Press release

OSI Systems Reports Fiscal 2021 Fourth Quarter and Full Year Financial Results

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OSI Systems, Inc. (the “Company” or “OSI Systems”) (NASDAQ: OSIS) today announced financial results for the fourth quarter and fiscal year ended June 30, 2021.

Deepak Chopra, OSI Systems’ Chairman and Chief Executive Officer, said “We are pleased with our performance for fiscal 2021 and for the fourth quarter, as we finished with record fourth quarter revenues and earnings per share driven by outstanding performance in each of our Security and Optoelectronics and Manufacturing divisions. We enter fiscal 2022 with significant backlog and a robust pipeline of opportunities to enable us to continue the positive momentum.”

The Company reported revenues of $332.2 million for the fourth quarter of fiscal 2021, an increase of 20% from the $277.0 million reported for the fourth quarter of fiscal 2020. Net income for the fourth quarter of fiscal 2021 was $25.9 million, or $1.40 per diluted share, compared to net income of $14.0 million, or $0.76 per diluted share, for the fourth quarter of fiscal 2020. Non-GAAP net income for the fourth quarter of fiscal 2021 was $28.5 million, or $1.54 per diluted share, compared to non-GAAP net income for the fourth quarter of fiscal 2020 of $22.5 million, or $1.22 per diluted share.

For the fiscal year ended June 30, 2021, revenues decreased by 2% to $1.147 billion compared to $1.166 billion in the prior fiscal year. Net income for fiscal 2021 was $74.0 million, or $4.03 per diluted share, compared to net income of $75.3 million, or $4.05 per diluted share, in the prior fiscal year. Non-GAAP net income for the fiscal year ended June 30, 2021 was $97.9 million, or $5.32 per diluted share, compared to non-GAAP net income of $85.6 million, or $4.60 per diluted share, for the 2020 fiscal year.

During the three months ended June 30, 2021, the Company’s book-to-bill ratio was approximately 1.0. As of June 30, 2021, the Company’s backlog was $1.076 billion compared to $861 million as of June 30, 2020. During the quarter ended June 30, 2021, operating cash flow was $8.0 million, and net capital expenditures were $4.6 million. For the fiscal year ended June 30, 2021, operating cash flow was $139.1 million, and net capital expenditures were $15.8 million.

Mr. Chopra stated, “We are pleased with the fourth quarter performance of the Security division, which reported a 23% year-over-year increase in revenues coupled with significant adjusted operating margin expansion. This was driven by strength across multiple geographic channels and across the bulk of the product portfolio. We believe the Security division is poised for further success as we enter fiscal 2022 with a strong backlog and a streamlined cost structure.”

Mr. Chopra further commented, “Our Optoelectronics and Manufacturing division performed exceptionally well and ended the fiscal year with record fourth quarter sales, bookings, and backlog. Fourth quarter revenues increased 37% year-over-year with continued solid profits. We believe the business is well positioned for continued growth as we enter fiscal 2022.”

Mr. Chopra continued, “Our Healthcare division made significant improvements in fiscal 2021 with 15% sales growth and noteworthy operating margin expansion. As expected, fourth quarter revenues were comparatively down year-over-year due to a surge in international demand in Q4 of fiscal 2020 for our patient monitoring products at the inception of the pandemic.”

Fiscal Year 2022 Outlook

For fiscal year 2022, the Company anticipates revenues in the range of $1.190 billion to $1.225 billion and non-GAAP earnings per diluted share in the range of $5.72 to $6.00. 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 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 months and fiscal years ended June 30, 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, 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 fourth quarter and fiscal year ended June 30, 2021. 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 September 1, 2021. 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 ‘4243009’ 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 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

June 30,

 

Fiscal Year Ended

June 30,

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

Net revenues:

 

 

 

 

 

 

 

Products

$

203,688

 

 

$

264,571

 

 

$

850,478

 

 

$

872,809

 

Services

 

73,279

 

 

 

67,627

 

 

 

315,566

 

 

 

274,093

 

Total net revenues

 

276,967

 

 

 

332,198

 

 

 

1,166,044

 

 

 

1,146,902

 

Cost of goods sold:

 

 

 

 

 

 

 

Products

 

139,222

 

 

 

177,243

 

 

 

575,342

 

 

 

586,935

 

Services

 

36,197

 

 

 

36,888

 

 

 

170,063

 

 

 

140,049

 

Total cost of goods sold

 

175,419

 

 

 

214,131

 

 

 

745,405

 

 

 

726,984

 

Gross profit

 

101,548

 

 

 

118,067

 

 

 

420,639

 

 

 

419,918

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

 

60,306

 

 

 

68,123

 

 

 

251,961

 

 

 

240,747

 

Research and development

 

12,823

 

 

 

13,898

 

 

 

57,308

 

 

 

53,696

 

Impairment, restructuring and other charges, net

 

4,963

 

 

 

2,192

 

 

 

6,483

 

 

 

10,104

 

Total operating expenses

 

78,092

 

 

 

84,213

 

 

 

315,752

 

 

 

304,547

 

Income from operations

 

23,456

 

 

 

33,854

 

 

 

104,887

 

 

 

115,371

 

Interest and other expense, net

 

(4,479

)

 

 

(4,142

)

 

 

(18,765

)

 

 

(16,731

)

Income before income taxes

 

18,977

 

 

 

29,712

 

 

 

86,122

 

 

 

98,640

 

Provision for income taxes

 

(5,012

)

 

 

(3,818

)

 

 

(10,870

)

 

 

(24,591

)

Net income

$

13,965

 

 

$

25,894

 

 

$

75,252

 

 

$

74,049

 

 

 

 

 

 

 

 

 

Diluted earnings per share

$

0.76

 

 

$

1.40

 

 

$

4.05

 

 

$

4.03

 

Weighted average shares outstanding – diluted

 

18,328

 

 

 

18,471

 

 

 

18,600

 

 

 

18,388

 

 

UNAUDITED SEGMENT INFORMATION

(in thousands)

 

 

 

 

 

 

 

Three Months Ended

June 30,

 

Fiscal Year Ended

June 30,

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

Revenues – by Segment:

 

 

 

 

 

 

 

Security division

$

163,566

 

 

$

201,920

 

 

$

742,043

 

 

$

633,340

 

Healthcare division

 

57,460

 

 

 

51,894

 

 

 

185,322

 

 

 

212,315

 

Optoelectronics and Manufacturing division (including intersegment revenues)

 

67,144

 

 

 

92,174

 

 

 

283,828

 

 

 

349,887

 

Intersegment revenues eliminations

 

(11,203

)

 

 

(13,790

)

 

 

(45,149

)

 

 

(48,640

)

Total

$

276,967

 

 

$

332,198

 

 

$

1,166,044

 

 

$

1,146,902

 

 

 

 

 

 

 

 

 

Operating income (loss) – by Segment:

 

 

 

 

 

 

 

Security division

$

16,658

 

 

$

32,864

 

 

$

90,063

 

 

$

85,515

 

Healthcare division

 

9,973

 

 

 

5,923

 

 

 

15,766

 

 

 

31,563

 

Optoelectronics and Manufacturing division

 

5,470

 

 

 

8,827

 

 

 

30,566

 

 

 

38,465

 

Corporate

 

(8,052

)

 

 

(13,874

)

 

 

(31,630

)

 

 

(39,769

)

Intersegment eliminations

 

(593

)

 

 

114

 

 

 

122

 

 

 

(403

)

Total

$

23,456

 

 

$

33,854

 

 

$

104,887

 

 

$

115,371

 

OSI SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

June 30, 2020

 

June 30, 2021

Assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

76,102

 

$

80,613

Accounts receivable, net

 

269,840

 

 

290,653

Inventories

 

241,226

 

 

294,208

Other current assets

 

30,541

 

 

43,930

Total current assets

 

617,709

 

 

709,404

Property and equipment, net

 

127,936

 

 

118,004

Goodwill

 

310,627

 

 

320,304

Intangible assets, net

 

128,279

 

 

127,608

Other non-current assets

 

83,990

 

 

109,047

Total Assets

$

1,268,541

 

$

1,384,367

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Bank lines of credit

$

59,000

 

$

Current portion of long-term debt

 

926

 

 

846

Accounts payable and accrued expenses

 

154,487

 

 

210,077

Other current liabilities

 

115,688

 

 

133,844

Total current liabilities

 

330,101

 

 

344,767

Long-term debt

 

267,072

 

 

276,421

Other long-term liabilities

 

99,216

 

 

123,359

Total liabilities

 

696,389

 

 

744,547

Total stockholders’ equity

 

572,152

 

 

639,820

Total Liabilities and Stockholders’ Equity

$

1,268,541

 

$

1,384,367

RECONCILIATION OF GAAP TO NON-GAAP

NET INCOME AND EARNINGS PER SHARE

(in thousands, except earnings per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

June 30,

 

Fiscal Year Ended

June 30,

 

 

2020

 

2021

 

2020

 

2021

 

Net income

 

EPS

 

Net income

 

EPS

 

Net income

 

EPS

 

Net income

 

EPS

GAAP basis

$

13,965

 

$

0.76

 

$

25,894

 

$

1.40

 

$

75,252

 

$

4.05

$

74,049

 

$

4.03

Impairment, restructuring and other charges

 

4,963

 

 

0.27

 

 

2,192

 

 

0.12

 

 

6,483

 

0.35

 

10,104

 

0.55

Amortization of acquired intangible assets

 

5,550

 

 

0.30

 

 

4,525

 

 

0.25

 

 

16,351

 

0.88

 

15,644

 

0.85

Non-cash interest expense

 

2,157

 

 

0.12

 

 

2,249

 

 

0.12

 

 

8,751

 

0.47

 

8,968

 

0.48

Tax effect of above adjustments

 

(3,582

)

 

(0.20

)

 

(2,346

)

 

(0.13

)

 

(8,623

)

(0.47

)

 

(9,240

)

(0.50

)

Discrete tax items

 

(603

)

 

(0.03

)

 

(3,983

)

 

(0.22

)

 

(12,640

)

(0.68

)

 

(1,664

)

(0.09

)

Non-GAAP basis

$

22,450

 

$

1.22

 

$

28,531

 

$

1.54

 

$

85,574

 

$

4.60

$

97,861

 

$

5.32

RECONCILIATION OF GAAP TO NON-GAAP

OPERATING INCOME (LOSS) AND OPERATING MARGIN BY SEGMENT

(in thousands, except percentages)

Three Months Ended June 30, 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)

 

$

16,658

 

10.2

%

 

$

9,973

 

17.4

%

 

$

5,470

 

8.1

%

 

$

(8,645

)

 

$

23,456

 

8.5

%

Impairment, restructuring and other charges, net

 

 

4,618

 

2.8

%

 

 

 

 

 

 

340

 

0.5

%

 

 

5

 

 

 

4,963

 

1.8

%

Amortization of acquired intangible assets

 

 

4,142

 

2.5

%

 

 

 

 

 

 

1,408

 

2.2

%

 

 

 

 

 

5,550

 

2.0

%

Non-GAAP basis– operating income (loss)

 

$

25,418

 

15.5

%

 

$

9,973

 

17.4

%

 

$

7,218

 

10.8

%

 

$

(8,640

)

 

$

33,969

 

12.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 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)

 

$

32,864

 

16.3

%

 

$

5,923

 

11.4

%

 

$

8,827

 

9.6

%

 

$

(13,760

)

 

$

33,854

 

10.2

%

Impairment, restructuring and other charges, net

 

 

374

 

0.2

%

 

 

 

 

 

 

169

 

0.2

%

 

 

1,649

 

 

 

2,192

 

0.7

%

Amortization of acquired intangible assets

 

 

3,151

 

1.5

%

 

 

201

 

0.4

%

 

 

1,173

 

1.2

%

 

 

 

 

 

4,525

 

1.3

%

Non-GAAP basis– operating income (loss)

 

$

36,389

 

18.0

%

 

$

6,124

 

11.8

%

 

$

10,169

 

11.0

%

 

$

(12,111

)

 

$

40,571

 

12.2

%

RECONCILIATION OF GAAP TO NON-GAAP

OPERATING INCOME (LOSS) AND OPERATING MARGIN BY SEGMENT

(in thousands, except percentages)

Fiscal Year Ended June 30, 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)

 

$

90,063

 

12.1

%

 

$

15,766

 

8.5

%

 

$

30,566

 

10.8

%

 

$

(31,508

)

 

$

104,887

 

9.0

%

Impairment, restructuring and other charges, net

 

 

5,489

 

0.7

%

 

 

3,724

 

2.0

%

 

 

658

 

0.2

%

 

 

(3,388

)

 

 

6,483

 

0.6

%

Amortization of acquired intangible assets

 

 

12,533

 

1.8

%

 

 

 

 

 

 

3,819

 

1.3

%

 

 

 

 

 

16,352

 

1.4

%

Non-GAAP basis– operating income (loss)

 

$

108,085

 

14.6

%

 

$

19,490

 

10.5

%

 

$

35,043

 

12.3

%

 

$

(34,896

)

 

$

127,722

 

11.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year Ended June 30, 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)

 

$

85,515

 

13.5

%

 

$

31,563

 

14.9

%

 

$

38,465

 

11.0

%

 

$

(40,172

)

 

$

115,371

 

10.1

%

Impairment, restructuring and other charges, net

 

 

9,297

 

1.5

%

 

 

27

 

0.0

%

 

 

315

 

0.1

%

 

 

465

 

 

 

10,104

 

0.9

%

Amortization of acquired intangible assets

 

 

11,360

 

1.8

%

 

 

806

 

0.4

%

 

 

3,478

 

1.0

%

 

 

 

 

 

15,644

 

1.3

%

Non-GAAP basis– operating income (loss)

 

$

106,172

 

16.8

%

 

$

32,396

 

15.3

%

 

$

42,258

 

12.1

%

 

$

(39,707

)

 

$

141,119

 

12.3

%