Osi Systems Inc 10-Q for FY2021 Q3

Osi Systems Inc (OSIS)

10-Q 2021-04-30 For: 2021-03-31

Added on April 10, 2026

About this 10-Q

Osi Systems Inc filed this 10-Q on April 30, 2021, covering the quarter ended March 31, 2021 (FY2021 Q3).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $283.79M; down 3.1% from $292.88M a year earlier
Diluted EPS: $1.03; down 2.8% from $1.06 a year earlier

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Delaware		33-0238801
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	OSIS	The Nasdaq Global Select Market

Large accelerated filer ☒		Accelerated filer ☐

Non-accelerated filer ☐		Smaller reporting company ☐

		Emerging growth company ☐


		PAGE

PART I — FINANCIAL INFORMATION		3

Item 1 —	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets at June 30, 2020 and March 31, 2021	3
	Condensed Consolidated Statements of Operations for the three and nine months ended March 31, 2020 and 2021	4
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended March 31, 2020 and 2021	5
	Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended March 31, 2020 and 2021	6
	Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2020 and 2021	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2 —	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3 —	Quantitative and Qualitative Disclosures about Market Risk	32
Item 4 —	Controls and Procedures	32

PART II — OTHER INFORMATION		33
Item 1 —	Legal Proceedings	33
Item 1A —	Risk Factors	33
Item 2 —	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3 —	Defaults Upon Senior Securities	33
Item 4 —	Mine Safety Disclosures	33
Item 5 —	Other Information	33
Item 6 —	Exhibits	34
Signatures		35


	June 30,		March 31,
	2020		2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	76,102	$	92,465
Accounts receivable, net		269,840		258,594
Inventories		241,226		283,523
Prepaid expenses and other current assets		30,541		26,828
Total current assets		617,709		661,410
Property and equipment, net		127,936		125,477
Goodwill		310,627		319,211
Intangible assets, net		128,279		130,058
Other assets		83,990		89,804
Total assets	$	1,268,541	$	1,325,960
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Bank lines of credit	$	59,000	$	—
Current portion of long-term debt		926		925
Accounts payable		84,940		122,719
Accrued payroll and related expenses		46,127		40,860
Advances from customers		28,155		48,132
Other accrued expenses and current liabilities		110,953		113,433
Total current liabilities		330,101		326,069
Long-term debt		267,072		273,997
Deferred income taxes		5,846		1,507
Other long-term liabilities		93,370		108,494
Total liabilities		696,389		710,067
Commitments and contingencies (Note 10)
STOCKHOLDERS' EQUITY:
Preferred stock, $0.001 par value— 10,000,000 shares authorized; no shares issued or outstanding		—		—
Common stock, $0.001 par value—100,000,000 shares authorized; issued and outstanding, 18,011,982 shares at June 30, 2020 and 17,980,207 shares at March 31, 2021		122,553		110,744
Retained earnings		474,793		522,948
Accumulated other comprehensive loss		(25,194)		(17,799)
Total stockholders’ equity		572,152		615,893
Total liabilities and stockholders’ equity	$	1,268,541	$	1,325,960


	Three Months Ended March 31,				Nine Months Ended March 31,
	2020		2021		2020		2021
Net revenues:
Products	$	213,257	$	217,124	$	646,790	$	608,238
Services		79,626		66,663		242,287		206,466
Total net revenues		292,883		283,787		889,077		814,704
Cost of goods sold:
Products		141,069		144,958		436,120		409,692
Services		42,707		34,810		133,866		103,161
Total cost of goods sold		183,776		179,768		569,986		512,853
Gross profit		109,107		104,019		319,091		301,851
Operating expenses:
Selling, general and administrative		65,576		57,906		191,655		172,624
Research and development		15,358		13,932		44,485		39,798
Impairment, restructuring and other charges (benefit), net		4,548		(285)		1,520		7,912
Total operating expenses		85,482		71,553		237,660		220,334
Income from operations		23,625		32,466		81,431		81,517
Interest and other expense, net		(4,706)		(4,167)		(14,286)		(12,589)
Income before income taxes		18,919		28,299		67,145		68,928
(Provision) benefit for income taxes		639		(9,526)		(5,858)		(20,773)
Net income	$	19,558	$	18,773	$	61,287	$	48,155
Earnings per share:
Basic	$	1.08	$	1.04	$	3.36	$	2.68
Diluted	$	1.06	$	1.03	$	3.28	$	2.63
Shares used in per share calculation:
Basic		18,182		17,969		18,251		17,981
Diluted		18,513		18,298		18,693		18,278


	Three Months Ended March 31, 2020
						Accumulated
	Common Stock					Other
	Number of			Retained		Comprehensive
	Shares	Amount		Earnings		Loss		Total
Balance—December 31, 2019	18,267,574	$	133,566	$	441,270	$	(17,120)	$	557,716
Exercise of stock options	1,041		80		—		—		80
Vesting of RSUs	1,671		—		—		—		—
Shares issued under employee stock purchase program	36,758		2,221		—		—		2,221
Stock-based compensation expense	—		5,837		—		—		5,837
Repurchase of common stock	(295,833)		(24,781)		—		—		(24,781)
Taxes paid related to net share settlement of equity awards	(586)		(51)		—		—		(51)
Net income	—		—		19,558		—		19,558
Other comprehensive loss	—		—		—		(8,304)		(8,304)
Balance—March 31, 2020	18,010,625	$	116,872	$	460,828	$	(25,424)	$	552,276


	Three Months Ended March 31, 2021
						Accumulated
	Common Stock					Other
	Number of			Retained		Comprehensive
	Shares	Amount		Earnings		Loss		Total
Balance—December 31, 2020	17,933,256	$	100,816	$	504,175	$	(17,355)	$	587,636
Exercise of stock options	9,703		624		—		—		624
Vesting of RSUs	6,519		—		—		—		—
Shares issued under employee stock purchase program	35,539		2,193		—		—		2,193
Stock-based compensation expense	—		7,565		—		—		7,565
Repurchase of common stock	(2,452)		(235)		—		—		(235)
Taxes paid related to net share settlement of equity awards	(2,358)		(219)		—		—		(219)
Net income	—		—		18,773		—		18,773
Other comprehensive loss	—		—		—		(444)		(444)
Balance—March 31, 2021	17,980,207	$	110,744	$	522,948	$	(17,799)	$	615,893


	Nine Months Ended March 31, 2020
						Accumulated
	Common Stock					Other
	Number of			Retained		Comprehensive
	Shares	Amount		Earnings		Loss		Total
Balance—June 30, 2019	18,167,020	$	168,913	$	399,541	$	(16,727)	$	551,727
Exercise of stock options	201,003		4,112		—		—		4,112
Vesting of RSUs	388,756		—		—		—		—
Shares issued under employee stock purchase program	71,595		4,286		—		—		4,286
Stock-based compensation expense	—		18,097		—		—		18,097
Repurchase of common stock	(562,707)		(51,775)		—		—		(51,775)
Taxes paid related to net share settlement of equity awards	(255,042)		(26,761)		—		—		(26,761)
Net income	—		—		61,287		—		61,287
Other comprehensive loss	—		—		—		(8,697)		(8,697)
Balance—March 31, 2020	18,010,625	$	116,872	$	460,828	$	(25,424)	$	552,276


	Nine Months Ended March 31, 2021
						Accumulated
	Common Stock					Other
	Number of			Retained		Comprehensive
	Shares	Amount		Earnings		Loss		Total
Balance—June 30, 2020	18,011,982	$	122,553	$	474,793	$	(25,194)	$	572,152
Exercise of stock options	87,235		1,187		—		—		1,187
Vesting of RSUs	310,939		—		—		—		—
Shares issued under employee stock purchase program	68,180		4,215		—		—		4,215
Stock-based compensation expense	—		19,386		—		—		19,386
Repurchase of common stock	(322,588)		(25,051)		—		—		(25,051)
Taxes paid related to net share settlement of equity awards	(175,541)		(11,546)		—		—		(11,546)
Net income	—		—		48,155		—		48,155
Other comprehensive income	—		—		—		7,395		7,395
Balance—March 31, 2021	17,980,207	$	110,744	$	522,948	$	(17,799)	$	615,893


	June 30, 2020								March 31, 2021
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets :
Insurance company contracts	$	—	$	37,155	$	—	$	37,155	$	—	$	45,015	$	—	$	45,015
Liabilities:
Contingent consideration	$	—	$	—	$	13,867	$	13,867	$	—	$	—	$	19,337	$	19,337


	June 30,		March 31,
Accounts receivable, net	2020		2021
Accounts receivable	$	287,488	$	281,970
Less allowance for doubtful accounts		(17,648)		(23,376)
Total	$	269,840	$	258,594


	June 30,		March 31,
Inventories	2020		2021
Raw materials	$	132,797	$	144,043
Work-in-process		50,023		68,853
Finished goods		58,406		70,627
Total	$	241,226	$	283,523



	June 30,		March 31,
Property and equipment, net	2020		2021
Land	$	16,516	$	16,345
Buildings, civil works and improvements		57,709		57,645
Leasehold improvements		9,052		8,654
Equipment, furniture and fixtures		149,310		156,006
Computer software		18,217		23,052
Computer software implementation in process		11,817		10,615
Construction in process		3,598		4,459
Total		266,219		276,776
Less accumulated depreciation and amortization		(138,283)		(151,299)
Property and equipment, net	$	127,936	$	125,477


					Optoelectronics
					and
	Security		Healthcare		Manufacturing
	Division		Division		Division		Consolidated
Balance as of June 30, 2020	$	203,627	$	39,983	$	67,017	$	310,627
Goodwill acquired or adjusted during the period		1,905		3,244		—		5,149
Foreign currency translation adjustment		264		333		2,838		3,435
Balance as of March 31, 2021	$	205,796	$	43,560	$	69,855	$	319,211


		June 30, 2020						March 31, 2021
	Weighted	Gross						Gross
	Average	Carrying		Accumulated		Intangibles		Carrying		Accumulated		Intangibles
	Lives	Value		Amortization		Net		Value		Amortization		Net
Amortizable assets:
Software development costs	8 years	$	41,332	$	(16,295)	$	25,037	$	45,421	$	(14,817)	$	30,604
Patents	19 years		9,962		(2,584)		7,378		9,890		(2,790)		7,100
Developed technology	10 years		55,719		(19,556)		36,163		60,923		(24,352)		36,571
Customer relationships/backlog	7 years		64,128		(32,110)		32,018		62,577		(35,929)		26,648
Total amortizable assets			171,141		(70,545)		100,596		178,811		(77,888)		100,923
Non-amortizable assets:
In-process research and development			533		—		533		533		—		533
Trademarks			27,150		—		27,150		28,602		—		28,602
Total intangible assets		$	198,824	$	(70,545)	$	128,279	$	207,946	$	(77,888)	$	130,058


2021 (remaining 3 months)	$	4,660
2022		17,152
2023		17,377
2024		16,705
2025		13,986
Thereafter		31,043
Total	$	100,923


	June 30,		March 31,
Contract Assets:	2020		2021		$ Change		% Change
Unbilled revenue	$	43,011	$	46,866	$	3,855	9	%


Contract Liabilities:
Advances from customers	$	28,155	$	48,132	$	19,977	71	%
Deferred revenue—current		32,863		37,075		4,212	13	%
Deferred revenue—long-term		13,214		13,470		256	2	%


	Balance Sheet Category	June 30, 2020		March 31, 2021
Operating lease ROU assets, net	Other assets	$	27,936	$	23,856

Operating lease liabilities, current portion	Other accrued expenses and current liabilities	$	8,537	$	7,646
Operating lease liabilities, long-term	Other long-term liabilities		19,713		16,742
Total operating lease liabilities		$	28,250	$	24,388

Weighted average remaining lease term					4.2 years
Weighted average discount rate					4.2 %


	March 31, 2021
Less than one year	$	8,475
1 – 2 years		5,929
2 – 3 years		4,866
3 – 4 years		3,215
4 – 5 years		2,060
Thereafter		2,421
		26,966
Less: imputed interest		(2,578)
Total lease liabilities	$	24,388


	Three Months Ended March 31, 2020
					Optoelectronics and
			Healthcare		Manufacturing
	Security Division		Division		Division		Corporate		Total
Impairment charges	$	—	$	3,258	$	—	$	—	$	3,258
Acquisition-related costs		107		—		41		155		303
Employee termination costs		328		466		259		50		1,103
Facility closures/consolidation		30		—		—		—		30
Legal costs (recoveries), net		—		—		—		(146)		(146)
Total expensed	$	465	$	3,724	$	300	$	59	$	4,548



			Facility
	Employee		Closure/
	Termination		Consolidation		Acquisition-		Legal Costs and
	Costs		Cost		Related Costs		Settlements		Total
Balance as of June 30, 2020	$	545	$	201	$	—	$	1,882	$	2,628
Restructuring and other charges (benefit), net		4,156		1,420		277		(1,184)		4,669
Payments, adjustments and reimbursements, net		(4,570)		(1,501)		(277)		748		(5,600)
Balance as of March 31, 2021	$	131	$	120	$	—	$	1,446	$	1,697


		Weighted
		Average		Weighted-Average	Aggregate
	Number of	Exercise		Remaining Contractual	Intrinsic Value
	Options	Price		Term	(in thousands)
Outstanding at June 30, 2020	326,304	$	44.41
Granted	22,171		82.17
Exercised	(87,235)		34.44
Expired or forfeited	(2,710)		78.71
Outstanding at March 31, 2021	258,530		50.65	2.8 years	$	11,818
Exercisable at March 31, 2021	222,512		45.03	1.8 years		11,387


		Weighted-
		Average
	Shares	Fair Value
Nonvested at June 30, 2020	423,590	$	88.68
Granted	337,778		80.32
Vested	(310,939)		86.20
Forfeited	(8,244)		84.47
Nonvested at March 31, 2021	442,185	$	84.12


Beginning fair value, June 30, 2020	$	13,867
Addition of contingent earnout obligations		7,304
Foreign currency translation adjustment		523
Changes in fair value for contingent earnout obligations		(2,357)
Payments on contingent earnout obligations		—
Ending fair value, March 31, 2021	$	19,337


	Q3		% of		Q3		% of
	2020		Net Revenues		2021		Net Revenues		$ Change		% Change
Security	$	187.1	64	%	$	151.4	53	%	$	(35.7)	(19)	%
Healthcare		45.7	16			54.0	19			8.3	18
Optoelectronics and Manufacturing		60.1	20			78.4	28			18.3	30
Total net revenues	$	292.9	100	%	$	283.8	100	%	$	(9.1)	(3)	%


	YTD Q3		% of		YTD Q3		% of
	2020		Net Revenues		2021		Net Revenues		$ Change		% Change
Security	$	578.5	65	%	$	431.4	53	%	$	(147.1)	(25)	%
Healthcare		127.9	14			160.4	20			32.5	25
Optoelectronics and Manufacturing		182.7	21			222.9	27			40.2	22
Total net revenues	$	889.1	100	%	$	814.7	100	%	$	(74.4)	(8)	%


					Maximum number (or
					approximate dollar
					value) of
				Total number of	shares (or
				shares (or units)	units)
				purchased as	that may
	Total number of	Average price		part of publicly	yet be purchased
	shares (or units)	paid per share (or		announced plans or	under the plans or
	Purchased	unit)		Programs	programs (1)
January 1 to January 31, 2021	—	$	—	—	2,679,864
February 1 to February 28, 2021	—		—	—	2,679,864
March 1 to March 31, 2021	2,452		95.74	2,452	2,677,412
	2,452			2,452


Operating Income Metric
			Potential
			Additional Shares
CAGR EBIT			as % of Initial
Growth			Grant
	9.5	%	70	%
	10.0	%	80	%
	10.5	%	90	%
	11.0	%	100	%


Exhibit Number		Description
31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase

104		Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101)

	OSI SYSTEMS, INC.

	By:	/s/ Deepak Chopra
		Deepak Chopra
		President and Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ Alan Edrick
		Alan Edrick
		Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

	/s/ Deepak Chopra
	Deepak Chopra
	Chief Executive Officer
	(Principal Executive Officer)


	/s/ Alan Edrick
	Alan Edrick
	Chief Financial Officer
	(Principal Financial and Accounting Officer)