[Executive Summary & Company Overview](index=1&type=section&id=Executive%20Summary%20%26%20Company%20Overview) OSI Systems achieved record revenues and non-GAAP EPS in Q4 and FY2025, driven by Security and service growth, expanding its credit facility [Management Commentary](index=1&type=section&id=Management%20Commentary) OSI Systems' CEO reported record Q4 and FY2025 revenues and non-GAAP EPS, with the CFO highlighting an expanded credit facility for strategic investments - OSI Systems achieved **record-breaking fourth quarter and 2025 fiscal year revenues** and **non-GAAP earnings per share**, led by excellent execution in the Security division[3](index=3&type=chunk) - Fourth quarter performance was driven by **strong growth in the Security division's service revenues** resulting from an increasing installed base of products[3](index=3&type=chunk) - Subsequent to fiscal year end, the credit facility was expanded to **$825 million** with maturity extended to July 2030, enhancing capacity for strategic investments and long-term value[4](index=4&type=chunk) [Key Financial Highlights (Q4 & FY2025)](index=1&type=section&id=Key%20Financial%20Highlights) OSI Systems reported record revenues and non-GAAP EPS for Q4 and FY2025, with full-year revenues reaching $1.713 billion and a robust backlog Key Financial Highlights (Q4 & FY2025) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2025 | % Growth (QoQ) | Fiscal Years Ended June 30, 2024 | Fiscal Years Ended June 30, 2025 | % Growth (YoY) | | :------------------------- | :------------------------------- | :------------------------------- | :------------- | :------------------------------- | :------------------------------- | :------------- | | Revenues (in thousands) | $480,907 | $504,985 | 5% | $1,538,758 | $1,713,166 | 11% | | Operating income - GAAP (in thousands) | $62,818 | $73,022 | 16% | $189,061 | $217,524 | 15% | | Operating income - non-GAAP (in thousands) | $71,211 | $79,479 | 12% | $212,218 | $240,855 | 13% | | Earnings per share - GAAP | $2.55 | $3.03 | 19% | $7.38 | $8.71 | 18% | | Earnings per share - non-GAAP | $2.84 | $3.24 | 14% | $8.13 | $9.36 | 15% | | Book to Bill Ratio | 0.8 | 1.0 | - | 0.9 | 1.1 | - | | Cash flow provided by (used in) operating activities (in thousands) | $(29,041) | $561 | - | $(87,501) | $97,592 | - | - **Record Q4 Revenues of $505 million** and **Record Fiscal Year Revenues of $1.713 billion** (up **11% YoY**)[5](index=5&type=chunk) - **Record Non-GAAP EPS of $3.24 for Q4** and **$9.36 for Fiscal Year** (up **15% YoY**)[5](index=5&type=chunk) - Year-End Backlog of **over $1.8 billion**[5](index=5&type=chunk) [About OSI Systems](index=2&type=section&id=About%20OSI%20Systems) OSI Systems designs and manufactures specialized electronic systems across Security, Optoelectronics, and Healthcare, serving over 170 countries - OSI Systems designs and manufactures specialized electronic systems and components for critical applications[9](index=9&type=chunk) - The Company operates through three key segments: **Security, Optoelectronics and Manufacturing, and Healthcare**[9](index=9&type=chunk) - OSI Systems serves over **170 countries**, strategically positioning its sales, service, R&D, and manufacturing capabilities worldwide[9](index=9&type=chunk) [Fiscal Year 2025 Financial Performance](index=4&type=section&id=Fiscal%20Year%202025%20Financial%20Performance) OSI Systems reported significant revenue and net income growth in FY2025, with total net revenues reaching $1.713 billion and diluted EPS at $8.71 [Consolidated Statements of Operations (GAAP)](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20(GAAP)) For FY2025, total net revenues increased to $1.713 billion, and net income rose to $149.6 million, resulting in diluted EPS of $8.71 Consolidated Statements of Operations (GAAP) | Metric (in thousands, except per share data) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2025 | Fiscal Year Ended June 30, 2024 | Fiscal Year Ended June 30, 2025 | | :------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Products Revenues | $390,342 | $392,633 | $1,207,590 | $1,323,291 | | Services Revenues | $90,565 | $112,352 | $331,168 | $389,875 | | Total net revenues | $480,907 | $504,985 | $1,538,758 | $1,713,166 | | Gross profit | $154,317 | $168,238 | $530,458 | $587,182 | | Income from operations | $62,818 | $73,022 | $189,061 | $217,524 | | Net income | $44,679 | $52,748 | $128,154 | $149,637 | | Diluted earnings per share | $2.55 | $3.03 | $7.38 | $8.71 | | Weighted average shares outstanding – diluted | 17,504 | 17,412 | 17,354 | 17,178 | - Total net revenues increased by **11.3% year-over-year**, from **$1,538,758 thousand in FY2024 to $1,713,166 thousand in FY2025**[14](index=14&type=chunk) - Net income increased by **16.8% year-over-year**, from **$128,154 thousand in FY2024 to $149,637 thousand in FY2025**[14](index=14&type=chunk) [Consolidated Balance Sheets (GAAP)](index=5&type=section&id=Consolidated%20Balance%20Sheets%20(GAAP)) As of June 30, 2025, total assets grew to $2.241 billion, driven by receivables and goodwill, while long-term debt significantly increased Consolidated Balance Sheets (GAAP) | Metric (in thousands) | June 30, 2024 | June 30, 2025 | | :-------------------------------- | :------------ | :------------ | | Cash and cash equivalents | $95,353 | $106,405 | | Accounts receivable, net | $648,155 | $837,743 | | Inventories | $397,939 | $407,174 | | Total current assets | $1,215,524 | $1,422,861 | | Property and equipment, net | $113,967 | $126,747 | | Goodwill | $351,480 | $387,393 | | Intangible assets, net | $139,529 | $183,290 | | Total Assets | $1,936,008 | $2,241,257 | | Bank lines of credit | $384,000 | $178,000 | | Long-term debt | $129,383 | $463,504 | | Total liabilities | $1,072,525 | $1,290,173 | | Total stockholders' equity | $863,483 | $951,084 | - Accounts receivable, net, increased by **29.2%** from **$648,155 thousand in 2024 to $837,743 thousand in 2025**[16](index=16&type=chunk) - Long-term debt significantly increased from **$129,383 thousand in 2024 to $463,504 thousand in 2025**, while bank lines of credit decreased from **$384,000 thousand to $178,000 thousand**[16](index=16&type=chunk) [Non-GAAP Financial Measures & Reconciliation (Consolidated)](index=6&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliation%20(Consolidated)) OSI Systems provides non-GAAP measures to clarify underlying performance by excluding specific items, enhancing comparability and insight - Non-GAAP figures exclude restructuring and other charges, amortization of intangible assets acquired through business acquisitions, and associated tax effects, and discrete income tax items[10](index=10&type=chunk) - Management believes non-GAAP measures provide **enhanced insight into ongoing operations**, meaningful information for planning, and better comparability to peer companies[10](index=10&type=chunk) [Q4 2025 Consolidated Non-GAAP Reconciliation](index=6&type=section&id=Q4%202025%20Consolidated%20Non-GAAP%20Reconciliation) This section reconciles Q4 2025 GAAP to non-GAAP figures, adjusting for restructuring, amortization, and tax effects for clearer performance | Metric (in thousands, except per-share amounts) | GAAP Basis (Q4 2025) | Adjustments (Q4 2025) | Non-GAAP Basis (Q4 2025) | | :---------------------------------------------- | :------------------- | :-------------------- | :----------------------- | | Operating Income | $73,022 | $1,687 (Restructuring) + $4,770 (Amortization) | $79,479 | | % of Revenues | 14.5% | 0.3% + 0.9% | 15.7% | | Net Income | $52,748 | $1,687 (Restructuring) + $4,770 (Amortization) - $1,380 (Tax benefit) - $1,373 (Discrete tax) | $56,452 | | EPS | $3.03 | $0.10 (Restructuring) + $0.27 (Amortization) - $0.08 (Tax benefit) - $0.08 (Discrete tax) | $3.24 | [FY 2025 Consolidated Non-GAAP Reconciliation](index=7&type=section&id=FY%202025%20Consolidated%20Non-GAAP%20Reconciliation) This section reconciles FY 2025 GAAP to non-GAAP figures, adjusting for restructuring, amortization, and tax effects for clearer performance | Metric (in thousands, except per-share amounts) | GAAP Basis (FY 2025) | Adjustments (FY 2025) | Non-GAAP Basis (FY 2025) | | :---------------------------------------------- | :------------------- | :-------------------- | :----------------------- | | Operating Income | $217,524 | $5,335 (Restructuring) + $17,996 (Amortization) | $240,855 | | % of Revenues | 12.7% | 0.3% + 1.1% | 14.1% | | Net Income | $149,637 | $5,335 (Restructuring) + $17,996 (Amortization) - $5,413 (Tax benefit) - $6,717 (Discrete tax) | $160,838 | | EPS | $8.71 | $0.31 (Restructuring) + $1.05 (Amortization) - $0.32 (Tax benefit) - $0.39 (Discrete tax) | $9.36 | [Segment Performance Analysis](index=6&type=section&id=Segment%20Performance%20Analysis) Security consistently drove strong performance in Q4 and FY2025, Optoelectronics & Manufacturing maintained profitability, while Healthcare declined [Q4 2025 Segment Performance (Non-GAAP)](index=6&type=section&id=Q4%202025%20Segment%20Performance%20(Non-GAAP)) In Q4 2025, Security led with a 20.4% non-GAAP operating margin, Optoelectronics & Manufacturing maintained 13.6%, while Healthcare declined [Security Segment (Q4)](index=6&type=section&id=Security%20Segment%20(Q4)) The Security segment's non-GAAP operating income increased to $74.7 million in Q4 2025, with its operating margin improving to 20.4% | Metric (in thousands) | Q4 2024 | Q4 2025 | | :-------------------- | :-------- | :-------- | | GAAP Revenues | $342,509 | $366,971 | | GAAP Operating Income | $60,678 | $70,538 | | Non-GAAP Operating Income | $63,533 | $74,712 | | Non-GAAP % of Revenues | 18.5% | 20.4% | - Security segment's non-GAAP operating income increased from **$63,533 thousand in Q4 2024 to $74,712 thousand in Q4 2025**, with its non-GAAP operating margin improving from **18.5% to 20.4%**[18](index=18&type=chunk) [Optoelectronics & Manufacturing Segment (Q4)](index=6&type=section&id=Optoelectronics%20%26%20Manufacturing%20Segment%20(Q4)) Optoelectronics & Manufacturing segment's non-GAAP operating income rose to $15.3 million in Q4 2025, maintaining a strong 13.6% operating margin | Metric (in thousands) | Q4 2024 | Q4 2025 | | :-------------------- | :-------- | :-------- | | GAAP Revenues | $102,069 | $112,667 | | GAAP Operating Income | $10,321 | $14,999 | | Non-GAAP Operating Income | $14,185 | $15,326 | | Non-GAAP % of Revenues | 13.9% | 13.6% | - Optoelectronics & Manufacturing segment's non-GAAP operating income increased from **$14,185 thousand in Q4 2024 to $15,326 thousand in Q4 2025**, maintaining a strong non-GAAP operating margin of **13.6%**[18](index=18&type=chunk) [Healthcare Segment (Q4)](index=6&type=section&id=Healthcare%20Segment%20(Q4)) Healthcare segment's non-GAAP operating income significantly decreased to $0.4 million in Q4 2025, with its operating margin falling to 0.9% | Metric (in thousands) | Q4 2024 | Q4 2025 | | :-------------------- | :-------- | :-------- | | GAAP Revenues | $50,305 | $42,684 | | GAAP Operating Income | $3,856 | $(1,368) | | Non-GAAP Operating Income | $4,656 | $368 | | Non-GAAP % of Revenues | 9.3% | 0.9% | - Healthcare segment's non-GAAP operating income significantly decreased from **$4,656 thousand in Q4 2024 to $368 thousand in Q4 2025**, with its non-GAAP operating margin falling from **9.3% to 0.9%**[18](index=18&type=chunk) [FY 2025 Segment Performance (Non-GAAP)](index=7&type=section&id=FY%202025%20Segment%20Performance%20(Non-GAAP)) For FY2025, Security showed robust growth, Optoelectronics & Manufacturing increased profitability, while Healthcare experienced a decline [Security Segment (FY)](index=7&type=section&id=Security%20Segment%20(FY)) The Security segment's non-GAAP operating income increased to $221.7 million in FY2025, maintaining a strong 18.5% operating margin | Metric (in thousands) | FY 2024 | FY 2025 | | :-------------------- | :-------- | :-------- | | GAAP Revenues | $1,043,073 | $1,196,180 | | GAAP Operating Income | $183,270 | $204,952 | | Non-GAAP Operating Income | $195,512 | $221,716 | | Non-GAAP % of Revenues | 18.7% | 18.5% | - Security segment's non-GAAP operating income increased from **$195,512 thousand in FY2024 to $221,716 thousand in FY2025**, with a non-GAAP operating margin of **18.5%**[20](index=20&type=chunk) [Optoelectronics & Manufacturing Segment (FY)](index=7&type=section&id=Optoelectronics%20%26%20Manufacturing%20Segment%20(FY)) Optoelectronics & Manufacturing segment's non-GAAP operating income increased to $54.0 million in FY2025, maintaining a 13.1% operating margin | Metric (in thousands) | FY 2024 | FY 2025 | | :-------------------- | :-------- | :-------- | | GAAP Revenues | $384,268 | $412,065 | | GAAP Operating Income | $42,814 | $51,540 | | Non-GAAP Operating Income | $50,356 | $54,021 | | Non-GAAP % of Revenues | 13.1% | 13.1% | - Optoelectronics & Manufacturing segment's non-GAAP operating income increased from **$50,356 thousand in FY2024 to $54,021 thousand in FY2025**, maintaining a non-GAAP operating margin of **13.1%**[20](index=20&type=chunk) [Healthcare Segment (FY)](index=7&type=section&id=Healthcare%20Segment%20(FY)) Healthcare segment's non-GAAP operating income decreased to $6.0 million in FY2025, with its operating margin declining to 3.5% | Metric (in thousands) | FY 2024 | FY 2025 | | :-------------------- | :-------- | :-------- | | GAAP Revenues | $171,435 | $168,362 | | GAAP Operating Income | $6,013 | $2,462 | | Non-GAAP Operating Income | $8,028 | $5,960 | | Non-GAAP % of Revenues | 4.7% | 3.5% | - Healthcare segment's non-GAAP operating income decreased from **$8,028 thousand in FY2024 to $5,960 thousand in FY2025**, with its non-GAAP operating margin declining from **4.7% to 3.5%**[20](index=20&type=chunk) [Fiscal Year 2026 Outlook](index=2&type=section&id=Fiscal%20Year%202026%20Outlook) OSI Systems projects FY2026 revenues between $1.805 billion and $1.850 billion, with non-GAAP diluted EPS expected to range from $10.11 to $10.39 [FY 2026 Financial Guidance](index=2&type=section&id=FY%202026%20Financial%20Guidance) OSI Systems forecasts FY2026 revenues between $1.805 billion and $1.850 billion, with non-GAAP diluted EPS projected from $10.11 to $10.39 FY 2026 Financial Guidance | Metric | Guidance (FY 2026) | | :-------------------------- | :----------------------- | | Revenues | $1.805 billion - $1.850 billion | | YoY Growth Rate (Revenues) | 5.4% - 8.0% | | Non-GAAP Diluted Earnings Per Share | $10.11 - $10.39 | | YoY Growth Rate (Non-GAAP EPS) | 8.0% - 11.0% | [Non-GAAP Guidance Explanation](index=2&type=section&id=Non-GAAP%20Guidance%20Explanation) The company provides FY2026 diluted EPS guidance solely on a non-GAAP basis, as reconciliation to GAAP is impractical due to unpredictability - Fiscal 2026 diluted earnings per share guidance is provided on a **non-GAAP basis only**[7](index=7&type=chunk) - No reconciliation to GAAP diluted EPS is provided for forward-looking guidance due to the inherent difficulty in forecasting timing and amounts of reconciling items (e.g., acquisition costs, non-recurring items) that are outside the Company's control or unpredictable[7](index=7&type=chunk) [Additional Information & Disclosures](index=2&type=section&id=Additional%20Information%20%26%20Disclosures) This section details non-GAAP methodology, outlines forward-looking statement risks, and provides conference call and contact information [Presentation of Non-GAAP Financial Measures (Methodology)](index=3&type=section&id=Presentation%20of%20Non-GAAP%20Financial%20Measures%20(Methodology)) This section explains the rationale for non-GAAP measures, which exclude specific charges and amortization for clearer operational performance - Non-GAAP financial measures are presented to allow for the comparison of the underlying performance of the Company, excluding the impact of restructuring and other charges, amortization of intangible assets acquired through business acquisitions, and associated tax effects, and discrete income tax items[10](index=10&type=chunk) - Management believes non-GAAP measures provide **enhanced insight into ongoing operations**, meaningful information for planning and assessment, and financial results generally more comparable to peer companies[10](index=10&type=chunk) - Non-GAAP financial measures should not be assessed in isolation or as a substitute for measures of financial performance prepared in accordance with GAAP[10](index=10&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section highlights that forward-looking statements are subject to significant uncertainties and risks, which may cause actual results to differ materially - Forward-looking statements relate to the Company's current expectations, beliefs, and projections concerning matters that are not historical facts, including expected revenues, earnings, growth, cash flow generation, and operational performance in fiscal 2026 and beyond[12](index=12&type=chunk) - 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[12](index=12&type=chunk) - Potential negative consequences include **delays in contract awards**, failure to renew key customer contracts, delays in customer programs, cybersecurity breaches, changes in government policies, global economic uncertainty, supply chain disruptions, and unfavorable currency exchange rate fluctuations[12](index=12&type=chunk) [Conference Call & Contact Information](index=2&type=section&id=Conference%20Call%20%26%20Contact%20Information) Details for the August 21, 2025, conference call and webcast replay are provided, along with contact information for investor inquiries - The Company hosted a conference call and simultaneous webcast on **August 21, 2025, at 9:00 am PT (12:00 pm ET)** to discuss financial results[8](index=8&type=chunk) - A replay of the webcast will be available for approximately three months via the Investor Relations section of the OSI Systems website[8](index=8&type=chunk) - For additional information, contact **Ajay Vashishat, Vice President, OSI Systems, Inc. at (310) 349-2237 or avashishat@osi-systems.com**[13](index=13&type=chunk)

Core Viewpoint - OSI Systems (OSIS) is highlighted as a strong candidate for investors due to its consistent performance in beating earnings estimates and its favorable positioning for future earnings reports [1]. Earnings Performance - OSI has demonstrated a strong track record of surpassing earnings estimates, averaging a 2.75% beat over the last two quarters [2]. - In the most recent quarter, OSI reported earnings of $2.38 per share against an expectation of $2.44, resulting in a surprise of 2.52%. In the previous quarter, the company reported $2.42 per share against an estimate of $2.35, achieving a surprise of 2.98% [3]. Earnings Estimates and Predictions - Estimates for OSI have been trending higher, influenced by its history of earnings surprises. The stock currently has a positive Zacks Earnings ESP (Expected Surprise Prediction), indicating a strong likelihood of future earnings beats, especially with its solid Zacks Rank [6]. - Research indicates that stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have a nearly 70% chance of producing a positive surprise [7]. Earnings ESP and Analyst Sentiment - OSI currently has an Earnings ESP of +4.39%, suggesting increased analyst optimism regarding its near-term earnings potential. This positive Earnings ESP, combined with a Zacks Rank of 2 (Buy), indicates a strong possibility of another earnings beat [9]. - The Earnings ESP metric is crucial as it compares the Most Accurate Estimate to the Zacks Consensus Estimate, reflecting the latest analyst revisions prior to earnings releases [8].

Core Insights - TDK Corp. (TTDKY) and OSI Systems (OSIS) are both attractive options for value investors, with both companies currently holding a Zacks Rank of 2 (Buy) indicating positive earnings estimate revisions [3][7] Valuation Metrics - TDKY has a forward P/E ratio of 17.16, while OSIS has a forward P/E of 21.66, suggesting TDKY may be undervalued compared to OSIS [5] - TDKY's PEG ratio is 1.34, compared to OSIS's PEG ratio of 1.84, indicating TDKY has a more favorable valuation when considering expected earnings growth [5] - TDKY's P/B ratio is 1.9, significantly lower than OSIS's P/B of 4.14, further supporting TDKY's position as the superior value option [6] Value Grades - TDKY has earned a Value grade of A, while OSIS has a Value grade of C, highlighting TDKY's stronger valuation metrics [6]

Financial Performance & Guidance - OSI Systems reported revenue of $1.5 billion for the fiscal year ended June 30, 2024[8] - The company provides FY25 revenue guidance of $1.690 - $1.715 billion, representing 9.8% - 11.5% growth[12] - FY25 Non-GAAP Adjusted EPS guidance is $9.15 - $9.45, indicating 12.5% - 16.2% growth[12] - The company's year-end backlog is $1.7 billion[12] Business Segments & Geography - Security division accounts for 68% of OSI Systems' revenue[8, 30] - Optoelectronics division contributes 21% of the company's revenue[8, 93] - Healthcare division represents 11% of the company's revenue[8, 114] - 33% of the company's net sales are from the U S market[9] Recurring Revenue & Backlog - Security segment has recurring revenue of approximately 30%[16] - Healthcare segment has recurring revenue of over 40%[16] - Optoelectronics segment has repeat revenue of over 80%[16] - The company's backlog has grown at a CAGR of 19% from FYE20 to FYE24[16] Growth Drivers & Opportunities - Heightened global demand for high-performance threat detection screening solutions is a key market tailwind for the security division[18] - Strong demand for specialized optoelectronics is driven by the electrification and digitization of various products and solutions[18] - Increasing demand for efficient healthcare solutions to serve the aging population is a growth driver for the healthcare division[18]

Summary of OSI Systems Conference Call Company Overview - OSI Systems operates in three divisions: Security, Health Care, and Optoelectronics [3][4] - The Security division, RapidScan Systems, accounts for over two-thirds of revenues and is a leader in security detection [4][5] Key Points and Arguments Security Division - The Security division is primarily known for aviation products but is experiencing rapid growth in cargo and border solutions, particularly in the U.S. and internationally [4][5][10] - The U.S. government has significantly increased funding for non-intrusive inspection (NII) technology, with a proposed budget of $1.1 billion, quadrupling previous expectations of $300 million [12][14] - International growth remains strong, with notable opportunities in the Middle East, Latin America, Asia, and Europe [10][12] Revenue and Growth - Recent contracts in Mexico have matured, leading to a 50% decline in revenues from that region, but overall security revenues increased by 10% [15][16] - The service revenue from the installed base in Mexico is expected to increase as products roll off warranty, leading to higher margins [16][21] - The life cycle of security products is approximately 7-10 years, with aftermarket service revenues potentially doubling the initial product sale [20][21] Optoelectronics Division - The Opto business has shown resilience during a destocking period, with a 15% growth in the last quarter [30][31] - Companies are increasingly looking to shift manufacturing away from China, presenting opportunities for OSI Systems due to its global manufacturing footprint [32] Health Care Division - A new patient monitoring platform is set to launch in summer 2024, which is expected to drive significant growth [34][36] - The health care division has the highest contribution margins, and improvements in top-line revenue could lead to higher operating margins [36] Cash Flow and Financial Outlook - Free cash flow conversion is expected to be strong, with significant cash generation anticipated in fiscal 2026 [41][42] - The company has a disciplined approach to capital allocation, focusing on M&A, stock buybacks, and debt reduction [52][53] Market Position and Competition - OSI Systems is the largest security detection company and continues to gain market share, particularly in ports and borders [66][68] - The company is exploring acquisitions primarily in the security and optoelectronics sectors, with a focus on bolt-on opportunities [62][63] Leadership Transition - A new CEO has been appointed from within the company, ensuring continuity in strategy and operations [69][70] Margins and Future Expectations - Margins in the aviation sector are expected to be comparable to those in the cargo and border sectors, with no anticipated negative impact on overall operating margins [72] Additional Important Points - The company is actively managing costs, with SG&A as a percentage of sales decreasing as revenues grow [49][50] - Tariffs are not expected to have a material impact on the business, with the health care division being the most exposed [56][57] - The company has adequate manufacturing capacity to meet growing demand without significant new investments [60][61]

Core Viewpoint - Investors in the Electronics - Miscellaneous Components sector should consider TE Connectivity (TEL) and OSI Systems (OSIS) as potential value stocks, with TEL appearing to be the more attractive option based on valuation metrics [1][7]. Valuation Metrics - Both TEL and OSIS have a Zacks Rank of 2 (Buy), indicating a positive earnings outlook due to favorable analyst estimate revisions [3]. - TEL has a forward P/E ratio of 18.66, while OSIS has a forward P/E of 24.03, suggesting TEL is more undervalued [5]. - The PEG ratio for TEL is 2.01, compared to OSIS's PEG ratio of 2.04, indicating TEL's expected earnings growth is more favorable relative to its price [5]. - TEL's P/B ratio is 3.75, while OSIS has a P/B of 4.27, further supporting TEL's position as the superior value option [6]. Value Grades - TEL has a Value grade of B, while OSIS has a Value grade of C, reflecting TEL's stronger valuation metrics [6].

Group 1: Momentum Investing Overview - Momentum investing involves following a stock's recent trend, with the aim of buying high and selling higher, capitalizing on established price movements [1] - The Zacks Momentum Style Score helps investors identify effective metrics for assessing momentum in stocks [2] Group 2: OSI Systems (OSIS) Performance - OSI Systems currently holds a Momentum Style Score of B and a Zacks Rank of 2 (Buy), indicating strong potential for outperformance [3][4] - Over the past week, OSIS shares increased by 11.49%, significantly outperforming the Zacks Electronics - Miscellaneous Components industry, which rose by 3.47% [6] - In a longer timeframe, OSIS shares have gained 8.59% over the past quarter and 65.88% over the last year, while the S&P 500 has moved -5.55% and 13.72%, respectively [7] Group 3: Trading Volume and Earnings Outlook - The average 20-day trading volume for OSIS is 222,060 shares, indicating a bullish sign with rising stock prices [8] - Recent earnings estimate revisions for OSIS show 2 estimates moving higher for the full year, increasing the consensus estimate from $9.26 to $9.29 [10] - For the next fiscal year, 1 estimate has moved upwards with no downward revisions, supporting a positive earnings outlook [10] Group 4: Conclusion - Given the strong performance metrics and positive earnings outlook, OSI Systems is positioned as a promising investment opportunity with a Momentum Score of B [12]

Core Viewpoint - OSI Systems (OSIS) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which significantly influence stock prices [1][2]. Earnings Estimates and Stock Price Impact - Changes in a company's future earnings potential, reflected in earnings estimate revisions, are strongly correlated with near-term stock price movements [3]. - Institutional investors utilize earnings estimates to calculate the fair value of a company's shares, leading to stock price movements based on their buying or selling actions [3]. Zacks Rating System - The Zacks Rank stock-rating system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly Zacks Rank 1 stocks averaging a +25% annual return since 1988 [6]. - The Zacks rating system maintains a balanced distribution of 'buy' and 'sell' ratings, ensuring that only the top 20% of stocks receive favorable ratings based on earnings estimate revisions [8][9]. OSI's Earnings Estimate Revisions - OSI is projected to earn $9.29 per share for the fiscal year ending June 2025, reflecting a year-over-year increase of 14.3% [7]. - Over the past three months, the Zacks Consensus Estimate for OSI has risen by 0.7%, indicating a positive trend in earnings estimates [7].

Financial Performance - Total net revenues for the three months ended March 31, 2025, increased to $444,354, up 9.8% from $405,406 in the same period of 2024[11]. - Net income for the three months ended March 31, 2025, was $41,134, representing a 20.5% increase from $34,043 in the prior year[13]. - Earnings per share (diluted) rose to $2.40 for the three months ended March 31, 2025, compared to $1.95 for the same period in 2024, reflecting a 23.1% increase[11]. - Gross profit for the nine months ended March 31, 2025, was $418,944, up from $376,141 in the same period of 2024, indicating an increase of 11.4%[11]. - For the nine months ended March 31, 2025, total revenues increased to $1,208,181 thousand, up from $1,057,851 thousand in the same period of 2024, representing a growth of approximately 14.2%[90]. - Total net revenues for Q3 fiscal 2025 increased by 9.6% to $444.3 million compared to $405.4 million in Q3 fiscal 2024[111]. - Gross profit for Q3 fiscal 2025 was $150.3 million, representing a gross margin of 33.8%, compared to $136.1 million and 33.6% in Q3 fiscal 2024[113]. Assets and Liabilities - Total current assets decreased to $1,215,524 as of June 30, 2024, down from $1,272,529 as of March 31, 2025, a decline of 4.5%[10]. - Total liabilities decreased to $1,072,525 as of June 30, 2024, compared to $1,201,672 as of March 31, 2025, a reduction of 10.7%[10]. - The total stockholders' equity as of March 31, 2025, was $879,325, a decrease from $863,483 as of June 30, 2024, reflecting a decline of 1.8%[10]. - Cash and cash equivalents stood at $95,353 as of June 30, 2024, slightly down from $95,830 as of March 31, 2025[10]. - As of March 31, 2025, total unrecognized compensation cost related to share-based compensation grants was estimated at $18.6 million[69]. - Long-term debt as of March 31, 2025, totaled $473.196 million, with a long-term portion of $465.051 million[66]. Cash Flow - Cash flows from operating activities provided $97,030 thousand in the nine months ended March 31, 2025, compared to a cash outflow of $58,458 thousand in the same period of 2024[17]. - Cash and cash equivalents at the end of the period totaled $95,830 thousand, with approximately 83% held by foreign subsidiaries, primarily in India and the United Kingdom[23]. - Cash provided by operations for YTD Q3 fiscal 2025 was $97.0 million, compared to cash used in operations of $58.5 million in the same prior-year period[131]. - Net cash used in investing activities was $106.4 million for YTD Q3 fiscal 2025, compared to $24.9 million in the same prior-year period, with $75.5 million used for a business acquisition in September 2024[132]. - Net cash provided by financing activities was $10.4 million for YTD Q3 fiscal 2025, a decrease from $110.7 million in the same prior-year period, primarily due to net repayment of $228.0 million on the credit facility[133]. Expenses - Research and development expenses for the three months ended March 31, 2025, were $18,570, a 8.3% increase from $17,144 in the prior year[11]. - Operating expenses increased by 11.2% to $94.2 million in Q3 fiscal 2025, with selling, general and administrative expenses rising by 10.1% to $73.3 million[114]. - Research and development expenses increased by 8.8% to $18.6 million in Q3 fiscal 2025, reflecting higher compensation costs for new product development initiatives[115]. - Interest and other expense, net, increased to $8.2 million in Q3 fiscal 2025 from $7.4 million in Q3 fiscal 2024, driven by higher borrowings[117]. Acquisitions and Investments - The company acquired a privately held provider of military, space, and surveillance solutions for approximately $76.0 million, with total purchase consideration reaching $85.7 million, including contingent consideration[36]. - Revenue from the acquired business was $50.7 million from the acquisition date through March 31, 2025[37]. - The preliminary acquisition date fair value of total assets acquired was $115.9 million, including $31.5 million in goodwill and $46.2 million in other intangible assets[36]. - The company had net borrowings of $134,000 thousand on bank lines of credit during the nine months ended March 31, 2025, while there were repayments of $228,000 thousand in the same period of 2024[17]. Taxation - The effective tax rate for the nine months ended March 31, 2025, was 19.5%, a decrease from 21.7% in the same period of 2024[87]. - The effective tax rate for Q3 fiscal 2025 was 14.3%, down from 22.6% in Q3 fiscal 2024, with a provision for income taxes of $6.9 million[118]. - The company recognized net discrete tax benefits of $4.0 million for changes in prior year tax estimates during the nine months ended March 31, 2025, compared to $2.3 million in the prior year[87]. Legal and Compliance - The company is currently involved in various legal proceedings, but management believes that the ultimate disposition is not likely to have a material adverse effect on its financial condition[84]. - The company is in compliance with applicable financial covenants under the indenture governing the 2029 Notes as of March 31, 2025[63]. Market and Economic Factors - The company continues to face uncertainties related to global economic factors, including supply chain disruptions and geopolitical tensions, which may impact future performance[103].

Core Viewpoint - OSI Systems Inc. is conducting its fiscal '25 third quarter conference call to review financial and operational results, with key executives present [1][3]. Financial Results - The company has released its fiscal '25 third quarter financial results, which will be discussed during the call [4]. - Both GAAP and non-GAAP financial measures will be referenced in the discussion of the company's results [5].