On January 23, 2019 Varian (NYSE: VAR) reported its first quarter fiscal year 2019 results (Filing, 8-K, Varian Medical Systems, JAN 23, 2019, View Source [SID1234532877]). 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, significant litigation charges or benefits and legal costs, significant non-recurring tax expense or benefit, and gains or losses on equity investments.

"In the first quarter, we built on the strong trajectory from last year, bringing our trailing twelve-month orders growth rate to 11%," said Dow Wilson, chief executive officer of Varian. "The team delivered exceptional performance, with accelerating software revenues and overall orders growing double-digits in each of our three geographic regions. We made progress on our strategic growth initiatives, extending our global footprint by securing Halcyon approval in China and expanding our addressable markets by signing two Noona deals with pharmaceutical companies. With a strong start to the year and tariff mitigation activities on track, we are well-positioned to deliver results within our fiscal year 2019 guidance."

The company ended the quarter with $616 million in cash and cash equivalents and no debt. Net cash provided by operating activities was $141 million, down 21% due to timing of certain accounts receivable collections and inventory build to meet demand. During the quarter, the company invested $35 million to repurchase 320,000 shares of common stock.

Oncology Systems Segment

In the first quarter, Oncology revenues totaled $702 million, up 8%. Operating earnings for the segment decreased 10%, primarily driven by the impact of tariffs.

Orders were $716 million, up 16%. Orders in the Americas increased 12%. In EMEA, orders rose 15%, the sixth consecutive quarter of double-digit growth for the region. In APAC, orders increased 25%, with accelerating growth in China.

Proton Solutions Segment

In the first quarter, Proton Solutions revenues totaled $39 million, up 32%. The company completed clinical handovers for one room each at three sites.

Non-GAAP Adjustments

Varian’s GAAP operating earnings include $22 million from the gain on the sale of the company’s equity investment in Augmenix, Inc. The company also incurred $2 million in acquisition-related expenses.

Guidance for Full Fiscal Year 2019

We are reaffirming the following guidance for fiscal year 2019:

•Revenue range of $3.06 billion to $3.15 billion, representing growth of 5% to 8%
•Non-GAAP operating earnings as a percentage of revenues range of 17.0% to 18.0%
•Non-GAAP net earnings per diluted share range of $4.60 to $4.75
•Cash flows from operations range of $460 million to $510 million

The guidance assumes a Non-GAAP effective tax rate of 21% to 22% and a weighted average diluted share count of 92 million. The guidance also assumes currency rates as of the beginning of fiscal year 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 first 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 13685671. The teleconference replay will be available through 5:00 p.m. Pacific Time, Friday, January 25, 2019.