2020 Annual Report Creating Solutions for a Safer and Healthier
Total Page:16
File Type:pdf, Size:1020Kb
2020 Annual Report Creating Solutions for a Safer and Healthier World 12525 Chadron Avenue Hawthorne, California 90250 www.osi-systems.com INNOVATIVE Corporate Information SOLUTIONS BOARD OF DIRECTORS Independent Auditors Moss Adams LLP OSI Systems, Inc. provides specialized electronic systems and components that meet the Deepak Chopra Los Angeles, California critical needs of the homeland security, healthcare, defense, and aerospace industries. President, Chief Executive Officer and Chairman of the Board Steven C. Good Transfer Agent Director Broadridge Corporate Issuer Solutions, Inc. Ardmore, PA Meyer Luskin Director Annual Meeting Fiscal 2020 Financial Highlights The Annual Meeting of Stockholders will be held at 10:00 a.m. William F. Ballhaus, Jr. (June 30th fiscal year end) Thursday, December 10, 2020 at Director 12525 Chadron Avenue +9% -1% James B. Hawkins Hawthorne, CA 90250 +13% $1,182M +16% $1,089M $1,166M Director Sales by Geography $961M Safe Harbor Statement $830M OSI SYSTEMS, INC. 2020 ANNUAL REPORT This Annual Report contains forward-looking statements within United States 49% Gerald Chizever the meaning of the Private Securities Litigation Reform Act of EMEA 27% Director $1.166B 1995, Section 27A of the Securities Act of 1933, as amended, and APAC 14% Kelli Bernard Section 21E of the Securities Exchange Act of 1934, as amended. Other Americas 10% Director FY 2016 FY 2020 FY 2019 FY 2017 sales by year FY 2018 Forward-looking statements relate to the Company’s current Sales by Year expectations, beliefs, and projections concerning matters that 1200 EXECUTIVE OFFICERS are not historical facts. Forward-looking statements are not 1000 800 +6% Deepak Chopra guarantees of future performance and involve uncertainties, 600 +20% $4.60 risks, assumptions, and contingencies, many of which are 400 +21% $4.32 $133M $129M President, Chief Executive Officer and Chairman of the Board 200 $119M +35% $3.61 outside the Company’s control and which may cause actual 0 $2.99 Alan Edrick results to differ materially from those described in or implied $2.21 $59M $63M Executive Vice President and Chief Financial Officer by any forward-looking statement. Undue reliance should not be placed on forward-looking statements, which are based on Ajay Mehra non gaap eps currently available information and speak only as of the date FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Executive Vice President and President, Cargo Scanning and 5 on which they are made. The Company assumes no obligation 4 Solutions Non-GAAP EPS Operating Cash Flow to update any forward-looking statement made in this Annual 3 2 Victor Sze Report that becomes untrue because of subsequent events, 1 Executive Vice President and General Counsel new information, or otherwise, except to the extent it is 0 Reconciliation of GAAP to Non-GAAP EPS required to do so in connection with its ongoing requirements Mal Maginnis under Federal securities laws. For a further discussion of DILUTED EPS FY 2016 FY 2017 FY 2018* FY 2019 FY 2020 President, Rapiscan Detection factors that could cause the Company’s future results to cash ow GAAP basis $ 1.30 $ 1.07 $ (1.57) $ 3.46 $ 4.05 150 Impairment, restructuring, and other charges 1.10 2.37 1.88 0.20 0.35 Manoocher Mansouri differ materially from any forward-looking statements, see the 120 Amortization of acquired intangible assets 0.13 0.43 0.85 0.84 0.88 section entitled “Risk Factors” in the Company’s Form 10-K for 90 President, OSI Optoelectronics and Manufacturing Division Non-cash interest expense — 0.13 0.40 0.42 0.47 the year ended June 30, 2020 and other risks described therein 60 Gain from disposition of business — (0.11 ) — — — 30 Shalabh Chandra and in documents subsequently filed by the Company from Tax effect of the above adjustments (0.32 ) (0.78 ) (0.84 ) (0.41 ) (0.47 ) 0 Discrete income tax items — (0.12 ) 3.02 (0.19 ) (0.68 ) President, Healthcare Division time to time with the Securities and Exchange Commission. Impact of diluted shares — — (0.13 )— — Non-GAAP basis $ 2.21 $ 2.99 $ 3.61 $ 4.32 $ 4.60 Paul Morben President, OSI Electronics Glenn Grindstaff * For the fiscal year ended June 30, 2018, the weighted average diluted shares used to calculate EPS on a GAAP basis exclude potential common shares (stock options and restricted stock units) due to their antidilutive effect resulting from the Company’s reported net loss. For the fiscal year ended June 30, 2018, the weighted average diluted shares used to / www.bigpivot.net Partners Big Pivot Design by Annual Report Chief Human Resources Officer calculate EPS on a non-GAAP basis were approximately 19,274,000 shares. Dear Fellow Stockholders, Overall, fi scal 2020 was a solid year for us in party sales of $239 million and higher operating many respects. Despite working through chal- margins than the prior year. Our competitive lenges toward the end of fi scal 2020 resulting position in the marketplace strengthened as we from COVID-19, our global leaders rose to the effectively used our manufacturing and support occasion to meet the needs of our customers located in multiple regions to provide flexibility and partners while emphasizing safety among and help minimize COVID-19 related supply Deepak Chopra President, Chief our team members and prudently managing our chain disruptions. We continue to enhance our Executive Offi cer cost structure. We achieved $1.166 billion in rev- technology and manufacturing service offerings and Chairman enues and record non-GAAP earnings per share to provide greater value to our customer base. of the Board of $4.60 for the fi scal year. We also delivered During fi scal 2020, we acquired an optical sensor strong operating cash flow of $129 million and business primarily focused on the defense and completed acquisitions to strengthen our tech- aerospace markets that brings new customers nology position in the marketplace. Throughout while expanding our offering to the existing OSI’s history, we have focused on making acqui- customer base. sitions which expand our geographic reach and Our Healthcare division saw increased momen- bolster our product and solutions offerings. tum throughout fi scal 2020. We enhanced the Our Security division sales for fi scal year 2020 leadership and leveraged the strengths of the were $742 million. We had several key wins at team to improve execution. We made signifi cant major ports and airports worldwide and increas- investments in research and development that ingly participated in opportunities at ports and we expect to lead to multiple new product intro- borders where we have managed civil works ductions in patient monitoring and cardiology and and provided support for installation, training, remote monitoring. We fi nished the year on a high and ongoing maintenance. Many customs and note with signifi cant fourth quarter sales growth border agencies and critical infrastructure cus- and operating margin expansion. This was, in tomers around the world utilize our cargo and part, due to increased demand associated with vehicle inspection systems at road and rail traf- COVID-19 for patient monitoring solutions from fi c checkpoints. For checked baggage and air hospitals. Shortly after year-end, we acquired a cargo screening, our RTT®110 is utilized globally software company that develops cloud-based at airports and air logistic hubs. At passenger solutions to enhance the value of patient monitor- checkpoints, we see potential for solutions uti- ing platforms and predictive analytics. lizing remote screening, automated tray return Overall, I am proud of our team and its accom- systems, and artifi cial intelligence (AI) to lessen plishments in fi scal 2020. In fi scal 2021, we will the burden on operators. Our team is working on stay agile to handle the ongoing challenges from AI solutions to assist with image analysis and COVID-19, utilize our strong balance sheet for threat detection. Our penetration with air cargo growth initiatives and continue our mission to customers for our parcel inspection solutions, create a safer and healthier world. We thank our based on CT and transmission X-ray, continues employees and stockholders for their confi dence to increase as e-commerce traffi c is driving the and support. expansion of infrastructure to handle smaller shipment sizes. Sincerely, Our Optoelectronics and Manufacturing division’s performance was solid with fi scal 2020 third OSI Systems, Inc. 2020 Annual Report 1 HOLD BAGGAGE SCREENING / CARGO AND VEHICLE INSPECTION / BAGGAGE AND PARCEL INSPECTION / PEOPLE SCREENING / RADIATION DETECTION / TRACE DETECTION Security integration, S2 Global assists customs, Our Security division is a leading supplier border security, and tax collection agencies of security inspection solutions utilizing with inspection and information verifi cation multiple technologies and advanced threat of cargo traveling across borders, increasing identification algorithms based on X-ray the efficiency of trade and infrastructure, and high-speed computed tomography and supporting economic growth and imaging, ion mobility spectrometry, and transparency. Our expertise has crossed nuclear detection technologies. Our broad industries to support security at stadiums and portfolio of products, services, and solutions large venues where customers are benefi tting helps customers solve complex security from our comprehensive screening solutions. needs, including combatting terrorism, drug We also provide turnkey screening solutions and weapon smuggling and trade fraud. that reduce upfront capital requirements while With our leading detection technology and providing innovative screening technology, vast industry knowledge, we can meet ongoing operations, maintenance, and staffi ng. demanding security requirements while Each turnkey operation uses our intelligent offering customers outstanding value for platform to manage data integration from their security screening and inspection a wide array of agencies and data sources, operations. giving our customers greater insight into the Our S2 Global business helps organizations full spectrum of security-related information.