OSI Systems Inc. reported a 4% year-over-year decline in fourth-quarter revenue to $484 million, though adjusted earnings per share rose 17% to $3.78, modestly exceeding forecasts. The security and technology company’s shares fell 13.8% in extended trading after issuing fiscal 2027 guidance that fell short of some investor expectations.
Revenue for the quarter declined as planned deliveries of border security equipment were deferred due to access constraints linked to the Middle East conflict, with Mexico contract revenues also weighing on results. Adjusted operating margin expanded by 200 basis points to 17.7%, while operating cash flow reached a record $182 million. Full-year revenue rose 4% to a record $1.79 billion, with adjusted EPS increasing 11% to $10.35.
The company’s backlog climbed to approximately $1.9 billion, up from $1.6 billion a year earlier, and cash and equivalents nearly tripled to $360 million. OSI repurchased 565,000 shares in the quarter at an average price of $219, totaling $123.6 million, and received board authorization for an additional 1 million shares under its buyback program.
Fiscal 2027 guidance calls for revenue between $1.875 billion and $1.93 billion, representing growth of 5% to 8.1% over the prior year. Adjusted EPS is projected at $11.13 to $11.49, up 7.5% to 11%. The company expects free cash flow to exceed net income and service revenues to grow at a double-digit pace. Deferred revenues tied to Middle East contracts are expected to return in fiscal 2027, with the majority weighted toward the second half.
Chief Executive Ajay Mehra highlighted strong customer engagement in the company’s radio frequency portfolio as a positive, while Chief Financial Officer Alan Edrick emphasized that deferred revenues remain in backlog and are not lost orders. Mehra added that fiscal 2026 capped record annual revenue and earnings, though the outlook reflects near-term headwinds from geopolitical and contract timing factors.
