Question · Q2 2026
Lawrence Scott Solow asked for clarification on the security division's bookings, specifically if the book-to-bill was close to flat or below one. He also questioned if the less-than-expected orders impacted back-half sales and if revenue guidance would have been raised otherwise. He sought insight into whether Mexico contracts were the primary driver of margin fluctuations, inquired about the Opto division's drivers, and asked if full-year cash flow could approach or exceed net income.
Answer
Alan Edrick, EVP and CFO of OSI Systems, confirmed the security division's book-to-bill was a bit below 1.0 this quarter. He stated that while revenue guidance might have been raised if bookings matched expectations, it was prudent to maintain the range given timing shifts and potential shutdowns. He explained that Mexico contracts played a significant role in margin fluctuations due to inherent operational efficiencies, and this margin headwind is expected to subside after Q3, leading to margin expansion in Q4 and beyond. For Opto, he confirmed similar drivers like a diverse customer base and strong demand from customers diversifying supply chains. He also stated it's entirely possible for full-year cash flow to come close to or exceed net income if DSOs normalize as expected.
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