UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
______________
FORM 8-K
______________
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(D) OF
THE
SECURITIES EXCHANGE ACT OF 1934
DATE
OF REPORT (DATE OF EARLIEST EVENT REPORTED): October 23, 2014
______________
OSI SYSTEMS, INC.
(EXACT
NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
______________
DELAWARE
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000-23125
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330238801
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(STATE OR OTHER JURISDICTION OF
INCORPORATION)
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(COMMISSION FILE NUMBER)
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(IRS EMPLOYER IDENTIFICATION NO.)
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12525 CHADRON AVENUE HAWTHORNE, CA 90250
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(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES) (ZIP CODE)
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(310) 978-0516
(REGISTRANT’S
TELEPHONE NUMBER, INCLUDING AREA CODE)
N/A
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT.)
Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
⃞
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
⃞
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
⃞
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
⃞
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
|
On October 23, 2014, we issued a press release announcing our financial
results for the first quarter ended September 30, 2014. A copy of the
press release is attached hereto as Exhibit 99.1 and incorporated herein
in its entirety by this reference.
We are furnishing the information contained in this Item 2.02 (including
Exhibit 99.1). It shall not be deemed to be “filed” for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, or
otherwise subject to the liabilities of that section, nor shall it be
deemed to be incorporated by reference in any filing under the
Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended.
Item 9.01. Financial Statements and Exhibits.
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Exhibit 99.1: Press Release of OSI Systems, Inc., dated October
23, 2014.
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SIGNATURES
Pursuant to
the requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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OSI SYSTEMS, INC.
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Date:
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October 23, 2014
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By:
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/s/ Alan Edrick
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Alan Edrick
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Chief Financial Officer
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EXHIBIT INDEX
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Exhibit
Number
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Description
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99.1
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Press Release of OSI Systems, Inc., dated October 23, 2014.
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Exhibit 99.1
OSI
Systems Reports First Quarter Fiscal 2015 Financial Results
-
Record
Q1 Earnings Per Share
-
GAAP
of $0.55 (77% increase over prior year)
-
Non-GAAP
of $0.57 (24% increase over prior year)
-
Record
Q1 Revenue of $218 million
-
Company
raises FY 2015 Sales guidance to $970 million - $995 million.
-
Company
raises FY 2015 non-GAAP Earnings guidance to $3.53 - $3.76 per share
HAWTHORNE, Calif.--(BUSINESS WIRE)--October 23, 2014--OSI Systems, Inc.
(NASDAQ: OSIS) today announced financial results for the quarter ended
September 30, 2014.
Deepak Chopra, OSI Systems’ Chairman and CEO, stated, “We are pleased to
report solid first quarter performance which delivered record-breaking
revenue, earnings and free cash flow providing a strong start to our
fiscal year. Led by our Security division, our non-GAAP earnings
increased 24% over the prior year.”
The Company reported revenues of $218.4 million for the first quarter of
fiscal 2015, an increase of $12.1 million, or 6%, from the $206.3
million reported for the first quarter of fiscal 2014. Net income for
the first quarter of fiscal 2015 was $11.2 million, or $0.55 per diluted
share, compared to net income of $6.4 million, or $0.31 per diluted
share, for the first quarter of fiscal 2014. Excluding the impact of
restructuring and other charges, net income for the first quarter of
fiscal 2015 would have been approximately $11.8 million, or $0.57 per
diluted share, compared to net income of $9.4 million, or $0.46 per
diluted share, for the comparable period of fiscal 2014.
During the three months ended September 30, 2014, the Company generated
$28.0 million of free cash flow. Adjusted EBITDA during the quarter was
$41.1 million, an increase of 24% over the comparable period of fiscal
2014. As of September 30, 2014, the Company’s backlog was $0.8 billion,
which was comparable to the amount as of June 30, 2014. Capital
expenditures for the period totaled $3.1 million.
Mr. Chopra continued, “Our Security division reported a 17% topline
increase as a result of strong equipment sales, including partial
fulfillment of our Foreign Military Sales contract to the U.S.
Department of Defense. This sales growth combined with operating margin
expansion led to record first-quarter Security division operating income
of $17.3 million, a 31% increase over the prior year amount, excluding
the impact of restructuring and other charges.”
Mr. Chopra concluded, “Our Healthcare division’s bookings during the
first quarter increased significantly year-over-year, although the
timing of certain orders did not enable us to fulfill many orders until
the subsequent quarter. The resultant higher backlog and the opportunity
pipeline leave us optimistic for the future in our Healthcare division.”
Fiscal Year 2015 Outlook
The Company is raising its sales guidance for fiscal 2015 to $970
million – $995 million. In addition, the Company is raising its earnings
guidance and expects diluted earnings to increase at a rate of 13% to
20% over fiscal 2014 to $3.53 - $3.76 per share, excluding the impact of
impairment, restructuring and other non-recurring charges, and the
impact of certain tax elections.
Presentation of Non-GAAP Financial Measure; Non-GAAP Figures
This earnings release includes a presentation of Adjusted EBITDA, a
non-GAAP financial measure. Adjusted EBITDA is presented as a
supplemental measure of the Company’s financial performance that we
believe is useful to investors because the excluded items may vary
significantly in timing or amounts and/or may obscure trends useful in
evaluating and comparing the Company’s operating activities across
reporting periods. Its introduction coincided with the Company’s shift
to increased levels of capital intensive turnkey screening services and
the accompanying higher depreciation. Adjusted EBITDA is defined as net
income, plus net interest expense, provision for income taxes and
depreciation and amortization, as further adjusted to eliminate the
impact of stock-based compensation, and impairment, restructuring and
other charges. Not all companies use identical calculations and,
accordingly, the Company’s presentation of Adjusted EBITDA may not be
comparable to other similarly titled measures of other companies.
Adjusted EBITDA is not a recognized term under accounting principles
generally accepted in the United States and does not purport to be a
substitute for net income as an indicator of operating performance or
cash flows from operating activities as a measure of liquidity. In
addition, the Company uses Adjusted EBITDA to evaluate the effectiveness
of the Company’s business strategies and because the Company’s credit
agreements use measures similar to Adjusted EBITDA to measure compliance
with certain covenants.
Discussion of adjustments to arrive at non-GAAP net income and diluted
earnings per share figures and Adjusted EBITDA for the three months
ended September 30, 2013 and 2014 is provided to allow for the
comparison of underlying earnings, net of restructuring and other
charges. We believe that providing these non-GAAP figures provides
additional insight into the ongoing operations of the Company. Non-GAAP
financial measures should not be considered in isolation or as a
substitute for measures of financial performance prepared in accordance
with GAAP. We believe that these non-GAAP financial measures provide
meaningful supplemental information regarding the Company’s results
primarily because they exclude amounts that we do not view as reflective
of ongoing operating results when planning and forecasting and when
assessing the performance of the business. We believe that our non-GAAP
financial measures also facilitate the comparison of results for current
periods and guidance for future periods with results for past periods.
Reconciliations of GAAP to non-GAAP net income and diluted earnings per
share, and net income to Adjusted EBITDA are provided in the
accompanying tables.
Conference Call Information
OSI Systems, Inc. will host a conference call and simultaneous webcast
over the Internet beginning at 9:00 a.m. PT (12:00 p.m. ET), today to
discuss its results for the first quarter of fiscal 2015. 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 November 7, 2014. The replay can either be
accessed through the Company’s website, www.osi-systems.com,
or via telephonic replay by calling 1-888-286-8010 and entering the
conference call identification number ’12275623’ 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 located in more than a dozen
countries. It 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.
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. Such statements include, but are not
limited to, information provided regarding expected revenues and
earnings in fiscal 2015. 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; unanticipated impacts of sequestration and other provisions of
the Budget Control Act of 2011 as modified by the Bipartisan Budget Act
of 2013; changes in domestic and foreign government spending, budgetary,
procurement and trade policies adverse to the Company’s businesses;
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 annual 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, 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 operation. For a further
discussion of 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, 2014 and other risks
described in documents 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 its ongoing requirements under federal securities laws.
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OSI SYSTEMS, INC. AND SUBSIDIARIES
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Condensed Consolidated Statements of Operations
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(in thousands, except per share data)
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(unaudited)
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Three Months Ended
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September 30,
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2013
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2014
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Revenue
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$
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206,274
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$
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218,397
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Cost of goods sold
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138,328
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144,155
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Gross profit
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67,946
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74,242
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Operating expenses:
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Selling, general and administrative
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42,214
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44,182
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Research and development
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11,020
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12,670
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Restructuring and other charges
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4,239
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726
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Total operating expenses
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57,473
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57,578
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Income from operations
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10,473
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16,664
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Interest and other expense, net
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(1,470
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)
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(864
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)
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Income before income taxes
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9,003
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15,800
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Provision for income taxes
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2,609
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4,551
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Net income
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$
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6,394
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$
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11,249
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Diluted income per share
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$
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0.31
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$
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0.55
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Weighted average shares outstanding – diluted
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20,620
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20,529
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Consolidated Balance Sheets
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(in thousands)
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(unaudited)
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June 30, 2014
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September 30, 2014
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Assets
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Cash and cash equivalents
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$
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38,831
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$
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37,274
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Accounts receivable, net
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185,773
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155,849
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Inventories
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234,138
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264,394
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Other current assets
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120,488
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125,484
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Total current assets
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579,230
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583,001
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Non-current assets
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444,956
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445,054
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Total Assets
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$
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1,024,186
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$
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1,028,055
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Liabilities and Stockholders' Equity
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Bank lines of credit
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$
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24,000
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$
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30,000
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Current portion of long-term debt
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2,819
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2,820
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Accounts payable and accrued expenses
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130,437
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|
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134,546
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Deferred revenues
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60,677
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55,958
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Other current liabilities
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92,046
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|
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98,310
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Total current liabilities
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309,979
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321,634
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Long-term debt
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|
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10,436
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|
|
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11,267
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Advances from customers
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50,000
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|
|
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43,750
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Deferred income taxes
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|
|
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73,161
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|
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73,978
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Other long-term liabilities
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48,397
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|
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55,257
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Total liabilities
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491,973
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505,886
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Total stockholders’ equity
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532,213
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522,169
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Total Liabilities and Equity
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$
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1,024,186
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$
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1,028,055
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Segment Information
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(in thousands)
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(unaudited)
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|
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Three Months Ended
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September 30,
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2013
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2014
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Revenues – by Segment:
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Security division
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$
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97,153
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$
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113,439
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Healthcare division
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45,787
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47,834
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Optoelectronics and Manufacturing division, including intersegment
revenues
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71,311
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69,086
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Intersegment revenues elimination
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(7,977
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)
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(11,962
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)
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Total
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|
$
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206,274
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$
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218,397
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Operating income (loss) – by Segment:
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Security division (i)
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$
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11,622
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$
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17,259
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Healthcare division (ii)
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(1,998
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)
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62
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Optoelectronics and Manufacturing division (iii)
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|
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4,765
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4,327
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Corporate (iv)
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(4,045
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)
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|
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|
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(4,517
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)
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Eliminations
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129
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(467
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)
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Total
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|
|
|
$
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10,473
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|
|
|
|
$
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16,664
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(i)
|
|
Includes restructuring and other charges of $1.6 million and $0.1
million for the three months ended September 30, 2013 and 2014,
respectively.
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(ii)
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|
Includes restructuring and other charges of $2.0 and $0.1 million
for the three months ended September 30, 2013 and 2014,
respectively.
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(iii)
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Includes restructuring and other charges of $0.6 and $0.1 million
for the three months ended September 30, 2013 and 2014,
respectively.
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(iv)
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Includes restructuring and other charges of $0.4 million for the
three months ended September 30, 2014.
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|
Reconciliation of GAAP to Non-GAAP
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(in thousands, except earnings per share data)
|
(unaudited)
|
|
|
|
|
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Three Months Ended September 30,
|
|
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2013
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|
|
|
2014
|
|
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|
|
Net
|
|
|
|
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Net
|
|
|
|
|
|
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|
|
income
|
|
|
|
EPS
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|
|
|
income
|
|
|
|
EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP basis
|
|
|
|
$
|
6,394
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|
|
|
$
|
0.31
|
|
|
|
$
|
11,249
|
|
|
|
$
|
0.55
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Restructuring and other charges, net of tax
|
|
|
|
|
3,011
|
|
|
|
|
0.15
|
|
|
|
|
517
|
|
|
|
|
0.02
|
Non-GAAP basis
|
|
|
|
$
|
9,405
|
|
|
|
$
|
0.46
|
|
|
|
$
|
11,766
|
|
|
|
$
|
0.57
|
|
|
Reconciliation of Net Income to Adjusted EBITDA
|
(in thousands)
|
(unaudited)
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
6,394
|
|
|
|
$
|
11,249
|
Interest expense, net
|
|
|
|
|
1,470
|
|
|
|
|
870
|
Provision for income taxes
|
|
|
|
|
2,609
|
|
|
|
|
4,551
|
Depreciation and amortization
|
|
|
|
|
12,873
|
|
|
|
|
17,741
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
|
|
23,346
|
|
|
|
|
34,411
|
Stock-based compensation
|
|
|
|
|
5,638
|
|
|
|
|
5,995
|
Restructuring and other charges
|
|
|
|
|
4,239
|
|
|
|
|
726
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
$
|
33,223
|
|
|
|
$
|
41,132
|
|
CONTACT:
OSI Systems, Inc.
Ajay Vashishat, 310-349-2237
Vice
President, Business Development
avashishat@osi-systems.com
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