- Record Q2 Revenue of $236 million
(22% increase over prior year)
- Record Non-GAAP Q2 Earnings Per
Share
- GAAP of $0.71
- Non-GAAP of $0.78
- Free Cash Flow of $35
million
OSI Systems, Inc. (NASDAQ: OSIS) today announced financial
results for the second fiscal quarter ended December 31, 2013.
“We are pleased to announce strong second quarter results. We
achieved record sales, as each of our three divisions reported
double digit sales growth over the prior year, resulting in overall
growth of 22%. In addition, we reported record year-over-year
non-GAAP earnings for the 18th straight quarter along with
significant free cash flow,” said Deepak Chopra, OSI Systems’
Chairman and CEO.
The Company reported revenues of $236 million for the second
quarter of fiscal 2014, an increase of 22% as compared to the same
period a year ago. Net income for the second quarter of fiscal 2014
was $14.6 million, or $0.71 per diluted share, compared to net
income of $12.4 million, or $0.60 per diluted share, for the second
quarter of fiscal 2013. Excluding the impact of impairment,
restructuring and other charges, net income for the second quarter
of fiscal 2014 would have been $16.1 million, or $0.78 per diluted
share, compared to net income of $14.4 million, or $0.70 per
diluted share for the comparable quarter of the prior year.
For the six months ended December 31, 2013, the Company reported
revenues of $443 million, an increase of 18% as compared to the
same period a year ago. Net income in this period was $21.0
million, or $1.02 per diluted share, compared to net income of
$18.8 million, or $0.91 per diluted share, in the same period a
year ago. Excluding the impact of impairment, restructuring and
other charges, net income for the six months ended December 31,
2013 would have been $25.5 million, or $1.24 per diluted share,
compared to net income of $20.7 million, or $1.01 per diluted
share, for the comparable period in the prior year.
As of December 31, 2013, the Company’s backlog was approximately
$0.9 billion. During the second fiscal quarter, the Company
generated cash flow from operations of $69 million and capital
expenditures totaled $34 million.
Mr. Chopra continued, “During the second quarter, our Security
Division generated both record sales and profits as sales grew by
16% over the prior year and operating income, excluding the impact
of impairment, restructuring and other charges, increased by 49%.
The excellent performance of our turnkey operations were a major
contributor to our top line growth and increased operating
margins.”
Mr. Chopra concluded, “We are also pleased with the performance
of our Healthcare Division as sales grew by 12% over the prior year
while operating income increased by 33% over the same period. This
double-digit sales growth was encouraging and we remain optimistic
about our new product offerings.”
Fiscal Year 2014 Outlook
The Company is raising its sales guidance for fiscal 2014 to
$890 million - $920 million, representing an 11% to 15% increase
over fiscal 2013. In addition, the Company is updating its fiscal
2014 earnings guidance and expects earnings per diluted share to
increase at a rate of 12% - 23% to between $3.10 to $3.39,
excluding the impact of impairment, restructuring and other
charges, and the impact of certain tax elections. However, actual
sales and non-GAAP diluted EPS could vary from this guidance due to
the risks and uncertainties applicable to our business and industry
including the timing of certain awards and the outcome of the
issues with the Transportation Security Administration.
Non-GAAP Figures
Discussion of adjustments to arrive at non-GAAP figures for the
three and six months ended December 31, 2013 and 2012 is provided
to allow for the comparison of underlying earnings, net of
impairment, restructuring and other non-recurring charges and their
related tax benefit, thus providing additional insight into the
on-going operations of the Company. Non-GAAP financial measures
should not be considered a substitute for, or superior to, measures
of financial performance prepared in accordance with GAAP. We
believe that these non-GAAP financial measures provide meaningful
supplemental information regarding the Company’s results primarily
because they exclude amounts that we do not view as reflective of
ongoing operating results when planning and forecasting and when
assessing the performance of the business. We believe that our
non-GAAP financial measures also facilitate the comparison of
results for current periods and guidance for future periods with
results for past periods. Please see the reconciliation of GAAP to
non-GAAP net income and earnings per share at the end of this
release.
Conference Call Information
OSI Systems, Inc. will host a conference call and simultaneous
webcast over the Internet beginning at 9:00am PT (12:00pm ET),
today to discuss its results for the second quarter of fiscal 2014.
To listen, please log on to the Company’s website at
www.osi-systems.com and follow the link in the Investor Relations
section. A replay of the webcast will be available shortly after
the conclusion of the conference call until February 11, 2014. The
replay can either be accessed through the Company’s website,
www.osi-systems.com, or via telephonic replay by calling
888-286-8010 and entering the conference call identification number
‘56517283’ when prompted for the replay code.
About OSI Systems, Inc.
OSI Systems, Inc. is a vertically integrated designer and
manufacturer of specialized electronic systems and components for
critical applications, and provider of security screening services.
The Company sells its products in diversified markets, including
homeland security, healthcare, defense and aerospace. The Company
has more than 35 years of experience in electronics engineering and
manufacturing and maintains offices and production facilities in
more than a dozen countries. It implements a strategy of expansion
by leveraging its electronics and contract manufacturing
capabilities into selective end product markets through organic
growth and acquisitions. For more information on OSI Systems, Inc.
or any of its subsidiary companies, visit www.osi-systems.com. News
Filter: OSIS-E
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements relate to the Company’s current
expectations, beliefs, projections and similar expressions
concerning matters that are not historical facts and are not
guarantees of future performance. Forward-looking statements
involve uncertainties, risks, assumptions and contingencies, many
of which are outside the Company’s control and which may cause
actual results to differ materially from those described in or
implied by any forward-looking statement. Such statements include,
but are not limited to, information provided regarding expected
revenues and earnings in fiscal 2014. For example, the Company
could be exposed to a variety of negative consequences as a result
of one or more enforcement actions in respect of the matters that
are the subject of some or all of the Company’s ongoing
investigations and compliance review, including contract and
regulatory compliance matters with the U.S. Government, and such
actions, if brought, may result in judgments, settlements, fines,
injunctions, debarment and/or penalties, which could have a
material and adverse impact on the Company's business, financial
condition and results of operation. For a further discussion of
these and other factors that could cause the Company’s future
results to differ materially from any forward-looking statements,
see the section entitled “Risk Factors” in the Company’s Annual
Report on Form 10-K for the fiscal year ended June 30, 2013 and
other risks described in documents subsequently filed by the
Company from time to time with the Securities and Exchange
Commission. All forward-looking statements are based on currently
available information and speak only as of the date on which they
are made. The Company assumes no obligation to update any
forward-looking statement made in this press release that becomes
untrue because of subsequent events, new information or otherwise,
except to the extent it is required to do so in connection with its
ongoing requirements under federal securities laws.
OSI SYSTEMS, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per share
data)
(Unaudited)
For the Three Months Ended
December 31,
For the Six Months Ended
December 31,
2012 2013
2012 2013
Revenues $ 194,049 $ 236,408 $ 375,743 $ 442,682 Cost of goods sold
123,961 155,469 244,300 293,797 Gross
profit 70,088 80,939 131,443 148,885 Operating expenses: Selling,
general and administrative 36,829 45,556 76,754 87,770 Research and
development 11,858 11,175 23,174 22,195 Impairment, restructuring
and other charges 2,723 2,179 2,723
6,418 Total operating expenses 51,410 58,910
102,651 116,383 Income from operations 18,678 22,029 28,792
32,502 Interest expense and other, net 1,385 1,503
2,482 2,973 Income before income taxes 17,293 20,526
26,310 29,529 Provision for income taxes 4,872 5,953
7,550 8,562 Net income $ 12,421 $ 14,573 $ 18,760 $
20,967 Diluted earnings per share $ 0.60 $ 0.71 $ 0.91 $
1.02 Weighted average shares outstanding - diluted 20,609
20,589 20,589 20,604
CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
June 30, 2013 December 31, 2013 Assets Cash
and cash equivalents $ 34,697 $ 39,899 Accounts receivable, net
206,817 164,006 Inventories 206,213 219,998 Other current assets
78,972 82,246 Total current assets 526,699 506,149
Non-current assets 393,097 429,121 Total Assets $
919,796 $ 935,270
Liabilities and Stockholders'
Equity Bank lines of credit $ 59,000 $ 60,000 Current portion
of long-term debt 1,797 2,971 Accounts payable and accrued expenses
123,660 95,926 Deferred revenues 18,131 46,539 Other current
liabilities 78,825 80,847 Total current liabilities
281,413 286,283 Long-term debt 10,673 11,724 Advances from
customers 75,000 62,500 Other long-term liabilities 74,259
81,507 Total liabilities 441,345 442,014 Total stockholders’
equity 478,451 493,256 Total Liabilities and Equity $
919,796 $ 935,270
SEGMENT INFORMATION
(in thousands)
(unaudited)
Three Months EndedDecember
31,
Six Months EndedDecember
31,
2012
2013 2012
2013 Revenues – by Segment
Group: Security Group $ 91,863 $ 106,588 $ 174,779 $ 203,741
Healthcare Group 56,114 63,106 107,695 108,893 Optoelectronics and
Manufacturing Group including intersegment revenues 57,277 76,358
114,424 147,669 Intersegment revenues elimination (11,205 )
(9,644 ) (21,155 ) (17,621 ) Total $ 194,049
$ 236,408 $ 375,743 $ 442,682
Operating income (loss) – by Segment Group: Security Group
(1) $ 8,607 $ 15,149 $ 13,072 $ 26,771 Healthcare Group (2) 6,915
9,226 10,796 7,228 Optoelectronics and Manufacturing Group (3)
5,457 2,121 10,290 6,886 Corporate (2,438 ) (4,355 ) (5,687 )
(8,400 ) Eliminations 137 (112 ) 321
17 Total $ 18,678 $ 22,029 $
28,792 $ 32,502 (1) Includes
impairment, restructuring and other charges of $1.7 million and
$3.3 million for the three and six months ended December 31, 2013,
respectively, and $2.7 million for the three and six months ended
December 31, 2012. (2) Includes impairment, restructuring
and other charges of $2.0 million for the six months ended December
31, 2013. (3) Includes impairment, restructuring and other
charges of $0.5 million and $1.1 million for the three and six
months ended December 31, 2013, respectively.
Reconciliation of GAAP to
Non-GAAP
(in thousands, except earnings per
share data)
(Unaudited)
For the Three Months
Ended December 31, For the Six Months Ended December 31,
2012 2013 2012
2013 Net income
EPS Net income EPS Net
income EPS Net income
EPS GAAP basis $ 12,421 $ 0.60 $ 14,573
$ 0.71 $ 18,760 $ 0.91 $ 20,967 $ 1.02 Impairment,
restructuring and other charges, net of tax 1,956 0.10 1,547 0.07
1,956 0.10 4,557 0.22
Non-GAAP basis $ 14,377 $ 0.70 $ 16,120 $ 0.78 $
20,716 $ 1.01 $ 25,524 $ 1.24
OSI Systems, Inc.Ajay VashishatVice President, Business
Development310-349-2237avashishat@osi-systems.com
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