (bps) are rounded to the nearest tens. (1) Excludes the portion of amortization of intangible assets and in
Slide 8: Strong financial position
0.0x 1.0x 2.0x 3.0x Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 $- $100 $200 $300 $400 $500 $600 $700 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 -$333M Y/Y Cash Flow from Operations ($M) $0 $50 $100 $150 $200 $250 $300 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Debt ($M) Strong financial position Key balance
Slide 9: Long-term growth and value creation strategy
Long-term growth and value creation strategy 9 Global Leader in Radiation Therapy Global Leader in Multidisciplinary Cancer Care Solutions Improve operational, financial, and capital efficiency Innovate in radiation therapy Leverage artificial intelligence, machine learning and cloud solutions Grow
Slide 10: Segment Performance
Segment Performance varian
Slide 11: Oncology Systems segment (GAAP)
Oncology Systems segment (GAAP) Key financial metrics 11 Note: Unless noted otherwise, all ‘Orders’ reflect Gross Orders and all growth rates are in dollars and year on year, and basis points (bps) are rounded to the nearest tens. (1) Operating earnings includes an allocation of corporate costs base
Slide 12: Oncology Systems gross orders by geography
12 Oncology Systems gross orders by geography AMERICAS -4% Q1 Y/Y1 (-3% cc) -9% TTM Y/Y1 (-9% cc) APAC -12% Q1 Y/Y (-14% cc) 0% TTM Y/Y (-1% cc) EMEA +21% Q1 Y/Y (+18% cc) -3% TTM Y/Y (-4% cc) (1) In North America, Q1 flat orders growth and TTM orders growth of -8%
Slide 13: Varian Linac net installed base
Varian Linac net installed base Installed base growth Varian strengthened its global leadership in radiation therapy • Net installed base grew +3% or 293 units, driving future recurring software and services revenues • Installed base grew across all three geographies Q1 FY20 Q1 FY21 8,561 8,854 +293
Slide 14: Proton Solutions segment (GAAP)
Proton Solutions segment (GAAP) Key financial metrics 14 Note: Unless noted otherwise, all ‘Orders’ reflect Gross Orders and all growth rates are in dollars and year on year, and basis points (bps) are rounded to the nearest tens. (1) Operating earnings includes an allocation of corporate costs base
Slide 15: Operational centers
Operational centers Centers Under Development 30 ProBeam Sites Total Rooms 84 Operational Rooms1 41 (1) Number of Operational Rooms may not sum up to the total number on the map due to some sites having rooms which are under development. ProBeam proton therapy system sites 15
Slide 16: Other segment (GAAP)
Other segment (GAAP) Key financial metrics 16 Note: Unless noted otherwise, all ‘Orders’ reflect Gross Orders and all growth rates are in dollars and year on year, and basis points (bps) are rounded to the nearest tens. N/M: not meaningful. (1) Operating earnings includes an allocation of corporate
Slide 17: In summary, we are...
FOR INVESTOR USE ONLY 17 In summary, we are… …Driving toward our vision of a world without fear of cancer Winning in emerging markets with our strong value-based portfolio Global leader in radiation therapy Growing our net installed base driving future recurring software and services revenues Expand
Slide 18: Appendix
Appendix
Slide 19: Non-GAAP disclosure
Non-GAAP disclosure 19 Discussion of Non-GAAP Financial Measures This presentation includes the following non-GAAP financial measures derived from our Condensed Consolidated Statements of Earnings: organic revenue growth, non-GAAP operating earnings, non-GAAP net earnings and non-GAAP net earnings p
Slide 20: GAAP to non-GAAP reconciliation
GAAP to non-GAAP reconciliation THE FOLLOWING TABLE RECONCILES GAAP AND NON-GAAP FINANCIAL MEASURES Dollars and shares in millions, except per share amounts 1Q FY20 2Q FY20 3Q FY20 4Q FY20 1Q FY21 Non-GAAP adjustments Amortization of intangible assets and inventory step-up (1) $9.8 $9.1 $8.7 $8.6 $9
Slide 21: Total revenues by sales classification
Total revenues by sales classification 21 $M 1Q FY20 2Q FY20 3Q FY20 4Q FY20 1Q FY21 Product revenues $421.0 $407.3 $320.2 $439.3 $364.2 Y/Y 5 % (5)% (31)% (11)% (13)% Service revenues $407.9 $387.2 $374.1 $411.2 $414.6 Y/Y 20 % 11 % 3 % 6 % 2 % Total revenues $828.9 $794.5 $694.3 $850.5 $778.8 Y/Y
Slide 22: Total revenues by product type
Total revenues by product type 22 CC – Constant currency (1) Includes software support agreements that are recorded in revenues from service, and software licenses that are recorded in revenues from product, in the Condensed Consolidated Statements of Earnings. $M 1Q FY20 2Q FY20 3Q FY20 4Q FY20 1Q
Slide 23: Total revenues by region
Total revenues by region 23 CC – Constant currency $M 1Q FY20 2Q FY20 3Q FY20 4Q FY20 1Q FY21 Americas revenues $402.2 $387.9 $337.5 $407.1 $349.0 Y/Y 15 % 4 % (16)% 1 % (13)% Y/Y – CC 15 % 5 % (16)% 1 % (13)% EMEA revenues $272.9 $250.9 $217.2 $259.1 $267.6 Y/Y 9 % (4)% (20)% (11)% (2)% Y/Y – CC 11
Slide 24: Total Oncology Systems revenues by sales classification
Total Oncology Systems revenues by sales classification 24 CC – Constant currency $M 1Q FY20 2Q FY20 3Q FY20 4Q FY20 1Q FY21 Product revenues $382.0 $381.0 $290.0 $402.3 $338.5 Y/Y 4 % (5)% (33)% (8)% (11)% Y/Y – CC 5 % (4)% (33)% (9)% (13)% Service revenues $400.4 $379.5 $364.5 $398.1 $406.0 Y/Y 19
Slide 25: Total Oncology Systems revenues by region
Total Oncology Systems revenues by region 25 CC – Constant currency $M 1Q FY20 2Q FY20 3Q FY20 4Q FY20 1Q FY21 Americas revenues $378.9 $369.7 $318.1 $383.0 $332.5 Y/Y 15 % 4 % (18)% 1 % (12)% Y/Y – CC 15 % 4 % (17)% 2 % (12)% EMEA revenues $259.8 $240.9 $204.1 $237.3 $254.2 Y/Y 11 % (2)% (20)% (10)
Slide 26: Total Proton Solutions revenues by sales classification
Total Proton Solutions revenues by sales classification 26 $M 1Q FY20 2Q FY20 3Q FY20 4Q FY20 1Q FY21 Product revenues $20.1 $14.6 $23.1 $25.4 $17.0 Y/Y (40)% (48)% (9)% (29)% (16)% Service revenues $7.5 $7.7 $9.6 $13.1 $8.6 Y/Y 54 % 61 % 78 % 100 % 15 % Total revenues $27.6 $22.3 $32.7 $38.5 $25.6
Slide 27: Oncology Systems gross orders by region
Oncology Systems gross orders by region 27 CC – Constant currency $M 1Q FY20 2Q FY20 3Q FY20 4Q FY20 1Q FY21 Americas orders $359.5 $355.4 $329.1 $454.7 $346.9 Y/Y 7 % (3)% (8)% (19)% (4)% Y/Y – CC 7 % (3)% (8)% (18)% (3)% EMEA orders $236.7 $259.3 $191.1 $379.4 $286.0 Y/Y 8 % 11 % (32)% (4)% 21 % Y
Slide 28: Condensed consolidated statements of cash flows
Condensed consolidated statements of cash flows $M 1Q FY20 2Q FY20 3Q FY20 4Q FY20 1Q FY21 Net cash provided by Operating Activities $112.6 $21.9 $83.0 266.6 141.4 Net earnings 88.9 43.1 60.9 76.5 96.8 Share-based compensation expense 14.9 11.3 4.4 13.3 16.7 Depreciation 15.0 14.9 15.0 15.7 16.0 Amo
Slide 29: Our promise: People powering victories
Our promise 29 People powering victories Imagine a world without fear of cancer. We do, every day. We innovate new technologies for treating cancer and for connecting clinical teams to advance patient outcomes. Through ingenuity we inspire new victories and empower people in the fight against cancer
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