OSI Systems, Inc.

Good day and welcome to the OSI Systems, Inc. second quarter 2026 conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will 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, press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Alan Edrick, Chief Financial Officer. Please go ahead.

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. Mira, OSI's President and CEO. Welcome to the OSI Systems Fiscal 2026 Second 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 second 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 on this call are based on currently available information, and the company undertakes no obligation to update any forward-looking statement based upon 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 press release. I will begin with a high-level summary of our financial performance for the second quarter of fiscal 26, 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 the increased non-GAAP EPS guidance for fiscal year 26. we delivered strong second quarter financial results, setting Q2 records across multiple metrics, and we are excited about the momentum across our biggest divisions. The company's revenues increased 11% year over year to a Q2 record of $464 million. Our two largest divisions achieved double-digit top-line growth, with security up 15% and opto up 12%. This top-line performance is particularly impressive given that last year's Q2 included substantial revenue from large security programs in Mexico. The solid revenue growth led to record Q2 non-GAAP adjusted EPS of $2.58. These results included a step up in R&D, reflecting our commitment to innovation. Additionally, cash flow was solid as we generated $62 million in operating cash flow, And while this number is notable, we believe calendar 26 cash flow may be even stronger. 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, and thank you, everyone, for joining us today. I'm excited to discuss our business and share our Q2 fiscal 26 results with you in more detail. We had another record-breaking quarter in Q2 with revenues of $464 million, representing 11% year-over-year growth and strong earnings reflecting our continued momentum. Our security division performed well, and our optoelectronics and manufacturing division delivered another solid quarter. Overall, we continue to see nice demand across many of our markets, and our backlog remains healthy, providing confidence for a strong second half of fiscal 26 and visibility going beyond that. Let's discuss each division's performance starting with security. In our security division, we delivered overall double-digit revenue growth driven by increases in both product and service revenues. As we continually innovate to drive market leadership, we also continue to introduce new innovative product features. Security bookings were lower than expected during the quarter, primarily due to delays in receiving anticipated orders in part due to the U.S. government shutdown and some push out from international customers. These high probability opportunities are still in the pipeline. During the quarter, we announced a $20 million award to deliver a comprehensive radiological threat detection solution to an international customer. This project involves deploying a wide area radiation monitoring network that operates continuously to detect and track radioactive threats. Also, while the formal announcement came after the quarter, We were informed in Q2 that we were selected to support security screening at a major global sporting event in Europe this winter. These wins further reinforce OSI's position as a trusted global provider of critical security infrastructure, supporting national security and high profile mission critical environments worldwide. Switching to RF. We announced shortly after the end of the quarter an international order valued at approximately $30 million to deploy advanced RF-based communication and surveillance systems for naval operations. We are also gaining traction on Golden Dome, the U.S. initiative to create an integrated missile defense system. To that end, our RF business was selected to participate on a massive U.S. Missile Defense Agency contract known as SHIELD. This is a multiple award, indefinite delivery, indefinite quantity contract to support the development of Golden Dome. The contract has a ceiling value of $151 billion over a 10-year period. making it one of the largest IDIQ contracts ever issued by the U.S. Department of Defense. We were one of 2,400 awardees and believe delivery orders from the SHIELD IDIQ could be received in the foreseeable future. As a result of the Golden Dome potential and other growth opportunities for RF solutions, including the recent International Naval Order, we're enhancing our RF operational footprint. We are expanding into new facilities in Texas, which significantly increases production capacity, improves operational efficiency, and further demonstrates our commitment to our customers and long-term innovation in this space. Our overall security pipeline includes a wide range of opportunities, both internationally and domestically. and we are well positioned with a broad range of security offerings. Moving on to Optoelectronics. This division delivered another impressive quarter with double digit top line growth, achieving a second quarter record for revenues and adjusted operating income. This performance was driven by broad demand across our diversified product and customer base. We are seeing growth across industries ranging from medical diagnostics to semiconductors driven by the breadth of our offerings. Apto also had a strong book to bull ratio this quarter. This division continues to see an expanding opportunity pipeline as OEMs are active in diversifying away from China, and de-risking their supply chains by shifting to other low-cost manufacturing regions. By expanding our production capacity with our newest manufacturing facility in Mexico and leveraging our operations across Southeast Asia, India, and North America, we are poised to meet rising global demand and continue benefiting from this trend. Given strong bookings and consistent performance, We believe Opto is well positioned to build upon this momentum. And finally, let's discuss the healthcare division. While Q2 was a challenging quarter for our healthcare division, we remain focused on long-term value creation. We have intensified our sales efforts and are focusing our pipeline of new products by continuing to invest in next generation product development. While it will take time, To regain our footing, we are confident that these actions, along with a broader market recovery, will improve healthcare's performance in the coming quarters. Overall, we are pleased with OSI's Q2 and first half results. We grew revenues and profits significantly and continue to drive efficiencies in our business. I will now return the call to Alan to discuss our financial performance further before we open the call for questions. Thank you.