occidental systems corp. (NASDAQ: OSIS) – Now that is A blast from the past. It has been nearly ten years since I last wrote about manufacturers of X-ray and metal detector systems used for air passenger and cargo screening. However, OSI Systems made headlines Thursday morning when it reported strong sales and earnings.
OSI stock was up 15.3% as of 12:36 pm ET.
OSI announced its second-quarter results for fiscal 2025 on Thursday morning, with revenue reaching a record $419.8 million, an annual increase of 12%, well above the $406.6 million forecast by Wall Street analysts. Likewise, OSI’s earnings per share came in at $2.42, beating Wall Street’s consensus estimate of $2.33.
This is good news.
The bad news is that OSI’s “$2.42 per share” profit is just an estimate. According to generally accepted accounting principles (GAAP), earnings per share were $2.22, an increase of only 5% year-over-year. It’s worth noting, however, that OSI is candid about this: the report discusses GAAP numbers before mentioning non-GAAP numbers.
I think this is a transparent and shareholder-friendly move, so I applaud OSI.
And there’s always the possibility that OSI’s GAAP numbers could improve to something closer to their adjusted results. Management raised its forecast for fiscal 2025 sales, predicting growth of 9.5% to 11.1%, a full percentage point higher than previous guidance. Management also stated that the order-to-bill ratio in the second fiscal quarter was 1.2, which supports the premise that sales will grow in the next few quarters.
Management’s guidance for profit growth is that profit growth will exceed sales growth and fall within the range of 11.9% to 15.6%. Of course, that’s also taking into account non-GAAP earnings. But it’s worth noting that in its fiscal second quarter, OSI generated $47 million in free cash flow, turning a profit after four consecutive quarters of cash burn.
This is an improvement over OSI. Just hope the company can stick with it.
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