- Q1 Revenues of $255 Million
- Q1 Earnings Per Share
- GAAP EPS of $0.51
- Record Non-GAAP EPS of $1.06 (16% year-over-year
increase)
- Q1 Book-to-Bill Ratio of 1.6
- Backlog of $1.0 Billion as of September 30, 2020 (17%
increase from June 30, 2020)
- Record Q1 Operating Cash Flow of $54 Million
- Company Raises FY 2021 Guidance
OSI Systems, Inc. (the “Company” or “OSI Systems”) (NASDAQ:
OSIS) today announced financial results for the quarter ended
September 30, 2020.
Deepak Chopra, OSI Systems’ Chairman and Chief Executive
Officer, stated, “Overall, we are pleased with the first quarter
performance as we delivered strong earnings and outstanding cash
flow as well as robust bookings across all divisions despite the
continued impact of COVID-19. The exceptionally strong book-to-bill
ratio for the quarter resulted in significant growth in backlog,
and we enter Q2 with a robust pipeline of opportunities.”
The Company reported revenues of $254.9 million for the first
quarter of fiscal 2021, a decrease of 12% from the $290.9 million
reported for the first quarter of fiscal 2020. Net income for the
first quarter of fiscal 2021 was $9.3 million, or $0.51 per diluted
share, compared to net income of $20.7 million, or $1.10 per
diluted share, for the first quarter of fiscal 2020. Non-GAAP net
income for the first quarter of fiscal 2021 was $19.5 million, or
$1.06 per diluted share, compared to non-GAAP net income for the
fiscal 2020 first quarter of $17.2 million, or $0.91 per diluted
share.
During the quarter ended September 30, 2020, the Company's
book-to-bill ratio was 1.6. The Company's backlog was $1.0 billion
as of September 30, 2020 compared to $861 million as of June 30,
2020. The Company generated operating cash flow of $54 million
during the first quarter of fiscal 2021 compared to $25 million
during the first quarter of fiscal 2020. Capital expenditures were
$4 million during the three months ended September 30, 2020
compared to $6 million during the three months ended September 30,
2019.
Mr. Chopra commented, “Bookings in our Security division were
outstanding with a book-to-bill of 1.9, leading to a significant
increase in our backlog. Due in part to the continued impact of the
pandemic, as expected, the Security division reported a first
fiscal quarter reduction in year-over-year revenues. However,
strong operational performance drove adjusted operating margin
expansion. We continue to be well positioned in the global
marketplace to capitalize on future opportunities.”
Mr. Chopra continued, “Our Optoelectronics and Manufacturing
division bounced back from a challenging 2020 fourth fiscal quarter
to deliver strong revenues and operating income. With robust Q1
bookings, we believe Opto is poised to accelerate growth through
the remainder of fiscal 2021.”
Mr. Chopra concluded, “We are pleased with the exceptional first
quarter performance of the Healthcare division, as revenues
increased 28% over revenues in Q1 fiscal 2020. This increase in
revenues led to significant operating margin expansion. We continue
to invest in new product development efforts and in enhancing our
core product portfolio.”
During the first quarter, the Company repurchased 320,136 shares
under its current stock buyback program. As of September 30, 2020,
the Company’s program allows for the repurchase of approximately
2.68 million more shares.
Fiscal Year 2021 Outlook
Current Updated
Guidance
Previous Guidance
Revenues
$1.100 billion - $1.142
billion
$1.090 billion - $1.140
billion
Non-GAAP Diluted Earnings Per
Share
$4.65 - $5.10
$4.50 - $5.05
The Company is increasing its fiscal year 2021 revenues guidance
to a range of $1.100 billion to $1.142 billion. The Company is also
raising its fiscal 2021 non-GAAP earnings guidance to $4.65 to
$5.10 per diluted share. Actual revenues and non-GAAP diluted
earnings per share could vary from this guidance due to factors
discussed under “Forward-Looking Statements” or 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, 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 ended September 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 9:00am PT (12:00pm ET) today to discuss its results
for the first quarter of fiscal 2021. 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 November 12, 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 7284107 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 September
30,
2019
2020
Revenue:
Products
$
209,761
$
182,747
Services
81,091
72,161
Total revenues
290,852
254,908
Cost of goods sold:
Products
146,342
124,841
Services
45,299
34,316
Total cost of goods sold
191,641
159,157
Gross profit
99,211
95,751
Operating expenses:
Selling, general and administrative
62,177
58,617
Research and development
14,246
12,082
Impairment, restructuring and other
charges (benefit), net
(2,099
)
8,359
Total operating expenses
74,324
79,058
Income from operations
24,887
16,693
Interest and other expense, net
(4,736
)
(4,189
)
Income before income taxes
20,151
12,504
(Provision) benefit for income taxes
592
(3,160
)
Net income
$
20,743
$
9,344
Diluted income per share
$
1.10
$
0.51
Weighted average shares outstanding –
diluted
18,903
18,335
OSI SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED SEGMENT
INFORMATION
(in thousands)
Three Months Ended September
30,
2019
2020
Revenues – by Segment:
Security division
$
188,964
$
134,775
Healthcare division
40,208
51,503
Optoelectronics and Manufacturing
division, including intersegment revenues
73,638
79,914
Intersegment eliminations
(11,958
)
(11,284
)
Total
$
290,852
$
254,908
Operating income (loss) – by
Segment:
Security division
$
20,318
$
8,906
Healthcare division
2,817
8,984
Optoelectronics and Manufacturing
division
8,769
8,740
Corporate
(7,337
)
(9,456
)
Intersegment eliminations
320
(481
)
Total
$
24,887
$
16,693
OSI SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, 2020
September 30, 2020
Assets
Cash and cash equivalents
$
76,102
$
76,925
Accounts receivable, net
269,840
253,149
Inventories
241,226
255,434
Other current assets
30,541
29,285
Total current assets
617,709
614,793
Property and equipment, net
127,936
127,705
Goodwill
310,627
315,511
Intangible assets
128,279
134,781
Other non-current assets
83,990
78,158
Total Assets
$
1,268,541
$
1,270,948
Liabilities and Stockholders'
Equity
Bank lines of credit
$
59,000
$
51,000
Current portion of long-term debt
926
898
Accounts payable and accrued expenses
154,487
163,591
Other current liabilities
115,688
118,448
Total current liabilities
330,101
333,937
Long-term debt
267,072
269,356
Other long-term liabilities
99,216
110,115
Total liabilities
696,389
713,408
Total stockholders’ equity
572,152
557,540
Total Liabilities and Stockholders’
Equity
$
1,268,541
$
1,270,948
OSI SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO
NON-GAAP
NET INCOME AND EARNINGS PER
SHARE
(in thousands, except earnings
per share data)
Three Months Ended September
30,
2019
2020
Net income
Diluted EPS
Net income
Diluted EPS
GAAP basis
$
20,743
$
1.10
$
9,344
$
0.51
Impairment, restructuring and other
charges (benefit), net
(2,099
)
(0.11
)
8,359
0.46
Amortization of acquired intangible
assets
3,597
0.19
3,776
0.21
Non-cash interest expense
2,163
0.11
2,226
0.12
Tax effect of above adjustments
(1,021
)
(0.05
)
(3,946
)
(0.22
)
Impact from discrete income tax items
(6,214
)
(0.33
)
(276
)
(0.02
)
Non-GAAP basis
$
17,169
$
0.91
$
19,483
$
1.06
RECONCILIATION OF GAAP TO
NON-GAAP
OPERATING INCOME (LOSS) AND
OPERATING MARGIN BY SEGMENT
(in thousands, except
percentages)
Three Months Ended September
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)
$
20,318
10.8
%
$
2,817
7.0
%
$
8,769
11.9
%
$
(7,017
)
$
24,887
8.6
%
Restructuring and other charges (benefit),
net
-
-
-
-
(13
)
-
(2,086
)
(2,099
)
(0.7
)
Amortization of acquired intangible
assets
2,800
1.4
-
-
797
1.1
-
3,597
1.2
Non-GAAP basis– operating income
(loss)
$
23,118
12.2
%
$
2,817
7.0
%
$
9,553
13.0
%
$
(9,103
)
$
26,385
9.1
%
Three Months Ended September
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)
$
8,906
6.6
%
$
8,984
17.4
%
$
8,740
10.9
%
$
(9,937
)
$
16,693
6.5
%
Impairment, restructuring and other
charges (benefit), net
8,253
6.1
-
-
146
0.2
(40
)
8,359
3.3
Amortization of acquired intangible
assets
2,813
2.1
202
0.4
761
1.0
-
3,776
1.5
Non-GAAP basis– operating income
(loss)
$
19,972
14.8
%
$
9,186
17.8
%
$
9,647
12.1
%
$
(9,977
)
$
28,828
11.3
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201029005435/en/
OSI Systems, Inc. Ajay Vashishat Vice President, Business
Development Tel: (310) 349-2237 avashishat@osi-systems.com
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