OSI Systems, Inc. (NASDAQ:OSIS) today announced financial results
for the quarter ended September 30, 2016.
Deepak Chopra, OSI Systems’ Chairman and CEO,
stated, “We are pleased to report solid fiscal first quarter
performance, including record-breaking revenue. Further, on
September 9, 2016 we completed our acquisition of American Science
and Engineering, Inc. (“AS&E”) and we have been making solid
progress in integrating AS&E’s operations into our Security
division.”
The Company reported revenues of $220.9 million
for the first quarter of fiscal 2017, an increase of 10% from the
$200.1 million reported for the first quarter of fiscal 2016. Net
income for the first quarter of fiscal 2017 was $0.7 million, or
$0.03 per diluted share, compared to net income of $10.8 million,
or $0.53 per diluted share, for the first quarter of fiscal 2016.
Non-GAAP net income (excluding the impact of impairment,
restructuring and other charges and amortization of acquired
intangible assets, net of related tax impact thereof) for the first
quarter of fiscal 2017 was $8.7 million, or $0.44 per diluted
share, compared to non-GAAP net income for the first quarter of
fiscal 2016 of $11.2 million, or $0.55 per diluted share.
During the quarter ended September 30, 2016, the
Company's book-to-bill ratio for equipment and related services
(non-turnkey) was 1.1, and as of September 30, 2016 the Company's
backlog (measured as quantifiable purchase orders or contracts that
have been signed for which revenues are expected to be recognized
within the next five years) was $725 million.
Mr. Chopra further commented, “Our Security
division achieved record first quarter revenues of $123.7 million,
of which $14.2 million was generated by our newly acquired
subsidiary, AS&E. Excluding the revenues generated by AS&E,
sales in our Security division increased 14% over sales in the same
prior-year quarter, and the non-turnkey book-to-bill ratio for the
Security division was 1.2. This organic sales growth, coupled with
the acquisition of AS&E, makes us optimistic that fiscal 2017
will be a strong year for our Security division.”
Mr. Chopra concluded, “We continued in the first
fiscal quarter to face challenges in our Healthcare division with
year-over-year sales down 11%. We are making progress in many
aspects of the business and are optimistic about improving
performance of this division.”
Fiscal Year 2017 Outlook
Subject to risks described in this press
release, the Company is raising its fiscal 2017 sales guidance to
$955 million - $990 million. The updated revenue guidance includes
approximately $90 million attributable to the acquisition of
AS&E. In addition, the Company is increasing to $2.80 - $3.20
per diluted share its non-GAAP earnings guidance, which excludes
the impact of impairment, restructuring and other charges and
amortization of acquired intangible assets, net of their related
tax impact.
Actual sales and non-GAAP diluted earnings per
share could vary from this guidance including as a result of the
matters discussed under the “Forward-Looking Statements”
section.
The Company’s fiscal 2017 diluted earnings per
share guidance is provided on a non-GAAP basis only. The
Company does not provide a reconciliation of non-GAAP diluted EPS
guidance on a forward-looking basis to diluted EPS, the most
directly comparable GAAP measure, because it is unable to provide a
meaningful or accurate compilation of reconciling items or the
information is not available without unreasonable effort.
This is due primarily to year-over-year variability or the
difficulty in making accurate forecasts and projections of
impairment, restructuring and other charges and amortization of
acquired intangible assets and their related tax effects.
Presentation of Non-GAAP Financial
Measures
This earnings release includes a presentation of
non-GAAP net income, non-GAAP diluted earnings per share and
non-GAAP operating income (loss) by segment, all of which are
non-GAAP financial measures. The presentation of these non-GAAP
figures for the three months ended September 30, 2015 and 2016 is
provided to allow for the comparison of the underlying performance
of the Company, net of impairment, restructuring and other charges
and the amortization of intangible assets acquired through
business acquisitions, and their associated tax effects when
applicable. Management believes that these non-GAAP financial
measures provide (i) additional insight into the ongoing operations
of the Company, (ii) meaningful supplemental information regarding
the Company’s results excluding amounts management does not
view as reflective of ongoing operating results when planning and
forecasting and when assessing the performance of the business and
(iii) a meaningful comparison against results for past periods of
results for current periods and guidance for future periods.
Non-GAAP financial measures should not be considered in isolation
or as a substitute for measures of financial performance prepared
in accordance with GAAP.
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
OSI Systems, Inc. will host a conference call
and simultaneous webcast over the Internet beginning at 1:30pm PT
(4:30pm ET) today to discuss its results for the first quarter of
fiscal 2017. 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 10, 2016. The replay can either be accessed through the
Company’s website, www.osi-systems.com, or via telephonic replay by
calling 1-855-859-2056 and entering the conference call
identification number '6513459’ 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 in more than a dozen countries. The Company 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 its subsidiary companies, visit
www.osi-systems.com. News Filter: OSIS-E
Forward-Looking StatementsThis
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 and similar expressions
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 and growth in fiscal 2017. 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; 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 of volatility in oil prices; unfavorable currency exchange
rate fluctuations; 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 ongoing investigations and compliance
reviews; contract and regulatory compliance matters, and actions,
if brought, resulting in judgments, settlements, fines,
injunctions, debarment or penalties; AS&E integration and other
AS&E-related risks 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 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, 2016 and other risks described therein and in
documents subsequently 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 requirements under federal securities
laws.
|
OSI SYSTEMS, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(in thousands) |
|
June 30,
2016 |
|
(unaudited)September 30,
2016 |
Assets |
|
|
|
|
|
|
|
Cash and cash
equivalents |
$ |
104,370 |
|
|
$ |
122,966 |
|
Accounts receivable,
net |
|
141,716 |
|
|
|
177,857 |
|
Inventories |
|
273,288 |
|
|
|
289,601 |
|
Other current
assets |
|
35,944 |
|
|
|
45,757 |
|
Total
current assets |
|
555,318 |
|
|
|
636,181 |
|
Goodwill |
|
122,819 |
|
|
|
242,590 |
|
Intangible assets |
|
56,283 |
|
|
|
129,349 |
|
Other non-current
assets |
|
257,303 |
|
|
|
244,893 |
|
Total
Assets |
$ |
991,723 |
|
|
$ |
1,253,013 |
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
Bank lines of
credit |
$ |
125,000 |
|
|
$ |
339,000 |
|
Current portion of
long-term debt |
|
2,759 |
|
|
|
2,681 |
|
Accounts payable and
accrued expenses |
|
117,455 |
|
|
|
125,531 |
|
Other current
liabilities |
|
122,621 |
|
|
|
134,136 |
|
Total
current liabilities |
|
367,835 |
|
|
|
601,348 |
|
Long-term debt |
|
6,054 |
|
|
|
5,623 |
|
Deferred income
taxes |
|
29,160 |
|
|
|
29,123 |
|
Other long-term
liabilities |
|
47,828 |
|
|
|
70,212 |
|
Total
liabilities |
|
450,877 |
|
|
|
706,306 |
|
Total stockholders’
equity |
|
540,846 |
|
|
|
546,707 |
|
Total
Liabilities and Stockholders’ Equity |
$ |
991,723 |
|
|
$ |
1,253,013 |
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(in thousands, except per share data) |
|
|
Three Months EndedSeptember
30, |
|
|
2015 |
|
|
|
2016 |
|
|
|
|
|
Revenue: |
|
|
|
Products |
$ |
135,501 |
|
|
$ |
153,457 |
|
Services |
|
64,549 |
|
|
|
67,398 |
|
Total
revenues |
|
200,050 |
|
|
|
220,855 |
|
Cost of goods sold: |
|
|
|
Products |
|
94,317 |
|
|
|
113,121 |
|
Services |
|
37,762 |
|
|
|
39,647 |
|
Total cost
of goods sold |
|
132,079 |
|
|
|
152,768 |
|
Gross
profit |
|
67,971 |
|
|
|
68,087 |
|
Operating expenses: |
|
|
|
Selling,
general and administrative |
|
40,393 |
|
|
|
43,553 |
|
Research and
development |
|
11,881 |
|
|
|
12,478 |
|
Restructuring and other charges |
|
- |
|
|
|
9,957 |
|
Total
operating expenses |
|
52,274 |
|
|
|
65,988 |
|
Income from
operations |
|
15,697 |
|
|
|
2,099 |
|
Interest and other
expense, net |
|
(794 |
) |
|
|
(1,158 |
) |
Income before income
taxes |
|
14,903 |
|
|
|
941 |
|
Provision for income
taxes |
|
4,098 |
|
|
|
264 |
|
Net income |
$ |
10,805 |
|
|
$ |
677 |
|
|
|
|
|
Diluted income per
share |
$ |
0.53 |
|
|
$ |
0.03 |
|
Weighted average shares
outstanding – diluted |
|
20,474 |
|
|
|
19,591 |
|
UNAUDITED SEGMENT INFORMATION |
(in thousands) |
|
|
Three Months Ended September
30, |
|
|
2015 |
|
|
|
2016 |
|
Revenues – by
Segment: |
|
|
|
Security
division |
$ |
96,410 |
|
|
$ |
123,709 |
|
Healthcare
division |
|
51,465 |
|
|
|
45,650 |
|
Optoelectronics and Manufacturing division, including intersegment
revenues |
|
62,548 |
|
|
|
56,954 |
|
Intersegment
revenues elimination |
|
(10,373 |
) |
|
|
(5,458 |
) |
Total |
$ |
200,050 |
|
|
$ |
220,855 |
|
|
|
|
|
Operating
income (loss) – by Segment: |
|
|
|
Security
division |
$ |
12,635 |
|
|
$ |
9,350 |
|
Healthcare
division |
|
2,938 |
|
|
|
(3,264 |
) |
Optoelectronics and Manufacturing division |
|
5,561 |
|
|
|
4,650 |
|
Corporate |
|
(5,202 |
) |
|
|
(9,013 |
) |
Eliminations |
|
(235 |
) |
|
|
376 |
|
Total |
$ |
15,697 |
|
|
$ |
2,099 |
|
RECONCILIATION OF GAAP TO
NON-GAAPOPERATING INCOME (LOSS) BY
SEGMENT(in thousands) |
|
Three Months Ended September 30,
2015 |
|
SecurityDivision |
|
HealthcareDivision |
|
Optoelectronics
andManufacturingDivision |
|
Corporate |
|
Eliminations |
|
Total |
GAAP basis – operating
income (loss) |
$ |
12,635 |
|
|
$ |
2,938 |
|
|
$ |
5,561 |
|
|
$ |
(5,202 |
) |
|
$ |
(235 |
) |
|
$ |
15,697 |
|
Amortization of
acquired intangible assets |
|
208 |
|
|
|
164 |
|
|
|
195 |
|
|
|
- |
|
|
|
- |
|
|
|
567 |
|
Non-GAAP basis –
operating income (loss) |
$ |
12,843 |
|
|
$ |
3,102 |
|
|
$ |
5,756 |
|
|
$ |
(5,202 |
) |
|
$ |
(235 |
) |
|
$ |
16,264 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
2016 |
|
Security Division |
|
Healthcare Division |
|
Optoelectronics and Manufacturing
Division |
|
Corporate |
|
Eliminations |
|
Total |
GAAP basis – operating
income (loss) |
$ |
9,350 |
|
|
$ |
(3,264 |
) |
|
$ |
4,650 |
|
|
$ |
(9,013 |
) |
|
$ |
376 |
|
|
$ |
2,099 |
|
Impairment,
restructuring and other charges: |
|
|
|
|
|
|
|
|
|
|
|
Impairment
of assets |
|
5,332 |
|
|
|
86 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,418 |
|
Acquisition-related costs |
|
725 |
|
|
|
- |
|
|
|
- |
|
|
|
3,149 |
|
|
|
- |
|
|
|
3,874 |
|
Facility
closure/ consolidation |
|
176 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
176 |
|
Employee
termination costs |
|
150 |
|
|
|
256 |
|
|
|
65 |
|
|
|
- |
|
|
|
- |
|
|
|
471 |
|
Other |
|
7 |
|
|
|
- |
|
|
|
- |
|
|
|
11 |
|
|
|
- |
|
|
|
18 |
|
Subtotal |
|
6,390 |
|
|
|
342 |
|
|
|
65 |
|
|
|
3,160 |
|
|
|
- |
|
|
|
9,957 |
|
Amortization of
acquired intangible assets |
|
601 |
|
|
|
164 |
|
|
|
366 |
|
|
|
- |
|
|
|
- |
|
|
|
1,131 |
|
Non-GAAP basis –
operating income (loss) |
$ |
16,341 |
|
|
$ |
(2,758 |
) |
|
$ |
5,081 |
|
|
$ |
(5,853 |
) |
|
$ |
376 |
|
|
$ |
13,187 |
|
RECONCILIATION OF GAAP
TO NON-GAAPNET INCOME AND EARNINGS PER
SHARE(in thousands except per share
data) |
|
Three Months Ended September 30, |
|
|
2015 |
|
|
|
2016 |
|
|
Net income |
|
EPS |
|
Net income |
|
EPS |
GAAP basis |
$ |
10,805 |
|
|
$ |
0.53 |
|
|
$ |
677 |
|
|
$ |
0.03 |
|
Impairment,
restructuring and other charges, net of tax* |
|
- |
|
|
|
- |
|
|
|
7,163 |
|
|
|
0.37 |
|
Amortization of
acquired intangible assets, net of tax* |
|
411 |
|
|
|
0.02 |
|
|
|
814 |
|
|
|
0.04 |
|
Non-GAAP basis |
$ |
11,216 |
|
|
$ |
0.55 |
|
|
$ |
8,654 |
|
|
$ |
0.44 |
|
* For purposes of calculating the tax impact of these
costs, the effective tax rate for the consolidated operations of
OSI Systems was used for each period.
For Additional Information, Contact:
OSI Systems, Inc.
Ajay Vashishat
Vice President, Business Development
12525 Chadron Ave
Hawthorne, CA 90250
Tel: (310) 349-2237
avashishat@osi-systems.com
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