PALO ALTO, Calif., April 29 /PRNewswire-FirstCall/ -- Varian, Inc. (NasdaqGS: VARI) today reported second quarter fiscal year 2009 revenues of $205.4 million, a decrease of 17.2% from the second quarter of fiscal year 2008.
Non-GAAP (adjusted) diluted earnings per share for the second quarter of 2009 were $0.55 (including $0.05 of share-based compensation expense), a decrease of 14.1% from the $0.64 (including $0.07 of share-based compensation expense) in the second quarter of 2008. On a GAAP basis, diluted earnings per share in the second quarter of 2009 were $0.35, compared to $0.52 in the second quarter of 2008.
Adjusted operating profit margin was 11.8% in the second quarter of 2009, compared to 12.0% in the prior-year quarter. On a GAAP basis, operating profit margin was 7.5% in the second quarter of 2009, compared to 10.9% in the same quarter a year ago.
Free cash flow, which is defined as operating cash flow less net fixed asset purchases, was $25.5 million, or 250% of GAAP net earnings, in the second quarter of 2009.
“We were able to maintain solid adjusted operating profit margins in the quarter even with the expected lower revenues,” said Garry W. Rogerson, Chairman and Chief Executive Officer. “This was primarily due to the positive impact of efficiency improvements we have implemented in recent years, combined with benefits from the cost reduction activities we announced on January 16, 2009 and positive foreign currency movements. We also generated excellent free cash flow, which demonstrates the fundamental strength and flexibility of our business, even in a challenging economic environment.”
On a sequential basis, second quarter 2009 revenues of $205.4 million decreased only 1.3% from first quarter 2009 revenues of $208.2 million. Second quarter 2009 adjusted diluted earnings per share were $0.55, an increase of 1.9% from the $0.54 reported in the first quarter of 2009. On a GAAP basis, second quarter 2009 diluted earnings per share were $0.35, compared to $0.45 in the prior quarter. Second quarter 2009 adjusted operating profit margin was 11.8%, an increase of 40 basis points compared to the 11.4% reported in the first quarter of 2009. On a GAAP basis, second quarter 2009 operating profit margin was 7.5%, compared to 9.6% in the prior quarter.
“We are encouraged by the stability reflected in the sequential results, with essentially flat revenues and profitability on an adjusted basis,” said Rogerson. “Looking forward, the diversity of our products, the applications we serve and our worldwide distribution position us well. There are a few positive signs for the future, including governmental spending initiatives, a global focus on environmental, food and product testing, and investments in alternative energies such as solar, nuclear and biofuels. We believe that our strategy is sound, but will remain vigilant with respect to the economic situation, making the appropriate decisions to maintain solid profitability and cash flow through this very difficult period and position ourselves for profitable growth with the economic recovery.”
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 second quarter of 2009 were $170.9 million, a decrease of 16.4% from the second quarter of the prior year. Adjusted operating profit margin was 12.0% in the second quarter of 2009, compared to 12.3% in the second quarter of the prior year. On a GAAP basis, operating profit margin was 7.3% in the second quarter of 2009, compared to 11.0% in the same quarter a year ago.
Vacuum Technologies revenues were $34.5 million in the second quarter of 2009, a decrease of 21.0% from the second quarter of 2008. Adjusted operating profit margin was 21.4% in the second quarter of 2009, compared to 20.1% in the second quarter of the prior year. On a GAAP basis, operating profit margin was 19.2% in the second quarter of 2009, compared to 20.1% 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 second quarter results later today, April 29, 2009, 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 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, impairment of private company equity investments, income tax expense, net earnings, diluted earnings per share and free cash flow. With the exception of free cash flow, these non-GAAP financial measures exclude acquisition-related intangible and inventory write-up amortization, restructuring and other related costs, and impairment of private company equity investments. 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 and our cash flows.
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 restructuring and other related costs (principally related to facility closures and employee terminations to reduce costs and improve operational efficiency) and impairment of private company equity investments 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 restructuring and other related costs and impairment of private company equity investments as important supplemental information useful to their understanding of our historical results and estimating of our future results.
We also believe that, in excluding acquisition-related intangible and inventory write-up amortization, restructuring and other related costs, and impairment of private company equity investments, 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.
We believe that the presentation of free cash flow provides investors with useful information on what is used by management to measure cash management performance, 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 and our cash flows, 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: when and how quickly global economic conditions improve, and whether conditions worsen before they improve; whether we will succeed in new product development, release, commercialization, performance and acceptance; whether we can achieve growth in sales for life science, environmental, energy and/or applied research and other applications; whether we can achieve sales growth in Europe, North America, Asia Pacific and/or Latin America; risks arising from the timing of shipments, installations and the recognition of revenue on certain research products, including nuclear magnetic resonance (NMR) spectroscopy systems, 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 our various 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/or earnings; whether we will see continued investment in capital equipment, in particular given the global liquidity and credit crisis; whether we will see reduced demand from customers that operate in cyclical industries; whether the global liquidity and credit crisis will impact the collectability of accounts receivable from our customers; the extent and timing of government funding for research; our ability to successfully evaluate, negotiate, complete and integrate acquisitions, in particular given the greater difficulty to borrow in the current credit environment; the actual costs, timing and benefits of restructuring activities (such as the employee reductions and other actions announced on January 16, 2009 and our Northern California operations consolidation) and other efficiency improvement activities (such as our global procurement, lower-cost manufacturing and outsourcing initiatives); variability in our effective income tax rate (due to factors including the timing and amount of discrete tax events and changes to unrecognized tax benefits); the timing and amount of share-based compensation; and other risks detailed from time to time in our filings with the U.S. Securities and Exchange Commission. We undertake no special obligation to update 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, environmental, energy, and applied research and other 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 3,600 people worldwide and operates manufacturing facilities in North America, Europe and Asia Pacific. Varian, Inc. had fiscal year 2008 sales of $1.0 billion, 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 at http://www.varianinc.com.
CONTACT: Investor Relations of Varian, Inc., +1-650-424-5471,
ir@varianinc.com
Web site: http://www.varianinc.com/
