Varex Imaging (VREX) Small-Cap Growth Virtual Investor Conference summary

Business overview and market position

• Largest global maker of X-ray components, with 75% of revenue from medical and 25% from industrial segments.

• Long-standing customer relationships, with major operations in the US, Europe, China, Philippines, and growing presence in India.

• Recurring revenue from X-ray tubes and sources is about 30-33% of total revenue.

• Competes with both large OEMs (GE, Siemens, Philips, Canon) and specialized companies (IAE, Comet, Trixell, Vieworks, iRay, CareRay).

• Gained market share in sources, but lost share in static detectors to Asia-based competitors due to price sensitivity.

China market and macro environment

• Anti-corruption campaign in China has impacted business, expected to subside by end of 2024.

• Optimistic about long-term growth in China due to government focus on healthcare infrastructure.

• Local manufacturing and product registration in China align with Made in China 2025 goals.

• Awaiting details on government stimulus, which could drive demand in late 2024 or early 2025.

• Manufacturing in China helps mitigate, but not fully insulate from, tariff and trade risks.

Supply chain and inventory normalization

• Supply chain crisis led to customer overstocking; normalization process began 3-4 months ago and should conclude by end of 2024.

• Inventory levels at OEM customers are returning to normal, expected to support demand stabilization.