OSI Systems Reports Fiscal 2019 Second Quarter Financial Results
HAWTHORNE, Calif.--(BUSINESS WIRE)--Jan 24, 2019--OSI Systems, Inc. (the “Company” or “OSI Systems”) (NASDAQ: OSIS) today announced financial results for the three and six months ended December 31, 2018.
Deepak Chopra, OSI Systems’ Chairman and Chief Executive Officer, stated, “We are pleased to report excellent second quarter financial performance. We achieved record revenues leading to strong profits and solid cash flow. With a substantial backlog, we continue to see the Company well positioned for the remainder of fiscal 2019.”
The Company reported revenues of $303.2 million for the second quarter of fiscal 2019, an increase of 9% from the $277.5 million reported for the second quarter of fiscal 2018. Net income for the second quarter of fiscal 2019 was $19.1 million, or $1.03 per diluted share, compared to net loss of $47.0 million, or ($2.47) per diluted share, for the second quarter of fiscal 2018. Non-GAAP net income for the second quarter of fiscal 2019 was $22.1 million, or $1.19 per diluted share, compared to non-GAAP net income for the second quarter of fiscal 2018 of $19.1 million, or $0.97 per diluted share.
For the six months ended December 31, 2018, revenues increased 7% to $569.5 million, compared with the same period a year ago. Net income for this period was $28.5 million, or $1.53 per diluted share, compared with net loss of $36.8 million, or ($1.95) per diluted share, for the same period a year ago. Non-GAAP net income for the six months ended December 31, 2018 was $37.3 million, or $2.00 per diluted share, compared with non-GAAP net income of $34.6 million, or $1.76 per diluted share, for the comparable prior-year period.
During the quarter ended December 31, 2018, the Company’s book-to-bill ratio for equipment and related services was 0.9. As of December 31, 2018, the Company’s backlog was approximately $998 million representing a 20% year-over-year increase. Operating cash flow during the quarter ended December 31, 2018 was $43.7 million, and capital expenditures were $4.8 million.
Mr. Chopra commented, “Our Security division delivered record second fiscal quarter revenues of $189 million, or a 10% increase compared with the prior-year period and delivered strong operating profit during the quarter. We were also pleased with our sales activity in the key markets of aviation, port and border security.”
Mr. Chopra continued, “The performance in our Healthcare division improved significantly from the first quarter. Bookings accelerated leading to stronger sales. With an enhanced focus on profitable product lines and channels coupled with a reduced cost structure, the division returned to double digit operating margins excluding restructuring and other charges.”
Mr. Chopra concluded, “Our Optoelectronics and Manufacturing division continued to perform well in the quarter delivering year-over-year sales growth of 13%, operating margin expansion, and strong cash flow.”
The Company’s effective tax rate for the three and six months ended December 31, 2018 was 26.8% and 23.0%, respectively. Excluding the benefit of certain discrete tax items, the Company’s tax rate for the three and six months ended December 31, 2018 was 28.3% and 28.2%, respectively. As a result of the enactment of the Tax Cuts and Jobs Act (the “Tax Act”) in December 2017, the Company recognized a charge of $56 million, or $2.96 per share, in the second quarter of fiscal 2018. The Company’s reported tax rate, which included the charge, was 465.0% for the second quarter of fiscal 2018, and 231.4% for the first half of fiscal 2018. The Company’s tax rate, excluding the charge related to the Tax Act and certain discrete tax items, was 28.0% and 28.2% for the three and six months ended December 31, 2017.
Fiscal Year 2019 Outlook
The Company is raising its fiscal 2019 sales guidance to a range of $1.150 billion - $1.185 billion, which would represent growth of 6% to 9% compared to the prior fiscal year. In addition, the Company is increasing its non-GAAP earnings guidance to $3.93 - $4.10 per diluted share for fiscal 2019. Actual sales and non-GAAP diluted earnings per share could vary from this guidance due to factors discussed under “Forward-Looking Statements” and other factors.
The Company’s fiscal 2019 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 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 that would be excluded from GAAP diluted EPS, including, for example, acquisition costs and other non-recurring items that have not yet occurred, are out of the Company’s control, or cannot be reasonably predicted. For the same reasons, the Company is unable to address the probable significance of unavailable information which may be material and therefore could result in GAAP diluted EPS, the corresponding GAAP financial measure, being materially less than 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 month periods ended December 31, 2017 and 2018 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 related to convertible debt, and their associated tax effects, and the impact of discrete income tax items including charges resulting from the implementation of the Tax Act. 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 purposes of planning, forecasting, and assessing the performance of the Company’s businesses, (iii) a meaningful comparison of results of the current period against results of past periods, and (iv) financial results that are comparable to those of peer companies. 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 similar measures used by other companies due to possible differences in method 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 1:30 p.m. PT (4:30 p.m. ET) today to discuss its results for the second quarter of fiscal 2019. 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 February 7, 2019. 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 ’5456605’ 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
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 performance in fiscal 2019. 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; failure to secure the renewal of key customer 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; 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 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 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.
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CONTACT: OSI Systems, Inc.
Vice President, Business Development
Tel: (310) 349-2237
KEYWORD: UNITED STATES NORTH AMERICA CALIFORNIA
INDUSTRY KEYWORD: TECHNOLOGY HARDWARE TRANSPORT AIR SECURITY SEMICONDUCTOR HEALTH MEDICAL DEVICES MANUFACTURING AEROSPACE ENGINEERING DEFENSE OTHER DEFENSE
SOURCE: OSI Systems, Inc.
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PUB: 01/24/2019 04:05 PM/DISC: 01/24/2019 04:05 PM