Sunny Sanyal: Interest expense, I would just model, I did not provide any guidance on interest expense, but they should at least at this point. No change from Q1 really, whatever debt we are carrying, $200 million on convertible that is at 4% and about $243 million on high yield note. That’s about 7.875 interest rate. So that should continue. I just want to remind you, maybe you heard our comments, I just want to remind you that coupon on both the debts is payable in the same quarter. So we pay coupon interest payments in Q1 and Q3. And so maybe that is what you’re asking. So we’re not expecting a cash coupon payment in Q2, but of course, we would recognize the expense over Q2 for that.
Jim Sidoti: Got it. All right. Thank you.
Operator: Thank you. Our next question is from Michael with Mizuho Securities. Please proceed with your question.
Unidentified Participant: Hey, guys. How are you doing? Just looking at — you guys are carrying a fair amount of cash or have been? And then I saw some comments at the recent equity conference that you were at. How are you viewing the capital structure? I know you’ve caught the bonds a couple of times; I think you have one claw available left. Are you just going to stockpile cash until you, sort of, debt closer to that convert maturity? Or how are you guys thinking about the cap structure and your use of cash in regards to that?
Sunny Sanyal: Yes. Thanks Mike. So what we have said that we want to keep $100 million of cash as operating cash and we reported about $108 million of total cash at the end of December quarter. So we do not have that much more cash that we are carrying at this time, compared to the cash levels that I would like to carry for. Just general operations. I want to remind you that our cash is distributed across various geographies. We are a multinational company and movement of cash, et cetera, sometimes may have bad tax consequences. And so as a result, cash is not at one place. So that said, your comment in terms of one tranche that is possible for us to pay that is true. Every calendar year, we can pay down 10% of our high yield notes.
So that is at this point about $243 million, so that gives us an opportunity to pay down about $24 million in debt as and when we have sufficient cash to pay that down and provided our Board of Directors approves that. So pending those two things, we can do that. We have highlighted that retiring that is a high priority for us. And that said, as we look towards our business, typically, we generate cash. So as our cash from operations improves our cash balance. We would like to, overall, bring down the overall debt levels. Right now, the debt levels are about $450 million on the company. And we would like to bring it down by about $100 million. When is the right time for that? Depends on various factors, but that is what something we would like to get to.
At the right time, when the environment is right, and when we can execute towards that.
Unidentified Participant: Okay, great. And then so you did mention that your coupons are both coincidentally in the same quarters Q1 and Q3. So Q2, Q4 should be sort of a cash influx, right, relative to sort of what we saw this quarter, right, because the coupon doesn’t get paid. So your high watermarks on cash generally going to be Q2 and Q4, does that sound right?
Sunny Sanyal: In general, from a modeling perspective, that is right. But from tactical, prospective AR, AP, and then et cetera. And it pertains to that, but in general, your thinking is right. But we would like to make sure we have sufficient windage over that in terms of tactical movements. But in general, your thought is on the right direction, Mike.
Unidentified Participant: Okay, great. Well thank you very much for taking my question.
Sunny Sanyal: Thank you, Mike. Take care.
Operator: Thank you. There are no further questions at this time. I’d like to turn the floor back over to Christopher Belfiore for any closing comments.
Christopher Belfiore: Great. Thank you. Sunny, do you have any final comments?
Sunny Sanyal: Yes. Thank you, Chris. So in closing, I mean, the quarter was largely as expected and outside of the gross margin pressure from the — from revenue mix. Economic uncertainty is creating caution across various industries. But as we continue to view the healthcare industry, we participate in as a stable — we see the healthcare industry as a stable grower over the long-term. I’m very proud of the effort our employees are making globally on a daily basis in this uncertain environment. And I appreciate you’re taking the time for us to join — for joining us today and for your continued interest in Varex. Thank you.
Christopher Belfiore: Thanks, 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 this quarterly conference will be available through February 14 and can be accessed at our website vareximaging.com/investors or by calling 877-660-6853 from anywhere in the U.S. or 201-612-7415 from non-U.S. locations. The replay conference call access code is 13735486. Thank you and goodbye.
Operator: This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.
