Apr 26, 2011

OSI Systems Reports Third Quarter Fiscal 2011 Financial Results

  • Q3 Earnings Per Share
    • GAAP of $0.45 (36% increase over prior year)
    • Non-GAAP: $0.48 (33% increase over prior year)
  • Record quarterly sales of $175 million (20% increase over prior year)
  • Record third quarter backlog of $304 million (27% increase over June)
  • Company raises FY 2011 Earnings guidance to $1.78 - $1.86 per share (28% - 34% growth)

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

Deepak Chopra, OSI Systems' Chairman and CEO, stated, "We are pleased to report outstanding third quarter results led by record revenues, including double digit sales growth across each of our divisions, resulting in significant earnings growth. With an exceptionally strong backlog and pipeline of opportunities, we are well positioned for continued sales and earnings growth."

The Company reported revenues of $174.9 million for the third quarter of fiscal 2011, an increase of 20% as compared to the same period a year ago. Net income for the third quarter of fiscal 2011 was $8.8 million, or $0.45 per diluted share, compared to net income of $6.1 million, or $0.33 per diluted share, for the third quarter of fiscal 2010.

For the nine months ended March 31, 2011, the Company reported revenues of $472.7 million, an increase of 10% as compared to the same period a year ago. Net income for the nine months ended March 31, 2011 was $21.4 million, or $1.10 per diluted share, compared to net income of $15.6 million, or $0.85 per diluted share, for the nine months ended March 31, 2010.

Excluding the impact of restructuring and other charges, net income for the third quarter of fiscal 2011 would have been approximately $9.4 million, or $0.48 per diluted share, compared to net income of $6.8 million, or $0.36 per diluted share, for the third quarter of fiscal 2010 and net income for the nine months ended March 31, 2011 would have been approximately $22.8 million, or $1.18 per diluted share, compared to net income of $16.7 million, or $0.91 per diluted share, for the nine months ended March 31, 2010. These non-GAAP figures are provided to allow for the comparison of underlying earnings, net of restructuring and other charges, thus providing additional insight into the on-going operations of the Company.

As of March 31, 2011, the Company's backlog was $304 million compared to $240 million as of June 30, 2010, an increase of 27%. During the nine months ended March 31, 2011, the Company generated cash flow from operations of $25 million.

Mr. Chopra continued, "Our Security division had another outstanding quarter as revenues increased 27% to a record $88 million. In addition, strong bookings continued resulting in a Security backlog of $194 million, an increase of 34% since the start of fiscal 2011. The backlog, combined with a robust pipeline, provides confidence in sustaining exceptional growth in our Security division."

Mr. Chopra continued, "Sales in our Healthcare division increased 11% over the prior year. An improving market coupled with our recently announced new product offerings as well as the substantial improvements we have made to our cost structure, position us well for continued top line growth and margin expansion."

Mr. Chopra concluded, "Our Optoelectronics and Manufacturing Division generated sales and operating income growth of 25% and 138%, respectively. These strong results reflect the profitability of a growing, diversified customer base with strong operating discipline and the benefits of our vertical integration strategy."

Fiscal Year 2011 Outlook

Subject to the risk factors detailed in the Safe Harbor section of this press release, the Company is raising its annual revenue guidance to between $655 million - $665 million. In addition, the Company is raising its fiscal 2011 earnings guidance and expects earnings per diluted share to increase at a rate of 28% - 34% to between $1.78 - $1.86, 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 third 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 May 10, 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 ‘12002869' 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

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.

 
Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
       
Three Months Ended

March 31,

Nine Months Ended

March 31,

2010     2011 2010     2011
Revenue $ 145,401 $ 174,931 $ 429,783 $ 472,671
Cost of goods sold   92,184   112,678   275,734     303,497  
Gross profit 53,217 62,253 154,049 169,174
 
Operating expenses:
Selling, general and administrative 34,789 37,116 101,679 103,050
Research and development 9,129 12,436 27,471 33,509
Restructuring and other charges   946   905   1,553     2,064  
Total operating expenses   44,864   50,457   130,703     138,623  
Income from operations 8,353 11,796 23,346 30,551
Interest expense and other income, net   175   612   (1,214 )   (484 )
Income before income taxes 8,528 12,408 22,132 30,067
Provision for income taxes   2,416   3,642   6,558     8,691  
Net income $ 6,112 $ 8,766 $ 15,574   $ 21,376  
Diluted income per share $ 0.33 $ 0.45 $ 0.85   $ 1.10  
Weighted average shares outstanding — diluted   18,772   19,687   18,219     19,424  
 
 
Consolidated Balance Sheets
(in thousands)
(Unaudited)
       
June 30, March 31,
2010 2011
Assets
Cash and cash equivalents $ 51,989 $ 39,630
Accounts receivable, net 132,728 136,357
Inventories 125,930 159,870
Other current assets   38,554   36,093
Total current assets 349,201 371,950
Non-current assets   163,913   180,345
Total Assets $ 513,114 $ 552,295
Liabilities and Stockholders' Equity
Current portion of long-term debt $ 12,743 $ 221
Accounts payable and accrued expenses 63,945 91,598
Other current liabilities   67,906   64,817
Total current liabilities 144,594 156,636
Long-term debt 23,366 2,814
Other long-term liabilities   31,444   35,327
Total liabilities 199,404 194,777
Total shareholders' equity   313,710   357,518
Total Liabilities and Equity $ 513,114 $ 552,295
 

 
Segment Information
(in thousands)
(Unaudited)
               
Three Months Ended

March 31,

Nine Months Ended

March 31,

2010 2011 2010 2011
Revenues — by Segment Group:
Security Group $ 69,341 $ 88,173 $ 175,768 $ 215,973
Healthcare Group 45,910 51,114 149,920 152,837
Optoelectronics and Manufacturing Group including intersegment revenues 38,177 47,865 127,631 137,458
Intersegment revenues elimination   (8,027 )   (12,221 )   (23,536 )   (33,597 )
Total $ 145,401   $ 174,931   $ 429,783   $ 472,671  
 
Operating income (loss) — by Segment Group:
Security Group $ 7,096 $ 8,177 $ 13,198 $ 17,292
Healthcare Group 1,706 2,274 9,009 10,536
Optoelectronics and Manufacturing Group 1,504 4,284 8,222 11,975
Corporate (2,390 ) (2,805 ) (8,359 ) (8,053 )
Eliminations   437     (134 )   1,276     (1,199 )
Total $ 8,353   $ 11,796   $ 23,346   $ 30,551  
 
       

Reconciliation of GAAP to Non-GAAP

(in thousands, except earnings per share data)

(Unaudited)

 
For the Three Months Ended March 31, For the Nine Months Ended March 31,
2010     2011 2010     2011

Net

income

    EPS

Net

income

    EPS

Net

income

    EPS

Net

income

    EPS
 
GAAP basis $ 6,112 $ 0.33 $ 8,766 $ 0.45 $ 15,574 $ 0.85 $ 21,376 $ 1.10
 
Restructuring and other charges, net of tax 678 0.03 639 0.03 1,093 0.06 1,467 0.08
               
Non-GAAP basis $ 6,790 $ 0.36 $ 9,405 $ 0.48 $ 16,667 $ 0.91 $ 22,843 $ 1.18

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

Source: OSI Systems, Inc.

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