Osi Systems, Inc. · NASDAQ:OSIS
Osi Systems — Q2 FY2006 Earnings Presentation
50 slides from Osi Systems's earnings presentation, April 2006
Slide 1: OSI Systems, Inc.
Slide 2: Safe Harbor Statement
“Safe Harbor” Statement This presentation may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Because such statements are subject to risks and uncertainties actual results may differ materially
Slide 3: Company Background: OSI Systems, Inc.
Company Background: OSI Systems, Inc. Nasdaq: OSI Systems, Inc. (“OSIS”) Share Price 04/13/06: $19.10 Market Cap. Approx: $312m Global developer, manufacturer and seller of: Security and Inspection Systems – Rapiscan Systems Medical Monitoring and Anesthesia systems – Spacelabs Healthcare, Inc. Opto
Slide 4: OSI Systems Profit & Loss Statement
OSI Systems Profit & Loss Statement $m 2Q FY 06 2Q FY 05 % Growth Sales 117.1 102.5 14% Gross Profit 45.1 36.5 24% Operating Expenses (40.9) (33.1) Operating Income 4.2 3.2 31% Stock Option Expenses (1.3) - Profit Before Tax 2.9 3.2 Tax (1.9) (0.8) Minority Interest (1.0) - Net Income 0.1 2.4 Dilute
Slide 5: OSI Systems Annual Revenue Growth
OSI Systems Annual Revenue Growth $450m to 500 $455m 450 FY 2006 Est. $385m 400 350 300 Millions $247.1 m $219m 250 1H 2006 200 $182.6m 150 $124 m $94.9 m $105.2m 100 50 0 2000 2001 2002 2003 2004 2005 2006 Growth % Yr on Yr: 11% 18% 47% 35% 58% 17% to 18%
Slide 6: OSI Systems Balance Sheet
OSI Systems Balance Sheet $m 31 Dec 05 30 June 05 Cash & Equivalents 17.2 14.6 Accounts Receivables 101.4 89.2 Other Current Assets 139.2 133.4 Fixed Assets 111.5 109.5 Total Assets 369.5 347.1 Accounts Payable 104.1 97.0 Other Current liabilities 12.3 16.3 Long Term Debt 11.2 10.2 Equity 241.9 223.
Slide 7: OSI Systems Operating Segments
OSI Systems Operating Segments Mkt. Cap: $345m Q2 FY 2006 Q2 FY 2006 Q2 FY 2006 Revenue: $30.4m Revenue: $61m Revenue: $25.8m Operating Income: $(0.7)m Op. Income: $5.3m (9%) Op. Income: $2.9m (11%) Fiscal Year 2005 Fiscal Year 2005 Fiscal Year 2005 Revenue: $123.2m Revenue: $195.7m Revenue: $66.1m
Slide 8: OSI Guidance for Second Half Fiscal 2006
OSI Guidance for Second Half Fiscal 2006 Second half of fiscal 2006 revenue guidance of $231m to $236m Up 18% to 21% from $194.9m reported in 2H FY 2005 Full year fiscal 2006 revenue guidance of $450m to $455m Up 16% to 18% from $385m reported in FY 2005 Expect Company to be profitable in the second
Slide 9: Optoelectronic and Electronic Manufacturing Services and Solutions
Optoelectronic and Electronic Manufacturing Optoelectronic and Electronic Manufacturing Services and Solutions Services and Solutions
Slide 10: OSI Optoelectronics Group
OSI Optoelectronics Group Background 35 years of Opto-electronic manufacturing experience Manufacturing facilities in Norway, China, Malaysia, Singapore, India, Indonesia and the U.S. Produce products for over 300 customers globally Mission Statement Increase manufacturing efficiencies In source man
Slide 11: Spacelabs Healthcare
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Slide 12: Spacelabs Healthcare, Inc. Company Overview
Spacelabs Healthcare, Inc. Company Overview Profitable global medical technology business – Patient Monitoring, Anaesthesia, Pulse Oximetry & Clinical Trials Business model - – Target markets w/w > US$4billion annually – High visibility, 23% recurring revenues in service and S&A Recognized brand nam
Slide 13: Spacelabs Healthcare: Stock Performance
Spacelabs Healthcare: Stock Performance Ticker symbol - SLAB (London), IPO completed Oct. 2005 Company 80% owned by OSI Systems Current market cap: $167m, up 15% since IPO; Current enterprise value of $202m, up from $180m since IPO; – Represents approximately 60% of OSI market cap or approximately $
Slide 14: Spacelabs Profit & Loss Statement
Spacelabs Profit & Loss Statement $USD 31 Dec 05 30 June 05 % Growth Sales 112.4 96.8 16% Gross Profit 53.3 43.2 23% Operating Expenses (46.3) (39.1) Operating Income 7.0 4.1 71% Stock Option Expenses (0.5) - Profit Before Tax 6.5 4.1 Tax (2.3) (1.4) Minority Interest (0.1) - Net Income 4.1 2.7 50%
Slide 15: Quarterly Revenue Growth - Proforma Basis
Quarterly Revenue Growth - Proforma Basis 70 $61m $58m 60 $56m $52m $51m $51m $50 m $51m $49m 50 $47 m $44m $40 m $41m $40m 40 2003 millions 2004 2005 30 2006 20 03 04 05 06 03 04 05 06 03 04 05 03 04 05 10 0 Quarter 1 Quarter 2 Quarter 3 Quarter 4 *Proforma financial results, figures include revenu
Slide 16: Spacelabs Balance Sheet
Spacelabs Balance Sheet $USD 31 Dec 05 30 June 05 Cash & Equivalents 11.7 7.9 Accounts Receivables 58.4 44.1 Other Current Assets 40.0 46.3 Fixed Assets 32.5 33.0 Total Assets 142.6 131.3 Accounts Payable 17.6 18.7 Other Current liabilities 47.3 43.2 Long Term Debt 35.3 57.3 Equity 42.4 12.1 Total L
Slide 17: Target Markets
Target Markets Product line Market Size Growth Rate Patient Monitoring $2.3b - 5% to 7% in developed markets - 10% to 15% in emerging markets/low acuity - 15% telemetry/wireless Anaesthesia $0.7m - $1b - 5%-7% in developed markets - 10% -15% emerging markets Medical Data $230m+ - Expected to grow to
Slide 18: Spacelabs Healthcare Organisational Structure
Spacelabs Healthcare, Inc. Organisational Structure Patient Anaesthesia / Medical Solutions Monitoring Ventilation Bone Ambulatory Blood Pressure Densitometry Pulse Oximetry Medical Data FY 2005 Sales Breakdown as % of total annual sales: 18 Patient Monitoring: 75% Anaesthesia: 10% Medical Solutions
Slide 19: Patient Monitoring: Market position and strategy
Patient Monitoring Spacelabs Medical – Market position and strategy Global player – Leading independent supplier in the US – International brand recognition • USA, Asia & Europe – International sales and service coverage Unique selling points – Long-term customers and strategic partnerships – Open a
Slide 20: Patient Monitoring Highlights
Patient Monitoring Highlights For the First Half of Fiscal 06 Strong sales order intake – up 15% globally. Manufacturing gross margin improvement of 5% Launch of new wireless patient monitors into North American market – Launch worldwide by Spring 2006 Ongoing commitment to R&D Low acuity monitor ta
Slide 21: Anaesthesia
Anaesthesia Background Anaesthesia systems, components, Supplies & Accessories (S&A) Market size – Est. US$700m pa Customers – Hospitals, surgery centres, Competition clinics – Drägerwerk AG – OEMs – GE Healthcare Leading player Sold 4,500 systems in - OEM products (vaporisers and ventilators) past
Slide 22: Anaesthesia Highlights
Anaesthesia Highlights For the First Half of Fiscal 06 Integration of anaesthesia and patient monitoring sales channels; 510(k) approval from the FDA for distribution of the Blease Sirius anaesthesia system into the U.S. market – target launch 2007 Approximately 40 new distributors added internation
Slide 23: Spacelabs Medical Data
Spacelabs Medical Data Focused Growth Opportunity Digital collection, interpretation and distribution of cardiac safety Market size clinical trials data – Est. US$240m per annum – growing to US$1.4 bn due to FDA regulations Customers – Pharma companies, CROs Competition – eResearch, BMS, Covance • P
Slide 24: Summary – First Half Operational Highlights
Summary – First Half Operational Highlights Awarded three year multi-source supplier contract with Premier, Inc., one of the U.S’s leading hospital and healthcare systems alliances; Launched a wireless network option for a range of UltraviewSL 2400 compact monitors in North America; Received 510(k)
Slide 25: Summary – Key Growth Drivers
Summary – Key Growth Drivers Product line expansion through strategic acquisitions Retain historic customer base Increase recurring revenue from S&A and service Leverage brand and sales channels Gross margin expansion in Patient Monitoring division Product line expansion through R&D Expand presence
Slide 26: Rapiscan Systems
Rapiscan systems An OS! Systems Company
Slide 27: Rapiscan Systems Overview
Rapiscan Systems Overview • Leader in multi-billion dollar worldwide security and inspection market; • Only vertically integrated security solutions provider; • Key product groups include: • People Screening – Metal Detectors, Backscatter Rapiscan Secure 1000; • Baggage & Parcel Inspection – Checkpo
Slide 28: Installed Base
Installed Base Baggage and Parcel Inspection - 12,000 Checkpoint X-ray systems People Screening - 40,000+ Metal Gates - 200+ Rapiscan Secure 1000’s Hold Baggage Screening Systems - Launched 12/05, first order 1/06 Cargo and Vehicle Inspection Systems - 40+ Cargo and Vehicle Inspection systems instal
Slide 29: Global Presence
Global Presence Finland Manufacturing, R&D, Sales United Kingdom Manufacturing, R&D, Sales San Jose, CA Manufacturing, R&D, Sales Washington D.C. Sales Headquarters Hawthorne, CA Manufacturing, R&D and Sales Hyderabad, India Manufacturing, R&D Singapore/Malaysia Manufacturing Distribute products to
Slide 30: Security & Inspection Market Landscape
Security & Inspection Market Landscape SEGMENT TECHNOLOGIES COMPANIES People Screening Metal Detectors Rapiscan, Ceia, Garret Backscatter Rapiscan, AS&E Baggage & Parcel Inspection - Carry-on & Non-Aviation X-Ray Rapiscan, Smiths, L3 - Hold Baggage Screening Multi-view X-Ray Rapiscan, L3, Smiths (Ch
Slide 31: People Screening
People Screening Rapiscan ayetene
Slide 32: Rapiscan Secure 1000
People Screening Rapiscan Secure 1000 Currently installed at Heathrow Airport in London Potential for further expansion of aviation market: • BAA, Plc. – U.K & E.U. • TSA trials – U.S. Increasing demand outside of aviation market
Slide 33: Baggage and Parcel Inspection
Baggage and Parcel Inspection
Slide 34: Diverse Conventional Product Line
Diverse Conventional Product Line Weatherproof, Mobile, Larger Parcels Military Design Checkpoint Baggage Smaller Parcels Palletized Cargo
Slide 35: Baggage and Parcel Inspection Systems
Baggage and Parcel Inspection Systems Core business for Rapiscan Systems Profitable product line with sales continuing to grow annually; Growth attributable to: • Replacement cycle business • Development of new airports internationally • U.S. and international government business • High security fac
Slide 36: Hold Baggage Screening
Rapiscan o ay stems OS! Systems Cor Hold Baggage Screening
Slide 37: Hold Baggage Screening – X-Ray Market Overview
Hold Baggage Screening – X-Ray Market Overview Technology: Multi-View X-ray for hold baggage Product Offering: Rapiscan MVXR5000 Market: Global with exception of U.S. Competition: L3 & Smiths Detection Market size: 1,000+ machines installed globally; ASP approximately $300k to $500k Current Systems:
Slide 38: Hold Baggage Screening: Rapiscan MVXR5000
Hold Baggage Screening: Rapiscan MVXR5000 High Speed Inline Multi-View X-Ray System • First Rapiscan product for HBS market - introduced 12/05 • Completed live trials at Gatwick International Airport; • Received U.K. Department for Transport “approval for use” in Dec. 2005 – first order Jan. 2006; •
Slide 39: Hold Baggage Screening: Certified CT Market Overview
Hold Baggage Screening: Certified CT Market Overview Technology: CT based Product: Rapiscan RTT1000 – in development Market: Global market – primarily driven by U.S. Competition: L3, Invision (GE) and Reveal Tech. Market size: Est. 1200+ installed in U.S ASP approximately $1m Current systems: 400 ba
Slide 40: Hold Baggage Screening: Rapiscan RTT120
Hold Baggage Screening: Rapiscan RTT120 Announced order with Manchester Airport Group – 7th March 2006 • First systems to be delivered in Fiscal 2008: • Initial contract approximately $7m – with option approximately $40m Features • Increased throughput – up to 1500 bags per hour; • Decreased footpri
Slide 41: Cargo & Vehicle Inspection
A a Cargo & Vehicle Inspection Rapiscan Ay eteee a! Systems Cor
Slide 42: Cargo and Vehicle Inspection
Cargo and Vehicle Inspection The Opportunity • Cargo inspection business in its infancy • Only 5% of inbound containers to the U.S. are inspected • Manual inspection not feasible: false alarm rates, costly • No current industry or government standard for inspection Rapiscan’s Advantage • Diverse ran
Slide 43: Cargo and Vehicle Inspection - GaRDS
Cargo and Vehicle Inspection - GaRDS • Fully Self Contained Commercial Vehicle • Ready to Scan In Less than 10 Minutes • Ability to scan a 20 ft Container in Less Than 10 Seconds. • Wireless Data Transmission to a Remote Site. • Utilizes Gamma Source – penetration of 170mm • ASP of $1m to $2m
Slide 44: Cargo and Vehicle Inspection – Rapiscan Eagle Mobile
Cargo and Vehicle Inspection – Rapiscan Eagle Mobile • X-ray based system • Fully Self Contained Commercial Vehicle • Ready to Scan In Less than 30 Minutes • Penetration – Up to 270mm of Steel • High Resolution • Wireless Data Transmission • Simple Single Person Deployment Procedures • ASP of $2m to
Slide 45: Cargo and Vehicle Inspection - VEDS (TNA)
Cargo and Vehicle Inspection - VEDS (TNA) • Vehicle Explosive Detection (VEDS) utilizes Thermal Neutron Analysis (TNA) • Automatic detection • Operator receives “red light or green light” • Available in three configuration: On Rails, In a Mobile, or On a Portal • Ability to be integrated with GaRDS
Slide 46: PFNA: Example Image of a Passenger Car
PFNA: Example Image of a Passenger Car • Operator’ Operator’s Display, showing explosives laden automobile (before automatic alarms are shown) OSI Systems Proprietary and Confidential
Slide 47: PFNA: Analysis of a Passenger Car
PFNA: Analysis of a Passenger Car • Operator’ Operator’s Display, alarmed only on the six explosives, and none of the innocuous items
Slide 48: Security Group Operating Performance
Security Group Operating Performance $M 2Q 06 1Q 06 4Q 05 3Q 05 2Q 05 1Q 05 People, Baggage & Parcel Screening 25.7 23.3 25.8 24.3 23.6 20.9 Cargo & Vehicle Inspection 4.7 3.7 6.4 4.7 8.4 9.1 Total Sales 30.4 27.0 32.2 28.0 32.0 30.0 Operating (Loss) Income (0.7) (3.2) (2.4) (4.1) (1.3) 2.4 • Rapisc
Slide 49: Growth Drivers – Next 12 Months
Growth Drivers – Next 12 months People Screening – Rapiscan Secure 1000: increased business from U.S Govt. Agencies Baggage and Parcel Inspection – Continued expansion into new markets; – Increased U.S. Government business; – Increased service revenue Hold Baggage Screening – Leverage of installed b
Slide 50: Thank You
Thank You