- Q4 Earnings per Diluted Share
- Non-GAAP EPS of $0.55
- GAAP EPS of $0.30
- FY 2017 Non-GAAP Diluted EPS
Guidance of 23% - 37% growth
OSI Systems, Inc. (NASDAQ: OSIS) today announced financial
results for its fourth quarter and fiscal year ended June 30,
2016.
Deepak Chopra, OSI Systems’ President and CEO, stated, “While
our fourth quarter and full year operating results, in part,
reflect the challenges of fiscal 2016, we are optimistic about our
prospects for fiscal 2017. We are confident that our strengthened
leadership team, enhanced product portfolios and robust pipeline of
opportunities across each of our divisions position us well for top
line growth and expanded profitability in fiscal 2017.”
The Company reported revenues of $221 million for the fourth
quarter of fiscal 2016, a decrease of 17% from the $267 million
reported for the fourth quarter of fiscal 2015. Net income for the
fourth quarter of fiscal 2016 was $5.9 million, or $0.30 per
diluted share, compared to net income of $22.4 million, or $1.09
per diluted share, for the fourth quarter of fiscal 2015. Excluding
the impact of impairment, restructuring and other charges, net
income for the fourth quarter of fiscal 2016 would have been $10.8
million, or $0.55 per diluted share, compared to net income of
$25.0 million, or $1.22 per diluted share, for the fourth quarter
of fiscal 2015.
For the fiscal year ended June 30, 2016, the Company reported
revenues of $830 million, a 13% decrease from the $958 million
reported for fiscal 2015. Net income for fiscal 2016 was $26.2
million, or $1.30 per diluted share, compared to net income of
$65.2 million, or $3.17 per diluted share, in fiscal 2015.
Excluding the impact of impairment, restructuring and other
charges, net income for fiscal 2016 would have been $42.4 million,
or $2.11 per diluted share, compared to net income of $72.4
million, or $3.53 per diluted share, for fiscal 2015.
During the quarter ended June 30, 2016, the Company’s
book-to-bill ratio for equipment and related services (non-turnkey)
was 1.0 and, as of June 30, 2016, the Company’s backlog was $623
million. During fiscal 2016, the Company generated cash flow from
operations of $59.2 million.
Mr. Chopra further commented, “Bookings were solid throughout
fiscal 2016 in the Security Division. The combination of various
contract push-outs and slower conversion of backlog into revenues
resulted in lighter sales during the fourth quarter in comparison
with a very strong performance in the same period of the prior
year. We expect significant growth in fiscal 2017 driven across
many product lines including the RTT™ 110 (Real Time Tomography)
explosives detection systems. Multiple significant wins during
fiscal 2016 and continuing into fiscal 2017 are expected to lead to
sizeable revenue growth in this product line in the coming year.
The future of the RTT™ 110 looks bright as it continues its
trajectory towards a market leadership position in Europe and
Middle East. We are also very encouraged by the outstanding
performance of our turnkey security screening services operations
in fiscal 2016 and the pipeline of opportunities for further
turnkey awards in fiscal 2017.”
Mr. Chopra continued, “Operating efficiencies in the
Optoelectronics and Manufacturing Division continued to drive year
over year profit growth. Though external sales decreased by 1%
during the fourth quarter from the prior year, we were able to
achieve operating margin improvement on a lower revenue base in the
fourth quarter as we have throughout fiscal 2016.”
Mr. Chopra concluded, “As anticipated, sales in our Healthcare
Division increased from the third quarter but were down year over
year. As we enter fiscal 2017, we are optimistic about our
Healthcare business in general due to adjustments to our product
portfolio and changes in the Division’s leadership and, as a
result, we expect to return to growth in fiscal 2017.”
Fiscal Year 2017 Outlook
Subject to the risks described in this release, the Company
anticipates fiscal 2017 sales to grow 4% - 8% to $865 million -
$895 million. In addition, the Company anticipates 23% - 37% growth
in earnings per diluted share to $2.60 to $2.90, excluding the
impact of impairment, restructuring and other charges and their
related tax effects. This guidance does not include the impact from
any pending or potential acquisitions. Actual sales and diluted
earnings per share could vary from this guidance including as a
result of the matters discussed under the “Forward-Looking
Statements” section. The Company’s 2017 diluted earnings per share
guidance is provided on a non-GAAP basis only, due primarily to the
variability and difficulty in making accurate forecasts and
projections of impairment, restructuring and other charges and
their related tax effects.
Presentation of Non-GAAP Financial Measures
This earnings release includes a presentation of non-GAAP net
income and diluted earnings per share, each of which is a non-GAAP
financial measure. Discussion of adjustments to arrive at non-GAAP
figures for the three months and fiscal years ended June 30, 2015
and 2016 is provided to allow for the comparison of underlying
earnings, net of impairment, restructuring and other charges and
their associated tax effects. Management believes that these
non-GAAP financial measures provide (i) additional insight into the
ongoing operations of the Company; (ii) meaningful supplemental
information regarding the Company’s results primarily because they
exclude amounts that management does not view as reflective of
ongoing operating results when planning and forecasting and when
assessing the performance of the business; and (iii) a meaningful
comparison of results for current periods and guidance for future
periods with results for past periods. Non-GAAP financial measures
should not be considered in isolation or as a substitute for
measures of financial performance prepared in accordance with
GAAP.
Reconciliations of GAAP to non-GAAP net income and diluted
earnings per share are in the accompanying tables.
Conference Call Information
OSI Systems, Inc. will host a conference call and simultaneous
webcast beginning at 1:30pm PT (4:30pm ET) today to discuss its
results for the fourth quarter and the full 2016 fiscal year. To
listen, please visit the investor relations section of the OSI
Systems website, http://investors.osi-systems.com/index.cfm 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 until August 30, 2016. The replay can either be
accessed through the Company’s website, www.osi-systems.com, or via
telephonic replay by calling 1-855-859-2056 and entering the
conference call identification number ‘64354940’ 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. The Company sells its products and provides
related services in diversified markets, including homeland
security, healthcare, defense and aerospace. The Company has more
than 30 years of experience in electronics engineering and
manufacturing and maintains offices and production facilities in
more than a dozen countries. The Company 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. Forward-looking
statements include, but are not limited to, information provided
regarding expected revenues, earnings and growth in fiscal 2017. In
addition, the Company could be exposed to a variety of negative
consequences as a result of delays related to the award of domestic
and international contracts; delays in customer programs; delays in
revenue recognition related to the timing of customer acceptance;
unanticipated impacts of sequestration and other U.S. Government
budget control provisions; changes in domestic and foreign
government spending, budgetary, procurement and trade policies
adverse to the Company's businesses; global economic uncertainty;
impact of volatility in oil prices; unfavorable currency exchange
rate fluctuations; market acceptance of the Company's new and
existing technologies, products and services; the Company's ability
to win new business and convert any orders received to sales within
the fiscal year in accordance with the Company's operating plan;
enforcement actions in respect of any noncompliance with laws and
regulations including export control and environmental regulations
and the matters that are the subject of some or all of the
Company's ongoing investigations and compliance reviews; contract
and regulatory compliance matters, and actions, if brought,
resulting in judgments, settlements, fines, injunctions, debarment
or penalties; risks related to our proposed acquisition of American
Science and Engineering, Inc., as well as other risks and
uncertainties, including, but not limited to, those detailed herein
and from time to time in the Company's Securities and Exchange
Commission filings which could have a material and adverse impact
on the Company's business, financial condition and results of
operations. For additional information on 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, 2015 and other risks described therein and 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 requirements under federal securities
laws.
OSI SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS (in thousands, except per share
data) Three Months Ended June 30,
Fiscal Year Ended June 30, 2015
2016 2015
2016 (unaudited) Revenue $ 266,601 $ 221,467 $
958,202 $ 829,660 Cost of goods sold 177,368
150,702 632,849 552,801 Gross
profit 89,233 70,765 325,353 276,859 Operating expenses: Selling,
general and administrative 41,710 43,888 171,756 166,655 Research
and development 13,170 11,945 51,639 49,816 Impairment,
restructuring and other charges 3,425 6,380
9,850 22,014 Total operating
expenses 58,305 62,213 233,245
238,485 Income from operations 30,928 8,552
92,108 38,374 Interest expense and other expense, net (747 )
(796 ) (3,255 ) (2,879 ) Income before income
taxes 30,181 7,756 88,853 35,495 Provision for income taxes
7,748 1,855 23,702 9,338
Net income $ 22,433 $ 5,901 $ 65,151 $
26,157 Diluted income per share $ 1.09 $ 0.30
$ 3.17 $ 1.30 Weighted average shares
outstanding – diluted 20,543 19,512
20,526 20,076
CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, 2015
June 30, 2016 Assets Cash and cash equivalents
$
47,593
$ 104,370 Accounts receivable, net 178,519 141,716 Inventories
230,421 273,288 Other current assets 40,101 35,944
Total current assets 496,634 555,318 Non-current assets
440,655 436,405 Total Assets
$
937,289
$ 991,723
Liabilities and Stockholders' Equity Bank
lines of credit
$
--
$ 125,000 Current portion of long-term debt 2,801 2,759 Accounts
payable and accrued expenses 106,887 117,455 Other current
liabilities 131,955 122,621 Total current liabilities
241,643 367,835 Long-term debt 8,556 6,054 Deferred income taxes
30,688 29,160 Other long-term liabilities 74,623
47,828 Total liabilities 355,510 450,877 Total stockholders’ equity
581,779 540,846 Total Liabilities and Stockholders’
Equity
$
937,289
$ 991,723
SEGMENT INFORMATION (in thousands)
Three Months Ended June 30, Fiscal Year
Ended June 30, 2015
2016 2015
2016 Revenues – by Segment: (unaudited)
Security Division $ 131,479 $ 110,532 $ 481,087 $ 411,212
Healthcare Division 78,981 55,332 255,691 211,458 Optoelectronics
and Manufacturing Division, including intersegment revenues 67,960
63,088 267,872 247,502 Intersegment revenues elimination
(11,819 ) (7,485 ) (46,448 ) (40,512 ) Total $
266,601 $ 221,467 $ 958,202 $ 829,660
Operating income (loss) – by Segment: Security
Division (1) $ 16,878 $ 8,122 $ 67,804 $ 37,845 Healthcare Division
(2) 13,408 2,221 24,666 8,351 Optoelectronics and Manufacturing
Division (3) 3,832 5,576 17,533 19,654 Corporate (4) (3,707 )
(8,017 ) (17,455 ) (27,199 ) Eliminations 517
650 (440 ) (277 ) Total $ 30,928 $
8,552 $ 92,108 $ 38,374 (1)
Includes impairment, restructuring and other charges of $1.2
million and $2.5 million for the three months ended June 30, 2015
and 2016, respectively, and $5.1 million and $10.0 million for the
fiscal years ended June 30, 2015 and 2016, respectively. (2)
Includes impairment, restructuring and other charges of $0.2
million and $1.4 million for the three months ended June 30, 2015
and 2016, respectively, and $1.4 million and $3.1 million for the
fiscal years ended June 30, 2015 and 2016, respectively. (3)
Includes impairment, restructuring and other charges of $1.9
million and $0.3 million for the three months ended June 30, 2015
and 2016, respectively, and $2.7 million and $3.3 million for the
fiscal years ended June 30, 2015 and 2016, respectively. (4)
Includes impairment, restructuring and other charges of $0.1
million and $2.2 million for the three months ended June 30, 2015
and 2016, respectively, and $0.7 million and $5.6 million for the
fiscal years ended June 30, 2015 and 2016, respectively.
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME AND EARNINGS PER
SHARE (in thousands, except earnings per share data)
Three Months Ended June 30, Fiscal
Year Ended June 30, 2015 2016 2015
2016 Net Net Net
Net income EPS income
EPS income EPS income EPS
GAAP basis $ 22,433 $ 1.09 $ 5,901 $ 0.30 $ 65,151 $ 3.17 $ 26,157
$ 1.30 Impairment, restructuring and other charges, net of
tax 2,546 0.13 4,854 0.25 7,222 0.36 16,223 0.81
Non-GAAP basis $ 24,979 $
1.22 $ 10,755 $ 0.55 $ 72,373 $ 3.53 $ 42,380 $ 2.11
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version on businesswire.com: http://www.businesswire.com/news/home/20160816006145/en/
OSI Systems, Inc.Ajay VashishatVice President, Business
Development12525 Chadron AveHawthorne, CA 90250(310)
349-2237avashishat@osi-systems.com
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