OSI Systems(US:OSIS)2021-08-18 18:20Financial Performance - The company reported record revenues of $332 million in Q4 2021, representing a 20% growth year-over-year, driven by strong performance in the Security and Opto divisions [9][30] - Non-GAAP adjusted diluted earnings per share (EPS) for Q4 was $1.54, up 26% from the previous year, while the full year non-GAAP EPS was $5.32, a 16% increase [9][10] - Operating cash flow for Q4 was $8 million, contributing to a record total of $139 million for the fiscal year [10][41] - The book-to-bill ratio was 1.0 in Q4 and 1.2 for the full fiscal year, with a backlog of nearly $1.1 billion, a 25% increase from the start of fiscal 2021 [11] Business Segment Performance - Security Division: Q4 revenues increased 23% year-over-year to $202 million, with a backlog 21% higher than the previous year. Global bookings rose 14% from Q4 2020 [13][30] - Optoelectronics Division: Q4 revenues were $92 million, a 37% increase year-over-year, with full-year revenues reaching $350 million, up 23% [22][30] - Healthcare Division: Q4 revenues were $52 million, about 10% below the previous year, attributed to strong prior year demand due to COVID-19 [24][30] Market Data and Trends - The company noted a gradual return of passenger airport activity to pre-COVID levels, with ongoing upgrades to security infrastructure being discussed with aviation customers [15] - The U.S. infrastructure bill is expected to positively impact the company, particularly in airport and port upgrades [20] Company Strategy and Industry Competition - The company aims to focus on increasing recurring revenues, strategic acquisitions, and advancing technology and product offerings [28][46] - The management believes they are gaining market share relative to competitors, particularly in the cargo space, due to a diverse product portfolio and strong operational execution [78][80] Management Commentary on Operating Environment and Future Outlook - Management expressed cautious optimism regarding growth in fiscal 2022, emphasizing the importance of managing risks associated with the ongoing pandemic [45][91] - The company anticipates solid revenue growth in Security and Opto divisions, with a modest reduction in Healthcare revenues due to challenging comparisons [43][44] Other Important Information - The company has a strong balance sheet with net leverage of approximately 1.0 and no outstanding borrowings on its credit facility [42] - Significant investments in R&D were made, particularly in Security and Healthcare, with plans for increased investment in fiscal 2022 [36][82] Q&A Session Summary Question: Can you provide direction on the segments, particularly Security? - Management believes there will be growth in Security without the comparable from Mexico, supported by a strong backlog and opportunity pipeline [51] Question: What are the expectations for margins in the Security segment? - Management aims for top-line growth coupled with operating margin expansion, with opportunities to sustain and expand margins moving forward [52][53] Question: What is the status of personnel in Afghanistan? - All personnel and subcontractors have been safely evacuated, and revenues from Afghanistan are expected to be minimal in fiscal 2022 [61][62] Question: Can you provide revenue levels from CertScan and turnkey programs? - Recurring revenue was about 37% for Security and Healthcare, with expectations to increase this percentage in fiscal 2022 [63] Question: How is the company positioned in the automotive sector? - The company is well-positioned in the automotive sector, particularly with electric vehicle platforms, and has strong demand from both domestic and European brands [105]