OSI Systems' third-quarter fiscal 2010 revenues increase 1% to $145.4M

OSI Systems, Inc. (NASDAQ:OSIS), a vertically integrated provider of solutions in Security, Healthcare, and specialized electronics, today announced financial results for the third quarter ended March 31, 2010.

“Our Security division experienced an excellent third quarter and is poised for continued sales and operating profit growth. As sales increased 23% in the quarter coupled with efficiency improvement initiatives, we reported a 10.2% operating margin which led to an operating profit increase of 119% over fiscal 2009.”

Deepak Chopra, OSI Systems' Chairman and CEO, stated, "We are very pleased with the strong quarterly earnings and cash flow in the face of a challenging economic environment. We are positioned very well for expanded earnings as sales growth accelerates."

The Company reported revenues of $145.4 million for the third quarter of fiscal 2010, an increase of 1% as compared to the same period a year ago. Net income for the third quarter of fiscal 2010 was $6.1 million, or $0.33 per diluted share, compared to net income of $2.6 million, or $0.15 per diluted share, for the third quarter of fiscal 2009.

For the nine months ended March 31, 2010, the Company reported revenues of $429.8 million, a decrease of 5% as compared to the same period a year ago. Net income for the nine months ended March 31, 2010 was $15.6 million, or $0.85 per diluted share, compared to net income of $6.9 million, or $0.39 per diluted share, for the nine months ended March 31, 2009.

Excluding the impact of restructuring and other charges, net income for the third quarter of fiscal 2010 would have been approximately $6.8 million or $0.36 per diluted share compared to a net income of $4.2 million or $0.24 per diluted share for the third quarter of fiscal 2009 and net income for the nine months of fiscal 2010 would have been approximately $16.7 million or $0.91 per diluted share compared to a net income of $10.8 million or $0.61 per diluted share for the nine months of fiscal 2009. These non-GAAP figures are provided to allow for the comparison of underlying earnings, net of restructuring and other charges, thus providing additional insight into the on-going operations of the Company.

As of March 31, 2010, the Company's backlog was $230 million compared to $203 million as of June 30, 2009, an increase of 13%. During the three and nine months ended March 31, 2010, the Company generated cash flow from operations of $16 million and $40 million, respectively.

Mr. Chopra continued, "Our Security division experienced an excellent third quarter and is poised for continued sales and operating profit growth. As sales increased 23% in the quarter coupled with efficiency improvement initiatives, we reported a 10.2% operating margin which led to an operating profit increase of 119% over fiscal 2009."

Mr. Chopra concluded, "Macroeconomic factors have continued to result in a challenging environment for our Healthcare division. In what is historically a seasonally soft quarter for our healthcare business, we managed to generate reasonable profit and strong cash flow. The substantial improvements to our cost structure that we have implemented have provided a much more efficient operating infrastructure, which is expected to result in significant operating margin leverage when our sales growth resumes."

Fiscal Year 2010 Outlook

Subject to the risk factors detailed in the Safe Harbor section of this press release, the Company is raising its fiscal 2010 earnings guidance and expects earnings per diluted share to increase at a rate of 43% - 50% to between $1.30 to $1.36, excluding the impact of restructuring and other non-recurring charges. In addition, the Company is providing revenue guidance for the fourth quarter of fiscal 2010 of $153 million to $167 million, representing an increase from the prior year of 10% to 20%.