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Category: Stock Market and OSI systems
Date: 26 August 2019 Stock Price: $100.83 We take a look at the latest financial results from OSI systems for the 4th quarter of their 2019 financial year. The group is vertically integrated and designs and manufactures electronic systems for defence, aerospace and health industries
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About OSI systems
OSI Systems, Inc. (NASDAQ: OSIS) is a vertically integrated designer and manufacturer of specialized electronic systems and components for critical applications in homeland security, healthcare, defense and aerospace. At our core, we are a technology solutions company. Our research and development teams are focused on expanding and enhancing our product portfolios and delivering breakthrough technology solutions designed to keep pace with the rapidly changing marketplace.
Our three operating divisions serve a large and growing worldwide customer base through an extensive distributor network and global operations in the Americas, the European Union, Middle East, and Asia Pacific.
Our three operating divisions serve a large and growing worldwide customer base through an extensive distributor network and global operations in the Americas, the European Union, Middle East, and Asia Pacific.
Financial overview of OSI systems latest results
Numbers we are interested in: (for the quarter)
- Total net revenues: $308.377 million (up from $287.326 million for the same quarter of the previous year)
- Total cost of goods sold: $195.356 million (up from $186.160 million for the same quarter of the previous year)
- Net income: $16.6 million (up from $5.1 million)
- Diluted earnings (loss) per share: $0.89 (up from $0.27 for the same quarter of the previous year):
- Weighted average shares outstanding – diluted: 18.808 million
- Cash and cash equivalents: $84.814 million
- Cash and cash equivalents per share: $4.46
- Inventories: $273.71 million
- Accounts receivable, net: $238.4 million
- Total stockholders’ equity: $551.727 million
- Net asset value per share: $29.46
OSI systems management commentary on the results and earnings guidance
HAWTHORNE, Calif.--(BUSINESS WIRE)--Aug. 26, 2019-- OSI Systems, Inc. (the “Company” or “OSI Systems”) (NASDAQ: OSIS) today announced financial results for the fourth quarter and fiscal year ended June 30, 2019. Deepak Chopra, OSI Systems’ Chairman and Chief Executive Officer, said, “We are pleased to announce a strong finish to an excellent year. Each division contributed to solid growth in fourth quarter revenues and earnings. With a healthy backlog and pipeline of opportunities, we believe the Company is well positioned as we enter fiscal 2020.”
The Company reported revenues of $308.4 million for the fourth quarter of fiscal 2019, an increase of 7% from the $287.3 million reported for the fourth quarter of fiscal 2018. Net income for the fourth quarter of fiscal 2019 was $16.7 million, or $0.89per diluted share, compared to net income of $5.1 million, or $0.27 per diluted share, for the fourth quarter of fiscal 2018. Non-GAAP net income for the fourth quarter of fiscal 2019 was $21.6 million, or $1.15 per diluted share, compared to non-GAAP net income for the fourth quarter of fiscal 2018 of $19.1 million, or $1.02 per diluted share.
For the fiscal year ended June 30, 2019, revenues increased by 9% to $1.182 billion compared to $1.089 billion in the prior fiscal year. Net income for fiscal 2019 was $64.8 million, or $3.46 per diluted share, compared to net loss of $29.1 million, or $(1.57)per diluted share, in the prior fiscal year. Non-GAAP net income for the fiscal year ended June 30, 2019 was $80.8 million, or $4.32 per diluted share, compared to non-GAAP net income of $69.5 million, or $3.61 per diluted share, for the 2018 fiscal year.
During the three months ended June 30, 2019, the Company's book-to-bill ratio for equipment and related services (non-turnkey) was approximately 1.0. As of June 30, 2019, the Company's backlog was $911 million. Operating cash flow during the quarter ended June 30, 2019 was $31.4 million, and capital expenditures were $6.5 million, compared to $17.3 million and $6.8 million, respectively, for the comparable prior year period. Mr. Chopra stated, “Our Security division had another strong quarter. Driven by growth in cargo and RTT® sales, fourth quarter revenues in the division reached a record $195 million. We look forward to launching two new turnkey programs in the first half of fiscal 2020 and continuing the strong momentum.” Mr. Chopra further commented, “Our Optoelectronics and Manufacturing division continued its steady performance. Sales growth was solid with another quarter of year-over-year operating margin expansion.”
Mr. Chopra continued, “In our Healthcare division, we leveraged the 5% sales growth in the fourth quarter of fiscal 2019 to significant growth in operating income. Bookings in the Healthcare division were strong, leading to a record year-end backlog for the division entering fiscal 2020.”
The Company’s effective tax rate for the three months and fiscal year ended June 30, 2019 was 26.4% and 24.8%, respectively. Excluding the benefit of certain discrete tax items, the Company’s tax rate for the three months and fiscal year ended June 30, 2019 was 30.4% and 28.9%, respectively. The Company’s reported tax rate was 10.7% and 179.0% for the three months and fiscal year ended June 30, 2018. Excluding a $56 million charge recorded in the second quarter of fiscal 2018 resulting from the enactment of the Tax Cuts and Jobs Act in December 2017 and certain discrete tax items, the Company’s effective tax rate was 19.7% and 26.8% for the three months and fiscal year ended June 30, 2018.
Fiscal Year 2020 Outlook
For fiscal year 2020, the Company anticipates revenues in the range of $1.235 billion to $1.270 billion and non-GAAP earnings per diluted share in the range of $4.58 to $4.80.
The Company reported revenues of $308.4 million for the fourth quarter of fiscal 2019, an increase of 7% from the $287.3 million reported for the fourth quarter of fiscal 2018. Net income for the fourth quarter of fiscal 2019 was $16.7 million, or $0.89per diluted share, compared to net income of $5.1 million, or $0.27 per diluted share, for the fourth quarter of fiscal 2018. Non-GAAP net income for the fourth quarter of fiscal 2019 was $21.6 million, or $1.15 per diluted share, compared to non-GAAP net income for the fourth quarter of fiscal 2018 of $19.1 million, or $1.02 per diluted share.
For the fiscal year ended June 30, 2019, revenues increased by 9% to $1.182 billion compared to $1.089 billion in the prior fiscal year. Net income for fiscal 2019 was $64.8 million, or $3.46 per diluted share, compared to net loss of $29.1 million, or $(1.57)per diluted share, in the prior fiscal year. Non-GAAP net income for the fiscal year ended June 30, 2019 was $80.8 million, or $4.32 per diluted share, compared to non-GAAP net income of $69.5 million, or $3.61 per diluted share, for the 2018 fiscal year.
During the three months ended June 30, 2019, the Company's book-to-bill ratio for equipment and related services (non-turnkey) was approximately 1.0. As of June 30, 2019, the Company's backlog was $911 million. Operating cash flow during the quarter ended June 30, 2019 was $31.4 million, and capital expenditures were $6.5 million, compared to $17.3 million and $6.8 million, respectively, for the comparable prior year period. Mr. Chopra stated, “Our Security division had another strong quarter. Driven by growth in cargo and RTT® sales, fourth quarter revenues in the division reached a record $195 million. We look forward to launching two new turnkey programs in the first half of fiscal 2020 and continuing the strong momentum.” Mr. Chopra further commented, “Our Optoelectronics and Manufacturing division continued its steady performance. Sales growth was solid with another quarter of year-over-year operating margin expansion.”
Mr. Chopra continued, “In our Healthcare division, we leveraged the 5% sales growth in the fourth quarter of fiscal 2019 to significant growth in operating income. Bookings in the Healthcare division were strong, leading to a record year-end backlog for the division entering fiscal 2020.”
The Company’s effective tax rate for the three months and fiscal year ended June 30, 2019 was 26.4% and 24.8%, respectively. Excluding the benefit of certain discrete tax items, the Company’s tax rate for the three months and fiscal year ended June 30, 2019 was 30.4% and 28.9%, respectively. The Company’s reported tax rate was 10.7% and 179.0% for the three months and fiscal year ended June 30, 2018. Excluding a $56 million charge recorded in the second quarter of fiscal 2018 resulting from the enactment of the Tax Cuts and Jobs Act in December 2017 and certain discrete tax items, the Company’s effective tax rate was 19.7% and 26.8% for the three months and fiscal year ended June 30, 2018.
Fiscal Year 2020 Outlook
For fiscal year 2020, the Company anticipates revenues in the range of $1.235 billion to $1.270 billion and non-GAAP earnings per diluted share in the range of $4.58 to $4.80.
OSI systems (NASDAQ:OSIS) stock price history
The image below shows the stock price history of OSI systems (NYSE: OSIS) for the last 5 years. Its been a fairly volatile all be it upward trending ride for investors in OSI systems. Towards the end of 2014 the group's stock was trading at just above $60 and it is currently trading at just over $100 a share.
OSI systems (NASDAQ:OSIS) stock valuation
Based on the group's latest financial results we value them at $95.06 a share. We therefore believe the group's stock is fully valued and we would not recommend buying into the group at its current share price. Looking to enter the company's stock at a price around 10% below our target price (or full value price) of $95.06