- Record Q2 Revenues of $305 Million
- Record Q2 Earnings Per Diluted Share
- GAAP EPS of $1.12
- Non-GAAP EPS of $1.27
- Q2 Book-to-Bill Ratio of 1.1x
OSI Systems, Inc. (the “Company” or “OSI Systems”) (NASDAQ:
OSIS) today announced financial results for the three and six
months ended December 31, 2019.
Deepak Chopra, OSI Systems’ Chairman and Chief Executive
Officer, stated, “We are pleased with the second quarter
performance as we delivered record earnings. With strong second
quarter bookings and a robust pipeline of opportunities, we are in
a good position as we enter the second half of fiscal 2020.”
For the second quarter of fiscal 2020, the Company reported
revenues of $305.3 million, compared to $303.2 million reported for
the second quarter of fiscal 2019. Net income for the second
quarter of fiscal 2020 was $21.0 million, or $1.12 per diluted
share, compared to net income of $19.1 million, or $1.03 per
diluted share, for the second quarter of fiscal 2019. Non-GAAP net
income for the second quarter of fiscal 2020 was $23.8 million, or
$1.27 per diluted share, compared to non-GAAP net income for the
fiscal 2019 second quarter of $22.1 million, or $1.19 per diluted
share.
For the six months ended December 31, 2019, revenues increased
5% to $596.2 million, compared with the same period a year ago. Net
income for this period was $41.7 million, or $2.22 per diluted
share, compared with $28.5 million, or $1.53 per diluted share, for
the same period a year ago. Non-GAAP net income for the six months
ended December 31, 2019 was $41.0 million, or $2.18 per diluted
share, compared with non-GAAP net income of $37.3 million, or $2.00
per diluted share, for the comparable prior-year period.
During the quarter ended December 31, 2019, the Company’s
book-to-bill ratio was 1.1x. As of December 31, 2019, the Company's
backlog was $886 million compared to $911 million as of June 30,
2019. Operating cash flow during the quarter ended December 31,
2019 was $34.8 million, and capital expenditures were $5.6
million.
Mr. Chopra commented, “Our Security division continued its
strong momentum with 7% sales growth resulting in record second
quarter revenues of $202 million. We continue to be well positioned
in the marketplace as we target significant opportunities
globally.”
Mr. Chopra continued, “Our Optoelectronics and Manufacturing
division sustained its strong performance as we leveraged modest
fiscal second quarter sales growth to significant year-over-year
operating margin expansion driven by a strong mix of revenues and
operational execution.”
Mr. Chopra concluded, “While this was a challenging quarter for
our Healthcare division as reduced revenues led to a significant
drop in operating income for that division, our first half fiscal
2020 adjusted operating income increased 7% over the comparable
period of the prior year on a non-GAAP basis. Our Healthcare
backlog is solid, and we will continue focusing on enhancing our
core products and developing new products.”
Fiscal Year 2020 Outlook
The Company is raising its fiscal year 2020 non-GAAP earnings
guidance to $4.63 to $4.85 per diluted share and is reducing its
fiscal year 2020 sales guidance to a range of $1.205 billion to
$1.240 billion. 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 but excluded in the calculation of non-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, the corresponding GAAP financial measure, 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 and six months ended December 31,
2018 and 2019 is provided to allow for the comparison of the
underlying performance of the Company, net of restructuring and
other charges (including certain legal costs), amortization of
intangible assets acquired through business acquisitions and
non-cash interest expense primarily 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 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 1:30pm PT (4:30pm ET) today to discuss its results for
the second quarter of fiscal 2020. 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 February 11, 2020. 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 8438418 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
December 31,
Six Months Ended
December 31,
2018
2019
2018
2019
Revenue:
Products
$
225,402
$
223,772
$
407,882
$
433,533
Services
77,803
81,570
161,572
162,661
Total revenues
303,205
305,342
569,454
596,194
Cost of goods sold:
Products
150,131
148,709
275,502
295,051
Services
42,730
45,860
87,695
91,159
Total cost of goods sold
192,861
194,569
363,197
386,210
Gross profit
110,344
110,773
206,257
209,984
Operating expenses:
Selling, general and administrative
67,097
63,902
128,804
126,079
Research and development
12,805
14,881
26,558
29,127
Restructuring and other charges (benefit),
net
(1,265
)
(929
)
2,931
(3,028
)
Total operating expenses
78,637
77,854
158,293
152,178
Income from operations
31,707
32,919
47,964
57,806
Interest expense and other, net
(5,620
)
(4,844
)
(10,952
)
(9,580
)
Income before income taxes
26,087
28,075
37,012
48,226
Provision for income taxes
(6,980
)
(7,089
)
(8,503
)
(6,497
)
Net income
$
19,107
$
20,986
$
28,509
$
41,729
Diluted earnings per share
$
1.03
$
1.12
$ 1.53
$
2.22
Weighted average shares outstanding –
diluted
18,624
18,682
18,679
18,783
UNAUDITED SEGMENT
INFORMATION
(in thousands)
Three Months Ended December
31,
Six Months Ended December
31,
2018
2019
2018
2019
Revenues – by Segment:
Security division
$
188,684
$
202,437
$
358,644
$
391,401
Healthcare division
51,559
41,992
89,832
82,200
Optoelectronics and Manufacturing division
(including intersegment revenues)
72,019
72,806
142,973
146,444
Intersegment revenues eliminations
(9,057
)
(11,893
)
(21,995
)
(23,851
)
Total
$
303,205
$
305,342
$
569,454
$
596,194
Operating income (loss) – by
Segment:
Security division
$
26,063
$
28,562
$
49,113
$
48,880
Healthcare division
2,209
1,294
334
4,111
Optoelectronics and Manufacturing
division
8,067
9,018
14,892
17,787
Corporate
(4,560
)
(6,080
)
(15,911
)
(13,417
)
Eliminations
(72
)
125
(464
)
445
Total
$
31,707
$
32,919
$
47,964
$
57,806
OSI SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, 2019
December 31, 2019
Assets
Cash and cash equivalents
$
96,316
$
95,056
Accounts receivable, net
238,440
257,385
Inventories
273,711
252,535
Other current assets
32,432
43,313
Total current assets
640,899
648,289
Property and equipment, net
127,385
129,588
Goodwill
307,108
309,429
Intangible assets, net
132,954
127,464
Other non-current assets
56,518
87,156
Total Assets
$
1,264,864
$
1,301,926
Liabilities and Stockholders'
Equity
Bank lines of credit
$
88,000
$
91,000
Current portion of long-term debt
804
837
Accounts payable and accrued expenses
169,718
183,288
Other current liabilities
123,486
108,811
Total current liabilities
382,008
383,936
Long-term debt
257,752
262,326
Other long-term liabilities
73,377
97,948
Total liabilities
713,137
744,210
Total stockholders’ equity
551,727
557,716
Total Liabilities and Stockholders’
Equity
$
1,264,864
$
1,301,926
RECONCILIATION OF GAAP TO NON-GAAPNET INCOME AND EARNINGS PER
SHARE(in thousands, except earnings per share data)
Three Months Ended December
31,
Six Months Ended December
31,
2018
2019
2018
2019
Net income
EPS
Net income
EPS
Net income
EPS
Net income
EPS
GAAP basis
$
19,107
$
1.03
$
20,986
$
1.12
$
28,509
$
1.53
$
41,729
$
2.22
Restructuring and other charges (benefit),
net
(1,265
)
(0.07
)
(929
)
(0.05
)
2,931
0.16
(3,028
)
(0.16
)
Amortization of acquired intangible
assets
4,022
0.22
3,566
0.19
8,190
0.44
7,163
0.38
Non-cash interest
1,955
0.10
2,239
0.12
3,881
0.21
4,402
0.23
Tax benefit of above adjustments
(1,331
)
(0.07
)
(1,352
)
(0.07
)
(4,231
)
(0.23
)
(2,373
)
(0.13
)
Discrete tax items
(392
)
(0.02
)
(696
)
(0.04
)
(1,934
)
(0.11
)
(6,910
)
(0.36
)
Non-GAAP basis
$
22,096
$
1.19
$
23,814
$
1.27
$
37,346
$
2.00
$
40,983
$
2.18
RECONCILIATION OF GAAP TO
NON-GAAP
OPERATING INCOME (LOSS) AND
OPERATING MARGIN BY SEGMENT
(in thousands, except
percentages)
Three Months Ended December
31, 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)
$
26,063
13.8
%
$
2,209
4.3
%
$
8,067
11.2
%
$
(4,632
)
$
31,707
10.5
%
Restructuring and other charges (benefit),
net
(46
)
0.0
%
3,335
6.5
%
46
0.0
%
(4,600
)
(1,265
)
(0.4
%)
Amortization of acquired intangible
assets
2,818
1.5
%
--
--
1,205
1.7
%
--
4,023
1.3
%
Non-GAAP basis– operating income
(loss)
$
28,835
15.3
%
$
5,544
10.8
%
$
9,318
12.9
%
$
(9,232
)
$
34,465
11.4
%
Three Months Ended December 31, 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)
$
28,562
14.1
%
$
1,294
3.1
%
$
9,018
12.4
%
$
(5,955
)
$
32,919
10.8
%
Restructuring and other charges (benefit),
net
405
0.2
%
--
--
30
0.0
%
(1,364
)
(929
)
(0.4
%)
Amortization of acquired intangible
assets
2,792
1.4
%
--
--
774
1.1
%
--
3,566
1.2
%
Non-GAAP basis– operating income
(loss)
$
31,759
15.7
%
$
1,294
3.1
%
$
9,822
13.5
%
$
(7,319
)
$
35,556
11.6
%
Six Months Ended December 31,
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)
$
49,113
13.7
%
$
334
0.4
%
$
14,892
10.4
%
$
(16,375
)
$
47,964
8.4
%
Restructuring and other charges (benefit),
net
--
--
3,526
3.9
%
420
0.3
%
(1,015
)
2,931
0.5
%
Amortization of acquired intangible
assets
5,916
1.6
%
--
--
2,274
1.6
%
--
8,190
1.5
%
Non-GAAP basis– operating income
(loss)
$
55,029
15.3
%
$
3,860
4.3
%
$
17,586
12.3
%
$
(17,390
)
$
59,085
10.4
%
Six Months Ended December 31,
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)
$
48,880
12.5
%
$
4,111
5.0
%
$
17,787
12.1
%
$
(12,972
)
$
57,806
9.7
%
Restructuring and other charges (benefit),
net
405
0.1
%
--
--
17
0.0
%
(3,450
)
(3,028
)
(0.5
%)
Amortization of acquired intangible
assets
5,592
1.4
%
--
--
1,571
1.1
%
--
7,163
1.2
%
Non-GAAP basis– operating income
(loss)
$
54,877
14.0
%
$
4,111
5.0
%
$
19,375
13.2
%
$
(16,422
)
$
61,941
10.4
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200128005795/en/
OSI Systems, Inc. Ajay Vashishat Vice President, Business
Development Tel: (310) 349-2237 avashishat@osi-systems.com
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