On April 24, 2019 Varian (NYSE: VAR) reported its second quarter fiscal year 2019 results (Press release, Varian Medical Systems, APR 24, 2019, View Source [SID1234535373]). All comparisons in this announcement are year-over-year, all quarter and year references are fiscal unless noted otherwise, and any references to orders are gross orders
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(1) Non-GAAP net earnings and Non-GAAP net earnings per diluted share are defined as GAAP net earnings and GAAP net earnings per diluted share adjusted to exclude the amortization of intangible assets, acquisition-related expenses and benefits, impairment charges, significant litigation charges or benefits and legal costs, gains or losses on equity investments, and significant non-recurring tax expense or benefit.
"In the second quarter, we maintained strong momentum," said Dow Wilson, chief executive officer of Varian. "Each of our geographies delivered exceptional orders growth, including strong double-digit performance in APAC and the seventh consecutive quarter of double-digit growth in EMEA. Based on the company’s results year-to-date and our outlook for the rest of the year, we are raising our fiscal year revenue guidance to 6 to 9 percent while increasing investments in growth priorities such as groundbreaking preclinical research with our FlashForward Consortium."
The company ended the quarter with $546 million in cash and cash equivalents and no debt. Net cash used in operating activities was $13 million, down $79 million due to the tax payments and net working capital impacts from revenue growth. During the quarter, the company invested $51 million to repurchase 420,000 shares of common stock.
Oncology Systems Segment
In the second quarter, Oncology revenues totaled $747 million, up 7%. Operating earnings for the segment decreased 8%, primarily driven by the impact of tariffs, currency fluctuations and costs related to the ramp of our software deployment capabilities.
In the second quarter, Oncology orders were $766 million, up 15%. Orders in the Americas increased 7% driven by strong U.S. growth. In EMEA, orders rose 17%, the seventh consecutive quarter of double-digit growth for the region. In APAC, orders increased 35%, with accelerating growth in China.
Proton Solutions Segment
In the second quarter, Proton Solutions revenues totaled $33 million, up 2%. Operating earnings were negatively impacted by $7 million in increased project costs and site delays.
Guidance for Full Fiscal Year 2019
The company is raising revenue guidance and are otherwise reaffirming the following guidance for fiscal year 2019:
This updated guidance reflects increased project costs and site delays in our Proton Solutions business of $7 million, incremental investments in our preclinical research with the FlashForwardTM Consortium of $5 million, and costs related to the ramp of our software deployment capabilities of $2 million, partially offset by an estimated reduction in gross tariff impact of $5 million.
The guidance assumes a Non-GAAP effective tax rate of 21% to 22% and a weighted average diluted share count of 92 million, unchanged from our original assumptions. The guidance also assumes currency rates as of the beginning of the fiscal third quarter of 2019, includes the expected net impact of all tariffs effective as of the beginning of the fiscal year, and excludes any future acquisitions.
Please refer to "Discussion of Non-GAAP Financial Measures" below for a description of items excluded from expected non-GAAP earnings.
Investor Conference Call
Varian Medical Systems is scheduled to conduct its second quarter fiscal year 2019 conference call at 1:30 p.m. Pacific Time today. To access the live webcast or replay of the call, visit the Investor Relations page on our website at www.varian.com/investors. To access the call via telephone, dial 1-877-869-3847 from inside the U.S. or 1-201-689-8261 from outside the U.S. The replay can be accessed by dialing 1-877-660-6853 from inside the U.S. or 1-201-612-7415 from outside the U.S. and entering conference ID 13688640. The teleconference replay will be available through 5:00 p.m. Pacific Time, Friday, April 26, 2019.