OSI Systems, Inc.

Thank you for standing by, and welcome to the OSI Systems fourth quarter and fiscal year-end conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1 on your telephone. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Alan Edrick, Executive Vice President and Chief Financial Officer. Please go ahead, sir.

Well, thank you. Good morning, and thank you for joining us today. I'm Alan Edrick, Executive Vice President and CFO of OSI Systems, and I am here today with Deepak Chopra, our President and CEO. Welcome to the OSI Systems Fiscal 21 Fourth Quarter and Year-End Conference Call. We are pleased to review with you our financial and our operational results and to provide our outlook for Fiscal 22. Earlier today, we issued a press release announcing our fourth quarter and fiscal year 21 financial results. Before we discuss our results, I would like to remind everyone that today's discussion will include forward-looking statements, and the company wishes to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 with respect to such forward-looking statements. All forward-looking statements made on this call are based on currently available information. and the company undertakes no obligation to update any forward-looking statement based on subsequent events or new information or otherwise. During today's call, we refer to both GAAP and non-GAAP financial measures when describing the company's results. For information regarding non-GAAP measures and the most directly comparable GAAP measures of the company's results and a quantitative reconciliation of those figures, please refer to today's earnings release. I will begin with a summary of our financial performance for the fourth quarter of fiscal 21, and then turn the call over to Deepak for an overview of our business performance. I will then return to finish with more detail regarding our financial results and to discuss our outlook for fiscal 22. We are proud of our strong fourth quarter, where we achieved new records across multiple metrics. In managing this continuing COVID environment, A major priority at OSI Systems has been and will remain the delivery on commitments to our customers and to our partners while ensuring the continued safety of our employees. Now we will cover some highlights. First, we reported a record $332 million in fourth quarter revenues, representing 20% growth over the prior year as the security and opto divisions posted impressive results. We reported record GAAP and record non-GAAP fiscal Q4 earnings per share. Q4 non-GAAP adjusted diluted earnings per share was $1.54, up 26% from our Q4 non-GAAP adjusted diluted EPS in fiscal 20. For the full year, we delivered non-GAAP EPS of $5.32, a 16% increase over non-GAAP EPS in the prior year. Third, We generated $8 million in operating cash flow during fiscal Q4, bringing cash flow for the full 2021 fiscal year to a new record total of $139 million. Fourth, bookings were once again solid in the quarter. Our book-to-bill ratio was 1.0 in Q4 and 1.2 for the full 2021 fiscal year. We enter fiscal 22 with a backlog of nearly $1.1 billion which is a 25 percent increase over our backlog at the beginning of fiscal 21 and a fiscal year end record for us. And finally, our balance sheet is solid with net leverage of approximately 1.0. Before diving more deeply into our financials, let me turn the call over to Deepak.

Thank you, Alan. And again, welcome to the OSI systems earnings call conference call. Throughout the fiscal 21, Our company was committed to serving our customers while creating a safe workplace for our employees in the ongoing COVID environment. As Ellen mentioned, our team delivered a strong Q4 performance with a 20% revenue growth over the prior year, solid bookings, and a record year-end backlog. Discussing each division in more depth, starting with some of the highlights relating to the security division, where Q4 fiscal 21 revenues increased 23% year over year to $202 million, and we ended fiscal 21 with a backlog 21% higher than the division's backlog at the end of the fourth quarter of fiscal 20 comparable period. The security division's Q4 growth was prevalent through much of the division's products. Global bookings increased 14% from Q4 2020 with orders from both U.S. and international customers. During the quarter, we were successful in expanding our presence with the Department of Defense agencies and made progress with ongoing international projects even as COVID spikes continue in certain regions that affect travel and logistics. Our turnkey services programs, which actively support local authorities in managing drug introduction, customs enforcement, and controls of goods and tariffs, continue to perform well in Puerto Rico, Albania, and Guatemala. These programs utilize CertScan, our proprietary software platform, that is cyber secure, can manage inspection image data, integrates with other IT systems at checkpoints and facilities, and facilitates the automation of inspection activity. The search scan software integration platform is often used in our cargo inspection equipment deployments and are continuing to see traction with large customers that are utilizing this software platform for use in their security infrastructure for inspection equipment from multiple vendors. In other words, SearchScan can be implemented as a standalone integration product by the security customers. Worldwide, passenger airport activity continues to return slowly to pre-COVID levels. and our team is working with our aviation customers regarding their plans to upgrade security infrastructure. Our RTT-110CT whole baggage screening system is deployed at numerous international airports as well as at commercial air cargo facilities. Shortly before quarter end, we received an order which we announced this week for multiple units of the RTT-110 to be installed at a major international airport in Asia. As we have said in the past, the RTT-110 is also being utilized very effectively by various air cargo customers, such as FedEx, DHL, UPS, etc., for efficient screening of packages. We announced selected wins in this segment during the last fiscal year and expect global logistic providers to continue investing in upgrades to handle volume growth from e-commerce and the reopening of the worldwide economy. Our growing install base of inspection equipment also creates ample recurring revenue opportunities. as we can provide our customers with continued maintenance and support through the equipment's life cycle. We reported growth in this recurring revenue both in Q4 and for the full fiscal year. Of note, during the quarter, we announced a multi-year contract valued at $16 million from an international customer to provide maintenance, repair, upgrades, and support services for several platforms of cargo, vehicle, and baggage inspection systems that are currently deployed at checkpoints. We also announced another contract valued at approximately $6 million under which we are responsible for operating and continuing service of various wrapper scan systems and AS&E cargo vehicle parcel systems and trace detection systems at a critical infrastructure facility. Looking ahead, in addition to significant backlog, the security division enters fiscal 22 with a healthy pipeline of diverse opportunities, both in U.S. and international. Our proven inspection platforms utilizing cutting edge technology and our flexible approach to servicing the marketplace puts us in a very strong position to capture new business. The U.S. infrastructure bill currently in legislation has large expenditures identified in areas that could help us generally, especially at airport and port upgrades and generally with our industrial OEM customers. We will assess the impact from the final version of the bill and expect to have a positive impact for our business in the long run. Moving on to optoelectronics. In Q4, the optoelectronics and manufacturing division generated total revenues, including intercompany, of 92 million, representing a 37% increase over revenues in Q4 of a comparable period last year, while expanding the Q4 adjusted operating margin. The division reached $350 million in revenues, including intercompany for the year, at 23% higher than the prior year. As we are vertically integrated, the purchasing activity at Opto is an excellent gauge for supply chain dynamics affecting the overall company. In a few cases, we have definitely seen longer lead times and higher sourcing costs, but the team is working through these challenges. Our Opto team did a wonderful job managing pandemic-related challenges while maintaining a safe working environment and meeting commitments to our customers in several different countries. For fiscal 22, given opto's year-end backlog the highest quarter-end backlog ever for our opto division we believe that this division is well positioned for another strong year moving to healthcare in the fourth fiscal quarter the healthcare division reported revenues of 52 million or about 10 percent below the fourth fiscal quarter of the prior year this result derives to some degree from the very strong prior year fourth quarter that was driven by heavy COVID-related demand near the onset of the pandemic. During the last quarter, we announced an order valued at approximately $4 million from the U.S. hospital to provide patient monitoring, telemetry, and related accessories. We also renewed an important group purchasing contract to provide patient monitoring systems to Premier Inc., one of the largest GPOs in the United States. During the fourth fiscal quarter and throughout fiscal 21, we made substantial investments in R&D to enhance our core offerings and develop new products in both patient monitoring and diagnostics cardiology. We also launched during the quarter the LiveScreen Pro event screening system, which provides rapid analysis, allowing an initial triage to find suspected or intermittent arrhythmia events. This product is expected to contribute to growth in cardiology in fiscal 22 and beyond. Overall, I'm pleased with our performance in Q4 and fiscal 21 and also very grateful for the perseverance that our team has demonstrated in handling COVID-related challenges and opportunities. Our ability to manufacture complete systems and subassemblies in North America, Europe, and Asia is paying off for us as it provides optionality in how we support our global customers and handle supply constraints as they may arise. Going forward, our focus will be on serving our core markets, increasing our recurring revenues, capitalizing on strategic acquisitions and opportunities and making notable advances in our technology and product portfolio while continuing to take care of our employees and their physical well-being and general well-being. I really look forward to fiscal 22. With that, I'm going to turn the call back over to Alan to talk in more detail about our financial performance and guidance before opening the call for questions. Thank you.