OSI Systems [OSIS]
2Q18 2Q17
Sales $267.3M $245.1M
Net Inc. $2.6M, 0.13 $14M, 0.72
Quarterly sales were a record and were up 9% on the back of strong growth in its security segment, which benefited from solid organic growth and the acquisition last year of an explosives trace detection business from Smiths Detection. The acquisition added $17.6 million to sales in the quarter. The company’s Optoelectronic and Manufacturing division also posted a strong gain in sales while the Healthcare segment saw revenue decline. The sharp fall in earnings was largely due to a loss at Healthcare and also to higher restructuring costs. OSI also spent more on research and development in the recent third quarter. Rapiscan Systems, which is the security business, posted an 18% rise in sales to $170.3 million while operating income rose 15% to just over $21 million on the higher sales and operational efficiencies. Sales were lower on Rapiscan turnkey services contract with Mexico, as expected, but were higher for products—particularly for cargo and vehicle inspection systems–and related services. The company says it has picked up a fourth turnkey service program with operation on a small multi-year contract for cargo screening on track to begin in Asia with civil work and begin generating sales a year from now. Rapiscan booked $270 million in orders in the quarter, including $130 million with the Mexico contract. Free cash flow was $26.7 million and backlog stood at $938 million, representing $200 million of growth since the start of the fiscal year. OSI raised its sales forecast a year but it is still approaching close to $1.1 billion. Earnings guidance was raised a nickel on the low end of the range to $3.45 EPS and two cents on the upper end to $3.69 EPS.