- Record Q2 Revenues of $373 Million (26% growth
year-over-year)
- Record Q2 Earnings Per Diluted Share
- GAAP EPS of $2.11
- Non-GAAP Adjusted EPS of $2.21 (86% growth
year-over-year)
- Q2 Operating Income Growth of 105% Year-Over-Year
- Q2-Ended Backlog of Approximately $1.8 Billion
- Company Increases FY 2024 Revenue and Non-GAAP Adjusted
Diluted EPS Guidance
OSI Systems, Inc. (the “Company” or “OSI Systems”) (NASDAQ:
OSIS) today announced its financial results for the three and six
months ended December 31, 2023.
Deepak Chopra, OSI Systems’ Chairman and Chief Executive
Officer, stated “We are pleased to report a record-breaking second
quarter for revenues and earnings, led by strong execution in the
Security division and solid performance in the Optoelectronics and
Manufacturing division. Given our robust backlog and high
visibility into our pipeline of opportunities, we anticipate a
strong second half of fiscal 2024.”
For Q2 FY24, the Company reported revenues of $373.2 million, a
26% increase over the $295.6 million reported for the same quarter
of the prior year. Net income for Q2 FY24 was $36.6 million, or
$2.11 per diluted share, compared to net income of $16.4 million,
or $0.96 per diluted share, for the same quarter of the prior year.
Non-GAAP net income for Q2 FY24 was $38.3 million, or $2.21 per
diluted share, compared to non-GAAP net income for the same quarter
of the prior year of $20.4 million, or $1.19 per diluted share.
For the six months ended December 31, 2023, revenues were $652.4
million compared to $563.7 million in the same period a year ago.
Net income for the six months ended December 31, 2023 was $49.4
million, or $2.87 per diluted share, compared to $27.6 million, or
$1.61 per diluted share, for the same period a year ago. Non-GAAP
net income for the six months ended December 31, 2023 was $53.8
million, or $3.12 per diluted share, compared to non-GAAP net
income of $35.3 million, or $2.06 per diluted share, for the same
prior-year period.
The Company's book-to-bill ratio was 1.0 for the second quarter
of fiscal 2024. As of December 31, 2023, the Company's backlog was
approximately $1.8 billion. For Q2 FY24, operating cash flow was
negative $23.5 million driven by investments in working capital
primarily to support recent business wins compared to negative $9.1
million for the same quarter of the prior year. Capital
expenditures were $3.5 million and $3.7 million for Q2 FY24 and Q2
FY23, respectively.
Mr. Chopra commented, “The Security division results reflect our
tremendous momentum given increasing demand for our product and
service offerings as well as our superior competitive position. Our
revenues increased 49% year-over-year, which we leveraged to
deliver significant operating income growth. The adjusted operating
margin expanded to 22.1% in the fiscal 2024 second quarter compared
to 14.7% in the same quarter of the prior fiscal year. Bookings
were solid and, importantly, despite the sizable conversion of
backlog to revenue in the quarter, the overall Security division
quarter-ended backlog remains comparable with the level of last
quarter. This gives us significant confidence that the positive
momentum in the Security division will continue in the second half
of this fiscal year and into the future.”
Mr. Chopra continued, “Our Optoelectronics and Manufacturing
division again delivered solid financial results with adjusted
operating margin expansion on comparable year-over-year revenues as
certain customers delayed the receipt of deliveries. This division
continues to benefit from our vertically-integrated global
manufacturing footprint, which further expanded into Mexico in
December 2023. I am proud of the Optoelectronics and Manufacturing
team’s focus on continuous improvement, and we are well-positioned
to take advantage of future growth.”
Mr. Chopra concluded, “While general market conditions continued
to pose challenges for our Healthcare division, and the division’s
revenues and operating income decreased compared to the same
quarter of the previous year, we are encouraged by the division’s
strong bookings which generated a book-to-bill ratio over 1.1. We
continue to focus on new product development, principally in our
patient monitoring portfolio and anticipate stronger performance in
the second half of the fiscal year compared to the first half of
fiscal 2024.”
Fiscal Year 2024 Outlook
The Company is increasing its fiscal 2024 revenues guidance from
anticipated growth in excess of 18% to anticipated growth in excess
of 19% over revenues in fiscal 2023. The Company is also increasing
its non-GAAP adjusted diluted earnings per share guidance from
greater than 27% growth to greater than 29% growth compared to
non-GAAP adjusted diluted earnings per share for fiscal year 2023.
Actual revenues and adjusted diluted earnings per share could vary
from this guidance due to factors discussed under “Forward-Looking
Statements” or other factors.
The Company’s fiscal 2024 adjusted 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 adjusted 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 adjusted
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 reasonably be predicted. For the same reasons,
the Company is unable to address the significance of unavailable
information which may be material and therefore could result in
GAAP diluted EPS, the most directly comparable GAAP financial
measure, being materially different from projected non-GAAP
adjusted diluted EPS.
Presentation of Non-GAAP Financial Measures
This earnings release includes a presentation of non-GAAP net
income, non-GAAP adjusted 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 all fiscal periods 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, non-cash interest expense, and their
associated tax effects, and the impact of discrete income tax
items. Although we exclude amortization of acquired intangible
assets from our non-GAAP figures, revenue generated from such
intangibles is included within revenue in determining non-GAAP
financial performance of the Company. Management believes that the
non-GAAP financial measures presented in this earnings release
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 financial information 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 financial
results for the periods presented in this earnings release. To
listen, please visit the Investor Relations section of the OSI
Systems website at 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 February 8, 2024. The
replay can be accessed through the Company’s website at
www.osi-systems.com.
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 and 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, and operational performance in fiscal
2024 and beyond. 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;
the impact of potential information technology, cybersecurity or
data security breaches; changes in domestic and foreign government
spending and budgetary, procurement and trade policies adverse to
the Company's businesses; the impact of the Russia-Ukraine
conflict, including the potential for broad economic disruption;
global economic uncertainty; 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; unfavorable interest 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 current fiscal year; 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. 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 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
December 31,
Six Months Ended
December 31,
2022
2023
2022
2023
Revenues:
Products
$
216,885
$
290,179
$
413,839
$
489,888
Services
78,712
83,056
149,829
162,557
Total net revenues
295,597
373,235
563,668
652,445
Cost of goods sold:
Products
158,294
187,385
301,663
324,368
Services
41,096
44,549
78,301
88,031
Total cost of goods sold
199,390
231,934
379,964
412,399
Gross profit
96,207
141,301
183,704
240,046
Operating expenses:
Selling, general and administrative
54,003
71,604
107,441
131,402
Research and development
14,456
16,350
28,996
32,272
Restructuring and other charges, net
2,257
1,026
3,476
1,492
Total operating expenses
70,716
88,980
139,913
165,166
Income from operations
25,491
52,321
43,791
74,880
Interest and other expense, net
(5,180
)
(6,534
)
(8,612
)
(12,282
)
Income before income taxes
20,311
45,787
35,179
62,598
Provision for income taxes
(3,957
)
(9,234
)
(7,590
)
(13,166
)
Net income
$
16,354
$
36,553
$
27,589
$
49,432
Diluted earnings per share
$
0.96
$
2.11
$
1.61
$
2.87
Weighted average shares outstanding –
diluted
17,103
17,302
17,140
17,238
UNAUDITED SEGMENT
INFORMATION
(in thousands)
Three Months Ended December
31,
Six Months Ended
December 31,
2022
2023
2022
2023
Revenues – by Segment:
Security division
$
167,444
$
249,975
$
312,436
$
414,604
Optoelectronics and Manufacturing
division, including intersegment revenues
98,709
98,097
192,625
194,225
Healthcare division
43,520
41,850
87,083
79,637
Intersegment eliminations
(14,076
)
(16,687
)
(28,476
)
(36,021
)
Total
$
295,597
$
373,235
$
563,668
$
652,445
Operating income (loss) – by
Segment:
Security division
$
21,593
$
51,856
$
36,518
$
72,465
Optoelectronics and Manufacturing
division
12,212
11,621
23,470
23,058
Healthcare division
1,404
429
3,032
593
Corporate
(9,276
)
(11,183
)
(19,424
)
(21,099
)
Intersegment eliminations
(442
)
(402
)
195
(137
)
Total
$
25,491
$
52,321
$
43,791
$
74,880
OSI SYSTEMS, INC. AND
SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, 2023
December 31, 2023
Assets
Cash and cash equivalents
$
76,750
$
127,258
Accounts receivable, net
380,845
370,168
Inventories
338,008
445,818
Prepaid expenses and other current
assets
44,300
59,839
Total current assets
839,903
1,003,083
Property and equipment, net
108,933
110,188
Goodwill
349,505
352,911
Intangible assets, net
140,857
143,288
Other non-current assets
116,488
117,007
Total Assets
$
1,555,686
$
1,726,477
Liabilities and Stockholders'
Equity
Bank lines of credit
$
215,000
$
316,000
Current portion of long-term debt
8,076
8,120
Accounts payable and accrued expenses
208,786
234,506
Other current liabilities
139,832
141,765
Total current liabilities
571,694
700,391
Long-term debt
136,491
132,792
Other long-term liabilities
121,336
122,851
Total liabilities
829,521
956,034
Total stockholders’ equity
726,165
770,443
Total Liabilities and Stockholders’
Equity
$
1,555,686
$
1,726,477
RECONCILIATION OF GAAP TO
NON-GAAP
NET INCOME AND EARNINGS PER
SHARE
(in thousands, except earnings
per share data)
Three Months Ended December
31,
Six Months Ended December
31,
2022
2023
2022
2023
Net income
EPS
Net income
EPS
Net income
EPS
Net income
EPS
GAAP basis
$
16,354
$
0.96
$
36,553
$
2.11
$
27,589
$
1.61
$
49,432
$
2.87
Restructuring and other charges, net
2,257
0.13
1,026
0.06
3,476
0.20
1,492
0.09
Amortization of acquired intangible
assets
3,768
0.22
4,680
0.27
7,488
0.44
8,387
0.48
Non-cash interest expense
139
0.01
-
-
295
0.02
-
-
Tax benefit of above adjustments
(1,418
)
(0.09
)
(1,465
)
(0.08
)
(2,690
)
(0.16
)
(2,544
)
(0.15
)
Discrete tax benefit
(716
)
(0.04
)
(2,540
)
(0.15
)
(814
)
(0.05
)
(2,953
)
(0.17
)
Non-GAAP basis
$
20,384
$
1.19
$
38,254
$
2.21
$
35,344
$
2.06
$
53,814
$
3.12
RECONCILIATION OF GAAP TO NON-GAAP
OPERATING INCOME (LOSS) AND
OPERATING MARGIN BY SEGMENT
(in thousands, except
percentages)
Three Months Ended December
31, 2022
Security Division
Optoelectronics and Manufacturing
Division
Healthcare Division
Corporate / Elimination
Total
% of
Sales
% of
Sales
% of
Sales
% of
Sales
GAAP basis – operating income (loss)
$
21,593
12.9
%
$
12,212
12.4
%
$
1,404
3.2
%
$
(9,718
)
$
25,491
8.6
%
Restructuring and other charges, net.
77
0.0
%
-
-
2,152
4.9
%
28
2,257
0.8
%
Amortization of acquired intangible
assets
2,883
1.8
%
684
0.7
%
201
0.5
%
-
3,768
1.3
%
Non-GAAP basis– operating income
(loss)
$
24,553
14.7
%
$
12,896
13.1
%
$
3,757
8.6
%
$
(9,690
)
$
31,516
10.7
%
Three Months Ended December
31, 2023
Security Division
Optoelectronics and Manufacturing
Division
Healthcare Division
Corporate / Elimination
Total
% of
Sales
% of
Sales
% of
Sales
% of
Sales
GAAP basis – operating income (loss)
$
51,856
20.7
%
$
11,621
11.8
%
$
429
1.0
%
$
(11,585
)
$
52,321
14.0
%
Restructuring and other charges, net.
164
0.1
%
525
0.5
%
-
-
337
1,026
0.3
%
Amortization of acquired intangible
assets
3,339
1.3
%
1,039
1.1
%
302
0.7
%
-
4,680
1.2
%
Non-GAAP basis– operating income
(loss)
$
55,359
22.1
%
$
13,185
13.4
%
$
731
1.7
%
$
(11,248
)
$
58,027
15.5
%
Six Months Ended December 31,
2022
Security Division
Optoelectronics and Manufacturing
Division
Healthcare Division
Corporate / Elimination
Total
% of
Sales
% of
Sales
% of
Sales
% of
Sales
GAAP basis – operating income (loss)
$
36,518
11.7
%
$
23,470
12.2
%
$
3,032
3.5
%
$
(19,229
)
$
43,791
7.8
%
Restructuring and other charges, net.
865
0.3
%
15
0.0
%
2,446
2.8
%
150
3,476
0.6
%
Amortization of acquired intangible
assets
5,703
1.8
%
1,382
0.7
%
403
0.5
%
-
7,488
1.3
%
Non-GAAP basis– operating income
(loss)
$
43,086
13.8
%
$
24,867
12.9
%
$
5,881
6.8
%
$
(19,079
)
$
54,755
9.7
%
Six Months Ended December 31,
2023
Security Division
Optoelectronics and Manufacturing
Division
Healthcare Division
Corporate / Elimination
Total
% of
Sales
% of
Sales
% of
Sales
% of
Sales
GAAP basis – operating income (loss)
$
72,465
17.5
%
$
23,058
11.9
%
$
593
0.7
%
$
(21,236
)
$
74,880
11.5
%
Restructuring and other charges, net.
436
0.1
%
576
0.3
%
-
0.0
%
480
1,492
0.2
%
Amortization of acquired intangible
assets
5,966
1.4
%
1,818
0.9
%
603
0.8
%
-
8,387
1.3
%
Non-GAAP basis– operating income
(loss)
$
78,867
19.0
%
$
25,452
13.1
%
$
1,196
1.5
%
$
(20,756
)
$
84,759
13.0
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240125956498/en/
For Additional Information,
Contact: OSI Systems, Inc. Ajay Vashishat Vice
President, Business Development Tel: (310) 349-2237
avashishat@osi-systems.com
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