- Record Q4 Revenues of $308 Million (7% year-over-year
increase)
- Record Fiscal 2019 Revenues of $1.182 Billion (9%
year-over-year increase)
- Q4 Earnings Per Diluted Share
- GAAP EPS of $0.89
- Non-GAAP EPS of $1.15 (13% year-over-year increase)
- FY 2020 Guidance
- Sales Guidance of $1.235 Billion - $1.270 Billion
- Non-GAAP Diluted EPS Guidance of $4.58 - $4.80
OSI Systems, Inc. (the “Company” or “OSI Systems”) (NASDAQ:
OSIS) today announced financial results for the fourth quarter and
fiscal year ended June 30, 2019.
Deepak Chopra, OSI Systems’ Chairman and Chief Executive
Officer, said, “We are pleased to announce a strong finish to an
excellent year. Each division contributed to solid growth in fourth
quarter revenues and earnings. With a healthy backlog and pipeline
of opportunities, we believe the Company is well positioned as we
enter fiscal 2020.”
The Company reported revenues of $308.4 million for the fourth
quarter of fiscal 2019, an increase of 7% from the $287.3 million
reported for the fourth quarter of fiscal 2018. Net income for the
fourth quarter of fiscal 2019 was $16.7 million, or $0.89 per
diluted share, compared to net income of $5.1 million, or $0.27 per
diluted share, for the fourth quarter of fiscal 2018. Non-GAAP net
income for the fourth quarter of fiscal 2019 was $21.6 million, or
$1.15 per diluted share, compared to non-GAAP net income for the
fourth quarter of fiscal 2018 of $19.1 million, or $1.02 per
diluted share.
For the fiscal year ended June 30, 2019, revenues increased by
9% to $1.182 billion compared to $1.089 billion in the prior fiscal
year. Net income for fiscal 2019 was $64.8 million, or $3.46 per
diluted share, compared to net loss of $29.1 million, or $(1.57)
per diluted share, in the prior fiscal year. Non-GAAP net income
for the fiscal year ended June 30, 2019 was $80.8 million, or $4.32
per diluted share, compared to non-GAAP net income of $69.5
million, or $3.61 per diluted share, for the 2018 fiscal year.
During the three months ended June 30, 2019, the Company's
book-to-bill ratio for equipment and related services (non-turnkey)
was approximately 1.0. As of June 30, 2019, the Company's backlog
was $911 million. Operating cash flow during the quarter ended June
30, 2019 was $31.4 million, and capital expenditures were $6.5
million, compared to $17.3 million and $6.8 million, respectively,
for the comparable prior year period.
Mr. Chopra stated, “Our Security division had another strong
quarter. Driven by growth in cargo and RTT® sales, fourth quarter
revenues in the division reached a record $195 million. We look
forward to launching two new turnkey programs in the first half of
fiscal 2020 and continuing the strong momentum.”
Mr. Chopra further commented, “Our Optoelectronics and
Manufacturing division continued its steady performance. Sales
growth was solid with another quarter of year-over-year operating
margin expansion.”
Mr. Chopra continued, “In our Healthcare division, we leveraged
the 5% sales growth in the fourth quarter of fiscal 2019 to
significant growth in operating income. Bookings in the Healthcare
division were strong, leading to a record year-end backlog for the
division entering fiscal 2020.”
The Company’s effective tax rate for the three months and fiscal
year ended June 30, 2019 was 26.4% and 24.8%, respectively.
Excluding the benefit of certain discrete tax items, the Company’s
tax rate for the three months and fiscal year ended June 30, 2019
was 30.4% and 28.9%, respectively. The Company’s reported tax rate
was 10.7% and 179.0% for the three months and fiscal year ended
June 30, 2018. Excluding a $56 million charge recorded in the
second quarter of fiscal 2018 resulting from the enactment of the
Tax Cuts and Jobs Act in December 2017 and certain discrete tax
items, the Company’s effective tax rate was 19.7% and 26.8% for the
three months and fiscal year ended June 30, 2018.
Fiscal Year 2020 Outlook
For fiscal year 2020, the Company anticipates revenues in the
range of $1.235 billion to $1.270 billion and non-GAAP earnings per
diluted share in the range of $4.58 to $4.80. Actual sales and
non-GAAP diluted earnings per share could vary from this guidance
due to factors discussed under “Forward-Looking Statements” or
other factors.
The Company’s fiscal 2020 diluted earnings per share guidance is
provided on a non-GAAP basis only. The Company does not provide a
reconciliation of guidance for non-GAAP diluted EPS to GAAP diluted
EPS (the most directly comparable GAAP measure) on a
forward-looking basis because the Company is unable to provide a
meaningful or accurate compilation of reconciling items and certain
information is not available. This is due to the inherent
difficulty and complexity in accurately forecasting the timing and
amounts of various items included in the calculation of GAAP
diluted EPS, such as acquisition costs and other non-recurring
items that have not yet occurred, are out of the Company’s control,
or cannot be reasonably predicted. For the same reasons, the
Company is unable to address the probable significance of
unavailable information which may be material and therefore could
result in GAAP diluted EPS being materially different from
projected non-GAAP diluted EPS.
Presentation of Non-GAAP Financial Measures
This earnings release includes a presentation of non-GAAP net
income, non-GAAP diluted earnings per share, non-GAAP operating
income (loss) by segment and non-GAAP operating margin, all of
which are non-GAAP financial measures. The presentation of these
non-GAAP figures for the three months and fiscal year ended June
30, 2018 and 2019 is provided to allow for the comparison of the
underlying performance of the Company, net of impairment,
restructuring and other charges (including certain legal costs),
amortization of intangible assets acquired through business
acquisitions and non-cash interest expense related to convertible
debt, and their associated tax effects, and the impact of discrete
income tax items. Management believes that these non-GAAP financial
measures provide (i) enhanced insight into the ongoing operations
of the Company, (ii) meaningful supplemental information regarding
the Company’s financial results (excluding amounts management does
not view as reflective of ongoing operating results) for purposes
of planning, forecasting, and assessing the performance of the
Company’s businesses, (iii) a meaningful comparison of financial
results of the current period against results of past periods, and
(iv) financial results that are more comparable to financial
results of peer companies than are GAAP figures. Non-GAAP financial
measures should not be assessed in isolation or as a substitute for
measures of financial performance prepared in accordance with GAAP.
These non-GAAP measures may not be the same as measures used by
other companies due to possible differences in methods and in the
items or events for which adjustments are made.
Reconciliations of GAAP to non-GAAP financial information are
provided in the accompanying tables. The financial results
calculated in accordance with GAAP and reconciliations from those
financial results should be carefully evaluated.
Conference Call Information
The Company will host a conference call and simultaneous webcast
beginning at 9:00am PT (12:00pm ET) today to discuss its results
for the fourth quarter and fiscal year ended June 30, 2019. 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 beginning shortly after the
conclusion of the conference call until September 9, 2019. The
replay can either be accessed through the Company’s website,
www.osi-systems.com, or by telephonic replay by calling
1-855-859-2056 and entering the conference call identification
number '6280859’ when prompted for the replay code.
About OSI Systems
OSI Systems 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. The Company combines more than 40 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 or 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, and projections concerning matters that are
not historical facts. Forward-looking statements are not guarantees
of future performance and 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, growth, and operational performance in fiscal
2020. 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; failure to secure the renewal of key
customer 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 and budgetary, procurement and trade policies
adverse to the Company's businesses; global economic uncertainty;
unfavorable currency exchange rate fluctuations; effect of changes
in tax legislation; market acceptance of the Company's new and
existing technologies, products, and services; the Company's
ability to win new business and convert orders received to sales
within the fiscal year; 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 investigations and compliance
reviews; contract and regulatory compliance matters, and actions
which, if brought, could result in judgments, settlements, fines,
injunctions, debarment, or penalties; and 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 those in any forward-looking statements, see the section
titled "Risk Factors" in the Company's most recently filed Annual
Report on Form 10-K and other risks described therein and in
documents subsequently filed by the Company from time to time with
the Securities and Exchange Commission. Undue reliance should not
be placed on forward-looking statements, which 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 under
federal securities laws.
OSI SYSTEMS, INC. AND
SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per
share data)
Three Months Ended June
30,
Fiscal Year Ended June
30,
2018
2019
2018
2019
Net revenues:
Products
$
203,397
$
224,052
$
732,927
$
856,712
Services
83,929
84,325
356,359
325,403
Total net revenues
287,326
308,377
1,089,286
1,182,115
Cost of goods sold:
Products
141,420
149,232
504,483
572,673
Services
44,740
46,124
193,151
178,848
Total cost of goods sold
186,160
195,356
697,634
751,521
Gross profit
101,166
113,021
391,652
430,594
Operating expenses:
Selling, general and administrative
64,001
66,402
239,592
262,484
Research and development
15,067
16,256
61,189
56,509
Impairment, restructuring and other
charges, net
11,474
2,673
34,963
3,827
Total operating expenses
90,542
85,331
335,744
322,820
Income from operations
10,624
27,690
55,908
107,774
Interest and other expense, net
(4,898
)
(5,063
)
(19,054
)
(21,610
)
Income before income taxes
5,726
22,627
36,854
86,164
Provision for income taxes
(612
)
(5,966
)
(65,981
)
(21,368
)
Net income (loss)
$
5,114
$
16,661
$
(29,127
)
$
64,796
Diluted earnings (loss) per share
$
0.27
$
0.89
$
(1.57
)
$
3.46
Weighted average shares outstanding –
diluted
18,680
18,808
18,592
18,720
UNAUDITED SEGMENT
INFORMATION
(in thousands)
Three Months Ended June
30,
Fiscal Year Ended June
30,
2018
2019
2018
2019
Revenues – by Segment:
Security division
$
185,217
$
195,420
$
690,001
$
747,550
Healthcare division
47,594
49,780
189,387
188,477
Optoelectronics and Manufacturing division
(including intersegment revenues)
65,461
74,730
254,485
288,630
Intersegment revenues eliminations
(10,946
)
(11,553
)
(44,587
)
(42,542
)
Total
$
287,326
$
308,377
$
1,089,286
$
1,182,115
Operating income (loss) – by
Segment:
Security division
$
17,914
$
23,370
$
84,106
$
97,426
Healthcare division
(7,634
)
6,525
(14,609
)
12,277
Optoelectronics and Manufacturing
division
5,800
7,307
22,024
29,519
Corporate
(6,429
)
(9,333
)
(35,030
)
(30,598
)
Intersegment eliminations
973
(179
)
(583
)
(850
)
Total
$
10,624
$
27,690
$
55,908
$
107,774
OSI SYSTEMS, INC. AND
SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, 2018
June 30, 2019
Assets
Cash and cash equivalents
$
84,814
$
96,316
Accounts receivable, net
210,744
238,440
Inventories
313,552
273,711
Other current assets
41,587
32,432
Total current assets
650,697
640,899
Property and equipment, net
115,524
127,385
Goodwill
292,213
307,108
Intangible assets, net
142,001
132,954
Other non-current assets
55,256
56,518
Total Assets
$
1,255,691
$
1,264,864
Liabilities and Stockholders'
Equity
Bank lines of credit
$
113,000
$
88,000
Current portion of long-term debt
2,262
804
Accounts payable and accrued expenses
194,815
169,718
Other current liabilities
133,245
123,486
Total current liabilities
443,322
382,008
Long-term debt
248,980
257,752
Other long-term liabilities
73,953
73,377
Total liabilities
766,255
713,137
Total stockholders’ equity
489,436
551,727
Total Liabilities and Stockholders’
Equity
$
1,255,691
$
1,264,864
RECONCILIATION OF GAAP
TO NON-GAAP
NET INCOME (LOSS) AND
EARNINGS (LOSS) PER SHARE
(in thousands, except earnings
per share data)
Three Months Ended
June 30,
Fiscal Year Ended
June 30,
2018
2019
2018
2019
Net income
EPS
Net income
EPS
Net income (loss)
EPS
Net income
EPS
GAAP basis
$
5,114
$
0.27
$
16,661
$
0.89
$
(29,127
)
$
(1.57
)
$
64,796
$
3.46
Impairment, restructuring and other
charges
11,474
0.61
2,673
0.14
34,963
1.88
3,827
0.20
Amortization of acquired intangible
assets1
4,643
0.25
3,763
0.20
15,713
0.85
15,775
0.84
Non-cash interest expense
1,912
0.10
1,999
0.11
7,470
0.40
7,850
0.42
Tax effect of above adjustments
(3,555
)
(0.19
)
(2,566
)
(0.14
)
(15,610
)
(0.84
)
(7,934
)
(0.41
)
Discrete tax items
(517
)
(0.02
)
(916
)
(0.05
)
56,087
3.02
(3,533
)
(0.19
)
Impact of diluted shares 2
-
-
-
-
-
(0.13
)
-
-
Non-GAAP basis
$
19,071
$
1.02
$
21,614
$
1.15
$
69,496
$
3.61
$
80,781
$
4.32
1
Amortization is based in part on the
preliminary fair value of the acquired intangibles and is subject
to change as purchase accounting is finalized.
2
For the fiscal year ended June 30, 2018,
the weighted average diluted shares used to calculate EPS on a GAAP
basis exclude potential common shares (stock options and restricted
stock units) due to their antidilutive effect resulting from the
Company’s reported net loss. For the fiscal year ended June 30,
2018, the weighted average diluted shares used to calculate EPS on
a non-GAAP basis were approximately 19,274,000 shares.
RECONCILIATION OF GAAP TO
NON-GAAP
OPERATING INCOME (LOSS) AND
OPERATING MARGIN BY SEGMENT
(in thousands, except
percentages)
Three Months Ended June 30,
2018
Security Division
Healthcare Division
Optoelectronics and Manufacturing
Division
Corporate / Elimination
Total
% of
Sales
% of
Sales
% of
Sales
% of
Sales
GAAP basis – operating income (loss)
$
17,914
9.7
%
$
(7,634
)
-16.0
%
$
5,800
8.9
%
$
(5,456
)
$
10,624
3.7
%
Impairment, restructuring and other
charges, net
1,766
0.9
%
9,439
19.8
%
222
0.3
%
47
11,474
4.0
%
Amortization of acquired intangible
assets
3,696
2.0
%
-
-%
947
1.4
%
-
4,643
1.6
%
Non-GAAP basis– operating income
(loss)
$
23,376
12.6
%
$
1,805
3.8
%
$
6,969
10.6
%
$
(5,409
)
$
26,741
9.3
%
Three Months Ended June 30,
2019
Security Division
Healthcare Division
Optoelectronics and Manufacturing
Division
Corporate / Elimination
Total
% of
Sales
% of
Sales
% of
Sales
% of
Sales
GAAP basis – operating income (loss)
$
23,370
12.0
%
$
6,525
13.1
%
$
7,307
9.8
%
$
(9,512
)
$
27,690
9.0
%
Impairment, restructuring and other
charges, net
132
0.1
%
21
0.0
%
638
0.9
%
1,882
2,673
0.9
%
Amortization of acquired intangible
assets
2,832
1.4
%
-
-%
931
1.2
%
-
3,763
1.2
%
Non-GAAP basis– operating income
(loss)
$
26,334
13.5
%
$
6,546
13.1
%
$
8,876
11.9
%
$
(7,630
)
$
34,126
11.1
%
RECONCILIATION OF GAAP TO
NON-GAAP
OPERATING INCOME (LOSS) AND
OPERATING MARGIN BY SEGMENT
(in thousands, except
percentages)
Fiscal Year Ended June 30,
2018
Security Division
Healthcare Division
Optoelectronics and Manufacturing
Division
Corporate / Elimination
Total
% of
Sales
% of
Sales
% of
Sales
% of
Sales
GAAP basis – operating income (loss)
$
84,106
12.2
%
$
(14,609
)
-7.7
%
$
22,024
8.7
%
$
(35,613
)
$
55,908
5.1
%
Impairment, restructuring and other
charges, net
3,893
0.6
%
24,168
12.8
%
1,711
0.6
%
5,191
34,963
3.2
%
Amortization of acquired intangible
assets
13,140
1.9
%
29
0.0
%
2,544
1.0
%
-
15,713
1.5
%
Non-GAAP basis– operating income
(loss)
$
101,139
14.7
%
$
9,588
5.1
%
$
26,279
10.3
%
$
(30,422
)
$
106,584
9.8
%
Fiscal Year Ended June 30,
2019
Security Division
Healthcare Division
Optoelectronics and Manufacturing
Division
Corporate / Elimination
Total
% of
Sales
% of
Sales
% of
Sales
% of
Sales
GAAP basis – operating income (loss)
$
97,426
13.0
%
$
12,277
6.5
%
$
29,519
10.2
%
$
(31,448
)
$
107,774
9.1
%
Impairment, restructuring and other
charges, net
132
0.0
%
3,547
1.9
%
1,058
0.4
%
(910
)
3,827
0.3
%
Amortization of acquired intangible
assets
11,597
1.6
%
-
-%
4,178
1.4
%
-
15,775
1.4
%
Non-GAAP basis– operating income
(loss)
$
109,155
14.6
%
$
15,824
8.4
%
$
34,755
12.0
%
$
(32,358
)
$
127,376
10.8
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190826005196/en/
OSI Systems, Inc. Ajay Vashishat Vice President, Business
Development Tel: (310) 349-2237 avashishat@osi-systems.com
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