- Q4 Revenues of $252 Million (14%
increase over prior year)
- Record Fiscal 2017 Revenues of $961
million (16% increase over prior year)
- Q4 Earnings Per Diluted Share
- GAAP EPS of $0.08
- Non-GAAP EPS of $1.02 (76% increase
over prior year)
- FY 2018 Guidance
- Sales Guidance of 8% - 12%
growth
- Non-GAAP Diluted EPS Guidance of 12%
- 20% growth
OSI Systems, Inc. (the “Company” or “OSI Systems”) (NASDAQ:
OSIS) today announced financial results for the quarter and fiscal
year ended June 30, 2017.
“We are pleased to announce outstanding fiscal fourth quarter
results. Each of our three operating divisions contributed to the
successful conclusion of a strong fiscal year. Performance at the
Security division, in particular, drove top-line growth and margin
expansion,” said Deepak Chopra, OSI Systems’ Chairman and Chief
Executive Officer.
The Company reported revenues of $252 million for the fourth
quarter of fiscal 2017, an increase of 14% from the $221 million
reported for the fourth quarter of fiscal 2016. Net income for the
fourth quarter of fiscal 2017 was $1.5 million, or $0.08 per
diluted share, compared to net income of $5.9 million, or $0.30 per
diluted share, for the fourth quarter of fiscal 2016. Non-GAAP net
income for the fourth quarter of fiscal 2017 was $19.9 million, or
$1.02 per diluted share, compared to non-GAAP net income for the
fourth quarter of fiscal 2016 of $11.4 million, or $0.58 per
diluted share.
For the fiscal year ended June 30, 2017, the Company reported
revenues of $961 million, an increase of 16% as compared to the
same period a year ago. Net income for fiscal 2017 was $21.1
million, or $1.07 per diluted share, compared to net income of
$26.2 million, or $1.30 per diluted share, in the same period a
year ago. Non-GAAP net income for the fiscal year ended June 30,
2017 was $58.8 million, or $2.99 per diluted share, compared to
non-GAAP net income of $44.3 million, or $2.21 per diluted share,
for the 2016 fiscal year.
During the three months ended June 30, 2017, the Company's
book-to-bill ratio for equipment and related services (non-turnkey)
was 1.4. As of June 30, 2017 the Company's backlog (measured as
quantifiable purchase orders or contracts for which revenues are
expected to be recognized within the next five years) was $738
million, compared to $623 million as of June 30, 2016. During
fiscal 2017, cash flow generated from operations was $62.8 million
and capital expenditures were $17.1 million.
Mr. Chopra stated, “Our Security division had an outstanding
finish to the year. Fourth quarter revenues increased 33% to a
record $147 million, $23 million of which was generated by our
AS&E business, which we acquired in September 2016. Excluding
the AS&E revenues, fourth quarter sales in our Security
division increased 12% over sales in the same prior-year fiscal
period. We leveraged our growth and benefitted from synergies from
the AS&E acquisition to significantly improve our fourth
quarter year-over-year operating income excluding the impact of
impairment, restructuring and other charges.”
Mr. Chopra further commented, “Our Optoelectronics and
Manufacturing division closed the year with an outstanding
operating margin due to operational improvements, together with a
more favorable product mix and a migration to more profitable
customers.”
Mr. Chopra concluded, “Our Healthcare business continued to
emerge from previous operating difficulties and a challenging
hospital spending environment. During the fourth quarter, sales
decreased by 3%; however, excluding the impact of a non-core
healthcare business divestiture in February 2017, fourth quarter
sales increased by 7% over the prior year. We believe that we are
well-positioned for top-line growth and margin expansion heading
into fiscal 2018.”
Fiscal Year 2018 Outlook
Subject to risks described in this press release, the Company
anticipates 8% to 12% growth in fiscal 2018 sales to $1,040,000,000
- $1,080,000,000. In addition, the Company anticipates 12% to 20%
growth in non-GAAP earnings per diluted share to $3.35 - $3.60,
excluding the fiscal 2018 impact of impairment, restructuring and
other charges, amortization of acquired intangible assets and
non-cash interest expense, and their related tax effects. As a
result of the matters discussed under “Forward-Looking Statements,”
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 and fiscal years ended June
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 adoption of ASU
2016-09 that affects income taxes. 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 fourth 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 September 7, 2017. 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 '72416491' 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 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; 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;
our ability to successfully integrate the Explosives Trace
Detection acquisition and achieve our profitability goals, 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 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 UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS (in thousands)
June 30, 2016
June 30, 2017 Assets Cash and cash
equivalents $ 104,370 $ 169,650 Accounts receivable, net 141,716
206,526 Inventories 273,288 248,510 Other current assets
35,944 28,314 Total current assets 555,318 653,000 Goodwill
122,819 242,129 Intangible assets 56,283 118,450 Other non-current
assets 257,303 216,508 Total Assets $ 991,723 $
1,230,087
Liabilities and Stockholders' Equity
Bank lines of credit $ 125,000 $ 103,000 Current portion of
long-term debt 2,759 2,396 Accounts payable and accrued expenses
117,455 137,559 Other current liabilities 122,621
103,179 Total current liabilities 367,835 346,134 Long-term debt
6,054 241,750 Deferred income taxes 29,160 20,681 Other long-term
liabilities 47,828 52,309 Total liabilities 450,877
660,874 Total stockholders’ equity 540,846 569,213
Total Liabilities and Stockholders’ Equity $ 991,723 $ 1,230,087
OSI SYSTEMS, INC. AND SUBSIDIARIES UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share
data)
Three Months Ended Fiscal Year
Ended June 30, June 30, 2016
2017 2016
2017 Revenues $ 221,467 $ 252,402 $ 829,660 $
960,951 Cost of goods sold 150,702 165,611
552,801 637,450 Gross profit
70,765 86,791 276,859 323,501 Operating expenses: Selling, general
and administrative 43,888 48,032 166,655 192,560 Research and
development 11,945 11,140 49,816 50,951 Impairment, restructuring
and other charges 6,380 24,813
22,014 46,698 Total operating expenses
62,213 83,985 238,485
290,209 Income from operations 8,552 2,806 38,374 33,292
Interest expense, net (827 ) (3,913 ) (2,852 ) (9,629 ) Other
income (expense), net 31 - (27 )
2,088 Income (loss) before income taxes 7,756 (1,107
) 35,495 25,751 Provision for (benefit from) income taxes
1,855 (2,654 ) 9,338 4,675
Net income $ 5,901 $ 1,547 $ 26,157 $
21,076 Diluted earnings per share $ 0.30 $
0.08 $ 1.30 $ 1.07 Weighted average shares
outstanding – diluted 19,512 19,479
20,076 19,689
UNAUDITED
SEGMENT INFORMATION
(in thousands)
Three Months Ended Fiscal Year
Ended June 30, June 30, 2016
2017 2016
2017 Revenues – by Segment: Security
division $ 110,532 $ 147,160 $ 411,212 $ 555,197 Healthcare
division 55,332 53,607 211,458 200,034 Optoelectronics and
Manufacturing division (including intersegment revenues) 63,088
60,236 247,502 236,100 Intersegment revenues eliminations
(7,485 ) (8,601 ) (40,512 ) (30,380 ) Total $
221,467 $ 252,402 $ 829,660 $ 960,951
Operating income (loss) – by Segment: Security
division $ 8,122 $ (1,511 ) $ 37,845 $ 35,256 Healthcare division
2,221 4,151 8,351 2,624 Optoelectronics and Manufacturing division
5,576 7,643 19,654 23,792 Corporate (8,017 ) (7,477 ) (27,199 )
(29,359 ) Intersegment eliminations 650 -
(277 ) 979 Total $ 8,552 $ 2,806
$ 38,374 $ 33,292
RECONCILIATION OF GAAP TO
NON-GAAP NET INCOME AND EARNINGS PER SHARE
(in thousands, except earnings per
share data)
Three Months Ended Fiscal Year
Ended June 30, June 30, 2016
2017 2016 2017 Net
Net Net Net income
EPS income EPS income EPS
income EPS GAAP basis $ 5,901 $ 0.30 $ 1,547 $ 0.08 $
26,157 $ 1.30 $ 21,076 $ 1.07 Impairment, restructuring and other
charges 6,380 0.33 24,813 1.27 22,014 1.10 46,698 2.37 Amortization
of acquired intangible assets 811 0.04 2,357 0.12 2,648 0.13 8,382
0.43 Non-cash interest expense - - 1,771 0.09 - - 2,477 0.13 Gain
from disposition of business - - - - - - (2,110 ) (0.11 ) Tax
effect of above adjustments (1,720 ) (0.09 ) (8,161 ) (0.42 )
(6,488 ) (0.32 ) (15,305 ) (0.78 ) Impact of adoption of ASU
2016-09 - - (2,433 )
(0.12 ) - - (2,433 )
(0.12 ) Non-GAAP basis $ 11,372 $ 0.58 $ 19,894
$ 1.02 $ 44,331 $ 2.21 $ 58,785
$ 2.99
RECONCILIATION OF GAAP TO NON-GAAP
OPERATING INCOME (LOSS) AND OPERATING MARGIN BY SEGMENT
(in thousands, except
percentages)
Three Months Ended June 30, 2016
Optoelectronics and Corporate / Security Division
Healthcare Division Manufacturing Division Elimination Total
% of % of % of % of
Sales
Sales
Sales
Sales
GAAP basis – operating income (loss) $ 8,122 7.3% $ 2,221 4.0% $
5,576 8.8% $ (7,367 ) $ 8,552 3.8% Impairment, restructuring and
other charges 2,505 2.3% 1,405 2.6% 268 0.4% 2,202 6,380 2.9%
Amortization of acquired intangible assets 219 0.2%
166 0.3% 426 0.7% - 811 0.4%
Non-GAAP basis– operating income (loss) $ 10,846 9.8% $
3,792 6.9% $ 6,270 9.9% $ (5,165 ) $ 15,743 7.1%
Three Months Ended June 30, 2017 Optoelectronics and
Corporate / Security Division Healthcare Division Manufacturing
Division Elimination Total
% of
% of
% of
% of
Sales
Sales
Sales
Sales
GAAP basis – operating income (loss) $ (1,511 ) (1.0)% $ 4,151 7.8%
$ 7,643 12.7% $ (7,477 ) $ 2,806 1.1% Impairment, restructuring and
other charges 21,849 14.9% 967 1.8% 473 0.8% 1,524 24,813 9.8%
Amortization of acquired intangible assets 1,980 1.3%
14 0.0% 364 0.6% - 2,358 1.0%
Non-GAAP basis– operating income (loss) $ 22,318 15.2% $
5,132 9.6% $ 8,480 14.1% $ (5,953 ) $ 29,977 11.9%
RECONCILIATION OF GAAP TO NON-GAAP OPERATING INCOME
(LOSS) AND OPERATING MARGIN BY SEGMENT
(in thousands, except
percentages)
Fiscal Year Ended June 30, 2016
Optoelectronics and Corporate / Security Division
Healthcare Division Manufacturing Division Elimination Total
% of
% of
% of
% of
Sales
Sales
Sales
Sales
GAAP basis – operating income (loss) $ 37,845 9.2% $ 8,351 3.9% $
19,654 7.9% $ (27,476 ) $ 38,374 4.6% Impairment, restructuring and
other charges 10,048 2.4% 3,088 1.5% 3,322 1.4% 5,556 22,014 2.7%
Amortization of acquired intangible assets 830 0.2%
655 0.3% 1,162 0.5% - 2,647 0.3%
Non-GAAP basis– operating income (loss) $ 48,723 11.8% $ 12,094
5.7% $ 24,138 9.8% $ (21,920 ) $ 63,065 7.6%
Fiscal Year Ended June 30, 2017 Optoelectronics and
Corporate / Security Division Healthcare Division Manufacturing
Division Elimination Total
% of
% of
% of
% of
Sales
Sales
Sales
Sales
GAAP basis – operating income (loss) $ 35,256 6.3% $ 2,624 1.3% $
23,792 10.1% $ (28,380 ) $ 33,292 3.5% Impairment, restructuring
and other charges 36,979 6.7% 3,315 1.7% 1,026 0.4% 5,378 46,698
4.8% Amortization of acquired intangible assets 6,558 1.2%
373 0.2% 1,451 0.6% - 8,382 0.9%
Non-GAAP basis– operating income (loss) $ 78,793 14.2% $ 6,312 3.2%
$ 26,269 11.1% $ (23,002 ) $ 88,372 9.2%
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version on businesswire.com: http://www.businesswire.com/news/home/20170824006139/en/
OSI Systems, Inc.Ajay VashishatVice President, Business
Development(310) 349-2237avashishat@osi-systems.com
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