OSI Systems (OSIS) Q4 2025 Earnings Call August 21, 2025 12:00 PM ET Company ParticipantsAlan Edrick - EVP & CFOAjay Mehra - President, CEO & DirectorMariana Pérez Mora - DirectorConference Call ParticipantsJosh Nichols - Senior Research AnalystLarry Solow - Partner & Managing director - Equity AnalystJeff Martin - Co-Director - Research & Senior Research AnalystRocco Barbero - Equity Research AnalystOperatorAs a reminder, today's program is being recorded. And now I'd like to introduce your host for today' ...

The consensus EPS estimate for the quarter has undergone an upward revision of 12% in the past 30 days, bringing it to its present level. This represents how the covering analysts, as a whole, have reassessed their initial estimates during this timeframe. Wall Street analysts forecast that Axon Enterprise (AXON) will report quarterly earnings of $1.54 per share in its upcoming release, pointing to a year-over-year increase of 28.3%. It is anticipated that revenues will amount to $642.98 million, exhibiting ...

Core Insights - Liberty Defense Holdings Ltd. has entered into a strategic, non-exclusive distribution agreement with K′(Prime) Technologies Inc. to introduce its HEXWAVE™ technology to the Canadian aviation and urban security market [1][2][3] - The HEXWAVE™ system utilizes AI and machine learning for real-time detection of weapons and threats, enhancing security capabilities in high-traffic areas [2][4] - K′(Prime) has over 20 years of experience in security equipment and has a significant presence in the Canadian aviation sector, which positions it well to support the deployment of HEXWAVE™ [5] Company Overview - Liberty Defense provides multi-technology security solutions for concealed weapons detection, focusing on high-traffic areas such as airports and stadiums [4] - The HEXWAVE system employs millimeter wave technology, advanced 3D imaging, and AI to detect both metallic and non-metallic threats [4] - Liberty is also developing next-generation aviation passenger screening technologies, including High-Definition Advanced Imaging Technology (HD-AIT) [4] K′(Prime) Technologies Inc. - K′(Prime) specializes in technology and scientific instrument services, enhancing customer satisfaction through a vast network of technicians across Canada [5] - In 2022, K′(Prime) secured a five-year, $160 million contract with the Canadian Air Transport Security Authority (CATSA) for maintenance services of passenger screening equipment at Canadian airports [5] - This contract positions K′(Prime) to support businesses with imaging equipment maintenance and new technology integration [5]

Core Viewpoint - The Canadian government's decision to order Hikvision Canada Ltd. to cease operations is seen as a significant infringement on the legitimate rights of Chinese enterprises and disrupts normal economic and trade cooperation between China and Canada [1][2][3]. Summary by Sections Canadian Government's Action - The Canadian government has mandated Hikvision Canada to stop its operations under the pretext of "national security," continuing a trend of Western countries targeting Chinese tech firms without providing clear evidence for their claims [2]. Response and Attitude of the Chinese Government - The Chinese Embassy in Canada has expressed strong opposition to Canada's actions, criticizing the broad interpretation of national security and the discriminatory practices against Chinese companies, emphasizing the commitment to protect the legitimate rights of Chinese enterprises [3]. Hikvision's Response - Hikvision has not publicly disclosed specific strategies in response to the situation but may consider legal avenues to protect its rights and assess the impact on its business to formulate future market adjustment plans [4]. International Community's Attention and Impact - The incident has drawn international attention to China-Canada economic relations, with many viewing Canada's actions as detrimental to healthy trade cooperation and potentially negatively affecting other Chinese companies looking to operate in Canada [5]. Future of China-Canada Economic Relations - The event casts a shadow over normal economic cooperation between China and Canada, with China urging Canada to rectify its actions. Continued unreasonable policies from Canada could lead to further tensions in bilateral economic relations [6]. Hikvision's Position and Influence in Overseas Markets - Hikvision is the world's largest supplier of video surveillance equipment, holding approximately 30% of the global market share as of 2023, and has operations in over 150 countries, with overseas revenue accounting for about 30%-40% of total revenue [8]. Extensive Overseas Market Layout - Hikvision has subsidiaries in major regions including Europe, Southeast Asia, and North America, serving a diverse clientele from government agencies to small businesses, and has significant technological capabilities in AI and IoT [9]. Participation in International Standard Setting - Hikvision is a member of several international organizations and has participated in setting international standards for video surveillance and data security, facing market access restrictions in countries like the U.S. and Canada due to the broad application of "national security" concepts [10].

Group 1 - The 2025 Listed Companies Forum was held in Wenzhou, where leaders from major exchanges announced multi-dimensional reform signals, including the implementation of the "1+6" reform measures and the planning of the ChiNext reform [2] - The Hong Kong market will adjust its stock trading fees from 0.002% to 0.0042% of the transaction amount starting June 30, which will lower costs for small transactions and help institutional investors optimize trading strategies [5] - The Hong Kong Stock Exchange received 16 IPO applications from mainland companies in one day, with total financing exceeding $44 billion this year, ranking first globally [6] Group 2 - China's fiscal policy has become more proactive this year, with an emphasis on early issuance and use of long-term special bonds and local government bonds to boost consumption and economic growth [4] - The number of public fund managers in China reached a record high of 4,041, reflecting a significant increase in the industry and a trend of talent turnover [11] - The domestic logistics total for January to May was 138.7 trillion yuan, showing a year-on-year growth of 5.3%, indicating a stable logistics operation and an accelerating demand for consumer logistics [12] Group 3 - The A-share market experienced a rise, with the Shanghai Composite Index reaching a new high for the year, and analysts expect structural opportunities in the upcoming earnings season [7] - The issuance of corporate bonds in China has gained momentum, with 62 bond issuance plans approved by the CSRC this year, totaling 577.966 billion yuan [21] - The recent adjustments in deposit rates by private banks have become a norm, with some banks still offering rates above 2%, indicating a divergence in deposit rate levels among different banks [12]

Core Insights - Vicon Industries' NEXT Modular Sensor System has received multiple industry awards, indicating strong market reception and early traction in the security industry [1][2][4] Product Recognition - NEXT was awarded the Innovation Award in the Video Surveillance category and was the Runner-Up for Best in Show at the Electronic Security Expo (ESX), highlighting its innovative features [2] - Campus Security Today recognized NEXT with the Secure Campus Award, emphasizing its adoption in the education sector and its quick deployment capabilities [3] Strategic Importance - The success of NEXT represents a significant turning point for Vicon, showcasing its transformation into a future-ready platform that meets the needs of commercial, municipal, and educational customers [5][6] - The accolades received by NEXT are seen as a validation of Vicon's strategic focus on innovation and its ability to solve real-world problems for end users [5][6] Market Positioning - Vicon is positioned to capture market share as institutions modernize their legacy infrastructure, driven by the demand for AI-enhanced and easy-to-deploy security solutions [6] - The recognition from industry experts and the education sector indicates Vicon's capability to succeed in high-urgency markets with stringent procurement standards [8] Future Outlook - NEXT is viewed as the beginning of a multi-year product roadmap aimed at developing advanced security solutions, reflecting Vicon's commitment to long-term growth [7]

Market Overview - The three major U.S. indexes ended the holiday-shortened trading week in the red, with the Nasdaq Composite declining by 0.44%, and both the S&P 500 and Dow Jones Industrial Average losing 0.17% each, attributed to renewed trade tensions with the European Union and China [1] - The Federal Reserve's May meeting minutes indicate that new foreign trade tariff policies could lead to persistent inflation, hinder economic growth, and diminish global confidence in U.S. assets [2] Economic Indicators - The second estimate of Q1 2025 Gross Domestic Product (GDP) showed a contraction at an annual rate of 0.2%, an improvement from the initial estimate of a 0.3% decline, marking the first drop in three years [2] - The labor market remains resilient but shows slight signs of weakening, with jobless aid rising to 240,000 for the week ending May 24th, and Continuing Jobless Claims increasing to 1.92 million [2] Stock Performance - Banco Comercial Português (BPCGY) shares gained 13.9% since being upgraded to Zacks Rank 2 (Buy) on March 31, outperforming the S&P 500's 6.1% increase [3] - PDS Biotechnology Corporation (PDSB) also saw a return of 9.5% since its upgrade to Zacks Rank 2 on March 31 [4] - A hypothetical portfolio of Zacks Rank 1 (Strong Buy) stocks returned -8.32% in 2025 (through May 5), compared to -5.35% for the S&P 500 index [4] Zacks Recommendations - StoneCo Ltd. (STNE) and BlackBerry Limited (BB) advanced 30.9% and 26.1% respectively since their Zacks Recommendation upgrades to Outperform on April 9 and March 4 [7] - The Zacks Focus List portfolio has returned -3.23% through April 30, 2025, compared to -4.92% for the S&P 500 index [11] - The Zacks Earnings Certain Admiral Portfolio (ECAP) returned +3.20% in Q1 2025, outperforming the S&P 500 index's -4.30% decline [15] Long-term Performance - The Zacks Focus List portfolio has produced an annualized return of +11.33% since 2004, compared to +9.95% for the S&P 500 index [13] - The Top 10 portfolio has delivered a cumulative return of +1832.3% since 2012, significantly outperforming the S&P 500 index's +434.2% return [23]

Core Insights - Advanced Industrial Services (AIS), a subsidiary of Cemtrex Inc., has secured a $1.84 million contract from the City of Lancaster for upgrades at its Advanced Wastewater Treatment Plant (AWWTP) [1][2] - The project involves replacing mechanical and electrical systems, rehabilitating clarifier structures, and modernizing control systems for four primary clarifiers, with completion expected within one year during the City's 2025–2026 fiscal year [2] - AIS is expanding its presence in the Northeast and Mid-Atlantic regions, establishing itself as a trusted partner for infrastructure modernization, particularly in wastewater treatment [3] Industry Context - The U.S. faces significant challenges with aging wastewater infrastructure, with the EPA estimating $630 billion in necessary upgrades over the next 20 years, a 73% increase since 2012 [4] - Increased federal and state funding is driving municipalities to accelerate investments in infrastructure, positioning experienced contractors like AIS to lead in this renewal effort [4] Company Overview - Cemtrex, Inc. operates in the Security and Industrial sectors, with AIS providing services such as rigging, millwrighting, process piping, and equipment installation to manufacturers nationwide [5]

Core Points - The 12th China International Police Equipment Expo was held from May 14 to May 17, showcasing the theme of "New Technology, New Equipment, New Quality Combat Power" with a record exhibition area of 64,000 square meters [1] - A total of 835 companies from 12 countries and regions participated, focusing on smart robots, intelligent drones, unmanned patrol vehicles, and robotic dogs, highlighting the trends of domestic production, intelligence, and automation [1] Group 1: Exhibition Highlights - The expo featured three halls and two zones, including a police equipment hall, domestic and international enterprise halls, and a new product and technology release area, with a special focus on smart and unmanned equipment [4] - A walking humanoid robot capable of providing policy consultations in 85 languages was showcased, significantly reducing the need for traditional police manpower [4][6] - The traffic management section displayed a DUI screening robot that can complete tests in 3 to 5 seconds and a smart traffic cone robot equipped with radar for remote control [6][8] Group 2: Technological Advancements - The event marked the first establishment of the "Smart Police Equipment Zone," featuring intelligent police equipment powered by a domestically developed police Harmony OS, enabling interconnected operations among devices [8][10] - A globally first intelligent omnidirectional anti-water robot was introduced, capable of underwater salvage and inspection, with a depth capability of 200 meters and a maximum operational radius of 400 meters [10] - AI-powered drones were highlighted for their applications in emergency rescue and law enforcement, including identifying drowning individuals and assisting in anti-smuggling operations [12][14] Group 3: Public Service Innovations - The expo also showcased public service equipment, including a "no document required" passage device that reduces customs clearance time to 7-9 seconds, benefiting over 15 million travelers since its pilot launch [15][16] - A national network identity authentication platform was introduced, allowing over 6 million people to apply for a network identity, enhancing personal information security and reducing excessive data collection by apps [15][16]

Core Viewpoint - Axon Enterprise, Inc. reported strong first-quarter 2025 results, with adjusted earnings and revenues exceeding consensus estimates, driven by robust demand for its products and services [1][2]. Financial Performance - Adjusted earnings per share for Q1 2025 were $1.41, surpassing the Zacks Consensus Estimate of $1.27, marking a 22.6% year-over-year increase [1]. - Total revenues reached $603.6 million, exceeding the consensus estimate of $589 million and reflecting a 31.3% year-over-year growth [2]. Business Segment Performance - **Connected Devices**: Revenues increased by 26% year over year to $340.9 million, driven by demand for TASER 10 devices and Axon Body 4 [3]. - **Software & Services**: Revenues rose 39% year over year to $262.7 million, attributed to a growing user base and increased adoption of premium features [4]. Cost and Margin Analysis - Cost of sales increased by 18.2% year over year to $237.9 million, while total operating expenses climbed 54.7% to $374.5 million [5]. - Adjusted gross margin improved slightly to 63.6% from 63.2% in the previous year [5]. Balance Sheet and Cash Flow - Cash and cash equivalents at the end of Q1 2025 were $1.09 billion, up from $454.8 million at the end of 2024 [6]. - The company generated net cash of $25.8 million from operating activities, compared to a cash outflow of $15.9 million in the previous year [6]. Free Cash Flow - Adjusted free cash flow for the first three months of 2025 was $932 million, a significant increase from $32.1 million in the prior year [7]. Outlook for 2025 - Axon expects revenues to be between $2.60 billion and $2.70 billion, indicating approximately 27% year-over-year growth at the midpoint [8]. - Adjusted EBITDA is projected to be in the range of $650 million to $675 million, with an adjusted EBITDA margin of about 25% [8]. - Capital expenditures are anticipated to be between $160 million and $180 million, focusing on R&D and capacity expansion [9].