OSI Systems Reports Fiscal 2018 Fourth Quarter and Full Year Financial Results
- Record Q4 Revenues of
$287 Million (14% year-over-year increase) - Record Fiscal 2018 Revenues of
$1.089 Billion (13% year-over-year increase) - Q4 Earnings Per Diluted Share
- GAAP EPS of
$0.27 - Non-GAAP EPS of
$1.02
- GAAP EPS of
- Backlog of
$976 Million (32% year-over-year increase) - FY 2019 Guidance
- Sales Guidance of
$1.125 Billion - $1.165 Billion - Non-GAAP Diluted EPS Guidance of
$3.80 - $4.00
- Sales Guidance of
The Company reported revenues of
For the fiscal year ended
During the three months ended
Mr. Chopra stated, “Our Security division finished the year with strong revenues and backlog. Fourth quarter revenues in the division increased 26% to a record
Mr. Chopra further commented, “Our Optoelectronics and Manufacturing division continued the steady performance seen throughout fiscal 2018. Fourth quarter sales increased 9% on a year-over-year basis. However, one of our businesses within this division incurred an operating loss in the quarter contributing to an overall year-over-year reduction in operating income. We have taken steps to address the operational issues and expect improved performance in fiscal 2019.”
Mr. Chopra continued, “Fourth quarter sales in our Healthcare division decreased 11% as compared to the prior fiscal year. Although we are disappointed with the second half results of our Healthcare division, we are encouraged by the direction under new leadership. We are increasing focus on patient monitoring, diagnostic cardiology, and supplies and accessories and leveraging our market positions in the U.S. and
Mr. Chopra concluded, “During fiscal 2018, we repurchased
As a result of the enactment of the Tax Cuts and Jobs Act (the “Tax Act”) in
The effective tax rate for fiscal 2018 was 179.0% primarily as a result of the Tax Act. Excluding discrete items and the impact of the Tax Act, the effective tax rate would have been approximately 27% for fiscal 2018. For the fourth quarter of fiscal 2018, the effective tax rate was 10.7%. Excluding discrete items and the impact of the Tax Act, the fourth quarter effective tax rate would have been approximately 19.7%.
Fiscal Year 2019 Outlook
For fiscal year 2019, the Company anticipates revenues in the range of
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, high variability, and complexity in accurately forecasting the timing and amount 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. The amount of these deductions 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 twelve months ended
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 over the Internet beginning at
About
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 and growth 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
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, |
|||||||||||||||
2017 | 2018 | 2017 | 2018 | |||||||||||||
Net revenues: | ||||||||||||||||
Products | $ | 167,555 | $ | 203,397 | $ | 655,840 | $ | 732,927 | ||||||||
Services | 84,847 | 83,929 | 305,111 | 356,359 | ||||||||||||
Total net revenues | 252,402 | 287,326 | 960,951 | 1,089,286 | ||||||||||||
Cost of goods sold: | ||||||||||||||||
Products | 117,793 | 141,420 | 466,293 | 504,483 | ||||||||||||
Services | 47,818 | 44,740 | 171,157 | 193,151 | ||||||||||||
Total cost of goods sold | 165,611 | 186,160 | 637,450 | 697,634 | ||||||||||||
Gross profit | 86,791 | 101,166 | 323,501 | 391,652 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative | 48,032 | 64,001 | 192,560 | 239,592 | ||||||||||||
Research and development | 11,140 | 15,067 | 50,951 | 61,189 | ||||||||||||
Impairment, restructuring and other charges, net |
24,813 | 11,474 | 46,698 | 34,963 | ||||||||||||
Total operating expenses | 83,985 | 90,542 | 290,209 | 335,744 | ||||||||||||
Income from operations | 2,806 | 10,624 | 33,292 | 55,908 | ||||||||||||
Interest expense, net | (3,913 | ) | (4,976 | ) | (9,629 | ) | (19,293 | ) | ||||||||
Other income, net | - | 78 | 2,088 | 239 | ||||||||||||
Income (loss) before income taxes | (1,107 | ) | 5,726 | 25,751 | 36,854 | |||||||||||
Provision for (benefit from) income taxes | (2,654 | ) | 612 | 4,675 | 65,981 | |||||||||||
Net income (loss) | $ | 1,547 | $ | 5,114 | $ | 21,076 | $ | (29,127 | ) | |||||||
Diluted earnings (loss) per share | $ | 0.08 | $ | 0.27 | $ | 1.07 | $ | (1.57 | ) | |||||||
Weighted average shares outstanding – diluted | 19,479 | 18,680 | 19,689 | 18,592 | ||||||||||||
UNAUDITED SEGMENT INFORMATION | ||||||||||||||||
(in thousands) |
||||||||||||||||
Three Months Ended
June 30, |
Fiscal Year Ended
June 30, |
|||||||||||||||
2017 | 2018 | 2017 | 2018 | |||||||||||||
Revenues – by Segment: | ||||||||||||||||
Security division | $ | 147,160 | $ | 185,217 | $ | 555,197 | $ | 690,001 | ||||||||
Healthcare division | 53,607 | 47,594 | 200,034 | 189,387 | ||||||||||||
Optoelectronics and Manufacturing division (including intersegment revenues) | 60,236 | 65,461 | 236,100 | 254,485 | ||||||||||||
Intersegment revenues eliminations | (8,601 | ) | (10,946 | ) | (30,380 | ) | (44,587 | ) | ||||||||
Total | $ | 252,402 | $ | 287,326 | $ | 960,951 | $ | 1,089,286 | ||||||||
Operating income (loss) – by Segment: | ||||||||||||||||
Security division | $ | (1,511 | ) | $ | 17,914 | $ | 35,256 | $ | 84,106 | |||||||
Healthcare division | 4,151 | (7,634 | ) | 2,624 | (14,609 | ) | ||||||||||
Optoelectronics and Manufacturing division | 7,643 | 5,800 | 23,792 | 22,024 | ||||||||||||
Corporate | (7,477 | ) | (6,429 | ) | (29,359 | ) | (35,030 | ) | ||||||||
Intersegment eliminations | - | 973 | 979 | (583 | ) | |||||||||||
Total | $ | 2,806 | $ | 10,624 | $ | 33,292 | $ | 55,908 | ||||||||
OSI SYSTEMS, INC. AND SUBSIDIARIES | ||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(in thousands) | ||||||
June 30, 2017 | June 30, 2018 | |||||
Assets | ||||||
Cash and cash equivalents | $ | 169,650 | $ | 84,814 | ||
Accounts receivable, net | 206,526 | 210,744 | ||||
Inventories | 248,510 | 313,552 | ||||
Other current assets | 28,314 | 41,587 | ||||
Total current assets | 653,000 | 650,697 | ||||
Goodwill | 242,129 | 292,213 | ||||
Intangible assets | 118,450 | 142,001 | ||||
Other non-current assets | 216,508 | 170,780 | ||||
Total Assets | $ | 1,230,087 | $ | 1,255,691 | ||
Liabilities and Stockholders' Equity | ||||||
Bank lines of credit | $ | 103,000 | $ | 113,000 | ||
Current portion of long-term debt | 2,396 | 2,262 | ||||
Accounts payable and accrued expenses | 137,559 | 194,815 | ||||
Other current liabilities | 103,179 | 133,245 | ||||
Total current liabilities | 346,134 | 443,322 | ||||
Long-term debt | 241,750 | 248,980 | ||||
Deferred income taxes | 20,681 | 15,002 | ||||
Other long-term liabilities | 52,309 | 58,951 | ||||
Total liabilities | 660,874 | 766,255 | ||||
Total stockholders’ equity | 569,213 | 489,436 | ||||
Total Liabilities and Stockholders’ Equity | $ | 1,230,087 | $ | 1,255,691 | ||
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, |
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2017 | 2018 | 2017 | 2018 | |||||||||||||||||||||||||||||
Net income | EPS | Net income | EPS | Net income | EPS |
Net income |
EPS | |||||||||||||||||||||||||
GAAP basis | $ | 1,547 | $ | 0.08 | $ | 5,114 | $ | 0.27 | $ | 21,076 | $ | 1.07 | $ | (29,127 | ) | $ | (1.57 | ) | ||||||||||||||
Impairment, restructuring and other charges | 24,813 | 1.27 | 11,474 | 0.61 | 46,698 | 2.37 | 34,963 | 1.88 | ||||||||||||||||||||||||
Amortization of acquired intangible assets1 | 2,357 | 0.12 | 4,643 | 0.25 | 8,382 | 0.43 | 15,713 | 0.85 | ||||||||||||||||||||||||
Non-cash interest expense | 1,771 | 0.09 | 1,912 | 0.10 | 2,477 | 0.13 | 7,470 | 0.40 | ||||||||||||||||||||||||
Gain from disposition of business | - | - | - | - | (2,110 | ) | (0.11 | ) | - | - | ||||||||||||||||||||||
Tax effect of above adjustments | (8,161 | ) | (0.42 | ) | (3,555 | ) | (0.19 | ) | (15,305 | ) | (0.78 | ) | (15,610 | ) | (0.84 | ) | ||||||||||||||||
Discrete tax items | (2,433 | ) | (0.12 | ) | (517 | ) | (0.02 | ) | (2,433 | ) | (0.12 | ) | 56,087 | 3.02 | ||||||||||||||||||
Impact of diluted shares 2 | - | - | - | - | - | - | - | (0.13 | ) | |||||||||||||||||||||||
Non-GAAP basis | $ | 19,894 | $ | 1.02 | $ | 19,071 | $ | 1.02 | $ | 58,785 | $ | 2.99 | $ | 69,496 | $ | 3.61 |
1 |
Amortization is based in part on the preliminary fair value of the acquired intangibles and is subject to change as purchase accounting is finalized. | ||
2 |
For the fiscal year ended June 30, 2018, the weighted average diluted shares used to calculate EPS on a GAAP basis exclude potential common shares (stock options and restricted stock units) due to their antidilutive effect resulting from the Company’s reported net loss. For the fiscal year ended June 30, 2018, the weighted average diluted shares used to calculate EPS on a non-GAAP basis were approximately 19,274,000 shares. | ||
RECONCILIATION OF GAAP TO NON-GAAP | ||||||||||||||||||||||||||||||
OPERATING INCOME (LOSS) AND OPERATING MARGIN BY SEGMENT | ||||||||||||||||||||||||||||||
(in thousands, except percentages) |
||||||||||||||||||||||||||||||
Three Months Ended June 30, 2017 | ||||||||||||||||||||||||||||||
Security Division | Healthcare Division |
Optoelectronics and |
Corporate / Elimination | Total | ||||||||||||||||||||||||||
% of | % of | % of | % of | |||||||||||||||||||||||||||
Sales |
Sales |
Sales |
Sales |
|||||||||||||||||||||||||||
GAAP basis – operating income (loss) | $ | (1,511 | ) | (1.0 | )% | $ | 4,151 | 7.8 | % | $ | 7,643 | 12.7 | % | $ | (7,477 | ) | $ | 2,806 | 1.1 | % | ||||||||||
Impairment, restructuring and other charges | 21,849 | 14.9 | % | 967 | 1.8 | % | 473 | 0.8 | % | 1,524 | 24,813 | 9.8 | % | |||||||||||||||||
Amortization of acquired intangible assets | 1,980 | 1.3 | % | 14 | 0.0 | % | 364 | 0.6 | % | - | 2,358 | 1.0 | % | |||||||||||||||||
Non-GAAP basis– operating income (loss) | $ | 22,318 | 15.2 | % | $ | 5,132 | 9.6 | % | $ | 8,480 | 14.1 | % | $ | (5,953 | ) | $ | 29,977 | 11.9 | % | |||||||||||
|
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Three Months Ended June 30, 2018 | ||||||||||||||||||||||||||||||
Security Division | Healthcare Division |
Optoelectronics and |
Corporate / Elimination | Total | ||||||||||||||||||||||||||
% of |
% of |
% of |
% of |
|||||||||||||||||||||||||||
Sales |
Sales |
Sales |
Sales |
|||||||||||||||||||||||||||
GAAP basis – operating income (loss) | $ | 17,914 | 9.7 | % | $ | (7,634 | ) | -16.0 | % | $ | 5,800 | 8.9 | % | $ | (5,456 | ) | $ | 10,624 | 3.7 | % | ||||||||||
Impairment, restructuring and other charges, net | 1,766 | 0.9 | % | 9,439 | 19.8 | % | 222 | 0.3 | % | 47 | 11,474 | 4.0 | % | |||||||||||||||||
Amortization of acquired intangible assets | 3,697 | 2.0 | % | - | - | % | 946 | 1.4 | % | - | 4,643 | 1.6 | % | |||||||||||||||||
Non-GAAP basis– operating income (loss) | $ | 23,377 | 12.6 | % | $ | 1,805 | 3.8 | % | $ | 6,968 | 10.6 | % | $ | (5,409 | ) | $ | 26,741 | 9.3 | % | |||||||||||
RECONCILIATION OF GAAP TO NON-GAAP | |||||||||||||||||||||||||||||
OPERATING INCOME (LOSS) AND OPERATING MARGIN BY SEGMENT | |||||||||||||||||||||||||||||
(in thousands, except percentages) |
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Fiscal Year Ended June 30, 2017 | |||||||||||||||||||||||||||||
Security Division | Healthcare Division |
Optoelectronics and |
Corporate / Elimination | Total | |||||||||||||||||||||||||
% of |
% of |
% of |
% of |
||||||||||||||||||||||||||
Sales |
Sales |
Sales |
Sales |
||||||||||||||||||||||||||
GAAP basis – operating income (loss) | $ | 35,256 | 6.3 | % | $ | 2,624 | 1.3 | % | $ | 23,792 | 10.1 | % | $ | (28,380 | ) | $ | 33,292 | 3.5 | % | ||||||||||
Impairment, restructuring and other charges | 36,979 | 6.7 | % | 3,315 | 1.7 | % | 1,026 | 0.4 | % | 5,378 | 46,698 | 4.8 | % | ||||||||||||||||
Amortization of acquired intangible assets | 6,558 | 1.2 | % | 373 | 0.2 | % | 1,451 | 0.6 | % | - | 8,382 | 0.9 | % | ||||||||||||||||
Non-GAAP basis– operating income (loss) | $ | 78,793 | 14.2 | % | $ | 6,312 | 3.2 | % | $ | 26,269 | 11.1 | % | $ | (23,002 | ) | $ | 88,372 | 9.2 | % | ||||||||||
|
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Fiscal Year Ended June 30, 2018 | |||||||||||||||||||||||||||||
Security Division | Healthcare Division |
Optoelectronics and |
Corporate / Elimination | Total | |||||||||||||||||||||||||
% of |
% of |
% of |
% of |
||||||||||||||||||||||||||
Sales |
Sales |
Sales |
Sales |
||||||||||||||||||||||||||
GAAP basis – operating income (loss) | $ | 84,106 | 12.2 | % | $ | (14,609 | ) | -7.7 | % | $ | 22,024 | 8.7 | % | $ | (35,613 | ) | $ | 55,908 | 5.1 | % | |||||||||
Impairment, restructuring and other charges, net | 3,893 | 0.6 | % | 24,168 | 12.8 | % | 1,712 | 0.6 | % | 5,190 | 34,963 | 3.2 | % | ||||||||||||||||
Amortization of acquired intangible assets | 13,140 | 1.9 | % | 29 | 0.0 | % | 2,544 | 1.0 | % | - | 15,713 | 1.5 | % | ||||||||||||||||
Non-GAAP basis– operating income (loss) | $ | 101,139 | 14.7 | % | $ | 9,588 | 5.1 | % | $ | 26,280 | 10.3 | % | $ | (30,423 | ) | $ | 106,584 | 9.8 | % |
View source version on businesswire.com: https://www.businesswire.com/news/home/20180823005716/en/
Source:
OSI Systems, Inc.
Ajay Vashishat
Vice President, Business Development
(310) 349-2237
avashishat@osi-systems.com