OSI Systems, Inc. EBITDA surged on 23.8% and EBITDA Margin increased slightly on 0.97 pp from 10.6% to 11.5%
08/23/2018 • About OSI Systems, Inc. (
$OSIS) • By InTwits
OSI Systems, Inc. reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- OSI Systems, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.1%. At the same time it's in pair with industry average of 3.6%
- CAPEX is quite volatile: $43m in FY2018, $17m in FY2017, $18m in FY2016, $15m in FY2015, $55m in FY2014
- The company has potentially unprofitable business model: ROIC is 6.2%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.2x while industry average is -0.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 13.4%. Revenue growth showed acceleration in FY18Q4 - it increased 13.8% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.71 pp from 2.2% to 2.9% in 2018.
Gross Margin increased on 2.3 pp from 33.7% to 36.0% in FY2018. SG&A as a % of Revenue increased slightly on 2.0 pp from 20.0% to 22.0% in FY2018. SG&A as a % of Revenue followed a growing trend at 0.93 pp per annum in the last 5 years.
Net Income margin decreased on 4.9 pp from 2.2% to -2.7% in FY2018. Net Income margin stuck to a declining trend at -2.1 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
OSI Systems, Inc.'s CAPEX/Revenue was 4.0% in FY2018. OSI Systems, Inc. showed CAPEX/Revenue growth of 2.4 pp from 1.6% in FY2015 to 4.0% in FY2018. For the last three years the average CAPEX/Revenue was 2.6%.
Return on investment
The company operates at low but positive ROIC (6.2%) and negative ROE (-5.5%). ROIC increased on 2.1 pp from 4.2% to 6.2% in FY2018. ROE decreased on 9.3 pp from 3.8% to -5.5% in FY2018. ROE declined at -3.8 pp per annum in FY2014-FY2018.
Leverage (Debt)
Debt level is 2.2x Net Debt / EBITDA and 2.9x Debt / EBITDA. Net Debt / EBITDA surged on 0.5x from 1.7x to 2.2x in FY2018. Debt increased on 4.9% while cash dropped on 50.0%. Net Debt/EBITDA followed a growing trend at 0.6x per annum in FY2014-FY2018.
OSI Systems, Inc. has short term refinancing risk: cash is only 73.6% of short term debt.
Management team
OSI Systems, Inc.'s CEO Deepak Chopra is a founder and has spent 27 years with the company. Alan I Edrick is a OSI Systems, Inc.'s CFO. Alan I Edrick has spent 12 years at the company.
Financial and operational results
FY ended 06/30/2018
OSI Systems, Inc. ($OSIS) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 907 | 958 | 830 | 961 | 1,089 | 13.4% |
| Gross Profit | 305 | 325 | 277 | 324 | 392 | 21.1% |
| SG&A | 167 | 172 | 167 | 193 | 240 | 24.4% |
| EBITDA | 136 | 151 | 96 | 102 | 126 | 23.8% |
| Net Income | 48 | 65 | 26 | 21 | -29 | -238.2% |
Balance Sheet
|
|---|
| Cash | 39 | 48 | 104 | 170 | 85 | -50.0% |
| Short Term Debt | 27 | 3 | 128 | 105 | 115 | 9.4% |
| Long Term Debt | 10 | 9 | 6 | 242 | 249 | 3.0% |
Cash flow
|
|---|
| Capex | 55 | 15 | 18 | 17 | 43 | 152.7% |
Ratios
|
|---|
| Revenue growth | 13.1% | 5.7% | -13.4% | 15.8% | 13.4% | |
| EBITDA growth | 32.9% | 11.5% | -36.3% | 5.4% | 23.8% | |
|
|---|
| Gross Margin | 33.6% | 34.0% | 33.4% | 33.7% | 36.0% | 2.3% |
| EBITDA Margin | 14.9% | 15.8% | 11.6% | 10.6% | 11.5% | 1.0% |
| SG&A, % of revenue | 18.4% | 17.9% | 20.1% | 20.0% | 22.0% | 2.0% |
| Net Income Margin | 5.3% | 6.8% | 3.2% | 2.2% | -2.7% | -4.9% |
| CAPEX, % of revenue | 6.0% | 1.6% | 2.1% | 1.8% | 4.0% | 2.2% |
|
|---|
| ROIC | 12.7% | 14.4% | 6.0% | 4.2% | 6.2% | 2.1% |
| ROE | 9.5% | 11.7% | 4.7% | 3.8% | -5.5% | -9.3% |
| Net Debt/EBITDA | -0.0x | -0.2x | 0.3x | 1.7x | 2.2x | 0.5x |
OSI Systems, Inc. ($OSIS) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 257 | 278 | 267 | 287 | | 16.4% | 14.4% | 9.0% | 13.8% |
| EBITDA | 40 | 39 | 21 | 25 | | 126.9% | 55.0% | -41.3% | 13.7% |
| Net Income | 10 | -47 | 3 | 5 | | 1,400.3% | -1,071.5% | -81.8% | 230.6% |
Balance Sheet
|
|---|
| Cash | 192 | 212 | 194 | 85 | | 56.2% | 53.3% | 22.4% | -50.0% |
| Short Term Debt | 216 | 197 | 230 | 115 | | -36.7% | -43.9% | 141.3% | 9.4% |
| Long Term Debt | 243 | 245 | 247 | 249 | | 4,228.9% | 4,882.3% | 2.9% | 3.0% |
Ratios
|
|---|
| Gross Margin | 35.5% | 36.6% | 36.5% | 35.2% | | 4.7% | 2.6% | 1.4% | 0.8% |
| EBITDA Margin | 15.5% | 14.2% | 8.0% | 8.7% | | 7.5% | 3.7% | -6.9% | -0.0% |
| Net Income Margin | 4.0% | -16.9% | 1.0% | 1.8% | | 3.6% | -18.9% | -4.8% | 1.2% |
Peers in Electronic Equipment & Instrum
Below we provide OSI Systems, Inc. benchmarking against other companies in Electronic Equipment & Instrum industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Hickok Inc ($HICKA) | | -7.2% | 13.5% | 258.4% | 178.7% |
| Electro Scientific Industries, Inc. ($ESIO) | | -12.2% | 15.9% | -12.7% | 128.5% |
| Microvision, Inc. ($MVIS) | | 163.6% | 60.7% | -34.7% | 82.8% |
| Ipsidy Inc ($IDTY) | | | | | 66.2% |
| Magal Security Systems Ltd. ($MAGS) | | -17.8% | 6.4% | -5.2% | 44.0% |
| |
|---|
| Median (61 companies) | -78.5% | 3.5% | 1.2% | 3.6% | 9.1% |
|---|
| OSI Systems, Inc. ($OSIS) | | 5.7% | -13.4% | 15.8% | 13.4% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Intellicheck, Inc. ($IDN) | 58.2% | 57.1% | 80.0% | 85.5% | 91.3% |
| Image Sensing Systems, Inc. ($ISNS) | 74.7% | 77.1% | 71.0% | 79.9% | 80.9% |
| National Instruments Corporation ($NATI) | 74.4% | 74.1% | 74.5% | 74.5% | 75.4% |
| Cognex Corporation ($CGNX) | 77.9% | 77.2% | 75.2% | 75.6% | 74.4% |
| Applied DNA Sciences Inc ($APDN) | | | 82.2% | 77.3% | 69.1% |
| |
|---|
| Median (60 companies) | 42.7% | 42.3% | 41.2% | 41.8% | 42.0% |
|---|
| OSI Systems, Inc. ($OSIS) | 33.6% | 34.0% | 33.4% | 33.7% | 36.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Cognex Corporation ($CGNX) | 32.9% | 30.1% | 31.9% | 36.0% | 30.1% |
| Coherent, Inc. ($COHR) | 14.2% | 16.7% | 18.9% | 24.9% | 26.6% |
| Hollysys Automation Technologies, Ltd. ($HOLI) | 21.3% | 26.9% | 23.5% | 16.1% | 23.9% |
| Electro Scientific Industries, Inc. ($ESIO) | -10.1% | -19.1% | -2.0% | -17.8% | 23.1% |
| FLIR Systems, Inc. ($FLIR) | 20.7% | 22.8% | 21.3% | 20.0% | 21.7% |
| |
|---|
| Median (60 companies) | 5.3% | 3.9% | 3.0% | 3.0% | 3.3% |
|---|
| OSI Systems, Inc. ($OSIS) | 14.9% | 15.8% | 11.6% | 10.6% | 11.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Wrap Technologies Inc ($WRTC) | | | | | 61.4% |
| ClearSign Combustion Corporation ($CLIR) | | 80.3% | 22.1% | 17.4% | 17.7% |
| LightPath Technologies, Inc. ($LPTH) | 16.8% | 5.0% | 6.5% | 7.8% | 7.7% |
| Giga-tronics Inc ($GIGA) | 1.7% | 0.1% | 1.3% | 0.3% | 7.0% |
| Applied DNA Sciences Inc ($APDN) | 8.4% | 3.9% | 16.1% | 3.1% | 6.8% |
| |
|---|
| Median (60 companies) | 1.8% | 2.0% | 2.1% | 1.6% | 2.2% |
|---|
| OSI Systems, Inc. ($OSIS) | 6.0% | 1.6% | 2.1% | 1.8% | 4.0% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Evans & Sutherland Computer Corp ($ESCC) | | | 83.3% | 39.6% | 55.3% |
| Electro Scientific Industries, Inc. ($ESIO) | -11.7% | -19.7% | -7.1% | -22.9% | 31.5% |
| Coherent, Inc. ($COHR) | 9.9% | 13.1% | 15.6% | 24.0% | 21.5% |
| Zebra Technologies Corporation ($ZBRA) | 3.3% | 0.9% | 2.2% | 10.2% | 20.8% |
| Cognex Corporation ($CGNX) | 18.3% | 15.6% | 17.7% | 25.6% | 20.1% |
| |
|---|
| Median (72 companies) | 3.3% | 1.8% | 1.8% | 1.8% | 0.9% |
|---|
| OSI Systems, Inc. ($OSIS) | 12.7% | 14.4% | 6.0% | 4.2% | 6.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Itron, Inc. ($ITRI) | 2.1x | 1.9x | 1.0x | 2.0x | 12.3x |
| Track Group Inc ($TRCK) | | | | | 12.2x |
| Mesa Laboratories, Inc. ($MLAB) | 0.7x | 1.1x | 1.7x | 2.0x | 3.5x |
| Trimble Inc. ($TRMB) | 1.3x | 1.7x | 1.1x | 1.3x | 3.4x |
| MTS Systems Corporation ($MTSC) | -0.0x | -0.4x | 5.8x | 3.9x | 3.2x |
| |
|---|
| Median (35 companies) | -0.8x | -0.9x | -0.9x | -0.8x | -0.9x |
|---|
| OSI Systems, Inc. ($OSIS) | -0.0x | -0.2x | 0.3x | 1.7x | 2.2x |
