- Q4 Revenues of $277 Million
- Q4 Earnings Per Diluted Share
- GAAP EPS of $0.76
- Non-GAAP EPS of $1.22 (6% year-over-year increase)
- FY 2020 Operating Cash Flow of $129 Million (8%
year-over-year increase)
- Company Provides Fiscal 2021 Revenue and Non-GAAP EPS
Guidance
OSI Systems, Inc. (the “Company” or “OSI Systems”) (NASDAQ:
OSIS) today announced financial results for the fourth quarter and
fiscal year ended June 30, 2020.
Deepak Chopra, OSI Systems’ Chairman and Chief Executive
Officer, said “We were pleased to deliver solid fourth quarter
earnings and overall financial performance as we closed out the
fiscal year in the midst of the COVID-19 pandemic. We continue to
prioritize the safety of our workforce as we navigate challenges
arising from the COVID-19 pandemic. I am confident in our ability
to execute our strategic goals during these uncertain times.”
The Company reported revenues of $277.0 million for the fourth
quarter of fiscal 2020, a decrease of 10% from the $308.4 million
reported for the fourth quarter of fiscal 2019. Net income for the
fourth quarter of fiscal 2020 was $14.0 million, or $0.76 per
diluted share, compared to net income of $16.7 million, or $0.89
per diluted share, for the fourth quarter of fiscal 2019. Non-GAAP
net income for the fourth quarter of fiscal 2020 was $22.5 million,
or $1.22 per diluted share, compared to non-GAAP net income for the
fourth quarter of fiscal 2019 of $21.6 million, or $1.15 per
diluted share.
For the fiscal year ended June 30, 2020, revenues decreased by
1% to $1.166 billion compared to $1.182 billion in the prior fiscal
year. Net income for fiscal 2020 was $75.3 million, or $4.05 per
diluted share, compared to net income of $64.8 million, or $3.46
per diluted share, in the prior fiscal year. Non-GAAP net income
for the fiscal year ended June 30, 2020 was $85.6 million, or $4.60
per diluted share, compared to non-GAAP net income of $80.8
million, or $4.32 per diluted share, for the 2019 fiscal year.
During the three months ended June 30, 2020, the Company's
book-to-bill ratio was approximately 1.0. As of June 30, 2020, the
Company's backlog was $861 million. Operating cash flow during the
quarter ended June 30, 2020 was $23.6 million, and capital
expenditures were $4.3 million.
Mr. Chopra stated, “We are pleased with the strong profits and
adjusted operating margin expansion in the Security division
despite lower than anticipated fourth quarter revenues due
primarily to the impact of the pandemic on our aviation and cargo
businesses. This is a testament to our proactive leadership and
ability to adapt swiftly.”
Mr. Chopra further commented, “Our Optoelectronics and
Manufacturing division ended the fiscal year with solid fourth
quarter bookings and a record year-end backlog as we enter fiscal
2021. The team successfully managed operational challenges
associated with COVID-19 to deliver a comparable year-over-year
adjusted operating margin.”
Mr. Chopra continued, “The Healthcare division delivered a
strong finish to the fiscal year with revenues increasing 15% in
the fourth quarter and significant improvement in adjusted
operating margin. We are very proud of the vital contributions our
Healthcare team and critical care patient monitoring products are
making to assist physicians and hospitals in their response to the
global pandemic.”
Stock Repurchase Program
The Company’s Board of Directors has authorized the purchase of
up to 2,000,000 shares of the Company's common stock, adding to the
previously authorized purchase of 1,000,000 shares for a total
authorization of 3,000,000 shares under its stock repurchase
program. The stock repurchase program may be expanded, reduced or
otherwise modified, or terminated, by the Company’s Board of
Directors at any time without prior notice. There is no assurance
that all or any of the shares authorized for repurchase under the
program will be repurchased by the Company.
Fiscal Year 2021 Outlook
For fiscal year 2021, the Company anticipates revenues in the
range of $1.09 billion to $1.14 billion and non-GAAP earnings per
diluted share in the range of $4.50 to $5.05. Actual revenues and
non-GAAP diluted earnings per share could vary from this guidance
due to factors discussed under “Forward-Looking Statements” and
other factors, including uncertainties as to the duration and scope
of the COVID-19 pandemic.
The Company’s fiscal 2021 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
otherwise 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 months and fiscal years ended June
30, 2019 and 2020 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 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
generally 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 fourth quarter and fiscal year ended June 30, 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 September 2, 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 '1972542’ 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, operational performance and impact of
the COVID-19 pandemic in fiscal 2021. 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; impact on the Company’s business related to
or resulting from the COVID-19 pandemic such as material delays and
cancellations of orders or deliveries thereon, supply chain
disruptions, plant closures, or other adverse impacts on the
Company’s ability to execute business plans; 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 many of which risks
could be amplified by the magnitude and duration of the COVID-19
pandemic. 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,
2019
2020
2019
2020
Net revenues:
Products
$
224,052
$
203,688
$
856,712
$
850,478
Services
84,325
73,279
325,403
315,566
Total net revenues
308,377
276,967
1,182,115
1,166,044
Cost of goods sold:
Products
149,232
139,222
572,673
575,342
Services
46,124
36,197
178,848
170,063
Total cost of goods sold
195,356
175,419
751,521
745,405
Gross profit
113,021
101,548
430,594
420,639
Operating expenses:
Selling, general and administrative
66,402
60,306
262,484
251,961
Research and development
16,256
12,823
56,509
57,308
Impairment, restructuring and other
charges, net
2,673
4,963
3,827
6,483
Total operating expenses
85,331
78,092
322,820
315,752
Income from operations
27,690
23,456
107,774
104,887
Interest and other expense, net
(5,063
)
(4,479
)
(21,610
)
(18,765
)
Income before income taxes
22,627
18,977
86,164
86,122
Provision for income taxes
(5,966
)
(5,012
)
(21,368
)
(10,870
)
Net income
$
16,661
$
13,965
$
64,796
$
75,252
Diluted earnings per share
$
0.89
$
0.76
$
3.46
$
4.05
Weighted average shares outstanding –
diluted
18,808
18,328
18,720
18,600
UNAUDITED SEGMENT
INFORMATION
(in thousands)
Three Months Ended
June 30,
Fiscal Year Ended
June 30,
2019
2020
2019
2020
Revenues – by Segment:
Security division
$
195,420
$
163,566
$
747,550
$
742,043
Healthcare division
49,780
57,460
188,477
185,322
Optoelectronics and Manufacturing division
(including intersegment revenues)
74,730
67,144
288,630
283,828
Intersegment revenues eliminations
(11,553
)
(11,203
)
(42,542
)
(45,149
)
Total
$
308,377
$
276,967
$
1,182,115
$
1,166,044
Operating income (loss) – by
Segment:
Security division
$
23,370
$
16,658
$
97,426
$
90,063
Healthcare division
6,525
9,973
12,277
15,766
Optoelectronics and Manufacturing
division
7,307
5,470
29,519
30,566
Corporate
(9,333
)
(8,052
)
(30,598
)
(31,630
)
Intersegment eliminations
(179
)
(593
)
(850
)
122
Total
$
27,690
$
23,456
$
107,774
$
104,887
OSI SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, 2019
June 30, 2020
Assets
Cash and cash equivalents
$
96,316
$
76,102
Accounts receivable, net
238,440
269,840
Inventories
273,711
241,226
Other current assets
32,432
30,541
Total current assets
640,899
617,709
Property and equipment, net
127,385
127,936
Goodwill
307,108
310,627
Intangible assets, net
132,954
128,279
Other non-current assets
56,518
83,990
Total Assets
$
1,264,864
$
1,268,541
Liabilities and Stockholders'
Equity
Bank lines of credit
$
88,000
$
59,000
Current portion of long-term debt
804
926
Accounts payable and accrued expenses
169,718
154,487
Other current liabilities
123,486
115,688
Total current liabilities
382,008
330,101
Long-term debt
257,752
267,072
Other long-term liabilities
73,377
99,216
Total liabilities
713,137
696,389
Total stockholders’ equity
551,727
572,152
Total Liabilities and Stockholders’
Equity
$
1,264,864
$
1,268,541
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,
2019
2020
2019
2020
Net income
EPS
Net income
EPS
Net income
EPS
Net income
EPS
GAAP basis
$
16,661
$
0.89
$
13,965
$
0.76
$
64,796
$
3.46
$
75,252
$ 4.05
Impairment, restructuring and other
charges
2,673
0.14
4,963
0.27
3,827
0.20
6,483
0.35
Amortization of acquired intangible
assets1
3,763
0.20
5,550
0.30
15,775
0.84
16,351
0.88
Non-cash interest expense
1,999
0.11
2,157
0.12
7,850
0.42
8,751
0.47
Tax effect of above adjustments
(2,566
)
(0.14
)
(3,582
)
(0.20
)
(7,934
)
(0.41
)
(8,623
)
(0.47 )
Discrete tax items
(916
)
(0.05
)
(603
)
(0.03
)
(3,533
)
(0.19
)
(12,640
)
(0.68 )
Non-GAAP basis
$
21,614
$
1.15
$
22,450
$
1.22
$
80,781
$
4.32
$
85,574
$ 4.60
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.
RECONCILIATION OF GAAP TO
NON-GAAP
OPERATING INCOME (LOSS) AND
OPERATING MARGIN BY SEGMENT
(in thousands, except
percentages)
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
-
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
%
Three Months Ended June 30,
2020
Security Division
Healthcare Division
Optoelectronics and Manufacturing
Division
Corporate / Elimination
Total
% of
Sales
% of
Sales
% of
Sales
% of
Sales
GAAP basis – operating income (loss)
$
16,658
10.2
%
$
9,973
17.4
%
$
5,470
8.1
%
$
(8,645
)
$
23,456
8.5
%
Impairment, restructuring and other
charges, net
4,618
2.8
%
-
-
340
0.5
%
5
4,963
1.8
%
Amortization of acquired intangible
assets
4,142
2.5
%
-
-
1,408
2.2
%
-
5,550
2.0
%
Non-GAAP basis– operating income
(loss)
$
25,418
15.5
%
$
9,973
17.4
%
$
7,218
10.8
%
$
(8,640
)
$
33,969
12.3
%
RECONCILIATION OF GAAP TO NON-GAAP
OPERATING INCOME (LOSS) AND
OPERATING MARGIN BY SEGMENT
(in thousands, except
percentages)
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
-
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
%
Fiscal Year Ended June 30,
2020
Security Division
Healthcare Division
Optoelectronics and Manufacturing
Division
Corporate / Elimination
Total
% of
Sales
% of
Sales
% of
Sales
% of
Sales
GAAP basis – operating income (loss)
$
90,063
12.1
%
$
15,766
8.5
%
$
30,566
10.8
%
$
(31,508
)
$
104,887
9.0
%
Impairment, restructuring and other
charges, net
5,489
0.7
%
3,724
2.0
%
658
0.2
%
(3,388
)
6,483
0.6
%
Amortization of acquired intangible
assets
12,533
1.8
%
-
-
3,819
1.3
%
-
16,352
1.4
%
Non-GAAP basis– operating income
(loss)
$
108,085
14.6
%
$
19,490
10.5
%
$
35,043
12.3
%
$
(34,896
)
$
127,722
11.0
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200820005762/en/
OSI Systems, Inc. Ajay Vashishat Vice President, Business
Development Tel: (310) 349-2237 avashishat@osi-systems.com
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