PALO ALTO, Calif., Jan. 23 /PRNewswire-FirstCall/ -- Varian, Inc. (NasdaqGS: VARI) today reported first quarter 2008 revenues of $237.4 million, representing an increase of 8.9% over revenues of $217.9 million in the first quarter of fiscal year 2007. The increase was broad-based, with growth in sales of products for both life science and industrial (which includes environmental, food and energy) applications. Sales increased in all geographic regions, with particularly strong sales growth in Asia Pacific and Latin America.
Non-GAAP (adjusted) net earnings for the first quarter of fiscal year 2008 increased 13.8% to $21.5 million, or $0.70 diluted earnings per share, compared to $18.9 million, or $0.61 diluted earnings per share, in the first quarter of fiscal year 2007. On a GAAP basis, net earnings in the first quarter of fiscal year 2008 were $17.6 million, or $0.57 diluted earnings per share, compared to $15.4 million, or $0.49 diluted earnings per share, in the first quarter of fiscal year 2007.
Adjusted operating earnings increased 6.1% to $30.1 million in the first quarter of fiscal year 2008, compared to $28.4 million in the first quarter last year. Adjusted operating profit margin was 12.7% in the first quarter of fiscal year 2008, compared to 13.0% in the prior-year quarter. This decrease was primarily due to lower adjusted operating margins in the Vacuum Technologies segment in the current quarter compared to unusually strong results in the year-ago quarter. In addition, the sales growth in the first quarter of fiscal year 2008 was entirely attributable to the Scientific Instruments segment, which has lower adjusted operating margins than the Vacuum Technologies segment. On a GAAP basis, operating earnings were $24.1 million and operating profit margin was 10.2% in the first quarter of fiscal year 2008, compared to $22.9 million and 10.5% in the same quarter a year ago.
Adjusted income tax expense was $10.1 million (a 31.9% effective tax rate) in the first quarter of fiscal year 2008, compared to $10.2 million (a 35.1% effective tax rate) in the prior-year quarter. The lower effective tax rate in the first quarter of fiscal year 2008 reflects the positive outcome of tax uncertainties during the quarter. The effective tax rate for the full fiscal year 2008 is expected to be approximately 34.5% to 35.5%. On a GAAP basis, income tax expense was $8.1 million (a 31.4% effective tax rate) in the first quarter of fiscal year 2008, compared to $8.3 million (a 35.0% effective tax rate) in the same quarter a year ago.
“Our balanced approach of focusing on a broad array of applications, product lines and geographies positioned us to deliver another solid financial performance with record orders, sales, and earnings for any first quarter,” said Garry W. Rogerson, President and Chief Executive Officer. “We accomplished this even though we incurred higher costs relating to sales commissions on strong orders, new product introductions and other initiatives in our Scientific Instruments segment, all of which should benefit us later in the year.”
For a complete reconciliation of non-GAAP (adjusted) financial information used in this press release to the most directly comparable GAAP financial information, please refer to the attached Reconciliations of GAAP to Adjusted Results, Actual.
Results by Segment
Scientific Instruments revenues for the first quarter of fiscal year 2008 were $197.0 million, representing an increase of 11.4% over revenues of $176.9 million in the first quarter of the prior fiscal year. Adjusted operating profit margin was 12.7% in the first quarters of both fiscal years 2008 and 2007. On a GAAP basis, operating profit margin was 10.1% in the first quarter of fiscal year 2008, compared to 10.7% in the same quarter a year ago.
Vacuum Technologies revenues decreased 1.6% to $40.4 million in the first quarter of fiscal year 2008, compared to $41.1 million in the first quarter of fiscal year 2007. Adjusted operating profit margin was 19.5% in the first quarter of fiscal year 2008, compared to an unusually high 22.2% in the first quarter of the prior fiscal year. On a GAAP basis, operating profit margin was 19.1% in the first quarter of fiscal year 2008, compared to 20.4% in the prior-year quarter.
Webcast Conference Call
Varian, Inc. will be providing a live webcast (in listen-only mode) of its investor conference call to review its first quarter results later today, January 23, 2008, at 2:00 p.m. Pacific time. The call may be heard via the Internet by going to www.varianinc.com, clicking on the Investors link at the top of the right side of the page, and then clicking on the Live Webcast link.
Non-GAAP (Adjusted) Financial Measures
This press release includes non-GAAP (adjusted) financial measures for cost of sales, selling, general and administrative expenses, research and development expenses, operating earnings, operating profit margins, income tax expense, net earnings and diluted earnings per share. These non-GAAP financial measures exclude share-based compensation expense, acquisition-related intangible and inventory write-up amortization and restructuring and other related costs. Reconciliations of each of these non-GAAP financial measures to the most directly comparable GAAP financial measures are detailed in the Reconciliations of GAAP to Adjusted Results attached to this press release. We believe that presentation of these non-GAAP financial measures provides useful information to investors regarding our results of operations.
We believe that excluding acquisition-related intangible and inventory write-up amortization provides supplemental information and an alternative presentation useful to investors’ understanding of the company’s core operating results and trends. In addition, investors have indicated to us that they analyze the benefits of acquisitions based on the cash return on the investment made, and thus consider financial measures excluding acquisition-related intangible and inventory write-up amortization as important, useful information.
We similarly believe that excluding share-based compensation expense and restructuring and other related costs (principally related to facility closures and employee terminations to improve operational efficiency) provides supplemental information and an alternative presentation useful to investors’ understanding of the company’s core operating results and trends, especially when comparing those results on a consistent basis to results for previous periods and anticipated results for future periods. Investors have indicated that they consider financial measures of our results of operations excluding share-based compensation expense and restructuring and other related costs as important supplemental information useful to their understanding of our historical results and estimating of our future results.
We also believe that, in excluding share-based compensation expense, acquisition-related intangible and inventory write-up amortization and restructuring and other related costs, our non-GAAP financial measures provide investors with transparency into what is used by management to measure and forecast our results of operations, to compare on a consistent basis our results of operations for the current period to that of prior periods, to compare our results of operations on a more consistent basis against that of other companies, in making financial and operating decisions and to establish certain management compensation.
Although we believe, for the foregoing reasons, that our presentation of non-GAAP financial measures provides useful supplemental information to investors regarding our results of operations, our non-GAAP financial measures should only be considered in addition to, and not as a substitute for or superior to, our financial measures prepared in accordance with GAAP.
Caution Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on management’s current expectations, are not guarantees of future performance, and involve certain risks and uncertainties that could cause the company’s actual results to differ materially from management’s current expectations and the forward-looking statements made in this press release. Those risks and uncertainties include, but are not limited to, the following: whether we will succeed in new product development, commercialization, performance and acceptance; whether we can achieve continued growth in sales for industrial applications and/or stronger growth in sales for life science applications; whether we can achieve continued sales growth in Europe and Asia Pacific and/or stronger growth in sales in the U.S.; risks arising from the timing of shipments, installations and the recognition of revenue on certain magnet-based products, including nuclear magnetic resonance (NMR), magnetic resonance (MR) imaging and fourier-transform mass spectrometer (FTMS) systems and superconducting magnets; the impact of shifting product mix on profit margins; competitive products and pricing; economic conditions in the company’s product and geographic markets; whether we will see continued and timely delivery of key raw materials and components by suppliers; foreign currency fluctuations that could adversely impact revenue growth and earnings; whether we will see continued investment in capital equipment; whether we will see reduced demand from customers that operate in cyclical industries; the impact of any delay or reduction in government funding for research; our ability to successfully evaluate, negotiate and integrate acquisitions; the actual costs, timing and benefits of restructuring activities (such as our Northern California facility consolidation) and other efficiency improvement activities (such as our global procurement and outsourcing initiatives); the timing and amount of discrete tax events; the timing and amount of share-based compensation; and other risks detailed from time to time in the company’s filings with the Securities and Exchange Commission. We disclaim any intent or obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise.
About Varian, Inc.
Varian, Inc. is a leading worldwide supplier of scientific instruments and vacuum technologies for life science and industrial applications. The company provides complete solutions, including instruments, vacuum products, laboratory consumable supplies, software, training and support through its global distribution and support systems. Varian, Inc. employs approximately 3,900 people worldwide and operates manufacturing facilities in North America, Europe and Asia Pacific. Varian, Inc. had fiscal year 2007 sales of $921 million, and its common stock is traded on the NASDAQ Global Select Market under the symbol “VARI.” Further information is available on the company’s Web site: www.varianinc.com.
NON-GAAP (ADJUSTED) FINANCIAL MEASURES (see also attached reconciliations of GAAP to Adjusted results for each of these measures):
ir@varianinc.com
CONTACT: Investor Relations of Varian, Inc., +1-650-424-5471,
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Web site: http://www.varianinc.com//
