- Q2 Revenues of $277 Million
- Q2 Earnings Per Diluted Share
- GAAP EPS of $1.09
- Non-GAAP EPS of $1.28
- Q2 Ending Backlog of $1.2 Billion (12% increase from June
30, 2021)
- Company Increases FY 2022 Earnings Guidance and Reduces FY
2022 Revenues Guidance
OSI Systems, Inc. (the “Company” or “OSI Systems”) (NASDAQ:
OSIS) today announced financial results for the three and six
months ended December 31, 2021.
Deepak Chopra, OSI Systems’ Chairman and Chief Executive
Officer, stated, “We are pleased with our overall performance in
the second quarter, during which we navigated a challenging general
business environment, including a heightened impact from COVID with
the emergence of the new Omicron variant, as well as increased
supply chain and logistics challenges. We ended the quarter with a
significant backlog, and we are pursuing various opportunities in
attractive long-term markets, which positions us well for the
future.”
The Company reported revenues of $276.7 million for the second
quarter of fiscal 2022, which is comparable to the $276.0 million
reported for the second quarter of fiscal 2021. Net income for the
second quarter of fiscal 2022 was $19.8 million, or $1.09 per
diluted share, compared to net income of $20.0 million, or $1.10
per diluted share, for the second quarter of fiscal 2021. Non-GAAP
net income for the second quarter of fiscal 2022 was $23.2 million,
or $1.28 per diluted share, compared to non-GAAP net income for the
fiscal 2021 second quarter of $24.6 million, or $1.35 per diluted
share.
For the six months ended December 31, 2021, revenues were $555.9
million compared to $530.9 million in the same period a year ago.
Net income for the six months ended December 31, 2021 was $38.8
million, or $2.13 per diluted share, compared with $29.4 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, 2021 was
$44.4 million, or $2.44 per diluted share, compared with non-GAAP
net income of $44.1 million, or $2.41 per diluted share, for the
comparable prior-year period.
For the three and six months ended December 31, 2021, the
Company's book-to-bill ratio was 0.9 and 1.2, respectively. As of
December 31, 2021, the Company's backlog was over $1.2 billion,
representing an increase of 12% from the Company’s backlog as of
June 30, 2021. The Company’s cash generated from operations was
$14.5 million during the quarter ended December 31, 2021. Net
capital expenditures were $3.7 million during the three months
ended December 31, 2021.
Mr. Chopra commented, “Given the challenging global backdrop, we
were pleased with the Security division performance. The evolving
pandemic as well as ongoing supply chain issues have adversely
impacted the division. We continue to work through these related
challenges with our customers and partners and are well positioned
in the global marketplace to capitalize on future
opportunities.”
Mr. Chopra continued, “Our Optoelectronics and Manufacturing
division again delivered outstanding results reporting record
revenues and record operating income. Robust bookings in the
quarter led to a record Q2 backlog for the division.”
Mr. Chopra concluded, “Our Healthcare division continued to
perform steadily with a solid second quarter. As anticipated
because of increased revenues at the onset of the pandemic, we
reported a small reduction in year-over-year revenues. During the
quarter, we continued to focus on new product development to
bolster our core offerings while simultaneously investing in
strengthening our sales and marketing efforts.”
During the second quarter of fiscal 2022, the Company refinanced
its credit facility, expanding its borrowing capacity from $535
million to $750 million and extending the maturity to December
2026. The Company also repurchased 312,790 shares under its current
stock buyback program, and, as of December 31, 2021, has the
authority to repurchase approximately 2.1 million additional
shares.
Fiscal Year 2022 Outlook
Previous Guidance
Current Guidance
Revenues
$1.190 billion - $1.225
billion
$1.160 billion - $1.195
billion
Non-GAAP Diluted Earnings Per
Share
$5.72 - $6.00
$5.75 - $6.02
The Company is increasing its non-GAAP diluted earnings per
share guidance given an anticipated stronger operating margin. The
Company is adjusting its fiscal year 2022 revenues guidance as set
forth above primarily as a result of the continued impacts stemming
from the COVID pandemic. Actual revenues and non-GAAP diluted
earnings per share could vary from this guidance due to factors
discussed under “Forward-Looking Statements” or other factors,
including uncertainties as to the duration and future scope of the
COVID-19 pandemic.
The Company’s fiscal 2022 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 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 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 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 six months ended December 31,
2020 and 2021 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 and non-cash interest expense primarily related to
convertible debt in fiscal 2021, 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, we believe that it is important for investors to
understand that revenue generated from such intangibles is included
within revenue in determining non-GAAP financial measures of the
Company. Management believes that these non-GAAP financial measures
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 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 second quarter of fiscal 2022. 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 beginning shortly after the conclusion of the
conference call until February 10, 2022. The replay can either be
accessed through the Company’s website, www.osi-systems.com, or by
telephonic replay by calling 1-855-859-2056 and entering the
conference call identification number 3496347 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 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, operational performance and impact of
the COVID-19 pandemic in fiscal 2022 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; 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; 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 investigations and compliance reviews; 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 it is 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,
2020
2021
2020
2021
Revenues:
Products
$
208,367
$
205,377
$
391,114
$
412,589
Services
67,642
71,304
139,803
143,349
Total revenues
276,009
276,681
530,917
555,938
Cost of goods sold:
Products
139,893
139,060
264,734
281,966
Services
34,035
37,848
68,351
74,869
Total cost of goods sold
173,928
176,908
333,085
356,835
Gross profit
102,081
99,773
197,832
199,103
Operating expenses:
Selling, general and administrative
56,101
54,879
114,718
112,202
Research and development
13,784
14,977
25,866
29,794
Impairment, restructuring and other
charges (benefit), net
(162
)
831
8,197
3,341
Total operating expenses
69,723
70,687
148,781
145,337
Income from operations
32,358
29,086
49,051
53,766
Interest and other expense, net
(4,233
)
(2,217
)
(8,422
)
(4,233
)
Income before income taxes
28,125
26,869
40,629
49,533
Provision for income taxes
(8,087
)
(7,072
)
(11,247
)
(10,684
)
Net income
$
20,038
$
19,797
$
29,382
$
38,849
Diluted earnings per share
$
1.10
$
1.09
$
1.61
$
2.13
Weighted average shares outstanding –
diluted
18,196
18,106
18,266
18,203
OSI SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED SEGMENT
INFORMATION
(in thousands)
Three Months Ended
December 31,
Six Months Ended
December 31,
2020
2021
2020
2021
Revenues – by Segment:
Security division
$
145,236
$
145,918
$
280,011
$
295,435
Healthcare division
54,895
52,425
106,398
103,013
Optoelectronics and Manufacturing
division, including intersegment revenues
87,521
91,490
167,435
183,795
Intersegment eliminations
(11,643
)
(13,152
)
(22,927
)
(26,305
)
Total
$
276,009
$
276,681
$
530,917
$
555,938
Operating income (loss) – by
Segment:
Security division
$
19,776
$
18,171
$
28,682
$
39,764
Healthcare division
9,323
7,030
18,307
12,950
Optoelectronics and Manufacturing
division
10,414
13,382
19,154
23,165
Corporate
(7,361
)
(9,663
)
(16,817
)
(22,126
)
Intersegment eliminations
206
166
(275
)
13
Total
$
32,358
$
29,086
$
49,051
$
53,766
OSI SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, 2021
December 31, 2021
Assets
Cash and cash equivalents
$
80,613
$
86,332
Accounts receivable, net
290,653
288,037
Inventories
294,208
334,242
Other current assets
43,930
61,179
Total current assets
709,404
769,790
Property and equipment, net
118,004
116,115
Goodwill
320,304
320,319
Intangible assets, net
127,608
126,643
Other non-current assets
109,047
110,239
Total Assets
$
1,384,367
$
1,443,106
Liabilities and Stockholders'
Equity
Bank lines of credit
$
--
$
81,622
Current portion of long-term debt
846
287,247
Accounts payable and accrued expenses
210,077
200,964
Other current liabilities
133,844
124,622
Total current liabilities
344,767
694,455
Long-term debt
276,421
602
Other long-term liabilities
123,359
127,901
Total liabilities
744,547
822,958
Total stockholders’ equity
639,820
620,148
Total Liabilities and Stockholders’
Equity
$
1,384,367
$
1,443,106
OSI SYSTEMS, INC. AND SUBSIDIARIES
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,
2020
2021
2020
2021
Net income
EPS
Net income
EPS
Net income
EPS
Net income
EPS
GAAP basis
$
20,038
$
1.10
$
19,797
$
1.09
$
29,382
$
1.61
$
38,849
$
2.13
Impairment, restructuring and other
charges (benefit), net
(162
)
(0.01
)
831
0.05
8,197
0.45
3,341
0.18
Amortization of acquired intangible
assets
3,704
0.20
3,162
0.18
7,480
0.41
6,360
0.36
Non-cash interest expense
2,260
0.12
57
--
4,486
0.25
125
0.01
Tax benefit of above adjustments
(1,600
)
(0.08
)
(1,009
)
(0.06
)
(5,546
)
(0.31
)
(2,476
)
(0.14
)
Impact from discrete income tax items
347
0.02
347
0.02
71
--
(1,798
)
(0.10
)
Non-GAAP basis
$
24,587
$
1.35
$
23,185
$
1.28
$
44,070
$
2.41
$
44,401
$
2.44
RECONCILIATION OF GAAP TO NON-GAAP
OPERATING INCOME (LOSS) AND
OPERATING MARGIN BY SEGMENT
(in thousands, except
percentages)
Three Months Ended December
31, 2020
Security
Division
Healthcare
Division
Optoelectronics
and
Manufacturing
Division
Corporate /
Elimination
Total
% of
Sales
% of
Sales
% of
Sales
% of
Sales
GAAP basis – operating income (loss)
$
19,776
13.6
%
$
9,323
17.0
%
$
10,414
11.9
%
$
(7,155
)
$
32,358
11.7
%
Restructuring and other charges (benefit),
net
269
0.2
%
27
--
--
--
(458
)
(162
)
(0.1
%)
Amortization of acquired intangible
assets
2,732
1.9
%
201
0.4
%
771
0.9
%
- -
3,704
1.4
%
Non-GAAP basis– operating income
(loss)
$
22,777
15.7
%
$
9,551
17.4
%
$
11,185
12.8
%
$
(7,613
)
$
35,900
13.0
%
Three Months Ended December
31, 2021
Security
Division
Healthcare
Division
Optoelectronics
and
Manufacturing
Division
Corporate /
Elimination
Total
% of
Sales
% of
Sales
% of
Sales
% of
Sales
GAAP basis – operating income (loss)
$
18,171
12.5
%
$
7,030
13.4
%
$
13,382
14.6
%
$
(9,497
)
$
29,086
10.5
%
Impairment, restructuring and other
charges, net
353
0.2
-
-
-
-
478
831
0.3
%
Amortization of acquired intangible
assets
2,251
1.5
201
0.4
710
0.8
-
3,162
1.2
%
Non-GAAP basis– operating income
(loss)
$
20,775
14.2
%
$
7,231
13.8
%
$
14,092
15.4
%
$
(9,019
)
$
33,079
12.0
%
Six Months Ended December 31,
2020
Security
Division
Healthcare
Division
Optoelectronics
and
Manufacturing
Division
Corporate /
Elimination
Total
% of
Sales
% of
Sales
% of
Sales
% of
Sales
GAAP basis – operating income (loss)
$
28,682
10.2
%
$
18,307
17.2
%
$
19,154
11.4
%
$
(17,092
)
$
49,051
9.2
%
Restructuring and other charges (benefit),
net
8,522
3.1
%
27
--
146
0.1
%
(498
)
8,197
1.6
%
Amortization of acquired intangible
assets
5,545
2.0
%
403
0.4
%
1,532
0.9
%
--
7,480
1.4
%
Non-GAAP basis– operating income
(loss)
$
42,749
15.3
%
$
18,737
17.6
%
$
20,832
12.4
%
$
(17,590
)
$
64,728
12.2
%
Six Months Ended December 31,
2021
Security
Division
Healthcare
Division
Optoelectronics
and
Manufacturing
Division
Corporate /
Elimination
Total
% of
Sales
% of
Sales
% of
Sales
% of
Sales
GAAP basis – operating income (loss)
$
39,764
13.5
%
$
12,950
12.6
%
$
23,165
12.6
%
$
(22,113
)
$
53,766
9.7
%
Impairment, restructuring and other
charges, net
628
0.2
%
-
-
-
-
2,713
3,341
0.6
%
Amortization of acquired intangible
assets
4,537
1.5
%
403
0.8
1,420
0.8
%
-
6,360
1.1
%
Non-GAAP basis– operating income
(loss)
$
44,929
15.2
%
$
13,353
13.4
%
$
24,585
13.4
%
$
(19,400
)
$
63,467
11.4
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220127005379/en/
OSI Systems, Inc. Ajay Vashishat Vice President, Business
Development Tel: (310) 349-2237 avashishat@osi-systems.com
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