Business Wire | Aug 18, 2021 08:30AM EDT

OSI Systems Reports Fiscal 2021 Fourth Quarter and Full Year Financial Results

Aug. 18, 2021

HAWTHORNE, Calif.--(BUSINESS WIRE)--Aug. 18, 2021--OSI Systems, Inc. (the "Company" or "OSI Systems") (NASDAQ: OSIS) today announced financial results for the fourth quarter and fiscal year ended June 30, 2021.

Deepak Chopra, OSI Systems' Chairman and Chief Executive Officer, said "We are pleased with our performance for fiscal 2021 and for the fourth quarter, as we finished with record fourth quarter revenues and earnings per share driven by outstanding performance in each of our Security and Optoelectronics and Manufacturing divisions. We enter fiscal 2022 with significant backlog and a robust pipeline of opportunities to enable us to continue the positive momentum."

The Company reported revenues of $332.2 million for the fourth quarter of fiscal 2021, an increase of 20% from the $277.0 million reported for the fourth quarter of fiscal 2020. Net income for the fourth quarter of fiscal 2021 was $25.9 million, or $1.40 per diluted share, compared to net income of $14.0 million, or $0.76 per diluted share, for the fourth quarter of fiscal 2020. Non-GAAP net income for the fourth quarter of fiscal 2021 was $28.5 million, or $1.54 per diluted share, compared to non-GAAP net income for the fourth quarter of fiscal 2020 of $22.5 million, or $1.22 per diluted share.

For the fiscal year ended June 30, 2021, revenues decreased by 2% to $1.147 billion compared to $1.166 billion in the prior fiscal year. Net income for fiscal 2021 was $74.0 million, or $4.03 per diluted share, compared to net income of $75.3 million, or $4.05 per diluted share, in the prior fiscal year. Non-GAAP net income for the fiscal year ended June 30, 2021 was $97.9 million, or $5.32 per diluted share, compared to non-GAAP net income of $85.6 million, or $4.60 per diluted share, for the 2020 fiscal year.

During the three months ended June 30, 2021, the Company's book-to-bill ratio was approximately 1.0. As of June 30, 2021, the Company's backlog was $1.076 billion compared to $861 million as of June 30, 2020. During the quarter ended June 30, 2021, operating cash flow was $8.0 million, and net capital expenditures were $4.6 million. For the fiscal year ended June 30, 2021, operating cash flow was $139.1 million, and net capital expenditures were $15.8 million.

Mr. Chopra stated, "We are pleased with the fourth quarter performance of the Security division, which reported a 23% year-over-year increase in revenues coupled with significant adjusted operating margin expansion. This was driven by strength across multiple geographic channels and across the bulk of the product portfolio. We believe the Security division is poised for further success as we enter fiscal 2022 with a strong backlog and a streamlined cost structure."

Mr. Chopra further commented, "Our Optoelectronics and Manufacturing division performed exceptionally well and ended the fiscal year with record fourth quarter sales, bookings, and backlog. Fourth quarter revenues increased 37% year-over-year with continued solid profits. We believe the business is well positioned for continued growth as we enter fiscal 2022."

Mr. Chopra continued, "Our Healthcare division made significant improvements in fiscal 2021 with 15% sales growth and noteworthy operating margin expansion. As expected, fourth quarter revenues were comparatively down year-over-year due to a surge in international demand in Q4 of fiscal 2020 for our patient monitoring products at the inception of the pandemic."

Fiscal Year 2022 Outlook

For fiscal year 2022, the Company anticipates revenues in the range of $1.190 billion to $1.225 billion and non-GAAP earnings per diluted share in the range of $5.72 to $6.00. Actual revenues and non-GAAP diluted earnings per share could vary from this guidance due to factors discussed under "Forward-Looking Statements" or other factors, including uncertainties as to the duration and scope of the COVID-19 pandemic.

The Company's fiscal 2022 diluted earnings per share guidance is provided on a non-GAAP basis only. The Company does not provide a reconciliation of guidance for non-GAAP diluted EPS 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 included in the calculation of GAAP diluted EPS but excluded in the calculation of non-GAAP diluted EPS, such as acquisition costs and other non-recurring items that have not yet occurred, are out of the Company's control, or cannot otherwise reasonably be predicted. For the same reasons, the Company is unable to address the significance of unavailable information which may be material and therefore could result in GAAP diluted EPS, the most directly comparable GAAP financial measure, being materially different from 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 months and fiscal years ended June 30, 2020 and 2021 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 primarily related to convertible debt, and their associated tax effects, and the impact of discrete income tax items. Although we exclude amortization of acquired intangible assets from our non-GAAP figures, we believe that it is important for investors to understand that revenue generated from such intangibles is included within revenue in determining non-GAAP financial measures of the Company. Management believes that these non-GAAP financial measures provide (i) enhanced insight into the ongoing operations of the Company, (ii) meaningful information regarding the Company's financial 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 financial results of the current period against results of past periods, and (iv) financial results that are generally more comparable to financial results of peer companies than are GAAP figures. 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 measures used by other companies due to possible differences in methods 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 9:00am PT (12:00pm ET) today to discuss its results for the fourth quarter and fiscal year ended June 30, 2021. 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 beginning shortly after the conclusion of the conference call until September 1, 2021. 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 '4243009' 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

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, growth, operational performance and impact of the COVID-19 pandemic in fiscal 2022 and beyond. 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; changes in domestic and foreign government spending and budgetary, procurement and trade policies adverse to the Company's businesses; global economic uncertainty; impact on the Company's business related to or resulting from the COVID-19 pandemic such as material delays and cancellations of orders or deliveries thereon, supply chain disruptions, plant closures, or other adverse impacts on the Company's ability to execute business plans; 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 investigations and compliance reviews; contract and regulatory compliance matters, and actions which, if brought, could result 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. Many of the referenced risks could be amplified by the magnitude and duration of the COVID-19 pandemic. 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.

OSI SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)



Three Months Ended Fiscal Year Ended June 30, June 30,

2020 2021 2020 2021

Net revenues:

Products $ 203,688 $ 264,571 $ 850,478 $ 872,809

Services 73,279 67,627 315,566 274,093

Total net revenues 276,967 332,198 1,166,044 1,146,902

Cost of goods sold:

Products 139,222 177,243 575,342 586,935

Services 36,197 36,888 170,063 140,049

Total cost of goods 175,419 214,131 745,405 726,984 sold

Gross profit 101,548 118,067 420,639 419,918

Operating expenses:

Selling, general 60,306 68,123 251,961 240,747 and administrative

Research and 12,823 13,898 57,308 53,696 development

Impairment,restructuring and 4,963 2,192 6,483 10,104 other charges, net

Total operating 78,092 84,213 315,752 304,547 expenses

Income from 23,456 33,854 104,887 115,371 operations

Interest and other (4,479 ) (4,142 ) (18,765 ) (16,731 )expense, net

Income before 18,977 29,712 86,122 98,640 income taxes

Provision for (5,012 ) (3,818 ) (10,870 ) (24,591 )income taxes

Net income $ 13,965 $ 25,894 $ 75,252 $ 74,049



Diluted earnings $ 0.76 $ 1.40 $ 4.05 $ 4.03 per share

Weighted average shares outstanding 18,328 18,471 18,600 18,388- diluted

UNAUDITED SEGMENT INFORMATION

(in thousands)

Three Months Ended

June 30,

Fiscal Year Ended

June 30,

2020

2021

2020

2021

Revenues - by Segment:

Security division

$

163,566

$

201,920

$

742,043

$

633,340

Healthcare division

57,460

51,894

185,322

212,315

Optoelectronics and Manufacturing division (including intersegment revenues)

67,144

92,174

283,828

349,887

Intersegment revenues eliminations

(11,203

)

(13,790

)

(45,149

)

(48,640

)

Total

$

276,967

$

332,198

$

1,166,044

$

1,146,902

Operating income (loss) - by Segment:

Security division

$

16,658

$

32,864

$

90,063

$

85,515

Healthcare division

9,973

5,923

15,766

31,563

Optoelectronics and Manufacturing division

5,470

8,827

30,566

38,465

Corporate

(8,052

)

(13,874

)

(31,630

)

(39,769

)

Intersegment eliminations

(593

)

114

122

(403

)

Total

$

23,456

$

33,854

$

104,887

$

115,371

UNAUDITED SEGMENT INFORMATION

(in thousands)



Three Months Ended Fiscal Year Ended June 30, June 30,

2020 2021 2020 2021

Revenues - by Segment:

Security division $ 163,566 $ 201,920 $ 742,043 $ 633,340

Healthcare division 57,460 51,894 185,322 212,315

Optoelectronics andManufacturingdivision (including 67,144 92,174 283,828 349,887 intersegmentrevenues)

Intersegmentrevenues (11,203 ) (13,790 ) (45,149 ) (48,640 )eliminations

Total $ 276,967 $ 332,198 $ 1,166,044 $ 1,146,902



Operating income(loss) - by Segment:

Security division $ 16,658 $ 32,864 $ 90,063 $ 85,515

Healthcare division 9,973 5,923 15,766 31,563

Optoelectronics andManufacturing 5,470 8,827 30,566 38,465 division

Corporate (8,052 ) (13,874 ) (31,630 ) (39,769 )

Intersegment (593 ) 114 122 (403 )eliminations

Total $ 23,456 $ 33,854 $ 104,887 $ 115,371

OSI SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

June 30, 2020 June 30, 2021

Assets



Cash and cash equivalents $ 76,102 $ 80,613

Accounts receivable, net 269,840 290,653

Inventories 241,226 294,208

Other current assets 30,541 43,930

Total current assets 617,709 709,404

Property and equipment, net 127,936 118,004

Goodwill 310,627 320,304

Intangible assets, net 128,279 127,608

Other non-current assets 83,990 109,047

Total Assets $ 1,268,541 $ 1,384,367



Liabilities and Stockholders' Equity



Bank lines of credit $ 59,000 $ --

Current portion of long-term debt 926 846

Accounts payable and accrued expenses 154,487 210,077

Other current liabilities 115,688 133,844

Total current liabilities 330,101 344,767

Long-term debt 267,072 276,421

Other long-term liabilities 99,216 123,359

Total liabilities 696,389 744,547

Total stockholders' equity 572,152 639,820

Total Liabilities and Stockholders' Equity $ 1,268,541 $ 1,384,367

RECONCILIATION OF GAAP TO NON-GAAPNET INCOME AND EARNINGS PER SHARE(in thousands, except earnings per share data)



Three Months Ended Fiscal Year Ended June 30, June 30,

2020 2021 2020 2021

Net income EPS Net income EPS Net income EPS Net income EPS

GAAP basis $ 13,965 $ 0.76 $ 25,894 $ 1.40 $ 75,252 $ 4.05 $ 74,049 $ 4.03

Impairment,restructuring 4,963 0.27 2,192 0.12 6,483 0.35 10,104 0.55and othercharges

Amortizationof acquired 5,550 0.30 4,525 0.25 16,351 0.88 15,644 0.85intangibleassets

Non-cashinterest 2,157 0.12 2,249 0.12 8,751 0.47 8,968 0.48expense

Tax effect ofabove (3,582 ) (0.20 ) (2,346 ) (0.13 ) (8,623 ) (0.47 ) (9,240 ) (0.50 )adjustments

Discrete tax (603 ) (0.03 ) (3,983 ) (0.22 ) (12,640 ) (0.68 (1,664 ) (0.09items ) )

Non-GAAP $ 22,450 $ 1.22 $ 28,531 $ 1.54 $ 85,574 4.60 $ 97,861 5.32basis $ $

RECONCILIATION OF GAAP TO NON-GAAP

OPERATING INCOME (LOSS) AND OPERATING MARGIN BY SEGMENT

(in thousands, except percentages)

Three Months Ended June 30, 2020

Security Division

Healthcare Division

Optoelectronics and Manufacturing Division

Corporate / Elimination

Total

% of Sales

% of Sales

% of Sales

% of Sales

GAAP basis - operating income (loss)

$

16,658

10.2

%

$

9,973

17.4

%

$

5,470

8.1

%

$

(8,645

)

$

23,456

8.5

%

Impairment, restructuring and other charges, net

4,618

2.8

%

-

-

340

0.5

%

5

4,963

1.8

%

Amortization of acquired intangible assets

4,142

2.5

%

-

-

1,408

2.2

%

-

5,550

2.0

%

Non-GAAP basis- operating income (loss)

$

25,418

15.5

%

$

9,973

17.4

%

$

7,218

10.8

%

$

(8,640

)

$

33,969

12.3

%

Three Months Ended June 30, 2021

Security Division

Healthcare Division

Optoelectronics and Manufacturing Division

Corporate / Elimination

Total

% of Sales

% of Sales

% of Sales

% of Sales

GAAP basis - operating income (loss)

$

32,864

16.3

%

$

5,923

11.4

%

$

8,827

9.6

%

$

(13,760

)

$

33,854

10.2

%

Impairment, restructuring and other charges, net

374

0.2

%

-

-

169

0.2

%

1,649

2,192

0.7

%

Amortization of acquired intangible assets

3,151

1.5

%

201

0.4

%

1,173

1.2

%

-

4,525

1.3

%

Non-GAAP basis- operating income (loss)

$

36,389

18.0

%

$

6,124

11.8

%

$

10,169

11.0

%

$

(12,111

)

$

40,571

12.2

%

RECONCILIATION OF GAAP TO NON-GAAP

OPERATING INCOME (LOSS) AND OPERATING MARGIN BY SEGMENT

(in thousands, except percentages)

Three Months Ended June 30, 2020

Healthcare Optoelectronics Corporate / Security Division Division and Manufacturing Elimination Total Division

% of % of % of % of Sales Sales Sales Sales

GAAP basis -operating $ 16,658 10.2 % $ 9,973 17.4 % $ 5,470 8.1 % $ (8,645 ) $ 23,456 8.5 %income (loss)

Impairment,restructuring 4,618 2.8 % - - 340 0.5 % 5 4,963 1.8 %and othercharges, net

Amortizationof acquired 4,142 2.5 % - - 1,408 2.2 % - 5,550 2.0 %intangibleassets

Non-GAAPbasis- $ 25,418 15.5 % $ 9,973 17.4 % $ 7,218 10.8 % $ (8,640 ) $ 33,969 12.3 %operatingincome (loss)





Three Months Ended June 30, 2021

Healthcare Optoelectronics Corporate / Security Division Division and Manufacturing Elimination Total Division

% of % of % of % of Sales Sales Sales Sales

GAAP basis -operating $ 32,864 16.3 % $ 5,923 11.4 % $ 8,827 9.6 % $ (13,760 ) $ 33,854 10.2 %income (loss)

Impairment,restructuring 374 0.2 % - - 169 0.2 % 1,649 2,192 0.7 %and othercharges, net

Amortizationof acquired 3,151 1.5 % 201 0.4 % 1,173 1.2 % - 4,525 1.3 %intangibleassets

Non-GAAPbasis- $ 36,389 18.0 % $ 6,124 11.8 % $ 10,169 11.0 % $ (12,111 ) $ 40,571 12.2 %operatingincome (loss)

RECONCILIATION OF GAAP TO NON-GAAP

OPERATING INCOME (LOSS) AND OPERATING MARGIN BY SEGMENT

(in thousands, except percentages)

Fiscal Year Ended June 30, 2020

Healthcare Optoelectronics Corporate / Security Division Division and Manufacturing Elimination Total Division

% of % of % of % of Sales Sales Sales Sales

GAAP basis -operating $ 90,063 12.1 % $ 15,766 8.5 % $ 30,566 10.8 % $ (31,508 ) $ 104,887 9.0 %income (loss)

Impairment,restructuring 5,489 0.7 % 3,724 2.0 % 658 0.2 % (3,388 ) 6,483 0.6 %and othercharges, net

Amortizationof acquired 12,533 1.8 % - - 3,819 1.3 % - 16,352 1.4 %intangibleassets

Non-GAAPbasis- $ 108,085 14.6 % $ 19,490 10.5 % $ 35,043 12.3 % $ (34,896 ) $ 127,722 11.0 %operatingincome (loss)



Fiscal Year Ended June 30, 2021

Healthcare Optoelectronics Corporate / Security Division Division and Manufacturing Elimination Total Division

% of % of % of % of Sales Sales Sales Sales

GAAP basis -operating $ 85,515 13.5 % $ 31,563 14.9 % $ 38,465 11.0 % $ (40,172 ) $ 115,371 10.1 %income (loss)

Impairment,restructuring 9,297 1.5 % 27 0.0 % 315 0.1 % 465 10,104 0.9 %and othercharges, net

Amortizationof acquired 11,360 1.8 % 806 0.4 % 3,478 1.0 % - 15,644 1.3 %intangibleassets

Non-GAAPbasis- $ 106,172 16.8 % $ 32,396 15.3 % $ 42,258 12.1 % $ (39,707 ) $ 141,119 12.3 %operatingincome (loss)



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