OSI Systems (NASDAQ: OSIS) reported Q3 EPS of $1.20, $0.02 better than the analyst estimate of $1.18. Revenue for the quarter came in at $293 million versus the consensus estimate of $303 million.

• Q3 Revenues of $293 Million
• Record Q3 Earnings Per Diluted Share
  • GAAP EPS of $1.06
  • Non-GAAP EPS of $1.20
• Strong Balance Sheet and Liquidity Position
• Q3 Cash Flow from Operations of $46 Million
• Company Updates Fiscal Year 2020 Guidance

Deepak Chopra, OSI Systems’ Chairman and Chief Executive Officer, stated, “During this unprecedented time, we want to thank all the healthcare professionals, first responders, and others who are on the front lines fighting the COVID-19 pandemic. As responsible global citizens, we are assisting this effort by carrying out our mission to create solutions for a safer and healthier world. Thank you to our employees and our business network for their incredible efforts to maintain supply of our critically important products around the globe. It is a unique time and we are rising to meet the challenge while simultaneously focusing on the safety of our employees.

“We are pleased with our third quarter performance as we delivered record earnings per share and continue to have a strong balance sheet with a robust pipeline of opportunities. Although there has recently been increased demand for our healthcare products as a result of the pandemic, we expect certain delays in product deliveries and new orders in our other divisions as some of our customers are being negatively impacted by COVID-19.”

Mr. Chopra commented, “Our Security division reported a 3% sales decline, with third quarter revenues of $187 million. Towards the end of the quarter, we began to feel the impact of the pandemic, most notably with our aviation and cargo customers. We are well positioned in the marketplace as we target significant opportunities globally, although we do expect some continued headwinds.”

Mr. Chopra continued, “Our Optoelectronics and Manufacturing division continued its strong performance with year-over-year operating margin expansion. We faced operational challenges associated with COVID-19 in the latter part of the third fiscal quarter and expect these challenges to continue as the world battles coronavirus.”

Mr. Chopra concluded, “We are pleased with the important strides made in our Healthcare division leading to a significant improvement in the year-over-year adjusted operating margin. Our Healthcare backlog continues to be solid, and with the increased recent activity, we are expecting a strong fourth fiscal quarter in this division. We are proud of the work our team is doing in support of the pandemic response effort.”

GUIDANCE:

OSI Systems sees FY2020 EPS of $4.45-$4.65, versus the consensus of $4.47. OSI Systems sees FY2020 revenue of $1.165-1.185 billion, versus the consensus of $1.2 billion.

The Company is revising its fiscal year 2020 non-GAAP earnings guidance to $4.45 to $4.65 per diluted share and its fiscal year 2020 sales guidance to a range of $1.165 billion to $1.185 billion. Management’s current estimate of the impact of the COVID-19 pandemic is included in the guidance; however, given uncertainties as to the duration and scope of the pandemic and other variables, the extent to which COVID-19 may impact the Company’s financial results is difficult to predict and could vary materially from these estimates. Actual sales and non-GAAP diluted earnings per share could also vary from this guidance due to other factors, including those discussed under “Forward-Looking Statements”.

Alan Edrick, Executive Vice President and Chief Financial Officer, stated, “We have a strong balance sheet with net leverage of approximately 1.4 and a $535 million credit facility which provides liquidity to meet our operational needs for the foreseeable future. In this current environment, we are focused on maintaining our financial flexibility to support long-term growth and be in a nimble position to take advantage of strategic opportunities.”

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