Varian Medical Systems — Q4 FY2020 Earnings Presentation
30 slides from Varian Medical Systems's earnings presentation, Oct 27, 2020
Slide 1: Fourth Quarter Fiscal Year 2020
Fourth Quarter Fiscal Year 2020 October 27, 2020 Investor Relations
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: Q4 FY 2020 earnings
Agenda Q4 FY 2020 earnings 1. Fourth Quarter Overview 2. Segment Performance 3. Appendix VARIAN CONFIDENTIAL/ PROPRIETARY: DISCLOSED SOLELY FOR IMMEDIATE RECIPIENT ONLY
Slide 4: Fourth Quarter Overview
Fourth Quarter Overview varian
Slide 5: Q4 FY 2020 key financial metrics
Q4 FY 2020 key financial metrics $M Q4 Y/Y FY20 Y/Y Oncology Orders $1,041 (8%) $3,254 (4%) • Operating performance reflects COVID-19 impact across all geographies Revenues $850 (3%) $3,168 (2%) Oncology $800 (2%) $2,998 (2%) Proton Solutions $38 (8%) $121 (16%) • As previously announced on Other $1
Slide 6: Total company results (GAAP)
Operating performance reflects COVID-19 impact Total company results (GAAP) across all geographies • Revenues decline driven by inability to access sites Key P&L financial metrics and delays in pre-installation construction activities − Services Revenue growth reflects resilience of hardware and sof
Slide 7: Total company results (non-GAAP)
Total company results (non-GAAP) Operating performance reflects COVID-19 impact Key P&L financial metrics across all geographies • Revenues decline driven by inability to access sites and delays in pre-installation construction activities VARIAN − Services Revenue growth reflects resilience of $M Q4
Slide 8: Strong financial position
Strong financial position Key balance sheet and cash flow metrics Strong balance sheet with total accessible Cash & Cash Equivalents ($M) Cash Flow from Operations ($M) liquidity of $1.6 billion +$235M Y/Y +$148M Y/Y $800 $300 $250 $700 $200 • Cash & Cash equivalents of $766 million $600 $150 • Appr
Slide 9: Long-term growth and value creation strategy
Long-term growth and value creation strategy Focusing on these strategic enablers will deliver core business growth, global expansion and new opportunities Innovate in radiation therapy Leverage artificial intelligence, machine learning and Global Leader cloud solutions Global Leader in in Radiation
Slide 10: Segment Performance
Segment Performance varian
Slide 11: Oncology Systems segment (GAAP)
Oncology Systems segment (GAAP) Key financial metrics VARIAN Operating performance reflects COVID-19 impact $M Q4 FY20 Y/Y FY20 Y/Y across all geographies Gross Orders $1,041 (8%) $3,254 (4%) Revenues $800 (2%) $2,998 (2%) • Gross Orders decreased 8% in the quarter and fell 4% in the full fiscal yea
Slide 12: Oncology Systems gross orders by geography
Oncology Systems gross orders by geography APAC AMERICAS +14% Q4 Y/Y -19% Q4 Y/Y1 (+12% cc) (-18% cc) +6% FY20 Y/Y -7% FY20 Y/Y1 (+6% cc) (-7% cc) (1) In North America, Q4 orders growth of -17% and FY20 orders growth of -7% EMEA -4% Q4 Y/Y (-8% cc) -6% FY20 Y/Y 12 (-6% cc)
Slide 13: Varian linac net installed base
Varian linac net installed base Installed base growth Varian strengthened its global leadership in radiation therapy 8,717 • Net installed base grew +3% or 221 units, driving +221 future recurring software and services revenues (+3%) 8,496 • Installed base grew across all three geographies Q4 FY19 Q
Slide 14: Proton Solutions segment (GAAP)
Proton Solutions segment (GAAP) Key financial metrics VARIAN Operating performance reflects COVID-19 impact across all geographies $M Q4 FY20 Y/Y FY20 Y/Y Gross Orders $36 18% $132 (13%) • Gross Orders driven by one new order in the Revenues $38 (8%) $121 (16%) quarter for a total of four orders in
Slide 15: ProBeam proton therapy system sites
ProBeam proton therapy system sites 29 81 40 ProBeam Total Operational Sites Rooms Rooms1 Operational centers Centers Under Development (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. 15
Slide 16: Other segment (GAAP)
Other segment (GAAP) Key financial metrics VARIAN Operating performance reflects COVID-19 impact $M Q4 FY20 Y/Y FY20 Y/Y across all geographies Gross Orders $12 (33%) $49 n/m Revenues $12 (33%) $49 n/m • Revenues from Interventional Oncology business Product $12 (33%) $49 n/m represent sales for cry
Slide 17: In summary, we are…
In summary, we are… Global leader in radiation therapy Growing our net installed base driving future recurring …Driving software and services revenues toward our vision Expanding into high growth, high margin businesses of a world without fear of cancer Winning in emerging markets with our strong va
Slide 18: Appendix
Appendix
Slide 19: Non-GAAP disclosure
Non-GAAP disclosure 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 per
Slide 20: Organic revenue growth reconciliation
Organic revenue growth reconciliation $M FY20 FY19 Percent Change Impact from Impact from Organic Growth Acquisitions Foreign Exchange Total Revenues $3,168.2 $3,225.1 (2)% (2)% — % (4)% 20
Slide 21: 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 FY20 Non-GAAP adjustments Amortization of intangible assets and inventory step-up (1) $9.8 $9.1 $8.7 $8.6 $36.2
Slide 22: Total revenues by sales classification
Total revenues by sales classification $M 1Q FY20 2Q FY20 3Q FY20 4Q FY20 FY20 Product revenues $421.0 $407.3 $320.2 $439.3 $1,587.8 Y/Y 5 % (5)% (31)% (11)% (11)% Service revenues $407.9 $387.2 $374.1 $411.2 $1,580.4 Y/Y 20 % 11 % 3 % 6 % 10 % Total revenues $828.9 $794.5 $694.3 $850.5 $3,168.2 Y/Y
Slide 23: Total revenues by product type
Total revenues by product type $M 1Q FY20 2Q FY20 3Q FY20 4Q FY20 4Q Y/Y FY20 FY20 Y/Y Hardware $359.0 $340.9 $264.0 $377.3 (12)% $1,341.2 (12)% Oncology Systems $320.0 $316.1 $234.3 $340.6 (10)% $1,211.0 (13)% Proton Solutions $20.1 $13.1 $22.6 $25.1 (26)% $80.9 (32)% Other $18.9 $11.7 $7.1 $11.6 (
Slide 24: Total revenues by region
Total revenues by region $M 1Q FY20 2Q FY20 3Q FY20 4Q FY20 FY20 Americas revenues $402.2 $387.9 $337.5 $407.1 $1,534.7 Y/Y 15 % 4 % (16)% 1 % — % Y/Y – CC 15 % 5 % (16)% 1 % 1 % EMEA revenues $272.9 $250.9 $217.2 $259.1 $1,000.1 Y/Y 9 % (4)% (20)% (11)% (7)% Y/Y – CC 11 % (2)% (18)% (13)% (6)% APAC
Slide 25: Total Oncology Systems revenues by sales classification
Total Oncology Systems revenues by sales classification $M 1Q FY20 2Q FY20 3Q FY20 4Q FY20 FY20 Product revenues $382.0 $381.0 $290.0 $402.3 $1,455.3 Y/Y 4 % (5)% (33)% (8)% (11)% Y/Y – CC 5 % (4)% (33)% (9)% (11)% Service revenues $400.4 $379.5 $364.5 $398.1 $1,542.5 Y/Y 19 % 10 % 1 % 5 % 9 % Y/Y –
Slide 26: Total Oncology Systems revenues by region
Total Oncology Systems revenues by region $M 1Q FY20 2Q FY20 3Q FY20 4Q FY20 FY20 Americas revenues $378.9 $369.7 $318.1 $383.0 $1,449.7 Y/Y 15 % 4 % (18)% 1 % — % Y/Y – CC 15 % 4 % (17)% 2 % — % EMEA revenues $259.8 $240.9 $204.1 $237.3 $942.1 Y/Y 11 % (2)% (20)% (10)% (6)% Y/Y – CC 13 % — % (18)%
Slide 27: Total Proton Solutions revenues by sales classification
Total Proton Solutions revenues by sales classification $M 1Q FY20 2Q FY20 3Q FY20 4Q FY20 FY20 Product revenues $20.1 $14.6 $23.1 $25.4 $83.2 Y/Y (40)% (48)% (9)% (29)% (32)% Service revenues $7.5 $7.7 $9.6 $13.1 $37.9 Y/Y 54 % 61 % 78 % 100 % 76 % Total revenues $27.6 $22.3 $32.7 $38.5 $121.1 Y/Y
Slide 28: Oncology Systems gross orders by region
Oncology Systems gross orders by region $M 1Q FY20 2Q FY20 3Q FY20 4Q FY20 FY20 Americas orders $359.5 $355.4 $329.1 $454.7 $1,498.7 Y/Y 7 % (3)% (8)% (19)% (7)% Y/Y – CC 7 % (3)% (8)% (18)% (7)% EMEA orders $236.7 $259.3 $191.1 $379.4 $1,066.5 Y/Y 8 % 11 % (32)% (4)% (6)% Y/Y – CC 11 % 13 % (30)% (
Slide 29: Condensed consolidated statements of cash flows
Condensed consolidated statements of cash flows $M 1Q FY20 2Q FY20 3Q FY20 4Q FY20 FY20 Net cash provided by Operating Activities $112.6 $21.9 $83.0 $266.0 $483.5 Net earnings 88.9 43.1 60.9 76.5 269.4 Share-based compensation expense 14.9 11.3 4.4 13.3 43.9 Depreciation 15.0 14.9 15.0 15.7 60.6 Amo
Slide 30: Our promise: People powering victories
Our promise 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. W
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