January 24, 2012

OSI Systems Reports Second Quarter Fiscal 2012 Financial Results

  • Record Q2 Revenue - 11% increase over prior year
  • Record Q2 Earnings Per Share - 30% increase over prior year
  • Security Division wins $400 million turnkey agreement after quarter end
  • Company raises FY 2012 Revenue guidance to $750 - $770 million (14% - 17% growth)
  • Company raises FY 2012 Earnings guidance to $2.30 - $2.42 per share (25% - 32% growth)

HAWTHORNE, Calif.--(BUSINESS WIRE)-- OSI Systems, Inc. (NASDAQ: OSIS-E), a vertically integrated provider of solutions in Security, Healthcare, and specialized electronics, today announced financial results for the second quarter ended December 31, 2011.

Deepak Chopra, OSI Systems' Chairman and CEO, stated, "We are very pleased to announce outstanding financial results for our second quarter. Our success was evident throughout all of OSI as each of our divisions reported both sales and earnings growth leading to record sales and earnings in our second quarter. In addition to the impressive financial performance during the quarter, perhaps our bigger news is the $400 million, six-year security agreement with the Servicio de Administración Tributaria ("SAT"), Mexico's tax and customs authority, awarded shortly after the quarter ended. This turnkey screening services agreement will have a profound impact on our business and our ability to enhance shareholder value."

The Company reported revenues of $188 million for the second quarter of fiscal 2012, an increase of 11% as compared to the same period a year ago. Net income for the second quarter of fiscal 2012 was $12.3 million, or $0.61 per diluted share, compared to net income of $9.2 million, or $0.47 per diluted share, for the second quarter of fiscal 2011.

For the six months ended December 31, 2011, the Company reported revenues of $349.3 million, an increase of 17% as compared to the same period a year ago. Net income for the six months ended December 31, 2011 was $17.1 million, or $0.85 per diluted share, compared to net income of $12.6 million, or $0.65 per diluted share, for the six months ended December 31, 2010.

As of December 31, 2011, the Company's backlog was $377 million compared to $304 million as of June 30, 2011, an increase of 24%.

Mr. Chopra continued, "During the second quarter our Security division continued to see excellent growth as revenues increased 16% to a record $89 million. The Security division has now had growth of at least 15% in four of the past five quarters. Our strong backlog at quarter end, which does not include the $400 million turnkey award, and a robust opportunity pipeline, provide excellent visibility into continued strong performance in this division."

Mr. Chopra added, "Our Healthcare division generated record profits during the quarter as operating income increased 47% on revenue growth of 6%. We saw an improved U.S. market with a positive response to our recent new product offerings. This growth in our most profitable region coupled with the impact of our cost reduction initiatives implemented over the past several years led to second quarter operating income of $8.3 million and an operating margin of 14%, both of which are records for our Healthcare division. In addition, newly established long-term contracts with major healthcare Group Purchasing Organizations (GPO's) are expected to contribute to continued growth in the U.S. market."

Alan Edrick, OSI System's Executive Vice President and CFO, stated, "Our second quarter results continue the strong momentum demonstrated consistently over the past few years. The significant increase in profit in our Healthcare division highlights the substantial leverage of this business. In addition, we are very excited by the prospects of the Mexico turnkey screening solutions award which is expected to provide a substantial recurring revenue and profit stream to OSI."

Fiscal Year 2012 Outlook

Subject to the risk factors detailed in the Safe Harbor section of this press release, the Company is raising its annual revenue guidance from $740 million - $760 million to a range of $750 million - $770 million. In addition, the Company is raising its fiscal 2012 earnings guidance and expects earnings per diluted share to increase at a rate of 25% - 32% to a range of $2.30 to $2.42, excluding the impact of restructuring and other non-recurring charges. In addition, the impact of the security agreement with SAT is not considered in the Company's guidance pending further clarity on expected timing.

Conference Call Information

OSI Systems, Inc. will host a conference call and simultaneous webcast over the Internet beginning at 9:00am PT (12:00pm ET), today to discuss its results for the second quarter of fiscal 2012. To listen, please log on to osi-systems.com 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 at 12:00pm PT (3:00pm ET) until February 6, 2012. The replay can either be accessed through the Company's website, www.osi-systems.com, or via telephonic replay by calling 1-888-286-8010 and entering the conference call identification number ‘42408250' 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 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 located in more than a dozen countries. It 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.

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include information regarding the Company's expectations, goals or intentions about the future, including, the Company's predictions about future sales and earnings. The actual results may differ materially from those described in or implied by any forward-looking statement. In particular, there can be no assurance that the Company will continue to generate cash or that strong sales by its Security division will continue to occur in the future. Other important factors are set forth in our Securities and Exchange Commission filings. All forward-looking statements speak only as of the date made, and we undertake no obligation to update these forward-looking statements.

 

OSI SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)

           

For the Three Months Ended
December 31,

For the Six Months Ended
December 31,

2010   2011 2010   2011
Revenues $ 169,287 $ 187,993 $ 297,740 $ 349,310

Cost of goods sold

  109,264     122,169     190,819     230,629  
 
Gross profit 60,023 65,824 106,921 118,681
 
Operating expenses:
Selling, general and administrative expenses 33,958 35,979 65,934 70,346

Research and development

11,842 11,546 21,073 22,426
Restructuring, and other charges   903     -     1,159     -  
 
Total operating expenses   46,703     47,525     88,166     92,722  
 
Income from operations 13,320 18,299 18,755 25,909
Interest expense and other, net   (506 )   (721 )   (1,096 )   (1,520 )
 
Income before income taxes 12,814 17,578 17,659 24,389
Provision for income taxes   3,596     5,277     5,049     7,327  
 
Net income $ 9,218   $ 12,301   $ 12,610   $ 17,062  
 
Diluted earnings per share $ 0.47   $ 0.61   $ 0.65   $ 0.85  
 
Weighted average shares outstanding - diluted   19,475     20,237     19,289     20,161  
 
 

CONSOLIDATED BALANCE SHEETS

(in thousands)

(Unaudited)

                 
June 30, December 31,
2011 2011
Assets
Cash and cash equivalents $ 55,619 $ 52,868
Accounts receivable, net 136,716 145,314
Inventories 169,634 205,789
Other current assets 43,317 36,429
Total current assets 405,286 440,400
Non-current assets   179,630   184,837
Total Assets $ 584,916 $ 625,237
 
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $ 80,887 $ 102,621
Other current liabilities 80,094 75,230
Total current liabilities 160,981 177,851
Long-term debt 2,756 2,554
Other long-term liabilities   36,379   44,467
Total liabilities 200,116 224,872
 
Total shareholders' equity   384,800   400,365
 
Total Liabilities and Equity $ 584,916 $ 625,237
 

 

Segment Information

(in thousands)

(unaudited)

           

Three Months Ended
December 31,

Six Months Ended
December 31,

2010   2011 2010   2011
Revenues — by Segment Group:
Security Group $ 76,703 $ 88,977 $ 127,800 $ 161,574
Healthcare Group 55,799 59,193 101,723 105,713

Optoelectronics and Manufacturing Group including
intersegment revenues

47,682 51,359 89,593 104,450
Intersegment revenues elimination   (10,897 )   (11,536 )   (21,376 )   (22,427 )
Total $ 169,287   $ 187,993   $ 297,740   $ 349,310  
 
Operating income (loss) — by Segment Group:
Security Group $ 7,004 $ 8,001 $ 9,115 $ 11,846
Healthcare Group 5,664 8,325 8,262 10,723
Optoelectronics and Manufacturing Group 4,270 4,451 7,691 9,389
Corporate (3,072 ) (2,599 ) (5,248 ) (5,906 )
Eliminations   (546 )   121     (1,065 )   (143 )
Total $ 13,320   $ 18,299   $ 18,755   $ 25,909  

OSI Systems, Inc.
Ajay Vashishat
Vice President, Business Development
310-349-2237
avashishat@osi-systems.com

Source: OSI Systems, Inc.

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