- Acquisition enhances OSI Systems’
security platform with leading backscatter X-ray inspection
technology and services for critical security end markets.
- Expected to be accretive to fiscal year
2017 non-GAAP diluted earnings per share excluding one-time
transaction expenses and integration costs; at least 10% accretive
to fiscal year 2018 GAAP diluted earnings per share.
OSI Systems, Inc. (NASDAQ: OSIS) today announced that it has
signed a definitive agreement to acquire American Science and
Engineering, Inc. (“AS&E”) (NASDAQ: ASEI), a leading provider
of detection solutions for advanced cargo, parcel, and personnel
inspection, for $37.00 per share in cash, representing a total
purchase price of approximately $187 million, net of $82 million of
AS&E cash and cash equivalents as of March 31, 2016. The
transaction has been unanimously approved by the OSI Systems and
AS&E Boards of Directors. The closing of the transaction,
anticipated during OSI Systems’ fiscal second quarter ending
December 31, 2016, is subject to the approval of AS&E’s
shareholders, antitrust approval, and other customary closing
conditions.
Deepak Chopra, OSI Systems’ Chairman and Chief Executive
Officer, said, “The acquisition of AS&E will be the most
significant security acquisition in our Company’s history and we
believe represents an excellent strategic fit consistent with our
expansion strategy. AS&E’s backscatter X-ray technology has
long been a leader within the security industry, and its
cutting-edge products, extensive service network, and premier
customer base are highly complementary to our current operations.
We look forward to welcoming AS&E’s talented team to OSI
Systems.”
“We are very pleased to join OSI Systems,” said Chuck Dougherty,
President and Chief Executive Officer of AS&E. “The
capabilities of our respective organizations are extremely
well-matched. We expect our customers and employees to benefit
substantially from the combination of our technology-driven
businesses.”
Financial Highlights
The transaction is expected to result in at least $18 million of
annual pre-tax cost synergies within the first two years
post-closing. These synergies include the benefits of optimizing
global business development and administration, manufacturing and
supply chain infrastructure, as well as the elimination of
redundant public company costs. The transaction is expected to be
accretive to OSI Systems’ fiscal year 2017 non-GAAP diluted
earnings per share excluding one-time transaction expenses and
integration costs and at least 10% accretive to OSI Systems’ fiscal
year 2018 GAAP diluted earnings per share.
OSI Systems expects to fund the acquisition with a combination
of balance sheet cash and borrowings from its existing $450 million
credit facility. Pro forma for the acquisition, OSI Systems is
anticipated to have a leverage ratio of 2.1x trailing 12 months pro
forma adjusted EBITDA as of March 31, 2016, excluding anticipated
annual cost synergies. OSI Systems expects continued strong cash
flow generation from the combined business.
“The acquisition of AS&E represents a strategic deployment
of capital to generate additional shareholder value,” said Alan
Edrick, OSI Systems’ Executive Vice President and Chief Financial
Officer. “The combination creates new opportunities for revenue and
profit growth while maintaining a flexible and conservative balance
sheet.”
Strategic Rationale
The acquisition of AS&E is consistent with OSI Systems’
strategy to expand its security offerings, enhance its product
development capabilities, and grow in attractive end markets and
geographies. AS&E’s track record of innovation, including its Z
Backscatter® X-ray technology, established its position in the
global cargo and vehicle inspection market. Furthermore, its
significant installed base and related service offerings provide a
stable, highly profitable base of business accounting for
approximately half of its annual revenue. Once combined, the
businesses will offer comprehensive, best-in-class technologies
driven by a common focus on continued innovation. This unique
portfolio, supported with a worldwide sales and service presence,
and the significant anticipated cost synergies are expected to
provide a foundation for accelerated growth in revenues and
profits.
Advisors
OSI Systems’ financial advisors are Citigroup and Roth Capital
and outside legal counsel are Latham & Watkins and Crowell
& Moring.
Non-GAAP Financial Measures; Non-GAAP Figures
This press release includes references to adjusted EBITDA and
non-GAAP diluted earnings per share, both of which are non-GAAP
financial measures. Adjusted EBITDA is defined as net income, plus
net interest and other expense, provision for income taxes, and
depreciation and amortization, as further adjusted to eliminate the
impact of stock-based compensation, and impairment, restructuring
and other charges. Not all companies use identical calculations
and, accordingly, OSI Systems’ calculation of adjusted EBITDA may
not be comparable to similarly titled measures of other companies.
Adjusted EBITDA is not a recognized term under accounting
principles generally accepted in the United States (GAAP) and does
not purport to be a substitute for net income as an indicator of
operating performance or cash flows from operating activities as a
measure of liquidity. OSI Systems uses adjusted EBITDA to evaluate
the effectiveness of OSI Systems’ business strategies and because
OSI Systems’ credit agreement uses measures similar to adjusted
EBITDA to measure compliance with certain covenants. Non-GAAP
diluted earnings per share excludes the impact of impairment,
restructuring and other charges, net of tax.
OSI Systems believes that the inclusion of non-GAAP diluted
earnings per share figures and adjusted EBITDA provides additional
insight into the operations of OSI Systems. Non-GAAP financial
measures should not be considered in isolation or as a substitute
for measures of financial performance prepared in accordance with
GAAP. OSI Systems also believes that these non-GAAP financial
measures provide meaningful supplemental information because they
exclude amounts that it does not view as reflective of ongoing
operating results when planning and forecasting and when assessing
the performance of OSI Systems’ business.
Conference Call Information
OSI Systems will host a conference call at 7:00am Pacific Time
on June 21, 2016 to discuss the acquisition, which will be followed
by a question-and-answer session. A copy of the presentation slides
will be available on OSI Systems’ website, www.osi-systems.com. To
listen, please visit the investor relations section of the OSI
Systems website, www.osi-systems.com, and follow the link that will
be posted on the front page. A replay of the webcast will be
available shortly after the conclusion of the conference call. The
replay can either be accessed through OSI Systems’ website,
www.osi-systems.com, or via telephonic replay by calling
1-855-859-2056 and entering the conference call identification
number ‘38194327’ 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 in the homeland security, healthcare, defense
and aerospace industries. It combines more than 30 years of
electronics engineering and manufacturing experience with offices
and production facilities in more than a dozen countries to
implement a strategy of expansion into selective end product
markets. For more information on OSI Systems, Inc. or any of its
subsidiary companies, visit www.osi-systems.com. News Filter:
OSIS-G
Forward-Looking Statements
Certain statements made herein are “forward-looking statements”
intended to qualify for the safe harbor from liability established
by the Private Securities Litigation Reform Act of 1995. All
statements other than historical facts included in this press
release, including, but not limited to, statements regarding the
timing and the closing of the transaction, the financing for the
transaction, the expected benefits of the transaction, prospective
performance and future business plans, and any assumptions
underlying any of the foregoing, are forward-looking statements.
These statements are based on current expectations and projections
of future events and reflect beliefs and assumptions that are based
on OSI Systems’ perception of historical trends, current conditions
and expected future developments as well as other factors
management believes are appropriate in the circumstances. If
underlying assumptions prove inaccurate or unknown, or unknown
risks or uncertainties materialize, actual results could vary
materially from the parties’ expectations and projections. Risks
and uncertainties include, among other things, uncertainties
regarding the timing of the closing of the transaction;
uncertainties as to how many of AS&E’s shareholders will vote
in favor of the transaction; the possibility that various closing
conditions to the merger and related transactions may not be
satisfied or waived, including that a governmental entity may
prohibit, delay, or refuse to grant approval for the consummation
of the transaction; that there is a material adverse change to
AS&E’s business; the outcome of any legal proceedings that may
be instituted with respect to the transaction; that the integration
of AS&E’s business into OSI Systems is not as successful as
expected; the failure to realize anticipated synergies and
cost-savings; the failure of OSI Systems to achieve the expected
financial and commercial results from the transaction; other
business effects, including effects of industry, economic or
political conditions outside either company’s control; transaction
costs; actual or contingent liabilities; as well as other
cautionary statements contained elsewhere herein and in the reports
filed by OSI Systems with the Securities and Exchange Commission,
including OSI Systems’ annual report for the year ended June 30,
2015 and subsequent quarterly reports. These forward-looking
statements reflect OSI Systems’ expectations and projections as of
the date of this press release. OSI Systems undertakes no
obligation to update the information provided herein to reflect any
change in OSI Systems’ expectations or projections with regard
thereto or any change in events, conditions or circumstances on
which any such information is based.
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version on businesswire.com: http://www.businesswire.com/news/home/20160621005618/en/
OSI Systems, Inc.Ajay VashishatVice President, Business
Development310-349-2237avashishat@osi-systems.com
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