OSI SYSTEMS INC

Previous wording

This management’s discussion and analysis of financial condition as of December 31, 2024 and results of operations for the three and six months ended December 31, 2024 should be read in conjunction with management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024 filed with the SEC.

Current wording

This management’s discussion and analysis of financial condition as of March 31, 2025 and results of operations for the three and nine months ended March 31, 2025 should be read in conjunction with management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024 filed with the SEC.

Previous wording

This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements relate to our current expectations, beliefs, and projections concerning matters that are not historical facts. Words such as “project,” “believe,” “anticipate,” “plan,” “expect,” “intend,” “may,” “should,” “will,” “would,” and similar words and expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance and involve uncertainties, risks, assumptions and contingencies, many of which are outside our control. Assumptions upon which our forward-looking statements are based could prove to be inaccurate, and actual results may differ materially from those expressed in or implied by such forward-looking statements. Important factors that could cause our actual results to differ materially from our expectations are disclosed in this report, our Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (including Part I, Item 1, “Business,” Part I, Item 1A, “Risk Factors” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) and other documents filed by us from time to time with the SEC. Such factors, of course, do not include all factors that might affect our business and financial condition. We could be exposed to a variety of negative consequences as a result of delays related to the award of domestic and international contracts; failure to secure the renewal of key customer contracts; delays in customer programs; delays in revenue recognition related to the timing of customer acceptance; the impact of potential information technology, cybersecurity or data security breaches; changes in domestic and foreign government spending, budgetary, procurement and trade policies adverse to our businesses; the impact of the Russia-Ukraine conflict or conflicts in the Middle East, including the potential for broad economic disruption; global economic uncertainty; material delays and cancellations of orders or deliveries thereon, supply chain disruptions, plant closures, or other adverse impacts on our ability to execute business plans; unfavorable currency exchange rate fluctuations; effect of changes in tax legislation; market acceptance of our new and existing technologies, products and services; our ability to win new business and convert any orders received to sales within the fiscal year; contract and regulatory compliance matters, and actions, which if brought, could result in judgments, settlements, fines, injunctions, debarment or penalties; as well as other risks and uncertainties, including but not limited to those factors described in our other SEC filings. All forward-looking statements contained in this report are qualified i…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements relate to our current expectations, beliefs, and projections concerning matters that are not historical facts. Words such as “project,” “believe,” “anticipate,” “plan,” “expect,” “intend,” “may,” “should,” “will,” “would,” and similar words and expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance and involve uncertainties, risks, assumptions and contingencies, many of which are outside our control. Assumptions upon which our forward-looking statements are based could prove to be inaccurate, and actual results may differ materially from those expressed in or implied by such forward-looking statements. Important factors that could cause our actual results to differ materially from our expectations are disclosed in this report, our Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (including Part I, Item 1, “Business,” Part I, Item 1A, “Risk Factors” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) and other documents filed by us from time to time with the SEC. Such factors, of course, do not include all factors that might affect our business and financial condition. We could be exposed to a variety of negative consequences as a result of delays related to the award of domestic and international contracts; failure to secure the renewal of key customer contracts; delays in customer programs; delays in revenue recognition related to the timing of customer acceptance; the impact of potential information technology, cybersecurity or data security breaches; changes in domestic and foreign government spending, budgetary, procurement and trade policies adverse to our businesses; the impact of the Russia-Ukraine conflict or conflicts in the Middle East, including the potential for broad economic disruption; global economic uncertainty, including the impact of tariffs; material delays and cancellations of orders or deliveries thereon, supply chain disruptions, plant closures, or other adverse impacts on our ability to execute business plans; unfavorable currency exchange rate fluctuations; effect of changes in tax legislation; market acceptance of our new and existing technologies, products and services; our ability to win new business and convert any orders received to sales within the fiscal year; contract and regulatory compliance matters, and actions, which if brought, could result in judgments, settlements, fines, injunctions, debarment or penalties; as well as other risks and uncertainties, including but not limited to those factors described in our other SEC filings. All forward-looking statements contain…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Security Division. Through our Security division, we provide security screening products and services globally, as well as turnkey security screening solutions and high-powered radio frequency solutions. These products and services are used to inspect baggage, parcels, cargo, people, vehicles and other objects for weapons, explosives, drugs, radioactive and nuclear materials and other contraband.

Current wording

Security Division. Through our Security division, we provide security screening products and services globally, as well as turnkey security screening solutions. These products and services are used to inspect baggage, parcels, cargo, people, vehicles and other objects for weapons, explosives, drugs, radioactive and nuclear materials and other contraband. Revenues from our Security division accounted for 66% and 69% of our total consolidated revenues for the nine months ended March 31, 2024 and 2025, respectively.

Previous wording

Optoelectronics and Manufacturing Division.* *Through our Optoelectronics and Manufacturing division, we design, manufacture and market optoelectronic devices and flex circuits and provide electronics manufacturing services globally for use in a broad range of applications, including aerospace and defense electronics, security and inspection systems, medical imaging and diagnostics, telecommunications, office automation, computer peripherals, industrial automation and consumer products. We also provide our optoelectronic devices and electronics manufacturing services to OEM customers and to our own Security and Healthcare divisions. Revenues from external customers in our Optoelectronics and Manufacturing division accounted for 24% and 22% of our total consolidated revenues for the six months ended December 31, 2023 and 2024, respectively.

Current wording

Optoelectronics and Manufacturing Division.* *Through our Optoelectronics and Manufacturing division, we design, manufacture and market optoelectronic devices and flex circuits and provide electronics manufacturing services globally for use in a broad range of applications, including aerospace and defense electronics, security and inspection systems, medical imaging and diagnostics, telecommunications, office automation, computer peripherals, industrial automation and consumer products. We also provide our optoelectronic devices and electronics manufacturing services to OEM customers and to our own Security and Healthcare divisions. Revenues from external customers in our Optoelectronics and Manufacturing division accounted for 22% and 21% of our total consolidated revenues for the nine months ended March 31, 2024 and 2025, respectively.

Previous wording

*Healthcare Division.*Through our Healthcare division, we design, manufacture, market and service patient monitoring, cardiology and remote monitoring, and connected care systems globally for sale primarily to hospitals and medical centers. Our products monitor patients in critical, emergency and perioperative care areas of the hospital and provide information, through wired and wireless networks, to physicians and nurses who may be at the patient’s bedside, in another area of the hospital or even outside the hospital. Revenues from our Healthcare division accounted for 12% and 11% of our total consolidated revenues for the six months ended December 31, 2023 and 2024, respectively.

Current wording

Healthcare Division.* *Through our Healthcare division, we design, manufacture, market and service patient monitoring, cardiology and remote monitoring, and connected care systems globally for sale primarily to hospitals and medical centers. Our products monitor patients in critical, emergency and perioperative care areas of the hospital and provide information, through wired and wireless networks, to physicians and nurses who may be at the patient’s bedside, in another area of the hospital or even outside the hospital. Revenues from our Healthcare division accounted for 12% and 10% of our total consolidated revenues for the nine months ended March 31, 2024 and 2025, respectively.

Previous wording

Global Economic Considerations. Our products and services are sold in numerous countries worldwide, with a large percentage of our sales generated outside the United States. We are exposed to and impacted by global macroeconomic factors, U.S. and foreign government policies and foreign exchange fluctuations. There is uncertainty surrounding macroeconomic factors in the U.S. and globally characterized by supply chain disruptions, inflationary pressure, and labor shortages. Increasing diplomatic and trade friction between the U.S. and China has also created significant uncertainty in the global economy. These global macroeconomic factors, coupled with political unrest internationally and the volatile U.S. political climate, resulting from the recent U.S. presidential election and congressional seat changes, have increased economic uncertainty and could impact demand for certain of our products and services. Conflicts in Gaza and nearby regions have created political and economic uncertainty in the Middle East. Also, the continued conflict between Russia and Ukraine and the sanctions imposed in response to this conflict have increased global economic and political uncertainty. We do not know how long this uncertainty will continue. These factors could have a material adverse effect on our business, results of operations and financial condition.

Current wording

Global Economic Considerations. Our products and services are sold in numerous countries worldwide, with a large percentage of our sales generated outside the United States. We are exposed to and impacted by global macroeconomic factors, U.S. and foreign government policies and foreign exchange fluctuations. There is uncertainty surrounding macroeconomic factors in the U.S. and globally characterized by supply chain disruptions, inflationary pressure, and labor shortages. Increasing diplomatic and trade friction between the U.S. and China has also created significant uncertainty in the global economy. These global macroeconomic factors, coupled with political unrest internationally and the volatile U.S. political climate, resulting from the recent U.S. presidential election and congressional seat changes, have increased economic uncertainty and impacted demand for certain of our products and services. Conflicts in Gaza and nearby regions have created political and economic uncertainty in the Middle East. Also, the continued conflict between Russia and Ukraine and the sanctions imposed in response to this conflict have increased global economic and political uncertainty. We do not know how long this uncertainty will continue. These factors could have a material adverse effect on our business, results of operations and financial condition.

Previous wording

Currency Exchange Rates. On a year-over-year basis, currency exchange rates negatively impacted reported sales by approximately 0.8% for the six months ended December 31, 2024 compared to the six months ended December 31, 2023, primarily due to the strengthening of the U.S. dollar against other foreign currencies in 2024. Any strengthening of the U.S. dollar against foreign currencies would adversely impact our sales for the remainder of the year, and any further weakening of the U.S. dollar against foreign currencies would positively impact our sales for the remainder of the year.

Current wording

Currency Exchange Rates. On a year-over-year basis, currency exchange rates positively impacted reported sales by approximately 0.7% for the nine months ended March 31, 2025 compared to the nine months ended March 31, 2024, primarily due to the weakening of the U.S. dollar against other foreign currencies in 2024. Any strengthening of the U.S. dollar against foreign currencies would adversely impact our sales for the remainder of the fiscal year, and any further weakening of the U.S. dollar against foreign currencies would positively impact our sales for the remainder of the fiscal year.

Previous wording

Revenues for the Security division during Q2 fiscal 2025 increased year-over-year due to increases in product and service revenues of approximately $36.8 million and $3.2 million, respectively. The increase in product revenues was primarily driven by growth in checkpoint screening systems, trace detections systems, and the acquired business further described in Note 2 to the condensed consolidated financial statements. The increase in service revenue was due primarily to an increase in the installed base of products.

Current wording

Revenues for the Security division during Q3 fiscal 2025 increased year-over-year due to increases in product and service revenues of approximately $5.2 million and $23.7 million, respectively. The increase in product revenues was primarily driven by the acquired business further described in Note 2 to the condensed consolidated financial statements. The increase in service revenue was due primarily to an increase in the installed base of products.

Previous wording

Revenues for the Healthcare division during Q2 fiscal 2025 increased year-over-year primarily due to an increase in patient monitoring sales of $3.6 million partially offset by a decrease in cardiology sales of $0.5 million.

Current wording

Revenues for the Healthcare division during Q3 fiscal 2025 increased year-over-year primarily due to an increase in patient monitoring sales.

Previous wording

Gross profit is impacted by sales volume and changes in overall manufacturing-related costs, such as raw materials and component costs, warranty expense, provision for inventory, freight, and logistics. Gross profit increased approximately $5.8 million in Q2 fiscal 2025 as compared to the prior year driven by the increase in sales. The gross margin in Q2 fiscal year 2025 decreased as compared to Q2 fiscal year 2024 as the prior year comparable quarter had a very favorable mix of Security division revenues, resulting in a higher gross margin.

Current wording

Gross profit is impacted by sales volume and changes in overall manufacturing-related costs, such as raw materials and component costs, warranty expense, provision for inventory, freight, and logistics. Gross profit increased approximately $14.2 million in Q3 fiscal 2025 as compared to the prior year driven by the increase in sales. The gross margin in Q3 fiscal year 2025 was comparable to Q3 fiscal year 2024.

Previous wording

Selling, general and administrative*.* Our significant selling, general and administrative (“SG&A”) expenses include employee compensation, sales commissions, travel, professional services, marketing expenses, foreign currency translation, and depreciation and amortization expense. SG&A expense for Q2 fiscal 2025 was comparable to the same prior-year period.

Current wording

Selling, general and administrative*.* Our significant selling, general and administrative (“SG&A”) expenses include employee compensation, sales commissions, travel, professional services, marketing expenses, foreign currency translation, and depreciation and amortization expense. SG&A expense increased in Q3 fiscal 2025 compared to the same prior-year period primarily due to employee compensation, professional fees and information technology costs.

Previous wording

Research and development. Research and development (“R&D”) expenses include research related to new product development and product enhancements. R&D expenses increased $2.0 million in Q2 fiscal 2025 as compared to Q2 fiscal 2024 driven by increased compensation costs to support new product development initiatives primarily in our Security division.

Current wording

Research and development. Research and development (“R&D”) expenses include research related to new product development and product enhancements. R&D expenses increased $1.5 million in Q3 fiscal 2025 as compared to Q3 fiscal 2024 driven by increased compensation costs to support new product development initiatives primarily in our Security division.

Previous wording

Restructuring and other charges. Restructuring and other charges generally consist of costs relating to reductions in our workforce, facilities consolidation, costs related to acquisition activity, and other non-recurring charges. During Q2 fiscal 2025, restructuring and other charges were $0.2 million primarily for acquisition activity. During Q2 fiscal 2024, restructuring and other charges were $1.0 million, which included $0.2 million in acquisition related costs, $0.3 million in legal charges, $0.3 million for facility closure costs for operational efficiency activities, and $0.2 million for employee terminations.

Current wording

Restructuring and other charges Restructuring and other charges generally consist of costs relating to reductions in our workforce, facilities consolidation, costs related to acquisition activity, and other non-recurring charges. During Q3 fiscal 2025, restructuring and other charges were $2.3 million, which included $1.8 million in employee terminations, and $0.5 million for facility closure costs. During Q3 fiscal 2024, restructuring and other charges primarily consisted of $0.5 million for facility closure costs for operational efficiency activities, and $0.5 million for employee terminations.

Previous wording

Interest and other expense, net*.* For Q2 fiscal 2025, interest and other expense, net was $8.6 million as compared to $6.5 million in the same prior-year period. This increase was driven by higher average levels of borrowings primarily to support the increase in working capital associated with the growth in revenues, business acquisition activity, and for the repurchase of approximately $80 million of common stock in July 2024. Interest expense in Q2 fiscal 2025 and Q2 fiscal 2024 includes a benefit from the interest rate swap of $0.6 million and $0.9 million, respectively.

Current wording

Interest and other expense, net. For Q3 fiscal 2025, interest and other expense, net was $8.2 million as compared to $7.4 million in the same prior-year period. This increase was driven by higher average levels of borrowings primarily to support the increase in working capital associated with the growth in revenues, business acquisition activity, and for the repurchase of approximately $80 million of shares of common stock in July 2024. Interest expense in Q3 fiscal 2025 and Q3 fiscal 2024 includes a benefit from the interest rate swap of $0.4 million and $0.9 million, respectively.

Previous wording

Income taxes. The effective tax rate for a particular period varies depending on a number of factors, including (i) the mix of income earned in various tax jurisdictions, each of which applies a unique range of income tax rates and income tax credits, (ii) changes in previously established valuation allowances for deferred tax assets (changes are based upon our current analysis of the likelihood that these deferred tax assets will be realized), (iii) the level of non-deductible expenses, (iv) certain tax elections (v) tax holidays granted to certain of our international subsidiaries and (vi) discrete tax items. For Q2 fiscal 2025 and 2024, we recognized a provision for income taxes of $11.5 million and $9.2 million, respectively. The effective tax rates for Q2 fiscal 2025 and 2024 were 23.3% and 20.2%, respectively. During Q2 fiscal 2025, we recognized a net discrete tax benefit of $0.3 million related to equity-based compensation under ASU 2016-09. During Q2 fiscal 2024, we recognized a net discrete tax benefit of $0.2 million related to equity-based compensation under ASU 2016-09 and a benefit of $2.3 million from changes in prior year estimates.

Current wording

Income taxes. The effective tax rate for a particular period varies depending on a number of factors, including (i) the mix of income earned in various tax jurisdictions, each of which applies a unique range of income tax rates and income tax credits, (ii) changes in previously established valuation allowances for deferred tax assets (changes are based upon our current analysis of the likelihood that these deferred tax assets will be realized), (iii) the level of non-deductible expenses, (iv) certain tax elections (v) tax holidays granted to certain of our international subsidiaries and (vi) discrete tax items. For Q3 fiscal 2025 and 2024, the provision for income taxes was $6.9 million and $9.9 million, respectively. The effective tax rates for Q3 fiscal 2025 and 2024 were 14.3% and 22.6%, respectively. During Q3 fiscal 2025 we recognized net discrete tax benefits of $4.5 million related to equity-based compensation under ASU 2016- 09 and changes in prior year tax estimates and uncertain tax benefits. During Q3 fiscal 2024 we recognized net discrete tax benefits of $0.2 million related to equity-based compensation under ASU 2016-09 and changes in prior year tax estimates.

Previous wording

Results of Operations for the Six Months Ended December 31, 2023 (YTD Q2 Fiscal 2024) Compared to the Six Months Ended December 31, 2024 (YTD Q2 Fiscal 2025) (amounts in millions)

Current wording

Results of Operations for the Nine Months Ended March 31, 2024 (YTD Q3 Fiscal 2024) Compared to the Nine Months Ended March 31, 2025 (YTD Q3 Fiscal 2025) (amounts in millions)

Previous wording

Revenues for the Security division during YTD Q2 fiscal 2025 increased year-over-year due to an increase in product and service revenues of approximately $88.8 million and $10.9 million, respectively. The increase in product revenues was primarily driven by growth in cargo and vehicle inspection systems, checkpoint screening systems, trace detections systems, and the acquired business further described in Note 2 to the condensed consolidated financial statements. The increase in service revenue was due primarily to an increase in the installed base of products.

Current wording

Revenues for the Security division during YTD Q3 fiscal 2025 increased year-over-year due to an increase in product and service revenues of approximately $94.0 million and $34.6 million, respectively. The increase in product revenues was primarily driven by growth in cargo and vehicle inspection systems, checkpoint screening systems, trace detection systems, and the acquired business further described in Note 2 to the condensed consolidated financial statements. The increase in service revenue was due primarily to an increase in the installed base of products.

Previous wording

Revenues for the Optoelectronics and Manufacturing division during YTD Q2 fiscal 2025 increased year-over year as a result of an increase in revenue in our contract manufacturing business of approximately $11.2 million, partially offset by a decrease in revenue of approximately $1.8 million in our optoelectronics business.

Current wording

Revenues for the Optoelectronics and Manufacturing division during YTD Q3 fiscal 2025 increased year-over year as a result of an increase in revenue in our contract manufacturing business.

Previous wording

Revenues for the Healthcare division during YTD Q2 fiscal 2025 increased year-over-year due to an increase in patient monitoring sales of $2.3 million, service revenue of $0.8 million and accessories revenue of $0.7 million, partially offset by a reduction in cardiology sales of $1.5 million.

Current wording

Revenues for the Healthcare division during YTD Q3 fiscal 2025 increased year-over-year due to an increase in patient monitoring sales and related service revenue.

Previous wording

Gross profit increased approximately $28.7 million in YTD Q2 fiscal 2025 as compared to the prior year driven by the increase in sales. The gross margin decreased as compared to the prior year comparable period as the prior year period had a very favorable mix of Security division revenues, resulting in a higher gross margin.

Current wording

Gross profit increased approximately $42.8 million in YTD Q3 fiscal 2025 as compared to the prior year driven by the increase in sales. The gross margin decreased as compared to the prior year comparable period as the prior year period had a favorable mix of Security division revenues, resulting in a higher gross margin.

Previous wording

Selling, general and administrative*.* SG&A expense for YTD Q2 fiscal 2025 was $11.5 million higher than in the same prior-year period, primarily due to increased employee compensation, changes in fair value of certain contingent earnout liabilities, and unfavorable impact of foreign currency exchange rates in YTD Q2 fiscal 2025 compared to the same prior-year period.

Current wording

Selling, general and administrative*.* SG&A expense for YTD Q3 fiscal 2025 was $18.2 million higher than in the same prior-year period, primarily due to increased employee compensation and unfavorable impact of foreign currency exchange rates in YTD Q3 fiscal 2025 compared to the same prior-year period.

Previous wording

Research and development. R&D expense for YTD Q2 fiscal 2025 increased $3.7 million over the same prior-year period driven by increased compensation costs to support new product development initiatives primarily in our Security division.

Current wording

Research and development. R&D expenses for YTD Q3 fiscal 2025 increased $5.2 million over the same prior-year period driven by increased compensation costs to support new product development initiatives primarily in our Security division.

Previous wording

Interest and other expense, net*.* The increase in interest and other expense, net was driven by higher average levels of borrowings primarily to support the increase in working capital associated with the growth in revenues, business acquisition activity, and for the repurchase of approximately $80 million of common stock in July 2024. Interest expense for YTD Q2 fiscal 2025 and 2024 included a benefit of $1.5 million and $1.8 million, respectively, from the interest rate swap.

Current wording

Interest and other expense, net*.* The increase in interest and other expense, net was driven by higher average levels of borrowings primarily to support the increase in working capital associated with the growth in revenues, business acquisition activity, and for the repurchase of approximately $80 million of shares of common stock in July 2024. Interest expense for YTD Q3 fiscal 2025 and 2024 included a benefit of $2.0 million and $2.7 million, respectively, from the interest rate swap.

Previous wording

Income taxes. The effective tax rate for a particular period varies depending on a number of factors, including (i) the mix of income earned in various tax jurisdictions, each of which applies a unique range of income tax rates and income tax credits, (ii) changes in previously established valuation allowances for deferred tax assets (changes are based upon our current analysis of the likelihood that these deferred tax assets will be realized), (iii) the level of non-deductible expenses, (iv) certain tax elections (v) tax holidays granted to certain of our international subsidiaries and (vi) discrete tax items. For YTD Q2 fiscal 2025 and 2024, we recognized a provision for income taxes of $16.6 million and $13.2 million, respectively. The effective tax rates for YTD Q2 fiscal 2025 and 2024 were 22.9% and 21.0%, respectively. For YTD Q2 fiscal 2024, we recognized a discrete tax benefit of $0.6 million related to equity-based compensation

Current wording

Income taxes. The effective tax rate for a particular period varies depending on a number of factors, including (i) the mix of income earned in various tax jurisdictions, each of which applies a unique range of income tax rates and income tax credits, (ii) changes in previously established valuation allowances for deferred tax assets (changes are based upon our current analysis of the likelihood that these deferred tax assets will be realized), (iii) the level of non-deductible expenses, (iv) certain tax elections (v) tax holidays granted to certain of our international subsidiaries and (vi) discrete tax items. For YTD Q3 fiscal 2025 and 2024, the provision for income taxes was $23.4 million and $23.1 million, respectively. The effective tax rates for YTD Q3 fiscal 2025 and 2024 were 19.5% and 21.7%, respectively. For YTD Q3 fiscal 2025, we recognized a discrete tax benefit of $1.3 million related to equity-based compensation under ASU 2016-09 and a benefit of $4.0 million from changes in prior year tax estimates and uncertain tax benefits. For YTD Q3 fiscal 2024, we recognized a discrete tax benefit of $0.8 million related to equity-based compensation under ASU 2016-09 and a benefit of $2.3 million from changes in prior year tax estimates.

Previous wording

Our principal sources of liquidity are our cash and cash equivalents, cash generated from operations and our credit facilities. Cash and cash equivalents totaled $101.6 million at December 31, 2024, an increase of $6.2 million, or 7%, from $95.4 million at June 30, 2024. We currently anticipate that our available funds, credit facilities and cash flow from operations will be sufficient to meet our operational cash needs for the next 12 months and the foreseeable future beyond that. In addition, we anticipate that cash generated from operations, without repatriating earnings from our non-U.S. subsidiaries, and our credit facilities will be sufficient to satisfy our obligations in the U.S.

Current wording

Our principal sources of liquidity are our cash and cash equivalents, cash generated from operations and our credit facilities. Cash and cash equivalents totaled $95.8 million at March 31, 2025, an increase of $0.4 million, or 0.5%, from $95.4 million at June 30, 2024. We currently anticipate that our available funds, credit facilities and cash flow from operations will be sufficient to meet our operational cash needs for the next 12 months and the foreseeable future beyond that. In addition, we anticipate that cash generated from operations, without repatriating earnings from our non-U.S. subsidiaries, and our credit facilities will be sufficient to satisfy our obligations in the U.S.

Previous wording

Our credit facility comprises a term loan and a $600 million revolving credit facility, which includes a $300 million sub-facility for letters of credit. As of December 31, 2024, there was $131.9 million outstanding under the term loan, $236.0 million outstanding under our revolving credit facility and $78.6 million of outstanding letters of credit. As of December 31, 2024, the total amount available under our revolving credit facility was $285.4 million. See Note 8 to the consolidated financial statements for further discussion.

Current wording

Our credit facility comprises a term loan and a $600 million revolving credit facility, which includes a $300 million sub-facility for letters of credit. As of March 31, 2025, there was $130.0 million outstanding under the term loan, $156.0 million outstanding under our revolving credit facility and $75.1 million of outstanding letters of credit. As of March 31, 2025, the total amount available under our revolving credit facility was $368.9 million. See Note 8 to the consolidated financial statements for further discussion.

Previous wording

Cash Provided by (Used in) Operating Activities. Cash flows from operating activities can fluctuate significantly from period to period, as net income, adjusted for non-cash items, and working capital fluctuations impact cash flows. For YTD Q2 fiscal 2025, cash provided by operations was $15.4 million compared to cash used in operations of $6.4 million in the comparable prior-year period. The net change in cash flows from operating activities was due primarily to favorable changes in net working capital and higher net income for YTD Q2 fiscal 2025 over the comparable prior-year period.

Current wording

*Cash Provided by (Used in) Operating Activities.*Cash flows from operating activities can fluctuate significantly from period to period, as net income, adjusted for non-cash items, and working capital fluctuations impact cash flows. For YTD Q3 fiscal 2025, cash provided by operations was $97.0 million compared to cash used in operations of $58.5 million in the comparable prior-year period. The net change in cash flows from operating activities was due primarily to favorable changes in net working capital compared to the prior-year period and higher net income for YTD Q3 fiscal 2025 over the comparable prior-year period.

Previous wording

Cash Used in Investing Activities. Net cash used in investing activities was $97.6 million for YTD Q2 fiscal 2025 as compared to $21.8 million in the same prior year period. We used $75.5 million for a business acquisition in September 2024, compared to $9.0 million in the first half of fiscal year 2024. Capital expenditures for YTD Q2 fiscal year 2025 were $13.2 million compared to $8.7 million in the same prior-year period. Expenditures for intangible and other assets for YTD Q2 fiscal year 2025 were $9.1 million compared to $8.4 million in the same prior-year period.

Current wording

Cash Used in Investing Activities. Net cash used in investing activities was $106.4 million for YTD Q3 fiscal 2025 as compared to $24.9 million in the same prior year period. We used $75.5 million for a business acquisition in September 2024, compared to $9.0 million in the first nine months of fiscal year 2024. Capital expenditures for YTD Q3 fiscal year 2025 were $17.7 million compared to $13.6 million in the same prior-year period. Expenditures for intangible and other assets for YTD Q3 fiscal year 2025 were $13.5 million compared to $12.9 million in the same prior-year period.

Previous wording

Cash Provided by Financing Activities. Net cash provided by financing activities was $89.2 million for YTD Q2 fiscal 2025, compared to $77.1 million during the same prior-year period. The change in cash flows from financing activities was primarily due to net proceeds of $340.5 million from the 2029 Notes, partially offset by (1) net repayment of $148.0 million on our credit facility and (2) repurchase of common stock of $80.4 million. Taxes paid related to net share settlement of equity awards were $22.6 million during YTD Q2 fiscal 2025 compared to $23.0 million in the same prior-year period.

Current wording

Cash Provided by Financing Activities. Net cash provided by financing activities was $10.4 million for YTD Q3 fiscal 2025, compared to $110.7 million during the same prior-year period. The decrease in cash flows from financing activities was primarily due to net proceeds of $340.6 million from issuance of the 2029 Notes, partially offset by (1) net repayment of $228.0 million on our credit facility and (2) repurchase of shares of common stock of $80.4 million. Taxes paid related to net share settlement of equity awards were $22.6 million during YTD Q3 fiscal 2025 compared to $23.2 million in the same prior-year period.

Previous wording

Our cash and cash equivalents totaled $101.6 million at December 31, 2024. Of this amount, approximately 77% was held by our foreign subsidiaries and subject to repatriation tax considerations. These foreign funds were held primarily by our subsidiaries in India, the United Kingdom, and to a lesser extent in Malaysia, Singapore, and Canada, among other countries. We intend to permanently reinvest certain earnings from foreign operations, and we currently do not anticipate that we will need this cash in foreign countries to fund our U.S. operations. In the event we repatriate cash from certain foreign operations and if taxes have not previously been withheld on the related earnings, we would provide for withholding taxes at the time we change our intention with regard to the reinvestment of those earnings.

Current wording

Our cash and cash equivalents totaled $95.8 million at March 31, 2025. Of this amount, approximately 83% was held by our foreign subsidiaries and subject to repatriation tax considerations. These foreign funds were held primarily by our subsidiaries in India, the United Kingdom, and to a lesser extent in Singapore, Canada, and Malaysia among other countries. We intend to permanently reinvest certain earnings from foreign operations, and we currently do not anticipate that we will need this cash in foreign countries to fund our U.S. operations. In the event we repatriate cash from certain foreign operations and if taxes have not previously been withheld on the related earnings, we would provide for withholding taxes at the time we change our intention with regard to the reinvestment of those earnings.

Previous wording

We did not repurchase any shares of common stock during the second quarter of fiscal year 2025.

Current wording

We did not repurchase any shares of common stock during the third quarter of fiscal year 2025.

Previous wording

During the six months ended December 31, 2024, there were no material changes outside the ordinary course of business to the information regarding specified contractual obligations contained in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024. See Notes 1, 6, 8 and 10 to the condensed consolidated financial statements for additional information regarding our contractual obligations.

Current wording

During the nine months ended March 31, 2025, there were no material changes outside the ordinary course of business to the information regarding specified contractual obligations contained in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024. See Notes 1, 6, 8 and 10 to the condensed consolidated financial statements for additional information regarding our contractual obligations.

Previous wording

From time to time, new accounting pronouncements are issued by the FASB and other regulatory bodies that are adopted as of the specified effective dates. Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on our Consolidated Financial Statements upon adoption. As discussed in Note 1, we are currently evaluating the potential impact on financial statement disclosures upon future adoption of ASU 2023 - 07 and ASU 2023 - 09. There were no new pronouncements adopted in the second quarter of fiscal year 2025.

Current wording

From time to time, new accounting pronouncements are issued by the FASB and other regulatory bodies that are adopted as of the specified effective dates. Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on our Consolidated Financial Statements upon adoption. As discussed in Note 1, we are currently evaluating the potential impact on financial statement disclosures upon future adoption of ASU 2023 - 07 and ASU 2023 - 09. There were no new pronouncements adopted in the third quarter of fiscal year 2025.