- Q3 Revenues of $303 Million
- Q3 Earnings Per Diluted Share
- GAAP EPS of $1.27
- Non-GAAP Adjusted EPS of $1.49
- Record Q3 Ended Backlog of $1.5 Billion (19% increase from
June 30, 2022)
- Q3 Operating Cash Flow of $65 Million
- Company Reiterates FY 2023 Revenues Guidance and Non-GAAP
Adjusted EPS Guidance
- Q4 Year-Over-Year Expected Revenue Growth of 11% -
18%
- Q4 Year-Over-Year Expected Adjusted EPS Growth of 26% -
38%
OSI Systems, Inc. (the “Company” or “OSI Systems”) (NASDAQ:
OSIS) today announced its financial results for the three and nine
months ended March 31, 2023.
Deepak Chopra, OSI Systems’ Chairman and Chief Executive
Officer, stated, “We were pleased with our third quarter
performance as revenues and adjusted operating income increased 4%
and 17%, respectively. Towards the end of the quarter, we announced
a major win in our Security division, which was booked upon
contract execution in the fourth fiscal quarter. Given our
significant backlog, we anticipate strong revenue and adjusted
earnings growth in the fourth quarter as we build momentum heading
into fiscal 24.”
For the third quarter of fiscal 2023, the Company reported
revenues of $302.9 million, a 4% increase compared to the $290.5
million reported for the third quarter of fiscal 2022. Net income
for the third quarter of fiscal 2023 was $21.8 million, or $1.27
per diluted share, compared to net income in the third quarter of
fiscal 2022 of $42.7 million (which included a gain on sale of
$27.4 million for a sale-leaseback transaction), or $2.41 per
diluted share. Non-GAAP net income for the third quarter of fiscal
2023 was $25.6 million, or $1.49 per diluted share, compared to
non-GAAP net income for the third quarter of fiscal 2022 of $25.5
million, or $1.43 per diluted share.
For the nine months ended March 31, 2023, revenues were $866.6
million compared to $846.4 million in the same period a year ago.
Net income for the nine months ended March 31, 2023 was $49.4
million, or $2.88 per diluted share, compared to net income for the
same period a year ago of $81.6 million (which also included the
sale-leaseback transaction gain on sale of $27.4 million), or $4.52
per diluted share. Non-GAAP net income for the nine months ended
March 31, 2023 was $61.0 million, or $3.55 per diluted share,
compared with non-GAAP net income of $69.9 million, or $3.87 per
diluted share, for the comparable prior-year period.
As of March 31, 2023, the Company's backlog was $1.5 billion,
representing an increase of 19% from the Company’s backlog as of
June 30, 2022. During the quarter ended March 31, 2023, operating
cash flow was $64.5 million, significantly surpassing the $38.4
million generated for the same quarter of the prior year. Capital
expenditures were $5.7 million and $2.9 million for the three
months ended March 31, 2023 and 2022, respectively.
Mr. Chopra commented, “The Security division’s revenues for the
third quarter increased 13% year-over-year contributing to strong
operating margin expansion. Just after quarter end, we executed the
contract on the previously announced approximately $600 million
Mexico award (including VAT), which we believe highlights our
industry leadership position. We are poised for a strong finish to
fiscal 2023, and we believe we are well-positioned in the Security
division for fiscal 24.”
Mr. Chopra continued, “Our Optoelectronics and Manufacturing
division delivered solid Q3 revenues along with significant
operating margin expansion. This division continues to capitalize
on our vertically integrated structure, experiencing robust demand
from customers that we believe are drawn to suppliers with
demonstrated international manufacturing and fulfillment
operations.”
Mr. Chopra concluded, “Our Healthcare division experienced a
challenging quarter with lower year-over-year revenues and
operating income. While our third quarter fiscal 2023 performance
was softer than we had expected, we are anticipating strong
sequential improvement for the fourth quarter. We continue to
strengthen the division’s offerings with new product development,
principally in our patient monitoring portfolio.”
Fiscal Year 2023 Outlook
The Company is reiterating its fiscal 2023 revenues guidance of
$1.240 billion - $1.265 billion and non-GAAP adjusted diluted
earnings per share guidance of $6.02 - $6.25. 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 2023 adjusted diluted earnings per share
guidance is provided on a non-GAAP basis only. The Company does not
provide a reconciliation of guidance for 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 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 adjusted diluted
EPS.
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 and nine months ended March 31, 2022
and 2023 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, gain on
sale of property in fiscal 2022, 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 results
for the third quarter of fiscal 2023. 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 May 11, 2023. 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
2023 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;
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; impact
on the Company’s business related to or resulting from the COVID-19
pandemic such as 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; 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. Many of the referenced risks could be
amplified by the magnitude and duration of the COVID-19 pandemic.
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
March 31,
Nine Months Ended
March 31,
2022
2023
2022
2023
Revenues:
Products
$
221,857
$
223,724
$
634,446
$
637,563
Services
68,620
79,165
211,969
228,994
Total net revenues
290,477
302,889
846,415
866,557
Cost of goods sold:
Products
150,311
156,534
432,277
458,197
Services
37,308
42,569
112,177
120,870
Total cost of goods sold
187,619
199,103
544,454
579,067
Gross profit
102,858
103,786
301,961
287,490
Operating expenses:
Selling, general and administrative
57,813
53,707
170,015
161,148
Research and development
15,150
14,852
44,944
43,848
Impairment, restructuring and other
charges, net
1,469
890
4,810
4,366
Total operating expenses
74,432
69,449
219,769
209,362
Income from operations
28,426
34,337
82,192
78,128
Interest and other expense, net
(2,301
)
(5,727
)
(6,534
)
(14,339
)
Other income, net
27,373
--
27,373
--
Income before income taxes
53,498
28,610
103,031
63,789
Provision for income taxes
(10,763
)
(6,802
)
(21,447
)
(14,392
)
Net income
$
42,735
$
21,808
$
81,584
$
49,397
Diluted earnings per share
$
2.41
$
1.27
$
4.52
$
2.88
Weighted average shares outstanding –
diluted
17,709
17,184
18,036
17,151
UNAUDITED SEGMENT
INFORMATION
(in thousands)
Three Months Ended
March 31,
Nine Months Ended
March 31,
2022
2023
2022
2023
Revenues – by Segment:
Security division
$
158,644
$
178,752
$
454,079
$
491,188
Healthcare division
52,178
43,911
155,191
130,994
Optoelectronics and Manufacturing
division, including intersegment revenues
92,122
93,888
275,917
286,513
Intersegment eliminations
(12,467
)
(13,662
)
(38,772
)
(42,138
)
Total
$
290,477
$
302,889
$
846,415
$
866,557
Operating income (loss) – by
Segment:
Security division
$
20,559
$
29,496
$
60,323
$
66,014
Healthcare division
7,480
1,787
20,430
4,819
Optoelectronics and Manufacturing
division
11,177
12,493
34,342
35,963
Corporate
(10,729
)
(10,148
)
(32,855
)
(29,572
)
Intersegment eliminations
(61
)
709
(48
)
904
Total
$
28,426
$
34,337
$
82,192
$
78,128
OSI SYSTEMS, INC. AND
SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, 2022
March 31, 2023
Assets
Cash and cash equivalents
$
64,202
$
65,622
Accounts receivable, net
307,973
300,663
Inventories
333,907
371,795
Other current assets
40,062
40,454
Total current assets
746,144
778,534
Property and equipment, net
109,684
109,139
Goodwill
336,357
346,716
Intangible assets, net
138,370
140,192
Other non-current assets
112,595
108,722
Total Assets
$
1,443,150
$
1,483,303
Liabilities and Stockholders'
Equity
Bank lines of credit
$
60,000
$
215,000
Current portion of long-term debt
244,575
8,080
Accounts payable and accrued expenses
194,266
188,143
Other current liabilities
115,113
139,190
Total current liabilities
613,954
550,413
Long-term debt
48,668
138,190
Other long-term liabilities
142,104
127,783
Total liabilities
804,726
816,386
Total stockholders’ equity
638,424
666,917
Total Liabilities and Stockholders’
Equity
$
1,443,150
$
1,483,303
UNAUDITED RECONCILIATION OF
GAAP TO NON-GAAP
NET INCOME AND EARNINGS PER
SHARE
(in thousands, except earnings
per share data)
Three Months Ended March
31,
Nine Months Ended March
31,
2022
2023
2022
2023
Net income
EPS
Net income
EPS
Net income
EPS
Net income
EPS
GAAP basis
$
42,735
$
2.41
$
21,808
$
1.27
$
81,584
$
4.52
$
49,397
$
2.88
Impairment, restructuring and other
charges, net
1,469
0.08
890
0.05
4,810
0.27
4,366
0.25
Amortization of acquired intangible
assets
3,357
0.19
3,738
0.22
9,717
0.54
11,226
0.65
Non-cash interest expense
188
0.01
124
0.01
313
0.02
419
0.02
Gain on sale of property
(27,368
)
(1.55
)
--
--
(27,368
)
(1.52
)
--
--
Tax benefit of above adjustments
5,330
0.30
(1,102
)
(0.07
)
2,854
0.15
(3,775
)
(0.21
)
Discrete tax items
(225
)
(0.01
)
168
0.01
(2,023
)
(0.11
)
(646
)
(0.04
)
Non-GAAP basis
$
25,486
$
1.43
$
25,626
$
1.49
$
69,887
$
3.87
$
60,987
$
3.55
UNAUDITED RECONCILIATION OF
GAAP TO NON-GAAP
OPERATING INCOME (LOSS) AND
OPERATING MARGIN BY SEGMENT
(in thousands, except
percentages)
Three Months Ended March 31,
2022
Security Division
Healthcare Division
Optoelectronics and Manufacturing
Division
Corporate / Elimination
Total
% of
Sales
% of
Sales
% of
Sales
% of
Sales
GAAP basis – operating income (loss)
$
20,559
13.0
%
$
7,480
14.3
%
$
11,177
12.1
%
$
(10,790
)
$
28,426
9.8
%
Impairment, restructuring and other
charges, net
633
0.4
%
-
-
-
-
836
1,469
0.5
%
Amortization of acquired intangible
assets
2,448
1.5
%
202
0.4
%
707
0.8
%
-
3,357
1.1
%
Non-GAAP basis– operating income
(loss)
$
23,640
14.9
%
$
7,682
14.7
%
$
11,884
12.9
%
$
(9,954
)
$
33,252
11.4
%
Three Months Ended March 31,
2023
Security Division
Healthcare Division
Optoelectronics and Manufacturing
Division
Corporate / Elimination
Total
% of
Sales
% of
Sales
% of
Sales
% of
Sales
GAAP basis – operating income (loss)
$
29,496
16.5
%
$
1,787
4.1
%
$
12,493
13.3
%
$
(9,439
)
$
34,337
11.3
%
Impairment, restructuring and other
charges, net
493
0.3
%
307
0.7
%
32
0.1
%
58
890
0.3
%
Amortization of acquired intangible
assets
2,784
1.5
%
268
0.6
%
686
0.7
%
-
3,738
1.3
%
Non-GAAP basis– operating income
(loss)
$
32,773
18.3
%
$
2,362
5.4
%
$
13,211
14.1
%
$
(9,381
)
$
38,965
12.9
%
Nine Months Ended March 31,
2022
Security Division
Healthcare Division
Optoelectronics and Manufacturing
Division
Corporate / Elimination
Total
% of
Sales
% of
Sales
% of
Sales
% of
Sales
GAAP basis – operating income (loss)
$
60,323
13.3
%
$
20,430
13.2
%
$
34,342
12.4
%
$
(32,903
)
$
82,192
9.7
%
Impairment, restructuring and other
charges, net
1,261
0.3
%
-
-
-
-
3,549
4,810
0.6
%
Amortization of acquired intangible
assets
6,985
1.5
%
605
0.4
%
2,127
0.8
%
-
9,717
1.1
%
Non-GAAP basis– operating income
(loss)
$
68,569
15.1
%
$
21,035
13.6
%
$
36,469
13.2
%
$
(29,354
)
$
96,719
11.4
%
Nine Months Ended March 31,
2023
Security Division
Healthcare Division
Optoelectronics and Manufacturing
Division
Corporate / Elimination
Total
% of
Sales
% of
Sales
% of
Sales
% of
Sales
GAAP basis – operating income (loss)
$
66,014
13.4
%
$
4,819
3.7
%
$
35,963
12.6
%
$
(28,668
)
$
78,128
9.0
%
Impairment, restructuring and other
charges, net
1,358
0.3
%
2,753
2.1
%
47
0.0
%
208
4,366
0.5
%
Amortization of acquired intangible
assets
8,487
1.7
%
671
0.5
%
2,068
0.7
%
-
11,226
1.3
%
Non-GAAP basis– operating income
(loss)
$
75,859
15.4
%
$
8,243
6.3
%
$
38,078
13.3
%
$
(28,460
)
$
93,720
10.8
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230427005331/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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