PALO ALTO, Calif., April 23 /PRNewswire-FirstCall/ -- Varian, Inc. (NasdaqGS: VARI) today reported second quarter 2008 revenues of $248.2 million, representing an increase of 7.9% over revenues of $229.9 million in the second 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 double-digit growth in Europe and Latin America.
Non-GAAP (adjusted) net earnings for the second quarter of fiscal year 2008 increased 10.3% to $21.6 million, or $0.71 diluted earnings per share, compared to $19.5 million, or $0.63 diluted earnings per share, in the second quarter of fiscal year 2007. On a GAAP basis, net earnings in the second quarter of fiscal year 2008 were $15.8 million, or $0.52 diluted earnings per share, compared to $16.3 million, or $0.53 diluted earnings per share, in the second quarter of fiscal year 2007. Current-quarter GAAP net earnings were negatively impacted by $1.9 million, or $0.06 per diluted share, due to the full write-off of the Company’s equity investment in a small private company.
Adjusted operating earnings increased 11.9% to $32.7 million in the second quarter of fiscal year 2008, compared to $29.2 million in the second quarter last year. Adjusted operating profit margin was a record 13.2% in the second quarter of fiscal year 2008, compared to 12.7% in the prior-year quarter. This improvement was primarily the result of favorable sales mix, sales volume leverage and cost reduction activities favorably impacting SG&A expenses. On a GAAP basis, operating earnings were $27.1 million and operating profit margin was 10.9% in the second quarter of fiscal year 2008, compared to $24.1 million and 10.5% in the same quarter a year ago.
“It was a sound quarter, with record revenues, adjusted diluted EPS and adjusted operating margins,” said Garry W. Rogerson, President and CEO. “With the many new products we recently released, the breadth of applications we serve and our global reach, we feel confident with our position for the rest of 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 second quarter of fiscal year 2008 were $204.4 million, representing an increase of 7.4% over revenues of $190.3 million in the second quarter of the prior fiscal year. Adjusted operating profit margin was 12.7% in the second quarter of fiscal year 2008 compared to 13.0% in the second quarter of the prior fiscal year. The decrease was attributable to the timing of costs related to new product introductions and other initiatives. On a GAAP basis, operating profit margin was 11.0% in the second quarter of fiscal year 2008, compared to 11.4% in the same quarter a year ago.
Vacuum Technologies revenues increased 10.5% to $43.7 million in the second quarter of fiscal year 2008, compared to $39.6 million in the second quarter of fiscal year 2007. Adjusted operating profit margin was 20.6% in the second quarter of fiscal year 2008, compared to 19.6% in the second quarter of the prior fiscal year. On a GAAP basis, operating profit margin was 20.1% in the second quarter of fiscal year 2008, compared to 19.3% 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 23, 2008, at 2:00 p.m. Pacific time. The call may be heard via the Internet by going to http://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, impairment of private company equity investments, income tax expense, net earnings and diluted earnings per share. These non-GAAP financial measures exclude share- based compensation expense, impairment of private company equity investments, 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, restructuring and other related costs (principally related to facility closures and employee terminations to 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 share-based compensation expense, 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 share-based compensation expense, 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.
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, in particular given global liquidity and credit concerns; 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 4,000 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: http://www.varianinc.com.
NON-GAAP (ADJUSTED) FINANCIAL MEASURES (see also attached reconciliations of GAAP to Adjusted results for each of these measures):
NON-GAAP (ADJUSTED) FINANCIAL MEASURES (see also attached reconciliations of GAAP to Adjusted results for each of these measures):
CONTACT: Investor Relations of Varian, Inc., +1-650-424-5471,
ir@varianinc.com
Web site: http://www.varianinc.com/
