OSIS OSI Systems Inc

• Record Q2 Revenues of $420 Million (12% Growth Year-Over-Year)
• Record Q2 Earnings Per Diluted Share
  • GAAP EPS of $2.22
  • Non-GAAP EPS of $2.42
• Q2 Book-to-Bill Ratio of 1.2
• Company Increases FY 2025 Revenue and Non-GAAP Diluted EPS Guidance

OSI Systems, Inc. (the “Company” or “OSI Systems”) (NASDAQ: OSIS) today announced its financial results for the three and six months ended December 31, 2024.

Ajay Mehra, OSI Systems’ President and Chief Executive Officer, stated, “We are pleased to report a record-breaking second quarter for revenues and earnings, led by continued strong execution in the Security division and solid performance in the Optoelectronics and Manufacturing division. Given our robust backlog and high visibility into our opportunity pipeline, we anticipate a strong second half of fiscal 2025.”

For Q2 FY25, the Company reported revenues of $419.8 million, a 12% increase over the $373.2 million reported for the same quarter of the prior year. Net income for Q2 FY25 was $37.8 million, or $2.22 per diluted share, compared to net income of $36.6 million, or $2.11 per diluted share, for the same quarter of the prior fiscal year. Non-GAAP net income for Q2 FY25 was $41.2 million, or $2.42 per diluted share, compared to non-GAAP net income for the same quarter of the prior year of $38.3 million, or $2.21 per diluted share.

For the six months ended December 31, 2024, revenues were $763.8 million, compared to $652.4 million in the same period a year ago. Net income for the six months ended December 31, 2024 was $55.8 million, or $3.27 per diluted share, compared to $49.4 million, or $2.87 per diluted share, for the same prior-year period. Non-GAAP net income for the six months ended December 31, 2024 was $62.5 million, or $3.67 per diluted share, compared to non-GAAP net income of $53.8 million, or $3.12 per diluted share, for the same prior-year period.

The Company's book-to-bill ratio was 1.2 for the second quarter of fiscal 2025. As of December 31, 2024, the Company's backlog was over $1.8 billion. For Q2 FY25, the Company generated cash from operations of $52.5 million, a significant improvement from cash used in operations of $23.5 million for the same quarter of the prior year. Capital expenditures were $5.5 million and $3.5 million for Q2 FY25 and Q2 FY24, respectively.

Mr. Mehra commented, “The results from our Security division highlight our substantial achievements, where revenues increased 16% year-over-year leading to operating income growth, despite facing a challenging comparison with the previous year's quarter. This performance was driven by the growing demand for our products and services across multiple regions. The adjusted operating margin for the division was 19.9% in the fiscal 2025 second quarter representing the second strongest adjusted operation margin in our history. Bookings were strong and despite the sizable conversion of backlog to revenue in the quarter, the Security division quarter-ended backlog increased to a record high. This gives us significant confidence that the positive momentum in the Security division will continue.”

Mr. Mehra continued, “Our Optoelectronics and Manufacturing division again delivered solid financial results in the fiscal 2025 second quarter with year-over-year growth in revenues and operating income. This division continues to benefit from our vertically-integrated global manufacturing footprint and is well-positioned to take advantage of future growth opportunities.”

Mr. Mehra concluded, “We are encouraged by the Q2 sales growth and bookings momentum in our Healthcare division and continue to focus on new product development, principally in our patient monitoring portfolio.”

Fiscal Year 2025 Outlook

 

Current Updated Guidance

Previous Guidance

 

 

 

Revenues

$1.685 billion - $1.710 billion

$1.670 billion - $1.695 billion

Growth Rate

9.5% - 11.1%

8.5% - 10.2%

 

 

 

Non-GAAP Diluted Earnings Per Share

$9.10 - $9.40

$9.00 - $9.30

Growth Rate

11.9% - 15.6%

10.7% - 14.4%

 

 

 

The Company is increasing its fiscal 2025 revenues and non-GAAP diluted earnings per share guidance, as reflected above. Actual revenues and adjusted diluted earnings per share could vary from this guidance due to factors discussed under “Forward-Looking Statements” or other factors.

The Company’s fiscal 2025 adjusted 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 adjusted 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 adjusted 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 adjusted 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 all fiscal periods 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 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, revenue generated from such intangibles is included within revenue in determining non-GAAP financial performance of the Company. Management believes that the non-GAAP financial measures presented in this earnings release 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 financial information 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 financial results for the periods presented in this earnings release. To listen, please visit the Investor Relations section of the OSI Systems website at 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 February 7, 2025. The replay can be accessed through the Company’s website at www.osi-systems.com.

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 and 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, and operational performance in fiscal 2025 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; the impact of potential information technology, cybersecurity or data security breaches; changes in domestic and foreign government spending and budgetary, procurement and trade policies adverse to the Company's businesses; the impact of the Russia-Ukraine conflict or conflicts in the Middle East, including the potential for broad economic disruption; global economic uncertainty; 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; unfavorable interest 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 current fiscal year; 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. 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 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 December 31,

 

Six Months Ended December 31,

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

Revenues:

 

 

 

 

 

 

 

Products

$

290,179

 

 

$

333,671

 

 

$

489,888

 

 

$

589,479

 

Services

 

83,056

 

 

 

86,149

 

 

162,557

 

 

 

174,348

 

Total net revenues

 

373,235

 

 

 

419,820

 

 

 

652,445

 

 

 

763,827

 

Cost of goods sold:

 

 

 

 

 

 

 

Products

 

187,385

 

 

 

224,087

 

 

 

324,368

 

 

 

394,509

 

Services

 

44,549

 

 

 

48,582

 

 

 

88,031

 

 

 

100,665

 

Total cost of goods sold

 

231,934

 

 

 

272,669

 

 

 

412,399

 

 

 

495,174

 

Gross profit

 

141,301

 

 

 

147,151

 

 

 

240,046

 

 

 

268,653

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

 

71,604

 

 

 

70,722

 

 

 

131,402

 

 

 

142,945

 

Research and development

 

16,350

 

 

 

18,257

 

 

 

32,272

 

 

 

36,030

 

Restructuring and other charges, net

 

1,026

 

 

 

215

 

 

 

1,492

 

 

 

1,393

 

Total operating expenses

 

88,980

 

 

 

89,194

 

 

 

165,166

 

 

 

180,368

 

Income from operations

 

52,321

 

 

 

57,957

 

 

 

74,880

 

 

 

88,285

 

Interest and other expense, net

 

(6,534

)

 

 

(8,619

)

 

 

(12,282

)

 

 

(15,978

)

Income before income taxes

 

45,787

 

 

 

49,338

 

 

 

62,598

 

 

 

72,307

 

Provision for income taxes

 

(9,234

)

 

 

(11,519

)

 

 

(13,166

)

 

 

(16,552

)

Net income

$

36,553

 

 

$

37,819

 

 

$

49,432

 

 

$

55,755

 

 

 

 

 

 

 

 

 

Diluted earnings per share

$

2.11

 

 

$

2.22

 

 

$

2.87

 

 

$

3.27

 

Weighted average shares outstanding – diluted

 

17,302

 

 

 

17,040

 

 

 

17,238

 

 

 

17,048

 

   

UNAUDITED SEGMENT INFORMATION

(in thousands)

 

 

Three Months Ended December 31,

 

Six Months Ended December 31,

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

Revenues – by Segment:

 

 

 

 

 

 

 

Security division

$

249,975

 

 

$

289,987

 

 

$

414,604

 

 

$

514,301

 

Optoelectronics and Manufacturing division, including intersegment revenues

 

98,097

 

 

 

100,743

 

 

 

194,225

 

 

 

198,538

 

Healthcare division

 

41,850

 

 

 

44,854

 

 

 

79,637

 

 

 

81,956

 

Intersegment eliminations

 

(16,687

)

 

 

(15,764

)

 

 

(36,021

)

 

 

(30,968

)

Total

$

373,235

 

 

$

419,820

 

 

$

652,445

 

 

$

763,827

 

 

 

 

 

 

 

 

 

Operating income (loss) – by Segment:

 

 

 

 

 

 

 

Security division

$

51,856

 

 

$

54,053

 

 

$

72,465

 

 

$

82,909

 

Optoelectronics and Manufacturing division

 

11,621

 

 

 

12,282

 

 

 

23,058

 

 

 

22,891

 

Healthcare division

 

429

 

 

 

1,722

 

 

 

593

 

 

 

2,522

 

Corporate

 

(11,183

)

 

 

(9,670

)

 

 

(21,099

)

 

 

(19,180

)

Intersegment eliminations

 

(402

)

 

 

(430

)

 

 

(137

)

 

 

(857

)

Total

$

52,321

 

 

$

57,957

 

 

$

74,880

 

 

$

88,285

 

   

OSI SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

June 30, 2024

December 31, 2024

Assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

95,353

 

$

101,633

Accounts receivable, net

 

648,155

 

 

703,933

Inventories

 

397,939

 

 

441,795

Prepaid expenses and other current assets

 

74,077

 

 

77,208

Total current assets

 

1,215,524

 

 

1,324,569

Property and equipment, net

 

113,967

 

 

124,023

Goodwill

 

351,480

 

 

382,166

Intangible assets, net

 

139,529

 

 

181,954

Other non-current assets

 

115,508

 

 

118,202

Total Assets

$

1,936,008

 

$

2,130,914

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

Bank lines of credit

$

384,000

 

$

236,000

Current portion of long-term debt

 

8,167

 

 

8,200

Accounts payable and accrued expenses

 

248,427

 

 

261,960

Other current liabilities

 

174,043

 

 

197,558

Total current liabilities

 

814,637

 

 

703,718

Long-term debt

 

129,383

 

 

466,560

Other long-term liabilities

 

128,505

 

 

134,806

Total liabilities

 

1,072,525

 

 

1,305,084

Total stockholders’ equity

 

863,483

 

 

825,830

Total Liabilities and Stockholders’ Equity

$

1,936,008

 

$

2,130,914

 

RECONCILIATION OF GAAP TO NON-GAAP

NET INCOME AND DILUTED EARNINGS PER SHARE

(in thousands, except earnings per share data)

 

 

Three Months Ended December 31,

 

Six Months Ended December 31,

 

2023

 

2024

 

2023

 

2024

 

Net income

 

EPS

 

Net income

 

EPS

 

Net income

 

EPS

 

Net income

 

EPS

GAAP basis

$

36,553

 

 

$

2.11

 

 

$

37,819

 

 

$

2.22

 

 

$

49,432

 

 

$

2.87

 

 

$

55,755

 

 

$

3.27

 

Restructuring and other charges, net

 

1,026

 

 

 

0.06

 

 

 

215

 

 

 

0.01

 

 

 

1,492

 

 

 

0.09

 

 

 

1,393

 

 

 

0.09

 

Amortization of acquired intangible assets

 

4,680

 

 

 

0.27

 

 

 

4,698

 

 

 

0.28

 

 

 

8,387

 

 

 

0.48

 

 

 

8,565

 

 

 

0.50

 

Tax benefit of above adjustments

 

(1,465

)

 

 

(0.08

)

 

 

(1,179

)

 

 

(0.07

)

 

 

(2,544

)

 

 

(0.15

)

 

 

(2,390

)

 

 

(0.14

)

Discrete tax benefit

 

(2,540

)

 

 

(0.15

)

 

 

(320

)

 

 

(0.02

)

 

 

(2,953

)

 

 

(0.17

)

 

 

(802

)

 

 

(0.05

)

Non-GAAP basis

$

38,254

 

 

$

2.21

 

 

$

41,233

 

 

$

2.42

 

 

$

53,814

 

 

$

3.12

 

 

$

62,521

 

 

$

3.67

 

 

RECONCILIATION OF GAAP TO NON-GAAP

OPERATING INCOME (LOSS) AND OPERATING MARGIN BY SEGMENT

(in thousands, except percentages)

 

Three Months Ended December 31, 2023

 

 

Security Division

 

Optoelectronics and Manufacturing Division

 

Healthcare Division

 

Corporate / Elimination

 

Total

 

 

 

 

% of Sales

 

 

 

% of Sales

 

 

 

% of Sales

 

 

 

 

 

% of Sales

GAAP basis – operating income (loss)

 

$

51,856

 

20.7

%

 

$

11,621

 

11.8

%

 

$

429

 

1.0

%

 

$

(11,585

)

 

$

52,321

 

14.0

%

Restructuring and other charges, net.

 

 

164

 

0.1

%

 

 

525

 

0.5

%

 

 

-

 

-

 

 

 

337

 

 

 

1,026

 

0.3

%

Amortization of acquired intangible assets

 

 

3,339

 

1.3

%

 

 

1,039

 

1.1

%

 

 

302

 

0.7

%

 

 

-

 

 

 

4,680

 

1.2

%

Non-GAAP basis– operating income (loss)

 

$

55,359

 

22.1

%

 

$

13,185

 

13.4

%

 

$

731

 

1.7

%

 

$

(11,248

)

 

$

58,027

 

15.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2024

 

 

Security Division

 

Optoelectronics and Manufacturing Division

 

Healthcare Division

 

Corporate / Elimination

 

Total

 

 

 

 

% of Sales

 

 

 

% of Sales

 

 

 

% of Sales

 

 

 

 

 

% of Sales

GAAP basis – operating income (loss)

 

$

54,053

 

18.6

%

 

$

12,282

 

12.2

%

 

$

1,722

 

3.8

%

 

$

(10,100

)

 

$

57,957

 

13.8

%

Restructuring and other charges, net.

 

 

-

 

-

 

 

 

-

 

-

 

 

 

-

 

-

 

 

 

215

 

 

 

215

 

0.1

%

Amortization of acquired intangible assets

 

 

3,722

 

1.3

%

 

 

590

 

0.6

%

 

 

386

 

0.9

%

 

 

-

 

 

 

4,698

 

1.1

%

Non-GAAP basis– operating income (loss)

 

$

57,775

 

19.9

%

 

$

12,872

 

12.8

%

 

$

2,108

 

4.7

%

 

$

(9,885

)

 

$

62,870

 

15.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended December 31, 2023

 

 

Security Division

 

Optoelectronics and Manufacturing Division

 

Healthcare Division

 

Corporate / Elimination

 

Total

 

 

 

 

% of Sales

 

 

 

% of Sales

 

 

 

% of Sales

 

 

 

 

 

% of Sales

GAAP basis – operating income (loss)

 

$

72,465

 

17.5

%

 

$

23,058

 

11.9

%

 

$

593

 

0.7

%

 

$

(21,236

)

 

$

74,880

 

11.5

%

Restructuring and other charges, net.

 

 

436

 

0.1

%

 

 

576

 

0.3

%

 

 

-

 

0.0

%

 

 

480

 

 

 

1,492

 

0.2

%

Amortization of acquired intangible assets

 

 

5,966

 

1.4

%

 

 

1,818

 

0.9

%

 

 

603

 

0.8

%

 

 

-

 

 

 

8,387

 

1.3

%

Non-GAAP basis– operating income (loss)

 

$

78,867

 

19.0

%

 

$

25,452

 

13.1

%

 

$

1,196

 

1.5

%

 

$

(20,756

)

 

$

84,759

 

13.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended December 31, 2024

 

 

Security Division

 

Optoelectronics and Manufacturing Division

 

Healthcare Division

 

Corporate / Elimination

 

Total

 

 

 

 

% of Sales

 

 

 

% of Sales

 

 

 

% of Sales

 

 

 

 

 

% of Sales

GAAP basis – operating income (loss)

 

$

82,909

 

16.1

%

 

$

22,891

 

11.5

%

 

$

2,522

 

3.1

%

 

$

(20,037

)

 

$

88,285

 

11.6

%

Restructuring and other charges, net.

 

 

479

 

0.1

%

 

 

547

 

0.3

%

 

 

152

 

0.2

%

 

 

215

 

 

 

1,393

 

0.2

%

Amortization of acquired intangible assets

 

 

6,708

 

1.3

%

 

 

1,170

 

0.6

%

 

 

687

 

0.8

%

 

 

-

 

 

 

8,565

 

1.1

%

Non-GAAP basis– operating income (loss)

 

$

90,096

 

17.5

%

 

$

24,608

 

12.4

%

 

$

3,361

 

4.1

%

 

$

(19,822

)

 

$

98,243

 

12.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20250123484625/en/

For Additional Information, Contact:

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