Aug 25, 2011

OSI Systems Reports Fourth Quarter and Fiscal Year 2011 Financial Results

  • Q4 Earnings per Share
    • GAAP EPS $0.61 (45% increase over prior year)
    • Non-GAAP EPS of $0.66 (40% increase over prior year)
  • Record quarterly sales of $183 million (11% increase over prior year)
  • Record fourth quarter Backlog of $304 million (27% increase over prior year)
  • FY 2012 Non-GAAP Earnings Guidance of approximately 20% - 26% growth

HAWTHORNE, Calif.--(BUSINESS WIRE)-- OSI Systems, Inc. (NASDAQ: OSIS) today announced financial results for its fourth quarter and fiscal year ended June 30, 2011.

Deepak Chopra, OSI Systems President and CEO, stated, "We are very pleased to report the results of our fourth quarter, as we generated outstanding profitability and strong sales growth leading to record annual sales and profits. This momentum, combined with our record backlog, positions us well for continued top line growth and earnings expansion in fiscal 2012."

The Company reported revenues of $183.4 million for the fourth quarter of fiscal 2011, an increase of 11% from the $165.3 million reported for the fourth quarter of fiscal 2010. Net income for the fourth quarter of fiscal 2011 was $12.0 million, or $0.61 per diluted share, compared to net income of $8.0 million, or $0.42 per diluted share for the fourth quarter of fiscal 2010. Excluding the impact of restructuring and other nonrecurring charges, net income for the fourth quarter of fiscal 2011 would have been approximately $13.0 million or $0.66 per diluted share compared to net income of $8.8 million or $0.47 per diluted share for the fourth quarter of fiscal 2010.

For the fiscal year ended June 30, 2011, the Company reported revenues of $656.1 million, a 10% increase from the $595.1 million reported for fiscal 2010. Net income for fiscal 2011 was $33.4 million, or $1.71 per diluted share, compared to net income of $23.6 million, or $1.28 per diluted share in fiscal 2010. Excluding the impact of restructuring and other nonrecurring charges, net income for fiscal 2011 would have been approximately $35.9 million, or $1.84 per diluted share compared to net income of $25.6 million or $1.39 per diluted share for the comparable period of fiscal 2010.

Discussion of adjustments to arrive at non-GAAP figures for the three and twelve months ended June 30, 2011 is provided to allow for the comparison of underlying earnings, net of restructuring and other nonrecurring charges, thus providing additional insight into the on-going operations of the Company. For the three months and fiscal year ended June 30, 2011 the Company incurred restructuring and other nonrecurring charges of $1.4 million and $3.4 million, respectively, compared to $1.3 million and $2.9 million for the comparable periods of fiscal 2010.

During fiscal 2011, the Company generated operating cash flow of $40.1 million, resulting in the Company paying down its long-term debt by $32.6 million and increasing its net cash from $15.9 million as of June 30, 2010 to $52.6 million as of June 30, 2011.

Mr. Chopra, continued, "Our Security Division completed a solid fiscal 2011 with another strong quarter of bookings leading to 17% growth in revenues. Further, our Security Division is primed to continue double-digit growth in fiscal 2012, as our turnkey screening business in Puerto Rico commenced operations during the fourth quarter and our backlog reached a record year-end level of $200 million, a 39% increase from the prior year."

Mr. Chopra continued, "Our Healthcare Division's strong fourth quarter performance resulted in our second straight quarter of double-digit sales growth. As a result of this growth, coupled with an improved cost structure, our Healthcare Division achieved record operating income of $7.7 million and an operating margin of 12.3% during the quarter."

Mr. Chopra continued, "Our Optoelectronics and Manufacturing Division finished strong reporting a 27% increase in sales during the fourth quarter. This outstanding performance resulted in both record annual sales and operating profit for the division. Heading into fiscal 2012, our Optoelectronics and Manufacturing Division is well positioned to continue strong growth with our growing, diversified customer base and the benefits of our vertical integration strategy."

Mr. Chopra concluded, "Heading into fiscal 2012, we are excited about our growth prospects. Our backlog of $304 million as of June 30, 2011 is 27% higher than the prior fiscal year, and represents a new record year-end backlog."

Company Outlook — Guidance for Fiscal 2012

Subject to the risk factors referenced in the Safe Harbor section of this press release, the Company announced that it anticipates fiscal 2012 sales to be between $722 million and $740 million, representing a 10% to 13% increase over fiscal 2011. In addition, the Company anticipates approximately 20% - 26% growth in earnings per diluted share to $2.21 to $2.32, excluding the impact of restructuring and other non-recurring charges.

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 fourth quarter of fiscal 2011. To listen, please visit the investor relations section of 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 at 12:00pm PT (3:00pm ET) until September 8, 2011. 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 ‘78165122' 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. News Filter: OSIS-E

Safe Harbor Statement

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)
       
Three Months Ended June 30, Year Ended June 30,
  2010         2011     2010         2011  
Revenue $ 165,328 $ 183,429 $ 595,111 $ 656,100
Cost of goods sold   101,343     113,337     377,077     416,834  
Gross profit 63,985 70,092 218,034 239,266
 
Operating expenses:
Selling, general and administrative 38,204 39,583 139,830 142,633
Research and development 11,106 11,939 38,577 45,448
Restructuring, and other charges  

1,253

    1,360     2,859     3,424  
Total operating expenses   50,563     52,882     181,266     191,505  

 

Income from operations 13,422 17,210 36,768 47,761
Interest and other expense, net   (558 )   (542 )   (1,772 )   (1,026 )
Income before income taxes 12,864 16,668 34,996 46,735
Income tax expense   4,881     4,622     11,439     13,313  
 
Net income $ 7,983   $ 12,046   $ 23,557   $ 33,422  
 
Diluted income per share $ 0.42   $ 0.61   $ 1.28   $ 1.71  
Weighted average shares outstanding — diluted   18,862     19,866     18,389     19,548  
 
Consolidated Balance Sheets
(in thousands)
(unaudited)
       
June 30, 2010 June 30, 2011
Assets
Cash and cash equivalents $ 51,989 $ 55,619
Accounts receivable, net 132,728 136,716
Inventories 125,930 169,634
Other current assets   38,554   43,317

Total current assets

349,201 405,286
Non-current assets   163,913   179,630
Total Assets $ 513,114 $ 584,916
 
Liabilities and Stockholders' Equity
Current portion of long-term debt $ 12,743 $ 221
Accounts payable and accrued expenses 63,945 80,666
Other current liabilities   67,906   80,094
Total current liabilities 144,594 160,981
Long-term debt 23,366 2,756
Other long-term liabilities   31,444   36,379
Total liabilities 199,404 200,116
Total stockholders' equity   313,710   384,800
Total Liabilities and Equity $ 513,114 $ 584,916

 
SEGMENT INFORMATION
(in thousands)
(unaudited)
               
Three Months Ended June 30, Year Ended June 30,
  2010     2011     2010     2011  
Revenues — by Segment Group:
Security Group $ 75,711 $ 78,713 $ 251,479 $ 294,686
Healthcare Group 56,637 62,213 206,557 215,050
Optoelectronics and Manufacturing Group including intersegment revenues 43,605 55,415 171,237 192,873
Intersegment revenues elimination   (10,625 )   (12,912 )   (34,162 )   (46,509 )
Total $ 165,328   $ 183,429   $ 595,111   $ 656,100  
 
Operating income (loss) — by Segment Group:
Security Group (i) $ 10,153 $ 8,060 $ 23,351 $ 25,352
Healthcare Group (ii) 4,104 7,321 13,113 17,857
Optoelectronics and Manufacturing Group (iii) 3,736 5,236 11,958 17,211
Corporate (iv) (2,519 ) (3,269 ) (10,878 ) (11,322 )
Eliminations   (2,052 )   (138 )   (776 )   (1,337 )
Total $ 13,422   $ 17,210   $ 36,768   $ 47,761  
 

(i)

Includes restructuring and other charges of $0.6 million for the three months ended June 30, 2011; and $0.5 million and $0.6 million for the years ended June 30, 2010 and 2011, respectively.

(ii)

Includes restructuring and other charges of $1.0 million and $0.3 million for the three months ended June 30, 2010 and 2011, respectively; and $1.3 million and $1.5 million for the years ended June 30, 2010 and 2011, respectively.

(iii)

Includes restructuring and other charges of $0.2 million for the three months ended June 30, 2010; and $1.0 million for the year ended June 30, 2010.

(iv)

Includes restructuring and other charges of $0.4 million for the three months ended June 30, 2011; and $0.1 million and $1.3 million for the years ended June 30, 2010 and 2011, respectively.

 
Reconciliation of GAAP to Non-GAAP
(in thousands, except earnings per share data)
       
Three Months Ended June 30, Year Ended June 30,
2010     2011 2010     2011
Net     Net     Net     Net    
income EPS income EPS income EPS income EPS
 
GAAP basis $ 7,983 $ 0.42 $ 12,046 $ 0.61 $ 23,557 $ 1.28 $ 33,422 $ 1.71
 
Restructuring and other charges, net of tax 861 0.05 983 0.05 1,996 0.11 2,449 0.13
               
Non-GAAP basis $ 8,844 $ 0.47 $ 13,029 $ 0.66 $ 25,553 $ 1.39 $ 35,871 $ 1.84

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

Source: OSI Systems, Inc.

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