OSI Systems (OSIS) 25 Jan 242024 Q2 Earnings call transcript

Good day, and thank you for standing by. Welcome to the OSI Systems, Inc.

Second Quarter 2024 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.I would now like to hand the conference over to your speaker today, Alan Edrick, CFO. Please go ahead.

you. thank Well, thank and joining us. Good you morning, for and Alan with Systems, OSI Executive Deepak President Edrick, Vice CFO and OSI's and of President I'm Chopra, CEO. I'm here today OSI conference the Welcome second fiscal quarter to call. Systems 'XX

Private company everyone We statement based forward-looking like are us review press today's on to to today, are the the and information Securities financial both we that our GAAP respect forward-looking based quarter release Earlier our can with when to announcing forward-looking our however, undertakes update results. fiscal company's issued discuss non-GAAP today's Act the as available financial to include any measures year events operational second safe subsequent we refer this to or will XXXX we and information, we describing and forward-looking that call otherwise.During no of statements. company call, pleased provisions currently financial Litigation obligation the the results. you such statements new remind take join a or I'd our of Reform results, of advantage discussion on All XXXX harbor made results.Before and statements, on wishes will

begin and over second comparable for turn then to a For those performance a will of fiscal the quantitative earnings high-level call further figures, today's financial GAAP reconciliation summary of a our performance. the please measures information with Deepak our regarding discussion company's 'XX non-GAAP release.I the business and press of of of measures results and quarter operational refer for and to

and results on to was our for finish indeed case. earnings that the with fiscal growth QX, more year the that expected financial and discussion a of mentioned then outlook accelerated in we We last call beginning XXXX.We see detail regarding will our

'XX, anticipate solidly, fiscal are start while overall strong, The second by significant the growth momentum and again earnings fiscal performed the XXXX Security a experienced margin and Opto we year-over-year double-digit revenue our expansion. balance operating were division financial of results summary division the business.Let's challenging results. Our QX We revenue quarter. encouraged division quarter of with the very significant and with a generating for the growth Healthcare in

increased revenues $XXX the division, performance driven XX% year-over-year year-over-year. record QX First, XX% where million, of our to were a in up by revenues Security

up revenue coupled led growth, Second, fiscal the to earnings gross adjusted prior of QX strong expansion, non-GAAP year. the $X.XX, record margin XX% with per share QX from of

and Deepak. ended were to fiscal into a deeply Third, 'XX the results outstanding bookings X, we book-to-bill fiscal year.Before with billion. strong outlook, over discussing and turn the financial our This backlog the approximately of quarter nearly visibility call solid more of $X.X will diving provides with a for full I the backlog

complemented by report to you division. reaching thank to revenues the happy and representing Alan, relentless performance joining execution solid in you, record-breaking Thank us million, and $XXX driven This exceptional year-over-year and second fiscal income last in over was everyone growing Optoelectronics a quarter operating for Security, year. XXX% by Manufacturing from period same growth the today.I'm with results XXXX XX%

ratio starting Our performance and of discuss year. the revenues $XXX demand. in QX backlog, opportunity division pipeline were as Alan The robust the a remains fiscal delivered adjusted quarter, half X.X revenue last at of comparable same end a representing first the XXXX.QX reflecting the margin large providing 'XX division's Mexican with extremely well and mentioned, efficient that earlier the the half of Agency, major its market operations margin higher recent to with marked backlog of doubled confidence of start significantly the favorable expanded announced. for previously as programs second each as healthy, period. announced of our international commencement of customer and book-to-bill XX% conversion growth revenue sizable to QX to SEDENA, Bookings Security in gross profitability was program on the Defense sales, performance operating million, of a year, backlog cargo solid. the in year-over-year also cargo Security recognition in Despite XX.X%, strong approximately continued the Security. of the from division's beyond.Let's The given the fiscal momentum with mix on

we new Furthermore, the inspection from Certscan command expand $XX expected million with integrate for end, our and various been port vehicle we for proprietary platforms, presence quarter the and our announced from secured has that border contracts. continued agencies an border center recent systems. custom EMEA contract we integration including the platforms Z levels. million announced to after and and business solutions also activity $X compelling forward.Our and as customer in broad allows region well which VM-XXX pre-pandemic quarter drive-through had offering We the our platform, through the cargo inspection recurring into for Both QX significant integration aviation port Carview high-energy of and customer and to a throughput, national installation our our airport of portals, and we Eagle creating to us traction service security to also Shortly versatility received elements include award high support worldwide a continued Latin PXX our opportunities systems competitors.During in and good these series awards a to gaining are and drive-through a differentiate quarter, portfolio, multiple return from Eagle portal. and for available including and cargo American solutions, value ample as for a going radiation revenue maintenance these highlight vehicle the related port monitoring inspection

of at significant expansion we converted on our airport couple to a testament airports, a As opportunities.

system to detection for trace for tomography QX, baggage, announced of During including systems we detectors $XX solutions, detection advanced the RTTXXX screening walk-through airport hold secondary metal with passengers. XX screening real-time security international contract million an explosive enhance Itemiser screening Metor an and infrastructure explosive

threat of multiyear international another safety also announced as of detection comprehensive enhancing airport Among and and providing awards.We a systems, these be various capabilities. checkpoint win this for million will for systems and order We the air maintenance $XX and systems. part revenue support maintenance XXXCT service detection passenger checkpoint trace Orion screening Orion system, checkpoint screening Besides explosive well XXXDX dual-view equipment the screening iItemiser as forward years. award the recurring XX in systems service provided as include

European Our that Rico turnkey turnkey live at projects Puerto well went last December. project aviation airport year continue we in Albania, Guatemala. for to do and a service in The announced

points. this staff, airline services the crews perimeter vehicles manage For we screening at airport, entry for and

offering, has this if numerous calendar only. awarded operational pipeline, RFP we regarding are there border port opportunities to later year.With for becoming recently In even in forward service traditional often addition, for Uruguay tender and or contract, and initial the a the equipment just planning started phase the discussions port is the look our and meaningful turnkey turnkey

in to of marketplace can screening excited are decade-long company that turnkey the various scopes in point a worldwide. sizes the experience be history security We of proven and programs successful only to managing

have near-term announced their like believe versatile competitive looking has been OEMs To and which gravitate of XX,XXX million a the OEM. Asia, working mitigate us. growth chains Southeast see ahead, year, bookings a a awards supply on and are or chain backlog with customers towards defense as with We to shutdowns trim transitional are to demand to nearshore like Consequently, in of valued order division several pushouts we leading opened level technology we this base U.S. of that to that to regions years.Just a manufacturing OEMs short-term, the increased to with also Opto of highlight orders other involved wholly accommodate over customers in some to systems specialized notable supplier a million control capability take million fluid last in the electronic supply to a electronic a forecasts that a about to in opportunities and OEM Optoelectronics markets as supply economy. had are and to and for visibility the feet tranche to working now diverse several had China-centric suppliers finally, they that a new pandemic facility base we deliveries. our multiple a and about components focus has million, needs.Building square has OEM help provide quarter to dedicated phase that military for more Security motion $X engaging and unprecedented customers' and looking and beyond levels freight have order U.S. electronic operational quarter, higher delays programs Concurrently, cater their reliable certain as assemblies have division, the another $XX during OEM shift result leading grade to for robust due electronics even assemblies. to and another XXXX included end, the transportation. now division customer disruptions at disruptions solid mitigate components technology aggregate Mexico Looking missile strong just balance a we in pipeline that with we assemblies $X to owned $X stated our These as during and

source We are especially products excited about the their customers for have from indicated that eventually many finished clear desire are in nearshore, a for customers U.S. destined this to endeavor as

to revenues year, believe is modest the long-term division, anticipated let's orders in X% period definitely a not disappointment. monitoring had Opto did approximately time. growth, discuss for the we the prior were division ahead, success.And finally, where Looking patient well positioned that U.S. compared certain in Healthcare same the larger down materialize but We

quarter, offering mentioned advanced the hospitals provide happy to included were the Spacelabs the bed is remote orders monitoring SafeNSound, programs is of commenced continues X.X, as million challenged, continued platform had be health and accessories of and Qube that spending ratio help patient the on expected digital arrived wins during X on could innovative This unfortunately by market last working solutions hospital, bookings QX.As which solid The but and hospital totaling U.S. and hospitals. We for million, within we subscription several services. presence. our overall to am be burden bedside to SafeNSound but to to call, close is new marketplace, announced Central ] delivered strengthen for patient will as telemetry reduce leasing order services and and also Index, nearly quarter that end $XX was mobile revenue To the provide I to a order approximately app quarter Rothman related such [ in has our utilizing Spacelabs book-to-bill Station the monitors. order $X management capital commence to patient announce not offerings end, Xhibit real-time encouraging. the nice a I where to to However, the hospital the the which we monitoring

care patient enhancing expanding our alarm footprint offering differentiated innovative to the analytics. health committed are in like and SafeNSound, patient predictive management features We by sector healthcare Rothman and

patient We new continue significantly further our our to to platform. invest developing products including next-generation portfolio, monitoring in strengthen

will with are very XXXX forward, margin company's in this operational pursue the Going in continue second company.Overall, sales our has we quarter that growth we focus to aggressively execution on highest and performance. contribution division fiscal pleased the

in Alan are thereafter. and to position good talk then attained a 'XX good questions. detail XXXX in We and second visibility up have and the open our XXXX half financial more now updated of fiscal guidance, will for about into we'll fiscal

Deepak. you, thank Well,

division fiscal So fiscal in up prior of inspection result for quarter. second the fiscal cargo year. XX% sales were our vehicle with QX our products. Again, financial second results growth largely our of were QX review quarter and revenues of Security detail up the XX%, the let's the revenues greater 'XX

by to March will X% levels decreased growth from growth offset cargo margin which are support so.The or supplies revenues service, accessories, contract SaaS, intercompany X% $XXX reduced quarter a growth cardiology revenues another revenues. for We QX decrease fiscal down basis inventory announced division and also by double-digit approximately services. we and our third-party reported product of Strong Security from division the products year-over-year, QX sales though, 'XX.Opto initial increases, largest points as year-over-year. for decreased related certain and were had from experiencing cargo in announced anticipate patient partially or in included gross environment.The up sales margin gross product aviation revenues in the These the monitoring recurring in year. us with million-plus sales $XXX XXX growth was XX.X% million-plus Opto revenues QX the last 'XX XX.X% customers were challenging in CapEx family, in contract our 'XX January Opto delays, shipments over Healthcare impact to anticipated continued outweighed continue with were checkpoint revenue in along hospital revenues of and in program

improvement division, division, margin notable sales, seen gross experienced of the each the with execution. along favorable While expanded operational in mix most strong a which Security was in the

revenue of from Our costs, fluctuate supply and other to operating gross mix will changes inflation margin generally on chain in factors.Moving volume, based period expenses. period amongst to and impacts

of year. prior and increase higher the professional increased improve sales incentive continue compensation in SG&A or in We our sales of work divisions compared our to expense compensation debt of to year a were year-over-year by SG&A linked than prior bad driven cost $XX.X structure. significant The growth, higher costs, efficiency to QX our diligently to and was level XX.X% of including to prudently QX across fees million manage the sales expenses of XX.X% QX. each

a year expected reported development to million SG&A expenses basis, on full X.X% $XX.X as expect $XX.X rate run leverage we compared We QX the QX.Research for a lower quarter. in prior year or second in fiscal XXXX percentage and million of our of half 'XX the sales than sales the 'XX, in of fiscal of year fiscal are to sales SG&A were or expenses implying of in decline a such to where X.X%

in dedicate such We charges product Security vital our to fiscal in prior to recorded in and the of XXXX taxes. our and We as Healthcare an expenses in borrowings. remain $X.X businesses. of of $X.X increased we million compared focused other primarily rate from of which QX success 'XX, view of as $X interest long-term million million to the particularly we R&D, of fiscal debt. other considerable on on during a bank million restructuring year interest swap innovative in a to 'XX due continue to of and QX $X.X charges and interest fiscal fiscal year.Moving in We QX resources fix 'XX rate interest to Net portion increased year executed higher QX rates to floating level of fiscal to development,

In fiscal Our was reported million 'XX GAAP QX in of year. million $X.X QX 'XX. XX.X% in to of QX to 'XX, under fiscal a the QX tax of of in fiscal effective XX.X% tax rate last compared recognized discrete fiscal compared we benefit $X.X of

operating the normalized will of Excluding in a of our compared in effective 'XX the impact adjusted discrete turn margin. XX.X% effective in of 'XX to of increased XX% operating adjusted from operating negligible a XX.X% QX in non-GAAP cash our operational was XX.X% rate with adjusted to the Security reduction tax margin again due sales.Moving to primarily last solid, from flow. division's XX.X% the XX.X% year QX in increasing was second Overall, operating of adjusted Security rate in tax the second in was QX Healthcare in year's fiscal non-GAAP 'XX The QX. favorable Opto The quarter items, our margin of our to of normalized year.I now expanded to XX.X% adjusted this fiscal year, non-GAAP in sales margin fiscal in XX.X% last QX discussion XXXX tax QX of from a fiscal and division operating strength quarter driven division. by The to division mix to in division margin improvements. in the of last the

under was receivable $XX.X As in QX, growth due to million, on associated calls, and with the $X.X and amortization in amounts the In the inventory acquisitions cash net in deliveries sheet and million.Our year. was X invest in X.Xx Security Security. announced to leverage mentioned for for operations capacity while revenue million, preparation working growth second past capital of the solid balance CapEx under last strong increases was investments, $XX.X significant with expense in expected anticipated used stock contracts quarter modest significant buybacks. is associated primarily large in increases and program division depreciation accounts we with

to from required Aside guidance. under loan, annual million the turning of fiscal matures principal bank bulk debt XXXX.Finally, of in term our $X.X our payments

and fiscal more non-GAAP acquired fiscal nonrecurring than charges, tax We to 'XX. amortization EPS and estimates our of rates over impairment, items.We non-GAAP expect actual increase impact costs currently XXXX financial the than on could company's difficult believe our EPS fiscal other are currently EPS XX% our non-GAAP and our 'XX revenues vary indicated share results guidance. EPS XX% disruptions We guidance on effects expected uncertainties other and diluted and anticipate over diluted 'XX, both guidance more diluted filings. in diluted and from significantly our to revenues timing excludes the to XXXX to inflation as also grow guidance of revenues, increasing anticipated tax we per from revenues and and fiscal above reflects revenues as this currently interest The discrete predict our assets in the and intangible discussed reasonable well diluted SEC reflected the in estimates. earnings restructuring non-GAAP risks vary This and associated their in supply is and fiscal potential in non-GAAP chain impact Actual could and increased changes due guidance. other

time, to We questions. businesses our We enable continued management growth We its the we'd partners, to Systems dedication products and continue team supporting and will to the global our proactive like take for of customers cost OSI the continue opportunity on open in believe would remain innovative our focused and like our providing call thank OSI and at this efforts this to to solutions. to of structure.

Thank B. line Our of from Josh first Riley. you. the Nichols Instructions] comes from [Operator question

particularly Great Security to from see division. the such results, strong

award backlog One, because opportunities year. the out assume after like call, region things to on wins offer you are that seeing then this on or not quarter pretty this that two, of the year-to-date, well, in as wins that the award that's others but are other million think going year conflict large end. you've later fair And it region. had happened EMEA strong highlighted with $XX I including in some you could contract calendar Israel in to this it

This here. is Deepak

As contracts globe, because looks is strong in regions. on basically believe Washington. are all the we pipeline the poised slowdown going is in bit some of all and cargo, over in what's there to U.S. hold strong, even all very everybody The on little over my the a aviation. in I in Security in that we in call, but place win big strong pipeline and just the and us mentioned that only world, of very well But to very not only other is

And then U.S., I look on have a don't the the in lot just border. since we you you touched clearly budget here, know yet. there's on But of focus a southern if

the some award calendar year later like a at the you that could fruition had that? about a that front? come year like IDIQs or on You've to there's something Could talk amount even availability good look or refresh there. wins TSA under very we if potentially opportunity large of this nice later, some of Because still next

Again, good question.

it. increasing a a poised lots in there's that half of the aviation, security. the talked all orders on has of space.On still southern it some the interest for partner are well in there, interest the a need will Middle very border are and poised is is barriers of the thing we praying that traffic temporary of we we we some definitely, over it we, itself as area I there about believe domestically well that definitely, border, again, But it, very IDIQ much capacity, of said [ of the look it, for for lot growth there and opportunity. all has times it even sides And it. both couple keep your uncertainty are where favored second East, around a very this globe. internationally. are being CVP poised And definitely, does, going a are And the is lot strong the the what's air Ukraine. lot And very question as that there's or and countries that ] the announced And house budgets before, of an sooner of those in which said that with we've well internationally down, the security and conflict, that there's out On we've enhancing and before, all we've later, also we from And equipment. settle at for both

I the be been billion this and 'XX presume how for do $X.X be has to this what's year, into the of for well visibility fiscal And to backlog Like awards. a just too? year, pretty much has but you're Security high question as improving Last grow that this can to you how company backlog as that the One, well, not just record you do with impressive top but me. conversion revenue. maintained not with the despite XQ visibility new for going you these confidence have next have much next the year think year? line, able

again, Well, question. good very

And have strong we mentioned, Pipeline lumpy it'll that we strong. revenue, that, backlog 'XX continue even very beyond. that business. a historically, and that it's as already you said you after next we've But after not seems the is just think As a QX into years, 'XX into know said just still what our strong. in

push it customers Some out.

even accelerated Some into wanted people it.

happen. can So that

that think are strong But be we years. will that a want the all you want hopefully next a specific for looks all is rates So come to has numbers. Traffic good coming with is strong Alan, down. give pipeline very we and of add The very interest we we good. around. sitting like is looking are saying to increasing, moved backlog any And economy to don't and something? that freight the pretty very do

of the for that remainder into this and I nicely. think coming years. Strong up it year sums visibility quite

positioned. we're think well we quite So

comes line Glynn from of Oppenheimer. Our Christopher next from the question

A question on healthcare.

of little can half, likely little help, just will a maybe normalization sounds a just growth about that beyond And year? market perhaps seasonal Or So construct an still is market work pandemic bit. still the natural a digested, with perhaps better be second more The little fight? right? that's How little most become progression like bit if normalized. maybe more a is overhang? of a do we you a street it below think it this And

look Well, great hospitals sort customers. we contract on. what it. would a telemetry, if it, control And of approached besides excited little, hospital, tailwinds. we stuff, it's And And them, remote is the the a Index it's I from section, away far our sort into caught we very challenging a of It's time section the away I are business a it, all the is them room a because coming there last But it are is the vital of said, of And at we But hospital. hospitals. got And to of is And We one has subscription a hospital, good answered a to of primary proud is, in we we are patient technician a that the read at monitors, it tell are go hey, a announce and a subscription they a spending business. which the to selling that of things room talk also is yourself. the will lot call have, of with we that up, start-up of are any overall, call a in is, medium much money and you we sitting are for And in during for year. with pandemic, like capital definitely everywhere, sitting what in one call down. it we again, and differentiating about brand-new Rothman model. you our Yes, got a slowing the it shortness a challenging and services looks that small ourselves the very a we couple paying technology same believe to the the actually catch with time. #XX, from believe having healthcare model. platform and the tough sign control at of we give some new We success have continue, people technicians. that products time, the are a looking years from event, we hopefully we model that our

Great. margins, I might to of it on Okay. to the of And different couple I wanted called then you mix mixes. projects different me, phases a and think, out times Security have these occurs ask, large

as to execute So mix relative quarters second of you probable in what's quarter kind in these the should we dynamic optimized as projects? regard most the

this appear is a pipeline Chris, have of in be margins quarter. second Good question. said, our Alan. backlog favorable we well. the indeed being It That in of in and that was number our the a to projects strong mix as opportunities

as So while it saw profile solid move very we be in same QX. that to we carry still it it may forward. the gross in very not we margin QX, expect But a was mix favorable

right. exactly You're

I overall you revenue flow. one. projects timing, slightly time year-to-date cash obviously, have harvest know and 'XX? next year it's But we in should negative assume last the fiscal ramp. tight and free No pretty And on more Great. and Okay. surprise continued the

flow correct. big working in some opportunity cash invest in near Yes. saying is associated to you're contracts an term. flow there's of Chris, although And we capital years what continue in think, as these with have we don't guidance, harvest the the really going directionally, past. then We'll forward awful in lot an to free provide I cash

what like is excited put So with. about our to we this. balance work to we're This sheet

from question from comes of line Securities. Our Larry CJS next Solow the

bump on fact last sort in in or why above XXs you've on also of give XXX would margins high. you of high would it revenue the make we obviously, times near going range an guidance, I the don't sort just record on at XX. the know Curious but can't a of Security of questions points as Actually level, have previous XXs that gotten in look margins. of I unusual your revenue, couple anything big to number? I at like this of the Most follow-ups. or in say just Or had good a specific that there Alan, A of this think been answered. kind piece, over in looks least low couple forward my this that it you've was

So make this parse just out, that not there anything should margin sustainable? kind trying to is of

we is but the and margin revenue questions, guidance every those to at operating margins XXs this to sustainable. we on there's things There low with will different with But Alan. changes of over of as increase these the and Larry, associated type Yes, don't we those about past believe every even saying type and XX which yes, talking Good reason opportunity always and in do provide like. you. don't the sustain level, disagree mix that levels, time. an are there's believe be you're Again, that

then give feel in drivers, of I doing terms it of look sort can orders you out, you orders, of the so much it are of the in if terms inspection And a the but of, funnel, of sounds demand? really are guess will. still seeing order like obviously, as are a vehicle potential What kind bigger us ports? areas you most qualitatively, lot or Okay. still you sort not strong. just queue inspection But Is at cargo

And even they more customer to borders and demand a broad, only and very but make area all I statement, lot with technology of of both lot efficient. turnkey our more the that good very This is are is proud turnkey to also about very and just It's that it reference things going the tool about new technology. what it. just of not is a about successful make look expands because expansion security of interest, in but old to they a and very multiyear for Good conscious and for are said one in every it replace aviation, at and have that Deepak not the contracts here. a that my solution buying into happy a success in question. that with port thinking equipment, as even that selling customers, point we customers been a is

are broad the security say this very and It's and one our I can over confidently So more there a this conscious business But and people consider in conscious people the border with we as we at presence, have more it's area, space. all security equipment. we be growing look no economy with right and everywhere, world. #X the ourselves

switching And fast real on on just Okay. just gears Opto.

guess, of there. couple I mentioned, things a You

the is sort this feel a Just sounds more you color but the flattish quarter, on of like like temporary. little it

Is I mentioned elaborate the forward? case? that a you're specific then guess, kind larger I guess of And bit a you delays can the impacted just you Mexico. sort said were program facility opening some of more, going that a you up if what little think the encouragement couple new there delays, and gives in you I secondly, of quarter

Sure. question. is Larry. This Good Alan,

to inventory So any on overbought that no of times to pandemic probably the levels Opto little was magnitude during programs of customers their from a a rightsizing optimum more own their programs level It inventory mitigation bit for some significant delays. were side, and large are a risk number they some there now delayed. who and have maybe the programs were just experienced

led quarter sales. think extent Offsetting beyond. that stuff And that another bit some us going and I Mexico that little forward, or did big about. contributor facility of a of fiscal as could It's to and for remarks we we new well, to said open to traction, it's it's going be So a that in that of kind up gaining 'XX relatively so. Opto we're excited in sort a flat to as my continue in the just

is Deepak This here.

manufacturing with that there. to opto on go away China-centric very want that, concerned it, about this and say portfolio from They this Just been customers add I can to that did vendors in and seen we've deliver their who to we've are saying space, broaden it.

We broader with Mexico gives up, look it OEM to opened our in reach customers us to now us. bigger, bigger them India. to in this And are cater into Indonesia, facility a it go well to and very for Malaysia a part placed at and

Martin [Operator question the from ROTH MKM. of from Instructions] Our line comes next Jeff

you're countries of now where and on I gaining think growth that be huge of like out. differentiator or whether can communicate win rate all across seems as that how the systems they those specifically have wanted helpful of That identify become to in Certscan? for being terms kind touch in what a of then parses markets share, general, you contracts Are And on threats Security, kind that percentage their markets need you Certscan? self-fulfilling to are prevention. a could

Definitely, help. it the that push Certscan do other with not everything. term, and very the won't competitors, have success, it stuff to software I we differentiate have and us stuff to contract it, All A then energy. said seen And that Deepak Jeff, longer have things broad that can in remote and or from energy, monitoring a But does can't say that. I unit initially like very we broad demonstrated but try the stuff say that, like can into believe every we that the Certscan might next in it. have has do back product together go low it this question. We we results But is high here. that. add-ons portfolio, we energy, integrate Certscan is we it X into Security every field where built and we and that have medium I've

the we reputation, we and ground. we that #X, I'm good positioned, so where space we that also and it are proudly portfolio, very very cargo But say in U.S. very cargo, security very at both we I #X, good can sports customers. are that confident are that catching are say domestic broadest are the Aviation, are think but very probably in liked can #X, in we and we don't least Regarding air I and #X international space. are and about well confident still borders by that I

a have that We for remote base, stuff control we broad in even it growth what think installed very screening remote we screen. doing And we're is where for opportunity another space, monitoring and a employee and and portfolio doing a started from called very large us. that's that, have like

a if throughout bigger the understand ask of the where just look longer-term then more through us cycles replacement here. more, are I help And one lens could some Could you of Great. world.

I screening replacement the next cycle other XX X years? the in think some X next in the be years next maybe upcoming, cycle markets U.S., you're going to to but months, the at replacement point several But necessarily not see is passenger there in in what here. might a

of Well, delay. U.S. specific years. definitely in more definitely, is baggage not screening There is the AI, automation area. been there's Passenger couple going one coming some more internationally, for replacement has cycle to the checked in next happen. And

Just them passenger their tourism need business passenger for increasing the related, going at all there look traffic, increase, security. is wherever wherever you to is traffic of space or think it that

one potential They're everybody India huge about of the making talking For new things it, expanding XX, They're is example, has growth opportunity. infrastructure. a like in XX, XX airports.

positioned there. well very are We

Africa, East, think, of Mexico, kind the we no where Middle Latin all are those one specific even but potential. there positive is growth over, places So It's area. Asia, there's America, everywhere

one mentioned. on Great. internal what you where then And to feel just just I you've do. more, if Are got like to you there some development Latches could. technologies

do spend R&D. You lot a on

You airport in mentioned AI, screening.

out that as Just continue differentiate? curious to opportunity a if there's technologies there see to significant you

keep focused we Well, advancement technology We into that well will into it. space, very spending cargo money the it. are In continue. good

RTT automation integrating our baggage for received. for is like, cargo checked into are other well and In space. We the Certscan aviation space, very the example, some

what more gates technology metal are into for throughput, the to some and passenger technology out call and the screening definitely, there better is it. the higher In stuff. do We AI putting there I stuff, resolution

integrate new plus are products. with technology our partnering also developing ourselves, We to some it working, platforms

I Chopra, like turn back the over would CEO, Thank conference closing you. Deepak At now for to this remarks. to time,

been confident you quarter, want to again Thank half our great all our employees forward I call, a again and you. our for to year and in feel we a strong It's us. look second very beyond. we the about stockholders all to and thank and Thank and our participating you, and and customers talking supporting good

This you Thank call. concludes conference for participating. today's

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