Greetings, and welcome to the Varex Q1 2024 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Christopher Belfiore, Director of Investor Relations. Thank you, Chris. You may begin. Good afternoon, and welcome to Varex Imaging Corporation's earnings conference call for the first quarter of fiscal year 2024. With me today are Sunny Sanyal, our President and CEO, and Sam Maheshwari, our CFO. Please note that the live webcast of this conference call includes a supplemental slide presentation that can be accessed at Varex website, at vareximaging.com. The webcast and supplemental slide presentation will be archived on Varex's website. To simplify our discussion, unless otherwise stated, all references to the quarter are for the first quarter of fiscal year 2024. In addition, unless otherwise stated, quarterly comparisons are made year-over-year from the first quarter of fiscal year 2024 to the first quarter of fiscal year 2023. This is a change compared to prior quarters, where since COVID, we have compared results sequentially. We believe going forward, this will be a better representation of our results, given that the impacts of COVID are largely behind us. Finally, all references to the year are to the fiscal year and not calendar year, unless otherwise stated. Please be advised that during this call, we will be making forward-looking statements, which are predictions or projections about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Risks relating to our business are described in our quarterly earnings release and our filings with the SEC. Additional information concerning factors that could cause actual results to materially differ from those anticipated is contained in our SEC filings, including Item 1A, Risk Factors of our quarterly reports on Form 10-Q and our annual report on Form 10-K. The information in this discussion speaks as of today's date, and we assume no obligation to update or revise the forward-looking statements in this discussion. On today's call, we will discuss certain non-GAAP financial measures. These non-GAAP measures are not presented in accordance with, nor are they a substitute for GAAP financial measures. We provided a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure in our earnings press release, which is posted on our website. I will now turn the call over to Sunny. Thanks, Chris. Good afternoon, everyone, and thank you for joining us for our first quarter earnings call. Revenue of $190 million in the first quarter of fiscal 2024 was in line with our expectations. Lower volumes and unfavorable mix in both medical and industrial segments impacted profitability. As a result, non-GAAP gross margin was 31%, and non-GAAP earnings per share was $0.06. Revenue in the first quarter was down 8% year-over-year. Revenue in the medical segment decreased 13% year-over-year, while the industrial segment revenue increased 10% year-over-year. Non-GAAP gross margin in the first quarter was 31%, which was below our expectations and down approximately 100 basis points compared to the same quarter last year. Adjusted EBITDA in the first quarter was $19 million, and non-GAAP EPS was $0.06. We ended the first quarter with $195 million worth of cash, cash equivalents, and marketable securities on the balance sheet, up $87 million compared to the first quarter of fiscal 2023. Let me give you some insights into sales detail by modality in the quarter, compared to a 5-quarter average, which we will refer to as the sales trend. In our medical segment, global sales of CT tubes were seasonally softer than usual and below its sales trend. Fluoroscopy and oncology modalities were weaker in the quarter and were below their respective sales trends. The lower volumes in these three modalities contributed to the unfavorable mix in the quarter for medical. Dental improved slightly in the quarter, but remained below its sales trend. Mammography continued to be solid, with revenues above the sales trend in the quarter, while radiographic was below its sales trend. Global sales of our industrial products in the quarter were solid, but below its sales trend in the quarter. We continued to see strong momentum in our cargo inspection business. Outside of cargo, we're experiencing softness in industrial end markets, particularly in semiconductor, automotive, and electronics. The lower-than-expected industrial revenue contributed to lower gross margin in the quarter. At the end of November, we attended the Radiological Society of North America show, which is the world's largest imaging-focused event and attended by radiology professionals and diagnostic imaging companies globally. We had over 150 meetings with our customers and prospects, and it was a very productive business development event for us. We displayed and discussed several new products across our entire portfolio, including a prototype of our photon counting detector module. Unlike in the last couple of years, where supply chain-related matters dominated the agenda,... Nearly all discussions with our customers at this RSNA were focused on new product development, including for CT, mammography, surgery, interventional, and general X-ray systems. We also met with several new OEMs with novel technologies that would benefit from our Azure and Photon Counting detectors and our software applications. Photon Counting continued to be at the front and center in many of our discussions. I'm happy to say that a major global OEM has expressed their interest to incorporate our Photon Counting technology into their next generation of CT scanners. Discussions with others are ongoing. With the acute supply chain problems behind them, our customers' focus has returned to new product introductions, and so have our discussions with them. In summary, we continue to be excited about the prospects for new imaging products like photon counting CT, and our unique position to support our customers in bringing innovative systems to market. With that, let me hand over the call to Sam. Thanks, Sunny, and hello, everyone. As a reminder, the first quarter is generally a seasonally low quarter for us. Our revenues were at the midpoint of guidance, while gross margin was below the guided range and non-GAAP EPS was lower than the guidance midpoint. During the quarter, we experienced unfavorable product mix in both medical and industrial segments, along with seasonally low volumes. As a result, revenues were $190 million, non-GAAP gross margin was 31%, and non-GAAP EPS was $0.06. Further, operating cash flows were $10 million for the quarter. First quarter revenues decreased 8% compared to the first quarter of fiscal 2023. Medical revenues were $140 million, and industrial revenues were $50 million. Medical revenues were 74%, and industrial revenues were 26% of our total revenues for the quarter. Looking at revenues by region, Americas decreased 6% compared to the first quarter of fiscal 2023, while EMEA increased 1% and APAC decreased 16%. As highlighted last quarter, the decline in APAC was primarily the result of lower sales in our China business due to the government's anti-corruption campaign into its healthcare system. China accounted for 17% of overall revenues in the first quarter, even though sales in China declined approximately 10% compared to the same period last year. Let me now cover our results on a GAAP basis. First quarter gross margin was 30%, 100 basis points lower year-over-year. Operating expenses were $53 million, up $3 million compared to the first quarter of fiscal 2023, and operating income was $4 million, down $9 million. GAAP net loss was about $500,000, and EPS was a loss of $0.01 per share based on fully diluted 41 million shares. Moving on to non-GAAP results for the quarter. Gross margin of 31% was down 100 basis points compared to the first quarter of fiscal 2023. R&D spending was $20 million, flat compared to the first quarter of fiscal 2023. Overall, R&D was 11% of revenues. Generally, our target is 8%-10% of revenues on an annual basis. SG&A was approximately $29 million, up $1 million compared to the first quarter of fiscal 2023. SG&A was 15% of revenues. Operating expenses were $49 million or 26% of overall revenues. Overall, operating expenses were in line with our expectations. Operating income was $10 million, down $8 million compared to the same quarter last year. Operating margin was 5% of revenue, compared to 9% in the first quarter of fiscal 2023. Tax expense was $1 million, or 20% of pre-tax income, compared to $2 million, or 15% in the first quarter of prior year. We continue to expect a tax rate of 21%-23% for full fiscal year 2024. Net earnings were $2 million, or $0.06 per diluted share, down $0.15 year-over-year. Average diluted shares for the quarter were 41 million on a non-GAAP basis. Now turning to the balance sheet. Accounts receivable decreased by $24 million from Q4 of fiscal 2023, primarily the result of lower sales in the quarter. Day sales outstanding increased by two days to 67 days. Inventory increased $12 million sequentially in the first quarter, and days of inventory increased to 198 days. This was the result of an increase in raw materials ahead of higher expected sales in subsequent quarters, as well as higher finished goods held in inventory during the quarter. Accounts payables increased by $9 million, and days payable increased 11 days to 50 days. Now moving to debt and cash flow information. Net cash flow from operations was $10 million, due primarily to the higher collections. We ended the quarter with cash, cash equivalents, and marketable securities of $195 million, up $87 million compared to the first quarter of prior year, and flat compared to fiscal 2023 year end. Please note that $195 million includes $141 million of cash and cash equivalents shown on the balance sheet, $53 million of marketable securities, and $1 million of deposit certificates. Gross debt outstanding at the end of the quarter was $448 million, and debt, net of $195 million of cash and marketable securities, was $253 million. Adjusted EBITDA for the quarter was $19 million or 10% of sales. Our trailing twelve months adjusted EBITDA was $125 million, and our net debt leverage ratio was approximately 2x on a trailing twelve-month basis. Now moving on to outlook for the second quarter of fiscal 2024. Revenues are expected between $195 million and $215 million, and non-GAAP earnings per diluted share are expected between $0.10 and $0.30. Our expectations are based on non-GAAP gross margin in a range of 32%-33%, non-GAAP operating expenses in a range of $49 million-$50 million, tax rate of about 22% for the second quarter, and non-GAAP diluted share count of about 41 million shares. With that, we'll now open the call for your questions. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Thank you. Our first question comes from the line of James Sidoti with Sidoti & Company. Please proceed with your question. Hi, good afternoon. Thanks for taking the questions. Just want to confirm, with China, it sounds like revenue for the quarter was about, a little over $32 million this quarter compared to a little over $36 million a year ago. Does that sound about right? Yeah. So, Larry, this quarter, yeah, they were above, slightly above $32 million, and then last year they were, you know, mid-30s, $34 million-$35 million, something like that. So, David, sorry. Yeah. That's all right. It's all It's all right. I don't mind if you call me Larry. He's a smart guy. It sounds like the decline was less than it was in the previous quarter, so are you starting to see things level off there? So, you know, China continues to remain soft, you know, due to the, due to two reasons: the macroeconomic situation in China, as well as the anti-corruption campaign there. But from quarter to quarter, you're gonna see some variation, Jim, just because, you know, we're talking $1 million-$2 million here or there. But overall, it is soft and, also we are hearing that the anti-corruption campaign kind of moves from one province to another. So you're gonna see some variation or some fluctuation around that. But overall, China is still continuing to be low. Right. And then, on last quarter's call, you talked about some initiatives or some products and non-organic inspection and getting the products. Can you give us an update on how that's going? I'm sorry, or it was, I guess, organic products, things like cannabis. Jim, so we did launch our irradiation product, and one of the first applications of that was in for cannabis irradiation. Yeah, that's going well. The product's showing well, and we've got a few customers on it. And it's moving forward. So, you know, if I look at the guidance, you're expecting revenue to be down again in the second quarter, and I assume that's largely due to the situation in China. Do you think that by the time you get to the second half of the year, you know, you think those trends start to reverse and you get back to top-line revenue growth in the second half of the year? Yes, Jim. As we mentioned in the prepared remarks, we are expecting a rebound in second half. The rebound in second half is gated or it's dependent upon China coming back, as well as somewhat of a pickup in industrial segment. Right now, we are seeing a softness in non-cargo domains of industrial, particularly in semiconductors, automotive, and electronics-related applications where our product is sold in the industrial segment. So we are expecting both of them to pick up at this time, and that should drive rebound in second half for us. So that is what we are expecting at this point. And you talked about new product launches on the medical side, you know, your customers starting to talk about that. How long does that take to turn into a real product and real revenue for Varex? So, you know, a lot of the conversations around, succession, successor products. If someone has got a CT scanner in the market, someone bring the next CT scanners, those tend to be in, usually within a two to three-year window. Yeah, those are. That's a fairly short cycle. So a lot of the conversations that we're having were in that vein of the next, next modality, next version of the modality and the next, markets, tier that they want to go after. And then, of course, in the longer term, so longer cycle time, cycle times are for the newer platforms like, photon counting and, nanotubes or anything brand new. Those tend to be 5+ years. Although photon counting is in, you know, we've been talking about it for some time, so it's getting closer. Okay. All right. That was it for me. Thanks, Jim. Thank you. Thank you. Our next question comes from the line of Anthony Petrone with Mizuho Group. Please proceed with your question. Thanks, Sunny, Sam. Hope your afternoon is going well. Maybe revert back to China. You know, just, you know, a couple questions there. You mentioned, one, the anti-corruption headwind, but also just underlying economy. On anti-corruption, you know, is there anything you're hearing on the ground as to when the program, you know, can be completed? Is it safe to assume that it can be completed by mid-year, or could it extend further into the year? And when you talk about just underlying economic pressures, you know, that's a new one. Is that something that you're hearing most recently from OEM partners in the region there? And then I'll have a couple follow-ups. So let me, Anthony, hand this to Sunny. I'll get us started and then have Sam chime in and add on. There were two—you know, there were always two parallel situations. One is the general health of the provinces, economic health of the provinces, post-COVID, after they spent a lot of money on their zero COVID policy. That was there, always in the backdrop. But however, the direct slowness, you know, we could attribute to the stop in purchasing due to the audit that was going on. What we're sensing now is that the audit is—the audits made substantial progress, and as Sam said, it's just, it's moving along through the provinces. And the expectation still is that it'll start to taper off towards the second half. Now, our understanding is that the audits don't necessarily end here. It's, it's a new sort of a way for the Chinese government to monitor and manage how their, how the monies are, are handled by the, the public hospital system. So I think the, in general, what we're sensing is a slight, I'd say, loosening up of the environment. And so that's why we still continue to be, be of the belief that the second half, we, we should expect to see things pick up in China. Yeah. You know, and I can just add there, Anthony, is that you know that there is no specific announcements or there are no sharp cutoff dates or deadlines that are announced. It is generally as we perceive and hear from our sales force. So we just need to be open to that, you know, and there can be various interpretations. But in general, we are thinking things will improve because the government does want to spend money on the infrastructure and provide better healthcare facilities and services to its citizens. So there is the positive pressure there, along with, we would say, taking care of the healthcare system for the long-term goodness of the system. So in that way, that's also positive for the long term. Maybe just a quick one there. I mean, is it safe to assume then, just the, I guess, the lead time on new deals is maybe slightly longer here because this audit process may be continuously going on in the background? Or are there certain, like, checks and balances upfront before a deal is closed, whether that's in the provinces or major coastal cities? Just kind of the mechanics of what's going on behind the scenes there would be helpful. You know, since we don't have direct visibility to end user hospital buying, I can't answer that very accurately for you. But the way we see it is, the hospital purchasing just stopped at some point because of they were in the middle of the audits. But once the audits are completed, the hospitals go back to their normal operating mechanisms. And so whatever was the deal cycles, the cycle times, we anticipate that that would, you know, come back for those particular hospitals. And for us, the lead times then, then come back to what would be normal, traditional lead, lead times. As hospitals start taking orders, they might have... I'm sorry. As vendors start, or OEMs start to take orders, they may have three to six-month delivery cycles, and that's when we get the, you know, indicators for our forecasts and our factory will then build the components. So it. I don't think anything gets extended. Once it turns on, it just comes back on in the way things were. So the question is, you know, it's not all at the same time. It's gonna start trickling in. You know, we're seeing early signs of a little bit of that happening. Thanks. And the last one for me, I'll hop back in, is just maybe an update on photon counting on the CT detector side. You know, just maybe where we are in the cycle, what you're hearing in terms of demand for conversions on, in, into photon counting, and how you expect that to play out over the next couple of years. Thanks. Yeah. So, you know, it's safe to say that the technology is here to stay, in the sense that there's outside of the OEMs and the vendors like us making the noise around the technology itself, the broad-based radiology community has picked up on photon counting as a viable technology and clinically, exciting for them. So from that perspective, we believe it's here to stay. And we are seeing that in the way our medical OEMs are beginning to talk about their future products and the need to incorporate their desire to incorporate photon counting technologies. From a CT perspective, the initial introductions were at the high end of the spectrum of CTs, but the need in the market is for it to be more in the general tiers that are, you know, that are more broadly available. We are targeting that type of a market segment, and our application, our products are geared towards CTs that would be in that, not super ultra-high end, but, you know, things that would be more broad-based. Thank you. Our next question comes from the line of Suraj Kalia with Oppenheimer. Please proceed with your question. Hi, Sunny and Sam, this is Shamus on for Suraj. Thank you for taking our questions. Hi, Shane. Hi. Just looking at, you know, kind of outside of China, what are you seeing in terms of the capital equipment environment? And then, you know, kind of more specifically, I think you noted in the geographic mix that Americas was down as well, and EMEA was pretty much flat. You know, I guess any color you could provide there as to, you know, what's happening in those regions as well. So our perception and what we're picking up is that the hospital environment in the U.S. is. There are hospitals generally doing better from a profitability standpoint. Their cost structure, the labor costs and nursing, you know, types of nursing and clinicians, manpower has gotten better, and so they're managing it better, so their profitability has improved, so that generally bodes well for capital availability for diagnostic imaging. So we feel positive about the U.S. market. Outside of that, you know, we haven't noticed any measurable difference in Europe or let's say, Japan. Those are our two biggest regions. So I think U.S. continues to be strong. Europe and Japan are still to be seen. Got it. Thank you. And then, looking at it, you know, the medical segment was down a little bit. I guess, how should we think about the relative health over the next three to four quarters? And, you know, where would you describe any soft spots that maybe need to be monitored? So I would say in medical, you're looking at Q1, which is generally a seasonally softer quarter. So when you're comparing to Q4, you might see that it's a little bit down. But we did indicate in our prepared remarks that we are seeing... We saw trends in oncology and CT, et cetera, in Q1, which was somewhat softer. So what I would say is that, you know, CT, we've been now growing continuously for five years in a row, so that business is doing well. It's just a quarterly situation, and then also impacted a little bit by China. So we expect CT to come up as China comes up. Other than that, there really isn't anything major that we are seeing, which is a takeaway here, Shane, other than that. I think the last couple of quarters, we talked about how our customers' environments have been choked manufacturing environment due to supply chain issues. And so they had in some of these modalities, they are down. They had stocked up, so we saw some inventory adjustments and softness. And CT, part of the CT bounce back will also happen as China starts to come back. Got it. Appreciate that. And, one last one from us, and then I'll hop back in queue. Just any latest thoughts on the convertible debt, you know, how you're going to potentially address it? And, I guess what's the optimal structure that, you know, if you had your choice, you'd be looking for? Thank you. Sure. Yes. So we are currently considering various approaches to refinance the convertible debt, and as and when we make a decision, we will be sure to share with all of you. I just want to remind that the debt is maturing next June, which is June of 2025. So that's an update on the convertible bond side. Secondly, in terms of overall structure, we would like to bring down the overall gross debt that the company is carrying, and I would like to see that we maintain overall Adjusted EBITDA-based net debt leverage ratio to be 3.0 or below. Right now, we are running at around 2.0, so we are fairly comfortable with our overall leverage situation. I would also say that we are currently in an excess cash situation, and we are purposely carrying excess cash on the balance sheet to deploy some of that for the refinancing purposes and bring the overall gross debt for the company down. Thank you. Our next question comes from the line of Larry Solow with CJS. Please proceed with your question. Great, thanks. Thank you for taking the questions, and thank you, shout out to Mr. Sidoti. I appreciate the thoughts. Sorry, Larry, for that. No, that's okay. Well, that's all good. I say a lot worse about people, so that's fine. I guess first question, just on the medical side, and you touched on it a little bit, but ex China, I guess it looks like you were down double digits ex China, too, right? Or close to it. Just in medical alone, because that's most of the sales I know into China today are medical, right? And they were down only 10%. I say only because I think we thought that would be more like 25%-30%. So just trying to figure out, was that some of the weakness in the quarter, you know, within that medical being down a little bit more and the mix? I know you called out maybe industrial down as well, but industrial was actually up 10% year-over-year. I know it was down sequentially, but I'm trying to figure out, was industrial kind of also below year? What was sort of the mix driver? And going forward, it looks like, you know, kind of the gross margin this quarter was supposed to be 33%-34%. Now you're rebounding in revenue, which looks like that's kind of in line with original projections, but your gross margin is still below what you thought Q1 was going to be. So can you maybe give us a little more color on that, if that makes sense? Yeah, I can start off with the gross margin first, Larry. So, gross margin, we did see softness in gross margin in Q1, and that was largely driven by unexpected softness in the industrial segment. Overall volume for the business is quite low at $190 million for the full company. So there is under absorption in our factories in both industrial and medical, so there's lower volume. And then the unfavorable mix in industrial segment drove gross margins down. And right now, we are seeing that the mix in industrial in Q2 is also not as strong, and the overall volume is also not where we would like it to be. So between China and industrial and the mix on the industrial is bringing the gross margins down, which we expect to rebound or recover in the second half, and that's what we are expecting right now. And then, remind me- More industrial, then. It's more of an industrial mix, a mix with an industrial than medical, it sounds like. Outside of the- In terms of the- Yeah. Yeah. Yeah. Right. Okay. Mm-hmm. And then could you repeat your first question or the other piece, or the, the first part of your question? Oh, my, my, my other question was just kind of, and I'll, and I'll rephrase it, I guess. I think at the start of the year or at the end of last, you know, when you, you kind of gave this 3%-5% full year revenue down guidance, and I think you had said, if I'm not mistaken, that you thought medical ex China would be flat to up. Do you still think that? I think at this point, when it comes to the guide or the outlook around 3%-5% down, I would say that at this point, we would be more closer to the lower end of the range than the higher end of the range, meaning more between 4%-5% as opposed to 3%-4%. So that- Yeah ... is there, because we were initially expecting a little bit better performance from our industrial segment. I'm not sure if we really commented on medical ex China. China still continues to be a situation. You know, China was a pretty strong growth area for us, but CT and some other products over there, and they're outside of the two things that we talked about, macroeconomic as well as anti-corruption. We expect China to come back. It's just that the timing is somewhat of- Right An unknown factor for us. And the full year will really, Larry, depend upon, does China come back at the beginning of Q3, or does it come back towards the end of Q3? And that will determine the medical, overall medical situation, in a big way for us. Okay. And then, and just on the industrial piece, again, I know you don't actually guide by segment, but you had a great year last year. This quarter, like I said, was up 10%, but, but down somewhat sequentially, and now you're lapping much more difficult comps too, obviously, as we get- Yeah ... showing even next quarter. Do you still, but it sounds like, you know, it sounds a little bit mixed there, too. Do you still think—certainly sounds like you'll grow sequentially, or that you're building that into your expectations. Do you think you grow in the back half year-over-year, or does this type, does that segment overall go, you know, you did $220 million last year. Is that a good place to start for this year, or do you think you can exceed that? Yeah. A little bit of a few things going on there. Let me explain that, Larry. So yes, the comps are going to become... Industrial, we grew very well last year. We grew 19%- Absolutely Year-over-year in 2023. So that's clearly a very strong growth we had last year in Industrial. Right. And yes, you rightly pointed out, we did $220 million there. In industrial, we are seeing kind of like a tale of two cities. And why I say that is this: In industrial, it is still very strong in the cargo inspection area, where we are shipping- Right a lot of hardware or what we call industrial systems or, you know, these big linear accelerators or LINACs. ... Right. Yeah. When we ship these LINACs, our gross margin on the hardware, or the system, upon shipment is lower. Our gross margin on the service piece is much higher. So overall, when you look at our industrial, we have softness, ex cargo. And within cargo, the distribution between systems and service is a lot more skewed towards systems, because right now we are shipping quite a bit of that. So that brings the overall gross margin down for the segment. It's a good thing because it'll generate- Eventually, it'll generate service revenue, right? Yeah, exactly. Exactly. I get that. So that's happening on the industrial side. In terms of overall volume or sales levels for industrial, obviously, we would not be able to repeat the percentage growth factor in industrial of 2023, but we are still hopeful of having a year-over-year growth in industrial, again, provided the timing when it comes back. The cargo inspection business, we have good visibility for the rest of the year. On the non-cargo industrial business, we need to see how it develops. If it comes back sooner than later, then the overall year will be a growth year, for sure. So that is something that we are monitoring, and that's where we are. Right. And, and just remind me, the cargo, that's like, includes, like, security, too. That's like one-third of the segment, plus or minus. Is that about right? And then everything else is two-thirds, am I... Is that right, in the ballpark? Security inspection is around in that range. For cargo. Yeah. Sometimes it can go higher, Larry, in certain quarters- Okay. When we're shipping quite, right? Okay. Um, yeah. Yeah. Okay, just last question, just on the photon technology and, you know, some, you know, being adopted more or, you know, maybe not. It just sounds like we're in the early stages, but of adoption. And you mentioned in one particular OEM. Would—I don't know if you could answer a broader question. Would this, I guess, in some to some extent, cannibalize the existing technology? And is this customer a customer today of you guys, of your existing technologies? Larry, before we go to this photon counting-related question, I just want to correct that cargo is around 20% of the segment, not 30%. Okay. With that- Okay. Yeah. And then on the photon counting, I'll ask Sunny to comment here, but in general, not in general, specifically, what Sunny talked about was photon counting for CT. Right. So that is not a market that we are participating today, so there is no cannibalization. That's really new market, new business development for us. Yeah, and Larry, and everyone, in general, the photon counting detectors go into whole new type of applications. Right. Where someone needs a flat panel or large area detector, they will go with a flat panel detector, and where they need a different type of performance, particularly in high-speed imaging or a different type of dynamic imaging, they'll use photon counting detectors. So we are not seeing cannibalization, or we don't expect cannibalization at this stage between flat panel detectors and photon counting. So that's one thing. But so within existing customers, these would be new applications, new products. And then, of course, as Sam said, the CT is a brand-new space, new addressable market. Got it. I appreciate that clarification. Thank you, Sunny. And thank you, guys. Thank you. Our next question comes from the line of Michael Toomey with Jefferies. Please proceed with your question. Hey, guys. Thanks for taking my questions. Mike Toomey here from Jefferies, covering for Young Li. Most of my questions have been answered, but just two, please. Can I ask a follow-up on the photon counting? You know, when do you think that this could start contributing to the revenue for you guys? Are we talking in the next two years or longer term? And anything you'd highlight on either pricing from your side, or costs kind of easing or stabilizing, whether that's globally or in China? Thanks to take my question. This is Sunny. I didn't catch the second part of the question, so maybe let me answer the first one. Sure. I think it would be cost, cost question. We'll come back to that. So, photon counting. So there's, there are, in addition to, we talked about CT, quite a bit about photon counting applications for CT. That is, that's a longer, duration project. Those are, you know, our typical cycles for these types of projects are, you know, three to five-ish type of years. More, and this being a new technology, more on the five-year side. However, we've been working with our customers now for about a couple of years, so we're looking at about a three-year type of a horizon for when we expect our- Uh. CT detectors to start contributing in any measurable volume, so to say. Between now and then, we will see some amounts of prototypes and, you know, low volumes of shipments. There are other applications within photon counting that are also being contemplated. Those will also be within that two to three-year window, but those are for other modalities, and there you'll see the revenue contribution to be modest. ... A large chunk of our photon counting detectors are being sold. A larger proportion of our photon counting detectors are going into industrial, for food inspection and other applications, high-speed, real-time imaging applications in industrial. Those are short-cycle. Those are happening continuously and we're counting on industrial to contribute to the growth of photon counting in the near term. Okay. All right, that's, that's really helpful. Just to reiterate, the second question was just if there's anything on price that you're charging, any pressure on pricing and any change, significant changes in the costs? At this time, you know, the supply chain driven issues, they are largely behind us. I would say that freight is quite manageable at this time. And, from the raw material cost perspective, things have, things have begun to normalize or they have rather stabilized at this point. We talked about price increases about 12-18 months ago. That round of price increases has largely been completed, and, other than, you know, on a spot basis, we are not embarking upon, any new across-the-board price increase type of a campaign, at this point. But we are looking at, here and there, different situations where, we need to, work on certain price-related initiatives, which we would do. In case inflation picks up much more than what we are planning, then we would address it through a campaign of price increases. But that is not front and center for the situation at this time. Okay, great. Thanks very much. Thank you. There are no further questions at this time. I'd like to turn the call back over to Chris for closing remarks. Great, thank you. I'll now turn over the call to Sunny for some final comments. Thank you, Chris. In closing, you know, as always, I'm very proud of all the hard work of our employees globally as they work to support our customers every day. We're looking forward to our customer successes with incorporating our technologies and also looking forward to their success this year with new product launches. So thank you for taking the time to join us today and for your continued interest in Varex. Thank you, Sunny, and thank you all for your questions and participating in our earnings conference call today. The webcast and supplemental slide presentation will be archived on our website. A replay of the quarterly conference call will be available through February twentieth and can be found at vareximaging.com/investorrelations. Thank you and goodbye. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.