- Record Q1 Revenue of $257.1 Million
(16% increase over prior year)
- Record Q1 Earnings Per Diluted
Share
- GAAP EPS of $0.52 vs. $0.03 in Q1
Fiscal 2017
- Non-GAAP EPS of $0.79 (80% increase
over prior year)
- Q1 Book-to-Bill Ratio of 1.6 for
Non-turnkey Business
- Company Raises FY 2018 Revenue
Guidance to $1,045 Million - $1,085 Million (9% - 13%
growth)
- Company Raises FY 2018 Non-GAAP
Earnings Guidance to $3.40 - $3.65 Per Diluted Share
OSI Systems, Inc. (the “Company” or “OSI Systems”) (NASDAQ:
OSIS) today announced financial results for the quarter ended
September 30, 2017.
Deepak Chopra, OSI Systems’ Chairman and CEO, stated, “We are
pleased to report solid fiscal first quarter performance, including
record revenues and earnings. Each of our divisions contributed to
our outstanding start to fiscal 2018 with year-over-year profit
growth. Based on this performance and our strong bookings, we have
heightened optimism that fiscal 2018 will be a successful year for
OSI.”
The Company reported revenues of $257.1 million for the first
quarter of fiscal 2018, an increase of 16% from the $220.9 million
reported for the first quarter of fiscal 2017. Net income for the
first quarter of fiscal 2018 was $10.2 million, or $0.52 per
diluted share, compared to net income of $0.7 million, or $0.03 per
diluted share, for the first quarter of fiscal 2017. Non-GAAP net
income for the first quarter of fiscal 2018 was $15.5 million, or
$0.79 per diluted share, compared to non-GAAP net income for the
first quarter of fiscal 2017 of $8.7 million, or $0.44 per diluted
share.
During the quarter ended September 30, 2017, the Company's
book-to-bill ratio for equipment and related services (non-turnkey)
was 1.6. As of September 30, 2017, the Company's backlog was $846
million as compared to $738 million as of June 30, 2017. Operating
cash flow during the quarter was $35 million.
Mr. Chopra further commented, “Our Security division achieved
record first quarter revenues of $162 million, of which
approximately $22 million was generated by our newly-acquired
explosive trace detection business. This business complements well
our Security division’s product portfolio, and together with the
strong overall start in the rest of the division, leaves us
well-positioned to achieve strong results in fiscal 2018.”
Mr. Chopra continued, “Our Healthcare business has continued to
respond positively to our new management team and improved product
portfolio. Excluding $4.1 million of revenue in the prior-year
period attributable to a non-core business we divested in February
2017, sales for the first quarter of fiscal 2018 increased by 10%
over the prior year, which was our third consecutive quarter of
solid year-over-year growth in this division.”
Mr. Chopra concluded, “Our Optoelectronics and Manufacturing
division performed solidly as the division leveraged sales growth
to achieve year-over-year operating margin expansion.”
Fiscal Year 2018 Outlook
The Company is raising its fiscal 2018 sales guidance to $1,045
million - $1,085 million. In addition, the Company is increasing to
$3.40 - $3.65 per diluted share its non-GAAP earnings guidance.
Actual sales and non-GAAP diluted earnings per share could vary
from this guidance.
The Company’s fiscal 2018 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 GAAP diluted EPS, the most directly
comparable GAAP measure, because it is unable to provide a
meaningful or accurate compilation of reconciling items and certain
information is not available.
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, 2016 and
2017 is provided to allow for the comparison of the underlying
performance of the Company, net of impairment, restructuring and
other charges, amortization of intangible assets acquired through
business acquisitions, non-cash interest expense related to
convertible debt, gain from the disposition of a business and their
associated tax effects, and the impact from discrete income tax
items. 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) for planning, forecasting
and assessing the performance of the business, (iii) a meaningful
comparison against results of past periods and (iv) comparable
financial results to those of peer companies. 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
The Company 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 2018. 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 9, 2017. 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 '3378548' 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 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 2018. 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; 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 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; 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 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. 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 UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS (in thousands)
June 30, 2017
September 30, 2017 Assets Cash and cash
equivalents $ 169,650 $ 192,028 Accounts receivable, net 206,526
203,068 Inventories 248,510 271,309 Other current assets
28,314 34,425 Total current assets 653,000 700,830 Goodwill
242,129 282,656 Intangible assets 118,450 145,036 Other non-current
assets 216,508 223,002 Total Assets $ 1,230,087 $
1,351,524
Liabilities and Stockholders' Equity
Bank lines of credit $ 103,000 $ 214,000 Current portion of
long-term debt 2,396 2,286 Accounts payable and accrued expenses
137,559 144,352 Other current liabilities 103,179
100,713 Total current liabilities 346,134 461,351 Long-term debt
241,750 243,416 Deferred income taxes 20,681 20,323 Other long-term
liabilities 52,309 55,054 Total liabilities 660,874
780,144 Total stockholders’ equity 569,213 571,380
Total Liabilities and Stockholders’ Equity $ 1,230,087 $ 1,351,524
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except per share
data)
Three Months Ended September 30,
2016 2017 Revenue:
Products $ 153,457 $ 165,653 Services 67,398
91,480 Total revenues 220,855 257,133 Cost of goods sold:
Products 113,121 114,180 Services 39,647
51,682 Total cost of goods sold 152,768
165,862 Gross profit 68,087 91,271 Operating expenses:
Selling, general and administrative 43,553 55,647 Research and
development 12,478 15,100 Impairment, restructuring and other
charges 9,957 1,130 Total operating
expenses 65,988 71,877 Income from
operations 2,099 19,394 Interest and other expense, net
(1,158 ) (4,249 ) Income before income taxes 941 15,145
Provision for income taxes
(264
) (4,988 ) Net income $ 677 $ 10,157
Diluted income per share $ 0.03 $ 0.52 Weighted
average shares outstanding – diluted 19,591
19,591
UNAUDITED SEGMENT INFORMATION
(in thousands)
Three Months Ended September 30,
2016 2017 Revenues –
by Segment: Security division $ 123,709 $ 162,245 Healthcare
division 45,650 45,529 Optoelectronics and Manufacturing division,
including intersegment revenues 56,954 58,926 Intersegment
elimination (5,458 ) (9,567 ) Total $ 220,855
$ 257,133
Operating income (loss) – by
Segment: Security division $ 9,350 $ 22,693 Healthcare division
(3,264 ) 847 Optoelectronics and Manufacturing division 4,650 5,175
Corporate (9,013 ) (8,753 ) Intersegment elimination 376
(568 ) Total $ 2,099 $ 19,394
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME AND
EARNINGS PER SHARE
(in thousands, except earnings per
share data)
Three Months Ended September 30, 2016
2017 Net income EPS Net
income EPS GAAP basis $ 677 $ 0.03 $ 10,157 $
0.52 Impairment, restructuring and other charges 9,957 0.51 1,130
0.06 Amortization of acquired intangible assets 1,131 0.06 3,542
0.18 Non-cash interest expense - - 1,804 0.09 Tax effect of above
adjustments (3,111 ) (0.16 ) (1,831 ) (0.10 ) Impact from discrete
income tax items - - 707
0.04 Non-GAAP basis $ 8,654 $ 0.44 $
15,509 $ 0.79
RECONCILIATION OF GAAP TO
NON-GAAP OPERATING INCOME (LOSS) AND OPERATING MARGIN BY
SEGMENT
(in thousands, except
percentages)
Three Months Ended September 30, 2016
Optoelectronics and
Manufacturing Corporate / Security Division
Healthcare Division Division Elimination
Total % of % of % of % of
Sales
Sales
Sales
Sales
GAAP basis – operating income (loss) $ 9,350 7.6% $ (3,264 ) -7.2%
$ 4,650 8.2% $ (8,637 ) $ 2,099 1.0% Impairment, restructuring and
other charges 6,390 5.1% 342 0.8% 65 0.1% 3,160 9,957 4.5%
Amortization of acquired intangible assets 601 0.5%
164 0.4% 366 0.6% - 1,131 0.5%
Non-GAAP basis– operating income (loss) $ 16,341 13.2% $ (2,758 )
-6.0% $ 5,081 8.9% $ (5,477 ) $ 13,187 6.0%
Three
Months Ended September 30, 2017 Optoelectronics and
Manufacturing Corporate / Security Division
Healthcare Division Division Elimination
Total
% of
% of
% of
% of
Sales
Sales
Sales
Sales
GAAP basis – operating income (loss) $ 22,693 14.0% $ 847 1.9% $
5,175 8.8% $ (9,321 ) $ 19,394 7.5% Impairment, restructuring and
other charges 310 0.2% - - - - 820 1,130 0.5% Amortization of
acquired intangible assets 3,162 1.9% 14 0.0%
366 0.6% - 3,542 1.4% Non-GAAP basis–
operating income (loss) $ 26,165 16.1% $ 861 1.9% $ 5,541
9.4% $ (8,501 ) $ 24,066 9.4%
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171026006355/en/
OSI Systems, Inc.Ajay VashishatVice President, Business
Development(310) 349-2237avashishat@osi-systems.com
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