- Q3 Sales of $211 million
- Q3 Earnings Per Diluted Share
- Non-GAAP EPS of $0.64
- GAAP EPS of $0.47
- Company Authorizes Additional
1,000,000 Share Stock Repurchase Program
OSI Systems, Inc. (NASDAQ: OSIS) today announced financial
results for the fiscal quarter ended March 31, 2016.
“Our third quarter results were largely in line with
expectations and were driven by the overall strength of our
Security Division and continued operating margin expansion in our
Optoelectronics and Manufacturing Division. We were disappointed
with the results of our Healthcare Division as topline challenges
continued due to an unfavorable environment. While the difficult
global market continues to challenge each of our businesses, our
backlog and pipeline of opportunities remain robust and our
management team is focused on setting the stage for a strong start
to fiscal 2017,” said Deepak Chopra, OSI Systems’ Chairman and
Chief Executive Officer.
The Company reported revenues of $210.8 million for the third
quarter of fiscal 2016, a decrease of 2% as compared to the same
period a year ago. Net income for the third quarter of fiscal 2016
was $9.3 million, or $0.47 per diluted share, compared to net
income of $13.2 million, or $0.64 per diluted share, for the third
quarter of fiscal 2015. Excluding the impact of impairment,
restructuring and other charges, net income for the third quarter
of fiscal 2016 would have been $12.7 million, or $0.64 per diluted
share, compared to net income of $15.9 million, or $0.78 per
diluted share for the comparable quarter of the prior year.
For the nine months ended March 31, 2016, the Company reported
revenues of $608.2 million, a decrease of 12% below the same period
a year ago. Net income for this period was $20.3 million, or $1.00
per diluted share, compared to net income of $42.7 million, or
$2.08 per diluted share, for the same period a year ago. Excluding
the impact of impairment, restructuring and other charges, net
income for the nine months ended March 31, 2016 would have been
$31.7 million, or $1.56 per diluted share, compared to net income
of $47.4 million, or $2.31 per diluted share, for the comparable
period in the prior year.
As of March 31, 2016, the Company’s backlog was approximately
$661 million. During the third quarter of fiscal 2016, the Company
generated cash flow from operations of $20.7 million, made capital
expenditures of $4.0 million and used $50.7 million to buy back
stock under its stock repurchase program.
Mr. Chopra continued, “During the third quarter, the Security
Division’s revenues increased by 11% to $110.6 million representing
the second highest third quarter sales in our history. The book to
bill ratio for the nine months ended March 31, 2016 in this
Division was approximately 1.1. With market challenges relating to
the timing of awards and delivery of products, we will continue to
focus on operational improvement initiatives including reducing our
cost base. We have a strong backlog and pipeline of product and
service opportunities, and we look forward to fiscal 2017.”
Mr. Chopra further commented, “Our Optoelectronics and
Manufacturing Division continued to deliver operating margin
expansion. Benefitting from a more favorable product and customer
mix, we reported a 9.6% operating margin, excluding the impact of
impairment, restructuring and other charges. This represented our
sixth consecutive quarter of year-over-year operating margin
expansion. During the quarter we acquired two businesses that will
expand our product offering and customer base in the United States
as well as our footprint in the United Kingdom. We believe this
Division is well positioned to resume top line growth in fiscal
2017.”
Mr. Chopra concluded, “Sales in our Healthcare Division
continued to be adversely affected by a difficult global market.
The softness is not expected to turn around this quarter, but
management is focused on regaining the positive momentum displayed
during the second half of the prior fiscal year. We have made
changes within the top management and recently appointed a new
leader for this Division. Although the impact of the management
changes and adjustments to our product portfolio will not be
immediate, we believe that such improvements will position us well
for a stronger fiscal 2017.”
Stock Repurchase Program
The Company announced that its Board of Directors has approved a
new stock repurchase program authorizing the purchase of up to one
million shares of the Company’s common stock. The shares of common
stock authorized to be repurchased under the new repurchase program
are in addition to the 63,158 shares remaining under the Company’s
existing stock repurchase program.
“Our Board of Directors and senior management are confident in
the Company’s growth prospects, cash flow profile and long-term
strategy,” said Mr. Chopra. “As we reviewed our capital allocation
strategy, this expanded stock repurchase program further
demonstrates our confidence in the strength of our businesses and
commitment to delivering shareholder value.”
Purchases may be made from time to time in the open market or in
privately negotiated transactions and block trades, in accordance
with federal securities laws, including Rule 10b-18 promulgated
under the Securities Exchange Act of 1934, as amended. This program
does not have an expiration date. The stock repurchase program may
be modified, terminated or expanded by the Company at any time
without prior notice. There is no guarantee as to the exact number
of shares, if any, that will be purchased by the Company under the
program. The amount and timing of any purchases will depend on
a number of factors, including price, trading volume, general
market conditions, legal requirements, and other factors.
Fiscal Year 2016 Fourth Quarter Outlook
Based on the information known as of today, the Company is
reducing its fiscal 2016 guidance. Fourth quarter sales guidance is
$230 million - $255 million and earnings guidance is $0.45 to $0.70
per diluted share, excluding the impact of impairment,
restructuring and other charges. Actual sales and diluted EPS could
vary from this guidance including as a result of the matters
discussed under the “Forward-Looking Statements” section. This
reflects the ongoing challenges facing the Healthcare Division as
well as the timing of awards and mix of revenues in the Security
Division.
Presentation of Non-GAAP Financial Measures
This earnings release includes a presentation of non-GAAP net
income and diluted earnings per share, each of which is a non-GAAP
financial measure. Discussion of adjustments to arrive at non-GAAP
figures for the three and nine months ended March 31,
2015 and 2016 is provided to allow for the comparison of
underlying earnings, net of impairment, restructuring and other
charges. Management believes that providing these non-GAAP figures
provides additional insight into the ongoing operations of the
Company. Non-GAAP financial measures should not be considered in
isolation or as a substitute for measures of financial performance
prepared in accordance with GAAP. Management believes that these
non-GAAP financial measures provide meaningful supplemental
information regarding the Company’s results primarily because they
exclude amounts that management does not view as reflective of
ongoing operating results when planning and forecasting and when
assessing the performance of the business. Management believes that
the Company’s non-GAAP financial measures also facilitate the
comparison of results for current periods and guidance for future
periods with results for past periods.
Reconciliations of GAAP to non-GAAP net income and diluted
earnings per share are in the accompanying tables.
Conference Call Information
OSI Systems, Inc. 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 third quarter of fiscal 2016. 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 May 11, 2016. 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 ‘97343664’ 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 and provides
related services in diversified markets, including homeland
security, healthcare, defense and aerospace. The Company has more
than 30 years of experience in electronics engineering and
manufacturing and maintains offices and production facilities in
more than a dozen countries. The Company 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
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, 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 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 2016 and
fiscal 2017. 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, 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 any
orders received to sales within the fiscal year in accordance with
the Company's operating plan; 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, as well as 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, 2015 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
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share
data)
(Unaudited)
Three Months Ended March 31, Nine Months Ended
March 31, 2015 2016
2015 2016
Revenues $ 215,375 $ 210,804 $ 691,601 $ 608,193 Cost of goods sold
142,771 140,745 455,481
402,099 Gross profit 72,604 70,059 236,120 206,094
Operating expenses: Selling, general and administrative
37,970 39,233 130,046 122,767 Research and development 12,559
12,945 38,469 37,871 Impairment, restructuring and other charges
3,620 4,537 6,425
15,634 Total operating expenses 54,149
56,715 174,940 176,272 Income
from operations 18,455 13,344 61,180 29,822 Interest and other
expense, net (812 ) (666 ) (2,508 )
(2,083 ) Income before income taxes 17,643 12,678 58,672 27,739
Provision for income taxes 4,415 3,335
15,954 7,483 Net income $ 13,228
$ 9,343 $ 42,718 $ 20,256 Diluted
earnings per share $ 0.64 $ 0.47 $ 2.08 $ 1.00
Weighted average shares outstanding –
diluted
20,529 19,941 20,515
20,261
CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, 2015
March 31, 2016
(Unaudited)
Assets Cash and cash equivalents $ 47,593 $ 97,425 Accounts
receivable, net 178,519 159,787 Inventories 230,421 291,092 Other
current assets 84,988 96,523 Total current assets
541,521 644,827 Non-current assets 438,153 430,475
Total Assets $ 979,674 $ 1,075,302
Liabilities and
Stockholders' Equity Bank lines of credit $ -- $ 125,000
Current portion of long-term debt 2,801 2,759 Accounts payable and
accrued expenses 114,525 146,097 Deferred revenues 47,787 34,796
Other current liabilities 84,168 97,331 Total current
liabilities 249,281 405,983 Long-term debt 8,556 6,770 Deferred
income taxes 65,435 68,887 Other long-term liabilities
74,623 61,543 Total liabilities 397,895 543,183 Total
stockholders’ equity 581,779 532,119 Total
Liabilities and Stockholders’ Equity $ 979,674 $ 1,075,302
SEGMENT INFORMATION
(in thousands)
(Unaudited)
Three Months Ended
March 31,
Nine Months Ended
March 31,
2015 2016
2015 2016 Revenues –
by Segment: Security Division $ 99,164 $ 110,550 $ 349,608 $
300,680 Healthcare Division 59,383 49,113 176,710 156,126
Optoelectronics and Manufacturing Division including intersegment
revenues 65,291 61,306 199,912 184,414 Intersegment revenues
elimination (8,463 ) (10,165 ) (34,629 )
(33,027 ) Total $ 215,375 $ 210,804 $ 691,601
$ 608,193
Operating income (loss) – by
Segment: Security Division (1) $ 13,266 $ 14,554 $ 50,926 $
29,723 Healthcare Division (2) 3,707 (188 ) 11,258 6,130
Optoelectronics and Manufacturing Division (3) 5,008 5,325 13,701
14,078 Corporate (4) (3,498 ) (6,077 ) (13,748 ) (19,182 )
Eliminations (28 ) (270 ) (957 ) (927 )
Total $ 18,455 $ 13,344 $ 61,180 $ 29,822
(1) Includes impairment, restructuring and
other charges of $2.1 million and $3.9 million for the three and
nine months ended March 31, 2015, respectively; and $1.2 million
and $7.5 million for the three and nine months ended March 31,
2016, respectively. (2) Includes impairment, restructuring
and other charges of $1.0 million and $1.1 million for the three
and nine months ended March 31, 2015, respectively; and $1.7
million for each of the three and nine months ended March 31, 2016.
(3) Includes impairment, restructuring and other charges of
$0.5 million and $0.7 million for the three and nine months ended
March 31, 2015, respectively; and $0.6 million and $3.1 million for
the three and nine months ended March 31, 2016, respectively.
(4) Includes impairment, restructuring and other charges of
$0.7 million for the nine months ended March 31, 2015; and $1.0
million and $3.3 million for the three and nine months ended March
31, 2016, respectively.
Reconciliation of
GAAP to Non-GAAP Net Income and Earnings Per Share
(in thousands, except earnings per
share data)
(Unaudited)
Three Months Ended March 31, Nine Months Ended
March 31, 2015 2016 2015
2016 Net income EPS Net income
EPS Net income EPS Net
income EPS GAAP basis $ 13,228 $ 0.64 $ 9,343 $
0.47 $ 42,718 $ 2.08 $ 20,256 $ 1.00 Add back - Impairment,
restructuring and other charges, net of tax 2,714
0.14 3,344 0.17 4,678 0.23
11,417 0.56 Non-GAAP basis $ 15,942 $ 0.78 $ 12,687 $ 0.64 $
47,396 $ 2.31 $ 31,673 $ 1.56
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160427006556/en/
OSI Systems, Inc.Ajay VashishatVice President, Business
Development(310) 349-2237avashishat@osi-systems.com
OSI Systems (NASDAQ:OSIS)
Historical Stock Chart
From Sep 2024 to Oct 2024
OSI Systems (NASDAQ:OSIS)
Historical Stock Chart
From Oct 2023 to Oct 2024