OSI Systems, Inc. (NASDAQ: OSIS), a vertically integrated
provider of solutions in Security, Healthcare, and specialized
electronics, today announced financial results for the third
quarter ended March 31, 2013.
Deepak Chopra, OSI Systems’ Chairman and CEO, stated, “We are
pleased to announce the results of our third quarter operations. We
achieved record earnings for the 12th consecutive quarter as a
result of significant operating margin expansion, led by our
Security division. Although we experienced lower sales in the
quarter due to a difficult prior-year comparison in our Security
division and lower than expected results in our Healthcare
division, our growth outlook for fiscal 2014 and beyond remains
strong with a very robust opportunity pipeline and new product
introductions in both divisions. With our Mexico turnkey program
ramping up nicely and the majority of our capital investment behind
us, we expect to generate significant free cash flow over the next
twelve months.”
The Company reported revenues of $198 million for the third
quarter of fiscal 2013, a decrease of 5% as compared to the same
period a year ago. Net income for the third quarter of fiscal 2013
was $13.5 million, or $0.66 per diluted share, compared to net
income of $12.6 million, or $0.62 per diluted share, for the third
quarter of fiscal 2012. Excluding the impact of impairment,
restructuring, and other charges, net income for the third quarter
of fiscal 2013 would have been $15.2 million, or $0.74 per diluted
share, compared to net income of $13.2 million, or $0.65 per
diluted share, for the third quarter of fiscal 2012.
For the nine months ended March 31, 2013, the Company reported
revenues of $574 million, an increase of 3% as compared to the same
period a year ago. Net income for the nine months ended March 31,
2013 was $32.3 million, or $1.57 per diluted share, compared to net
income of $29.6 million, or $1.46 per diluted share, for the nine
months ended March 31, 2012. Excluding the impact of impairment,
restructuring, and other charges, net income for the nine months
ended March 31, 2013 would have been $35.9 million, or $1.75 per
diluted share, compared to net income of $30.3 million, or $1.50
per diluted share, for the nine months ended March 31, 2012.
As of March 31, 2013, the Company’s backlog was approximately
$1.0 billion, which was comparable to the amount as of December 31,
2012. During the nine months ended March 31, 2013, the Company
generated cash flow from operations of $57 million and capital
expenditures were $139 million primarily as a result of the
significant investment in the Mexico turnkey program.
Mr. Chopra continued, “During the third quarter, our Security
division achieved record profits as the higher margin turnkey
screening solution model continues to play a larger role in the
division’s operations. The ramp up of our program in Mexico and a
solid pipeline of opportunities provide optimism for continued
strong performance of our Security division. Sales comparisons for
the third quarter were skewed as we recognized $42 million in
revenues in the prior year related to a $98 million contract where
we served as a prime contractor and hardware systems integrator.
Excluding the change in revenues from this program, the Security
division’s sales increased by 41%. The success of our turnkey
screening solution programs, the pipeline of opportunities and our
expanded product portfolio, continue to provide an outstanding
outlook for our Security division.”
Mr. Chopra added, “Our Healthcare division results were
disappointing. Although we did see a rebound in sales in our
European, Middle-Eastern, and African market, which grew year over
year, our North American sales were soft. Looking ahead, we
continue to believe in a bright future for our Healthcare division
as we gain traction with our recently expanded product offerings
including the recently launched Arkon anesthesia delivery
system.”
Outlook
Subject to the risk factors detailed in the Safe Harbor section
of this press release, the Company currently expects fourth quarter
earnings per diluted share to increase at a rate of 29% - 38% over
the prior-year period to between $1.02 to $1.09, excluding the
impact of impairment, restructuring and other charges. The Company
currently anticipates fourth quarter revenues to be between $220
million - $230 million.
Non-GAAP Figures
Discussion of adjustments to arrive at non-GAAP figures for the
three months and nine months ended March 31, 2013 is provided to
allow for the comparison of underlying earnings, net of impairment,
restructuring and other non-recurring charges and their related tax
benefit, thus providing additional insight into the on-going
operations of the Company. Non-GAAP financial measures should not
be considered a substitute for, or superior to, 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. Please see the reconciliation of GAAP to
non-GAAP net income and earnings per share at the end of this
release.
Conference Call Information
OSI Systems, Inc. will host a conference call and simultaneous
webcast over the Internet beginning at 9:00am PT (12:00pm ET),
today to discuss its results for the third quarter of fiscal 2013.
To listen, please log on to the Company’s website at
www.osi-systems.com and follow the link in the Investor Relations
section. A replay of the webcast will be available shortly after
the conclusion of the conference call for approximately two weeks.
The replay can either be accessed through the Company’s website,
www.osi-systems.com, or via telephonic replay by calling
1-888-843-7419 or 1-630-652-3042 and entering the conference call
identification number ‘34725974’ 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 in
diversified markets, including homeland security, healthcare,
defense, and aerospace. The Company has more than 35 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. News Filter:
OSIS-E
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 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 2013, sales of recently introduced products, and
expectations for the performance of the Company under its agreement
with Mexico’s tax and customs authority. 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. 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, 2012 and other risks
subsequently filed by the Company from time to time with the
Securities and Exchange Commission.
OSI SYSTEMS, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per share
data)
(Unaudited)
For the Three Months Ended
March 31,
For the Nine Months Ended
March 31,
2012 2013 2012
2013 Revenues $ 208,439 $ 198,409 $ 557,749 $
574,152 Cost of goods sold 139,308 126,571
369,937 370,871 Gross profit
69,131 71,838 187,812 203,281 Operating expenses: Selling,
general and administrative expenses 37,063 37,752 107,409 114,506
Research and development 12,932 12,386 35,358 35,560 Impairment,
restructuring and other charges 931 2,286
931 5,009 Total operating
expenses 50,926 52,424 143,698
155,075 Income from operations 18,205 19,414
44,114 48,206 Interest expense and other, net (792 )
(1,341 ) (2,312 ) (3,823 ) Income before income taxes
17,413 18,073 41,802 44,383 Provision for income taxes 4,838
4,544 12,165 12,094
Net income $ 12,575 $ 13,529 $ 29,637
$ 32,289 Diluted earnings per share $ 0.62
$ 0.66 $ 1.46 $ 1.57 Weighted
average shares outstanding - diluted 20,433
20,556 20,253 20,579
CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
June 30, March 31, 2012 2013
Assets Cash and cash equivalents $ 91,452 $ 47,680 Accounts
receivable, net 156,867 169,418 Inventories 195,178 198,292 Other
current assets 39,616 56,763 Total current assets
483,113 472,153 Property and equipment, net 111,664 238,815 Other
non-current assets 155,119 144,634 Total Assets $
749,896 $ 855,602
Liabilities and Stockholders'
Equity Bank lines of credit $ -- $ 55,000 Current portion of
long-term debt 215 1,795 Accounts payable and accrued expenses
75,252 109,974 Other current liabilities 85,182
88,925 Total current liabilities 160,649 255,694 Long-term debt
2,467 11,099 Advances from customers 100,000 81,250 Other long-term
liabilities 52,661 48,858 Total liabilities 315,777
396,901 Total shareholders’ equity 434,119 468,701
Total Liabilities and Equity
$ 749,896 $ 855,602
Segment Information
(in thousands) (Unaudited)
Three Months Ended
March 31,
Nine Months Ended
March 31,
2012 2013 2012 2013 Revenues – by
Segment Group: Security Group $ 111,796 $ 99,840 $ 273,370 $
274,619 Healthcare Group 56,333 51,357 162,046 159,052
Optoelectronics and Manufacturing Group including intersegment
revenues 49,976 54,761 154,426 169,185 Intersegment revenues
elimination (9,666 ) (7,549 ) (32,093 )
(28,704 ) Total $ 208,439 $ 198,409 $ 557,749
$ 574,152
Operating income (loss) – by Segment
Group:
Security Group(i)
$ 10,557 $ 16,179 $ 22,403 $ 29,251 Healthcare Group 6,254 3,593
16,977 14,389
Optoelectronics and Manufacturing
Group(ii)
3,558 3,271 12,947 13,561 Corporate (2,552 ) (4,017 ) (8,458 )
(9,704 ) Eliminations 388 388
245 709 Total $ 18,205 $ 19,414
$ 44,114 $ 48,206 (i) Includes
impairment, restructuring, and other non-recurring charges of $1.7
million and $4.4 million for the three and nine months ended March
31, 2013, respectively. (ii) Includes restructuring and other
charges of $0.6 million for the three and nine months ended March
31, 2013 and $0.9 million for the three months and nine months
ended March 31, 2012.
Reconciliation of GAAP to
Non-GAAP
(in thousands, except earnings per
share data)
(Unaudited)
For the Three Months Ended March 31, For the Nine
Months Ended March 31, 2012 2013
2012 2013
Net
income
EPS
Net
income
EPS
Net
income
EPS
Net
income
EPS GAAP basis $ 12,575 $ 0.62 $ 13,529
$ 0.66 $ 29,637 $ 1.46 $ 32,289 $ 1.57 Impairment,
restructuring and other charges, net of tax 672 0.03 1,711 0.08 660
0.04 3,644 0.18
Non-GAAP basis $ 13,247 $ 0.65 $ 15,240 $ 0.74 $ 30,297 $
1.50 $ 35,933 $ 1.75
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