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OSI Systems, Inc. today announced financial results for the fiscal quarter ended December 31, 2015.
“We entered fiscal 2016 with expectations of a challenging first half followed by a stronger second half. Though this is turning out to be true, the challenges associated with the global economy proved to be greater than anticipated leading to disappointing first half financial results. Despite this, we are encouraged by our strong first half bookings, which we believe positions us to rebound nicely in the second half of fiscal 2016,” said Deepak Chopra, OSI Systems’ Chairman and CEO.
The Company reported revenues of $197 million for the second quarter of fiscal 2016, a decrease of 23% as compared to the same period a year ago. Net income for the second quarter of fiscal 2016 was $0.1 million, or $0.01 per diluted share, compared to net income of $18.2 million, or $0.89 per diluted share, for the second quarter of fiscal 2015. Excluding the impact of impairment, restructuring and other charges, net income for the second quarter of fiscal 2016 would have been $8.1 million, or $0.40 per diluted share, compared to net income of $19.7 million, or $0.96 per diluted share, for the comparable quarter of the prior year.
For the six months ended December 31, 2015, the Company reported revenues of $397 million, a decrease of 17% as compared to the same period a year ago. Net income in this period was $10.9 million, or $0.53 per diluted share, compared to net income of $29.5 million, or $1.44 per diluted share, in the same period a year ago. Excluding the impact of impairment, restructuring and other charges, net income for the six months ended December 31, 2015 would have been $19.0 million, or $0.93 per diluted share, compared to net income of $31.5 million, or $1.54 per diluted share, for the comparable period in the prior year.
As of December 31, 2015, the Company’s backlog was approximately $695 million. During the second fiscal quarter, cash flow used in operations was $5.3 million.
Mr. Chopra stated, “As expected, our Optoelectronics and Manufacturing division sales decreased year over year. However, operational improvements, together with a more favorable product mix and a migration to more profitable customers, resulted in a 9.4% operating margin, excluding the impact of impairment, restructuring and other charges. This represented our fifth consecutive quarter of year-over-year operating margin expansion.”
Mr. Chopra continued, “During the second quarter of the prior fiscal year, our Security division revenues included approximately $39 million from a Foreign Military Sale to the U.S. Department of Defense for use in Iraq, creating a difficult comparison for the current fiscal year. Our fiscal 2016 second quarter results were further impacted by the deferral of revenue recognition for equipment shipped during the quarter. As a result, we began the process of streamlining certain functions in the Security division. Actions already completed are expected to result in approximately $6 million of annual cost savings with further opportunities being considered. Security division bookings in the first half were up 272% over the prior year. These bookings, together with the ramp up of our turnkey program in Albania and a solid pipeline of opportunities, position the division well for a strong second half weighted to the fourth quarter based upon the anticipated timing of converting our backlog and opportunities into revenue.”
Mr. Chopra concluded, “During the second quarter, our Healthcare division sales were well below expectations. A variety of factors contributed to the performance. Management changes are in process to ensure we have the right leadership in place in our Healthcare division. Based upon a detailed review of our funnel of opportunities and product portfolio, we are optimistic that our Healthcare division sales will rebound during the second half of the fiscal year.”
Fiscal Year 2016 Outlook
Based on the information known as of today, the Company’s updated current fiscal 2016 sales guidance is $900 million - $945 million and earnings guidance is $2.95 to $3.20 per diluted share, excluding the impact of impairment, restructuring and other charges. Actual sales and diluted EPS could vary from this guidance including as a result of the matters discussed under the “Forward-Looking Statements” section.
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 and provides related services 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 in more than a dozen countries. The Company implements a strategy of expansion by leveraging its electronics and contract manufacturing capabilities into selective end product markets through organic growth and acquisitions.