OSI Systems, Inc.

Good day and thank you for standing by. Welcome to the OSI Systems Inc. first quarter 2026 conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised, today's conference is being recorded. I would now like to hand the conference over to your speaker today, Alan Edrick, Chief Financial Officer. Please go ahead.

Thank you. Good afternoon, and thank you for joining us. I'm Alan Edrick, Executive Vice President and CFO of OSI Systems. And I'm here today with A.J. Mehra, OSI's President and CEO. Welcome to the OSI Systems Fiscal 2026 First Quarter Conference Call. We are pleased that you can join us as we review our financial and our operational results. Earlier today, we issued a press release announcing our Fiscal 26 first quarter financial results. Before we discuss these 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 in 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 will be discussing the company's results using both GAAP and non-GAAP financial measures. For more details on these non-GAAP measures, their comparable GAAP measures, and a quantitative reconciliation of the two, please refer to today's earnings release. I will begin with a high-level summary of our financial performance for the first quarter of fiscal 26 and and then turn the call over to AJ for a discussion of our business and operational performance. We will then finish with more detail regarding our financial results and a discussion of our increased guidance for fiscal year 26. We delivered strong first quarter financial results, setting multiple Q1 records across key metrics, and we are excited by the momentum across our businesses. Now for the high-level summary of our Q1 results. First, revenues increased 12% year-over-year to a Q1 record of $385 million. Each of our three divisions achieved double-digit top-line growth, highlighted by a 13% increase in revenues in the security division. This top-line performance is especially noteworthy given that the prior year Q1 included substantial revenue from major security programs in Mexico. Excluding contributions from those Mexico contracts and revenues generated by businesses acquired in fiscal 25, our underlying consolidated revenues grew roughly 26% in Q1, highlighting robust organic demand across our core businesses. Second, the solid revenue growth led to record Q1 non-GAAP adjusted EPS of $1.42. And third, Q1 bookings were strong, and with a book-to-bill ratio of approximately 1.1 in the quarter, we finished with a record Q1 backlog approaching $1.9 billion. This backlog, coupled with a robust pipeline of opportunities, provides good visibility as we continue into Q2. Before diving more deeply into our financial results and discussing our outlook for fiscal 26, I will turn the call over to AJ.

Thank you, Alan. Good afternoon, everyone. I want to start by recognizing the outstanding performance of our global OSI team in delivering a record-breaking first quarter. Our results this quarter reflect the strength of our diversified business model and our relentless focus on innovation, operational excellence, and customer satisfaction. As Alan mentioned, we achieved 12% revenue growth with solid earnings. Furthermore, our service revenues grew 23% during the quarter, as many of our product installations over the last few years are now generating recurring revenue from ongoing service and support. We closed the quarter with a record Q1 backlog and feel confident about the future outlook. Let's jump into the performance and key highlights across our three divisions for the first quarter. starting with our security division. Q1 revenues in this division were $254 million, a solid 13% year-over-year growth. Bookings were strong, resulting in a record Q1 security backlog, setting a strong foundation for continued growth. During the quarter, we continued to successfully perform on our port and border security contracts with Mexico. However, As Alan will elaborate shortly, the impact of these contracts on our overall business has moderated. It has been more than offset by robust growth across other areas of our diverse security portfolio. This dynamic was evident in Q1, where revenues from our aviation, cargo, and RF detection offerings, including service, drove double-digit overall growth. Our customers have witnessed a proven expertise in system integration, maintenance, operator training, and long-term support, all of which optimize the performance of our inspection equipment during its lifecycle. We've also effectively built our turnkey offerings to strengthen our position in global equipment tenders for ports, borders, and airport security. As I noted earlier, our bookings remained robust, with a book-to-bill ratio of 1.1 in the security division, supported by several significant wins, some of which we announced recently. We announced approximately $75 million in non-intrusive inspection product and integration orders, and more than $60 million in RF product orders that were received during Q1. These orders reflect our growing momentum in critical areas such as cargo and vehicle inspection and advanced RF detection technologies. More importantly, they reinforce the stability and depth of our relationships with our customers. Driven by factors like geopolitical conflicts, terrorism, and crime, Governments worldwide are investing heavily in advanced systems to enhance detection, deterrence, and response capabilities. These escalating global threats are being addressed by increasing focus on technology innovation and, in turn, shifting policy priorities supported by targeted funding. During the quarter, we also announced an award of a five-year contract from CBP, for its NII Common Integration Platform Program, also referred to as CIP. The CIP program is designed to enhance national border security by enabling sufficient screening and strengthening collaboration among CVP, the Department of Homeland Security, and other stakeholders. We are providing our CertScan platform to support CVP strategic goals by modernizing its inspection capabilities. Therefore, as part of the CIP program, we will support various integration efforts, not only on our platforms, but also with inspection technologies and solutions from other providers. This SaaS-based offering is expected to increase annual recurring revenues over time. We're also gaining significant traction in our RF product line and anticipate further momentum from opportunities tied to Golden Dome-related expenditures, highlighted in the one big, beautiful bill. Once the government resumes full operations, we anticipated heightened demand for a number of our core offerings. The successes in Q1 instilled great confidence in our robust growth prospects as we advance through the remainder of fiscal 2026 and beyond. Turning now to our Opto Electronics and Manufacturing Division, Opto delivered record Q1 revenues, including intercompany sales, while achieving strong profitability. We experienced notable strength and expansion across our product lines in North America, where many of our customers are leading OEMs in their industries. Our operations in Mexico continue to play an important role amid ongoing global tariff uncertainties. We fielded numerous inquiries from both existing and prospective OEMs seeking to realign their supply chains toward the U.S. and near-shore options. Our robust global manufacturing footprint spanning North America, Europe, and Southeast Asia positions us as a compelling alternative for capitalizing on this potential supply chain shift. Finally, turning to our healthcare division, Q1 sales rose a solid 10% year over year. As we've discussed on prior calls, we're executing on the improvement plans we put in place under a new leadership team and beginning to see tangible benefits in both sales and operations. That said, While this Q1 performance reinforces that we are on a good path, we still have considerable way to go before meeting our high-performance standards. Looking ahead, we'll continue to drive product innovation in healthcare with continued R&D investments while advancing operational efficiencies to enhance profitability. In summary, OSI Systems has tremendous momentum. We are a thriving business. diverse and substantial backlog and a robust balance sheet that supports both organic growth and strategic investments. We remain disciplined in managing our cost structure. We expect to generate strong cash flow this year, which, combined with our ample credit capacity, affords us significant flexibility in capital allocation. I want to thank our employees, customers, and shareholders for their continued support. With a strong foundation and expanding opportunities, we are well positioned to deliver long-term value. With that, I will turn the call over to Alan to discuss the financial performance and updated guidance in more detail before opening the call for questions. Thank you.