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• Revenue: Increased 10% year over year to a Q3 record of $444 million.

• Security Division Revenue: Increased 10% year over year to $350 million.

• Opto Division Revenue: Increased 15% year over year, surpassing $100 million in sales.

• Healthcare Division Revenue: Increased 5% year over year.

• Non-GAAP Adjusted Earnings Per Share: Record Q3 EPS of $2.44.

• Backlog: Record backlog of more than $1.8 billion.

• Operating Cash Flow: Record Q3 operating cash flow of $82 million.

• Gross Margin: 33.8%, up 20 basis points from the previous year.

• Adjusted Operating Margin: 14.2%, up from 13.9% in the previous year.

• Book-to-Bill Ratio: Exceeded 1.0 in Q3.

• SG&A Expenses: $73.2 million or 16.5% of sales.

• R&D Expenses: $18.6 million or 4.2% of revenues.

• Effective Tax Rate: GAAP rate of 14.3%.

• Guidance for Fiscal '25 Revenue: $1.69 billion to $1.715 billion.

• Guidance for Fiscal '25 Non-GAAP EPS: $9.15 to $9.45.

• Warning! GuruFocus has detected 10 Warning Signs with OSIS.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• OSI Systems Inc (NASDAQ:OSIS) reported a 10% year-over-year revenue increase to a Q3 record of $444 million, with growth in all three divisions.

• The company achieved a record Q3 non-GAAP adjusted earnings per share of $2.44.

• OSI Systems Inc (NASDAQ:OSIS) finished the quarter with a record backlog of more than $1.8 billion, providing good visibility for future growth.

• The company generated record Q3 operating cash flow of $82 million, a significant improvement from the negative cash flow in the same quarter last year.

• The Optoelectronics and Manufacturing division delivered a standout quarter with revenues growing 15% year over year, surpassing $100 million in sales.

Negative Points

• The evolving global trade environment, particularly US tariff policies, introduces uncertainty and potential challenges for OSI Systems Inc (NASDAQ:OSIS).

• The Security division's adjusted operating margin decreased year over year due to less favorable product mix and increased R&D investment.

• Revenues from Mexico contracts decreased significantly, impacting overall revenue growth.

• The Healthcare division's adjusted operating margin remains lighter than desired, indicating room for improvement.

• The tariff environment remains unstable, posing potential risks for future financial periods beyond Q4.

Q & A Highlights

Q: Can you expand on the tariff situation and its impact on each segment, and why there is no expected impact in Q4? A: Ajay Mehra, President and CEO, explained that there is no anticipated impact on Q4 due to proactive measures. The company has limited exposure to China in its largest divisions, and while healthcare has more exposure, there are ways to mitigate it. They are in discussions with customers and suppliers to address future impacts.