Varex Imaging Corporation (NASDAQ: VREX) reported Q2 EPS of $0.12, $0.23 worse than the analyst estimate of $0.35. Revenue for the quarter came in at $197 million versus the consensus estimate of $199.89 million.

Summary

• 2Q20 Revenues were $197 million
• 2Q20 Gross margin was 29% | Adjusted gross margin* was 32%
• 2Q20 Operating earnings margin was 1% | Adjusted operating earnings margin* was 5%
• 2Q20 Net earnings were ($0.05) per diluted share | Adjusted net earnings* were $0.12 per diluted share

“During the second quarter we began to see the impact of the COVID-19 pandemic on our business. Although our revenues increased over the prior year quarter, we experienced a substantial shift in mix between and within our business segments that lowered our overall margins,” said Sunny Sanyal, Chief Executive Officer of Varex.

“In our medical segment, during the second quarter a significant increase in sales of CT tubes and higher demand for other X-ray imaging products that assist with the fight against COVID-19 drove revenue growth. This growth was partially offset by a decline in sales of other medical products as our OEM customers managed their inventory levels in response to the uncertainty around spending for X-ray imaging systems. In our industrial segment, a decline in world oil prices and the widespread economic impact of COVID-19 led to lower sales of products for cargo screening and non-destructive inspection applications that were partially offset by increased sales of products for the airport security market,” Sanyal added.

Outlook

The unprecedented nature of the COVID-19 pandemic and its impact on the global economy has created a disruption to Varex’s business which includes significant uncertainty in demand for certain products for medical and industrial applications, as well as increased variability in its supply chain and manufacturing productivity. The company expects this uncertainty to continue for at least the remainder of the current fiscal year. As a result, Varex is withdrawing its previously issued guidance for fiscal year 2020.

Further, due to the unpredictability of when and how strong a global economic recovery may be, the company has been implementing actions to reduce its expenses and cash disbursements, some of which were previously disclosed in Varex’s Form 8-K dated April 10, 2020. The company continues to evaluate and implement additional cost reduction measures.

For earnings history and earnings-related data on Varex Imaging Corporation (VREX) click here.