OSI Systems at Wells Fargo Conference: Strategic Growth and Challenges

On Thursday, 12 June 2025, OSI Systems (NASDAQ:OSIS) presented at the Wells Fargo Industrials & Materials Conference 2025, providing a strategic overview of its operations and future outlook. CFO Alan Edrick discussed both the company’s promising growth opportunities and the challenges it faces. The conference call highlighted OSI Systems’ focus on expanding its market leadership while addressing concerns about cash flow and tariffs.

Key Takeaways

• OSI Systems’ Security division accounts for over two-thirds of revenue, with significant growth in cargo and port/border security.
• The company is optimistic about increased US border security funding and international opportunities.
• Strong free cash flow is expected to drive M&A, stock buybacks, and debt reduction.
• A CEO transition aims to maintain continuity, with the Security division’s president taking over.

Financial Results

• Security revenues increased by 10% despite a 50% decline in Mexico revenues last quarter.
• Over $100 million was collected from Mexico in March.
• OSI Systems anticipates strong free cash flow conversion in fiscal year 2026.

Operational Updates

• The Security division leads in market share, particularly in cargo and port/border security solutions.
• The Optoelectronics division grew by 15% last quarter, enhancing margins through vertical integration.
• The Healthcare division plans to launch a new patient monitoring platform next summer and aims for higher operating margins.

Future Outlook

• OSI Systems expects a potential upgrade cycle in aviation security, focusing on checked baggage screening systems.
• The company is expanding recurring revenue streams through service contracts and a "turnkey" security-as-a-service model.
• M&A strategy targets bolt-on acquisitions in the Security and Opto businesses.

Q&A Highlights

• CFO Alan Edrick assured that the company is addressing past cash flow conversion issues.
• Tariffs are not expected to materially impact the business, with strategies in place to mitigate effects.
• The CEO transition is designed to ensure stability, with the former CEO remaining as executive chairman.

In conclusion, OSI Systems appears poised to capitalize on growth opportunities while maintaining financial discipline. Readers are encouraged to refer to the full transcript for a detailed account of the conference call.

Full transcript - Wells Fargo Industrials & Materials Conference 2025:

Unidentified speaker, Interviewer: Alright. Let’s get started with the next session. We’re with OSI Systems. I’ve got Alan Edrick, the the CFO. So, Alan, thanks thanks so much for joining us today.

Alan Edrick, CFO, OSI Systems: Oh, thank you for having us.

Unidentified speaker, Interviewer: And maybe just just to kick it off kinda high level, for people in the room that aren’t familiar with OSI, could you talk a little bit about what you guys do, the end markets you serve, that sort of thing?

Alan Edrick, CFO, OSI Systems: Sure. Sure. So OSI Systems, we have three divisions. We have a security division. We have a health care division, and kinda what ties it all together is our optoelectronics division.

Most of our investors and most people probably follow us for our security division. Our security division is called RapidScan Systems. It represents over two thirds of our revenues, and we are the number one player in in security detection. And and what we do in security, many people know us for aviation because if you go to airports, we make products for check baggage, checkpoint, trace detection, body scanners, and the like. But the bigger part of our business in security and the fastest growing part of our business in security is what we call cargo and solutions for ports and borders and critical infrastructure here in The US at the Southern border, the Northern border, but internationally as well.

We’re number one in in cargo and solutions by a wide margin. We really are sort of dominating that market, we believe. And it’s really where you wanna be as well because it’s the fastest growing market. You know, unlike aviation, which is often a replacement market for cargo and solutions at ports and borders, you know, we’re still in the very early innings of the game. So we tend to be the the top player in the fastest growing market, which is really a nice place to be.

And our recurring revenue is significantly increasing in this area. In our health care business, we sell to hospitals. We sell to medium and large hospitals predominantly where we make patient monitors and cardiology products, and we have a nice recurring revenue stream there as well. Then again, what ties that together, as I was mentioning, was our optoelectronics business. So unlike security and health care, where we sell to the end customers, in opto, we make sensors, detectors, other electronic components for the leading OEMs, the Fortune five hundreds, in a variety of industries, aerospace and defense, industrial, medical, automotive, technology.

But in addition to selling to the party companies, many of the key components that go into our security products and many of the key components that go into our health care products are manufactured by our Opto division. So through that vertical integration, we enhance the overall company wide gross margin. We can be faster, more responsive to our customer needs and solve some of the supply chain challenges that have taken place over the last years.

Unidentified speaker, Interviewer: Yeah. So I guess a quick kind of follow-up. You mentioned kind of the penetration opportunity and sort of ports in the border side relative to the area. We spoke about this yesterday. Thought that was sort of an interesting anecdote of, you know, opportunities to still add equipment there.

Alan Edrick, CFO, OSI Systems: Yeah. Yeah. It really is. You know? So when you think about the ports and the borders, most of the sales that we’re making, we’re not replacing current equipment that’s already there.

It’s where they haven’t been doing scanning ever or really. So it’s it’s big, big opportunities both here in The United States, and we could talk a little bit more later about that opportunity, but internationally as well. You know, we’re seeing tremendous opportunities in The Middle East, in Latin America, in Asia, in Europe. So it’s really a fast expanding market for us.

Unidentified speaker, Interviewer: Yeah. Got it. So I guess maybe starting out on The U. S. Side with in security products.

I mean, you started to get some more details of the funding for next year coming out over the last couple days. Can you talk about a little bit about that? I mean, obviously, border security, big big priority for the administration. What you’re seeing and sort of when can that translate to to growth for you guys?

Alan Edrick, CFO, OSI Systems: Yeah. Super, super exciting for us as you mentioned. For border security here with the main agency, it’s called CBP, Customs and Border Protection, part of the Department of Homeland Security. And you’re absolutely right that it’s a high priority for the administration, but it’s also a high priority for congress. And while Republicans and Democrats don’t agree on a whole lot of things, one thing that they seem to agree on is the use of what they call NII technology, non intrusive inspection technology at at the borders.

And the budget that they put that you see, potentially here in the reconciliation bill and and budgets going forward is significantly higher than we’ve ever seen in the past. It’s, it’s 1,100,000,000.0 that they show for NII technology. And then they also have a couple other categories for biometrics and for other border security that we can also play in. So it appears that there’s huge opportunity for us. Our growth over the last couple of years, which has been very robust, has really been driven internationally.

And we continue to see very strong international growth. But now with The United States funding that you’re talking about, that looks to be very, very attractive. Now assuming this passes, you know, in the next few months, generally, it takes a little bit of time to to do the RFPs and and then issue the awards. But that could be something that happens in or around the end of the calendar year.

Unidentified speaker, Interviewer: Yeah. Got it. Kind of put you on the spot. The 1,100,000,000.0, do you know kind of roughly what the run

Alan Edrick, CFO, OSI Systems: rate has been? How much of an increase is Well, it’s significant. In the past, we were expecting around $300,000,000 So it’s quadrupling, and that’s why we’re so excited about it. Much, much larger than we even anticipated just six months ago. Yes.

Got it. Interesting.

Unidentified speaker, Interviewer: And then more on the international side. So Mexico, you guys have had some big contract wins. Those are starting to kind of get a little bit more mature. So I guess could you talk a little bit about, as that happens, both the growth profile of that business and also maybe the margins as the mix kind of changes a little bit?

Alan Edrick, CFO, OSI Systems: Yes. So we won a few contracts in Mexico that were quite notable. And we’ve been delivering on that starting at the end of fiscal twenty twenty three, but our fiscal twenty twenty four revenues were very robust. Fiscal twenty twenty five is strong too, but not to the level of fiscal twenty twenty four. The nice thing about Mexico, as you mentioned, as it becomes a bit more mature, in fact, during the last quarter, our revenues in Mexico were down 50%, but our overall security revenues were up 10%, which kind of just shows how strong our overall channel is outside of Mexico.

The nice thing about Mexico is as we’re delivering these products and we have a much bigger installed base, after they roll off of warranty, you then start to see the service revenues kick in. And service revenues generally contain a higher margin than the product revenues. We saw a very notable increase in our service revenues during the March, and we expect this to really be our new baseline to continue to grow off of.

Unidentified speaker, Interviewer: Yes. Got it. And apart from Mexico, internationally, are there regions or countries that you see as kind of the biggest opportunities? Or is it fairly widespread?

Alan Edrick, CFO, OSI Systems: Well, it definitely is very widespread, but we see The Middle East being very fertile territory for us. But really, on complete global picture, it seems to be very strong.

Unidentified speaker, Interviewer: Yeah. It. It. Okay. I guess just overall, business, because big uptake in kind of product deliveries of Elastic Beers within security, can you talk a little bit about the life cycle of those?

Like there’s a a service period after those get delivered and sort of how the business mix overall for for security trends from here.

Alan Edrick, CFO, OSI Systems: Yeah. So we’ve had significant, you know, product deliveries over the last few years, really increasing our installed base. The life cycle of most of our products tend to be in that seven to ten year range. And what we see is once we sell a product, the service revenue that we get, kind of the aftermarket revenue for that next seven to ten years, roughly approximates the initial price of the product we sold. So if we sold something for a million dollars, over the life of that product, we might get $2,000,000 overall.

So very nice for us. Important for us to have that large installed base, which leads to the stronger recurring revenue, and that recurring revenue generally is at higher margin than the initial product sale.

Unidentified speaker, Interviewer: Yes. Got it. Got it.

Unidentified speaker, Interviewer: So I guess another margin opportunity you guys have talked about, some of the new product offerings, turnkey product that you you now provide, the software updates. Could you talk about how those are sort of ramping up, adoption rates, and and sort of how accretive that could be for margin?

Alan Edrick, CFO, OSI Systems: Yeah. So the turnkey or or or security as a service for us is a is a great business model that that we pioneered. So the basic business model that we had always had was we sell the product, and then we get that recurring revenue through service, spare parts, maintenance. But a few years back, we sort of challenged ourselves to say, how can we expand those revenues? How can we expand the margins?

And we said, well, what if there’s a customer set out there that either doesn’t have the cash or the capital to buy the equipment upfront? Or if they do, what if they don’t have the operational expertise to run it? What if we do a full service for them that we call turnkey, where we manufacture the equipment, we place it at the customer site, but we own it. We staff it up with our people. We enter into long term contracts up to fifteen years, and then we get this great recurring revenue at higher margin.

And it’s been a real success for us. It’s a longer sales cycle, but our pipeline of opportunities in there is good. We’ve been working on a few deals for quite a a long time. So it’s getting to the point that we think there could have been opportunities as we enter fiscal twenty six here. We’re at June 30 fiscal year, so fiscal twenty six is a few weeks away, that we would that would be hopeful that we’ll see further turnkey wins in the next fiscal year.

Unidentified speaker, Interviewer: Yes. Got it. Can you touch a little bit on the airport part of the security business? It’s a smaller piece than the border stuff. But just kind of where are we in the kind of the airport investment cycle for that?

I think it sort of fell after COVID. And now that we’re hearing a lot of headlines around Newark Airport needing to upgrade a lot of systems, like is there opportunity for that to pick up?

Alan Edrick, CFO, OSI Systems: Yes. There’s a big opportunity in airports and aviation. The aviation business is a good business for us. It’s growing double digits as as well. The US infrastructure is badly in need of investment.

When you take a look at check baggage machines at airports, these machines are sometimes twenty years old, where most of the time it’s viewed that the life cycle is about ten years. So consequently, more service has been needed on these type of machines. So our belief is that there’s going to be a big upgrade cycle coming in on checked baggage. It’s been stated publicly. It’s probably still a couple of years away from starting.

And then it’ll be about a five year replacement cycle. For us, it’s all incremental revenue. Because at the time these things were rolled out twenty years ago, we did not have a checked baggage product. We then developed the industry’s specifically for security applications and have had great success selling it internationally. We have it in leading airports like Paris and Rome and and many locations throughout the world.

And as we come to The United States, we’d hope to as The United States starts to have our own rollout of the replacement cycle, we’d expect to get a similar market share. So we look at aviation as big opportunity for us going forward as well.

Unidentified speaker, Interviewer: Yes. Got it. Got it. Can you talk a little bit about the Opto business? So I mean, mix of end markets there, but we had a little bit of a sort of destocking period, I think, with some of your customers.

I think we’re the worst of that. Just kind of talk about how that business can grow and what are kind of

Alan Edrick, CFO, OSI Systems: the biggest drivers. Yeah. So our Opto business is spread throughout a number of industries, as we talked about earlier, with no customer concentration, which is great. The destocking, some companies most customers are now through the destocking. Even during the destocking, our Opto business was performing very nice.

It still has strong revenues and operating margin expansion. But if you look at our last quarter, we grew 15% in the Opto business. As we look forward into fiscal twenty twenty six, we see an opportunity for further growth in the business, both on the top line and margin expansion. The sales team in Opto has done a tremendous job mining new customers and getting additional business out of existing customers. And one of the additional newer opportunities that we see is there are many companies looking to move away from some of their manufacturing partners in China.

And we don’t manufacture in China. But our Opto business has a very global footprint where we’re in Asia, we’re in Indonesia, we’re in Malaysia, we’re in India, manufacturing, we have U. S, UK, Canada. So we offer a nice footprint for others to move to. And we’re seeing a good interest level from a number of companies and moving some of their manufacturing from China to one of our locations.

Unidentified speaker, Interviewer: Got it. Got it. Okay. And then part of the business in health care, I mean, you’ve made some progress. Margins have come back a little bit there, but the kind of mid single digit compared to you know, we’re low single digit at one point, but still not up to where they were, you know, years ago.

Just sort of what’s the outlook there and what are you guys working on?

Alan Edrick, CFO, OSI Systems: Yeah. I’d say the most exciting things for us in our health care division is two things. One, we’ve been developing a new patient monitoring platform. We’ve been spending significant research and development dollars on that. And we’re now getting to the point that we’re not far from launching our phase.

We believe that will happen next summer, so about a year from now, which we think can stimulate some significant growth. The is we brought on a new president at our Space Labs division February 1, so about four months ago. Very, very strong individual who led one of our competitors and significantly grew their patient monitoring business. A very sophisticated individual who’s going to be upgrading the talent in our organization, upgrading the infrastructure and some of the go to market strategy. So extremely excited about that.

The healthcare division generates the highest contribution margins of any of our divisions. So as we get the top line going, there’s a very big pull through to operating margins. As you said, in the past, we’ve had mid teens or even high teens operating margins for particular quarters, maybe not always for a full year. And if we can get those revenues going with a very, very high contribution margins, we think that’s available to us. We think that’s more likely to occur as we launch the new product platform, but we’ll be continuing to position ourselves for that strength.

We’ll also be, you know, addressing some some costs and the like to hopefully put up even better margins in in ’26.

Unidentified speaker, Interviewer: Yeah. Got it. Got it.

Unidentified speaker, Interviewer: I wanted to ask about cash flow, cash conversion. I think, six months, nine months ago, some concerns because you had sort of lagged a little bit and then that started to recover. So it’s gotten quite good. So just thoughts on what drove that and kind of the outlook into next year.

Alan Edrick, CFO, OSI Systems: Sure. So we’ve historically been a very strong generator of of cash flow as a company. When we won some big contracts, this is a good thing. We were investing in working capital. So we invested in inventory.

We invested in receivables as we were going through some, very strong growth. We’re now at the level that although we expect to continue to see strong growth, we’ll see some normalization of that working capital. The Mexico contracts that you referred to earlier were a big factor in that. And in Mexico, we still have some, I’ll call it, outsized receivables. Though we’ve been collecting a lot of cash, we collected over $100,000,000 from Mexico in the March, and we saw our DSOs come down in the December and the March.

And as we go into fiscal twenty twenty six, we think there’s going to be a tremendous conversion of free cash flow. So our free cash flow conversion percentage of net income is going be very, very strong. So as we normalize, we’re going to be we should be generating very, very significant free

Unidentified speaker, Interviewer: Yes. Got it. You guys did an acquisition earlier this fiscal year as RF based defense kind of focused product portfolio. Can you talk a little bit about what that business is and sort of how it contributes to the other work that you do?

Alan Edrick, CFO, OSI Systems: Yeah. This acquisition has has truly been exceptional for us so far. We bought this company in in September, a US based company. And this this company had tremendous technology. But being a smaller company, though the sales team was very, very strong, they didn’t have the entire reach that our sales team did.

So when we take their strong technology and we put it into our sales channel and in addition to theirs, it’s led to some great new bookings. The performance of this business has been strong right out of the gate. So we’ve had good revenues. We’ve had good operating margins. We expect that to continue.

It could be part of the new Golden Dome program as well. So a lot of excitement in in this business, but a great, great, strong technology platform where we sell to many of the same customers, both in The US and internationally. So it’s it’s done very well, and we’re we’ll look for acquisitions that continue to do similar type of things for us.

Unidentified speaker, Interviewer: Yeah. And does that does that align with kind of the security products business, or is it opto? I know there’s, a defense aspect in that.

Alan Edrick, CFO, OSI Systems: Yeah. There is a defense aspect. But, yes, it is part of our security division because the customers are the same customers that we sell to in the security division. So it’s been very, very helpful.

Unidentified speaker, Interviewer: Got it. Got it. Okay.

Unidentified speaker, Interviewer: On the cost side, you guys have done a really nice job controlling costs as you grow. SG and A, as a percentage of sales has come down as revenue has grown. Could so I guess, could you talk about is there opportunity for that kind of percentage of sales, SG and A to continue to come down? Does it need to grow at some point? Just kind of any thoughts on cost?

Alan Edrick, CFO, OSI Systems: Yes. So we’re always looking to grow the top line with operating margin expansion. And part of that operating margin expansion comes from leveraging our fixed cost structure. So as our revenues have gone up and the economies of scale associated with that, our SG and A as a percentage of sales has come down. We’re also always looking to challenge ourselves for continuous improvement to see how we can further optimize our SG and A or our operating expenses.

So as we go forward, we think we’ll continue with that strategy. And as we grow the top line, our expectation is to grow our SG and A at a slower rate than we grow our top line. So as a percentage of sales, it could come down further and further lead to more operating margin

Unidentified speaker, Interviewer: Yes.

Unidentified speaker, Interviewer: Got it. Got it. Okay. Could you talk a little bit about the capital deployment strategy, particularly given, as you said, there’s a lot of cash coming next year? What are the priorities?

Could there be buybacks? Is M and A still a big focus? Just any thoughts there.

Alan Edrick, CFO, OSI Systems: Yes. Yes. All of the above. With the strong free cash flow that we expect to generate, our capital allocation is really three things, and we can do all three of these things. M and A is in our DNA.

We do we like to do acquisitions. But again, as we were talking a little bit about earlier, we’re a very disciplined buyer. But we would like to do some acquisitions. Complementing that, stock buyback is a part of our capital allocation as well. And any residual cash we have, we would just use to pay down a revolver to reduce our interest expense.

Unidentified speaker, Interviewer: Yes. Got it. Got it.

Unidentified speaker, Interviewer: Okay. So tariffs, I mean, sort of news has died down a little bit. Maybe we’re making some progress, But just thoughts on how that potentially could impact your business, those we do end up with tariffs?

Alan Edrick, CFO, OSI Systems: Yes. Big picture, we don’t think tariffs will be material for us. In our Security business, not a big factor. In our Opto business, not a big factor either, although the tariffs that we do absorb in Opto, we tend to pass on to the customer, almost dollar for dollar. So we would expect very, very little P and L impact from Opto.

Interestingly, the area that we might have a little bit more exposure in is in our health care division. So if we’re going have exposure, I’d rather it be in our smallest division where we have about 10% of our revenues because we do source some stuff from China there. But we’re actively looking to replace that and have alternatives. So kind of in a nutshell, we don’t look at tariffs as anything material for us.

Unidentified speaker, Interviewer: Yeah. Got it. Got it.

Unidentified speaker, Interviewer: Okay. So a couple follow-up questions. And if anybody has one in the audience, definitely raise your hand. We’ll we’ll get you in. But one of the ones somebody had asked me recently was just on the capacity you guys have.

And like given that there’s a lot of demand, both in The U. S. Side and international, do you need to maybe build out any more capacity to support that? Or do you have spare room left?

Alan Edrick, CFO, OSI Systems: Yes. It’s a great question. And we do have multiple manufacturing facilities. And we’ve shown in the past that we have the ability to ramp our production and ramp it up fast. You know, won a big $500,000,000 contract in Mexico following a $200,000,000 contract there as well.

And through our manufacturing plants for that part of our business, both in The US and The UK, we ramped up and delivered everything that we need to deliver. So as we continue to grow, we believe we have adequate manufacturing capacity, we can add shifts, we can add more people. So we don’t believe it requires any significant investment. There might be some modest investments, but nothing significant.

Unidentified speaker, Interviewer: Yes. Got it. Got it.

Unidentified speaker, Interviewer: In M and A, I mean, we touched on it still sounds like it’s part of the strategy. Can you talk about what the pipeline looks like? Are there a lot of assets coming up for sale? And any particular areas that would be interesting to add? Oh, yes, absolutely.

So in M

Alan Edrick, CFO, OSI Systems: and A, we’re primarily focused on our security and our Opto businesses for acquisitions. There are a number of companies we’re exploring. There’s always that delta between what the seller thinks they’re worth and what the buyer. So sometimes that takes a little bit of time to narrow that gap. But yes, we’re seeing opportunities probably more on the bolt on size than the sort of the transformational size.

But similar to the acquisition you mentioned that we did in September, which was about $100,000,000 deal, including earn out. That’s kind of more on the bolt on capacity. But, yeah, we are seeing some nice things, and and we hope to be able to to consummate a deal or two in our next fiscal year.

Unidentified speaker, Interviewer: Yeah. Are there are there any sort of, like, adjacent end markets that maybe you would, you know, do an acquisition to get into, you know, kind of expand your addressable market? Or, you know, it would be very much sort of in the, you know, wheelhouse of what you’re doing already?

Unidentified speaker, Interviewer: Both. Yeah.

Alan Edrick, CFO, OSI Systems: You know, we we like to do some things that are right down the middle of the fairway, but we’ll also expand, you know, a little bit beyond that. Then, you know, the RF acquisition you mentioned is a good example of that. Probably not right down the middle of the fairway, but complements a lot of the stuff that we do and works well with our sales channel. So I think we would I think we would look at both.

Unidentified speaker, Interviewer: Yeah. Yeah. Got it. And then could you talk a little bit about market share in the security industry? So you guys compete with Leidos, with Smith.

You you’ve gained a lot of share in recent years. Can you talk about kind of what drove that? And and do you think there’s opportunity to continue the game? Yeah. Yeah.

We think so. I mean, I think we’ve been

Alan Edrick, CFO, OSI Systems: the fastest growing security company where I I believe we’re the the largest security detection company now. You know, all you know, the competitors you mentioned are are great companies, and we don’t take anybody for granted. For us, you know, security is the largest part of our business. So we are highly, highly focused on it. For some of our competitors, it’s an important part of their business, but it’s not the largest part of their business.

I think we think creative. We think out of the box. You know, we don’t approach each deal as a cookie cutter. We approach each deal to see what it’s gonna necessarily take to win. So our goal is to continue to take market share.

You know, we already have what we believe to be a very, very strong market share on the ports and borders and critical infrastructure side, but I think there’s opportunity to take more market share on the aviation side, particularly as this checked baggage replacement cycle starts where our market share is zero in The US on on checked baggage today. But once that starts, you know, it could be a a great opportunity for us.

Unidentified speaker, Interviewer: Yeah. Got it. And and you guys recently had a a CEO change. Can you talk about, you know, the new new leadership? And I I don’t think there’s a big change in the strategy, but, you know, just, you know, any thoughts on on that that turnover?

Alan Edrick, CFO, OSI Systems: Yeah. So the CEO change was was foreshadowed. You know, we had a our our previous CEO, who’s still with us as executive chairman, had been in place for quite some time. And earlier in ’24, we we announced that he would be retiring. And on January 1, we named our president of our security division, so the president of our largest business as the new CEO.

And I think what that was a measure is on a on a vote of continuity. You know, what we’re doing is is going extremely well. The individual who’s led our biggest division is is now has now taken over. You know, the last five and a half months have gone gone very, very well. Any new leader will bring some new ideas in, and, you know, he’s continuing to gain his traction, his feet, particularly in in in the other divisions and and getting fully up to speed.

But the CEO transition has gone, you know, phenomenally well, backed up by, you know, our our former CEO is still the executive chairman and, you know, has a has a nice voice in the company continuing. Got

Unidentified speaker, Interviewer: it. And and last one for me, and then and again, if anyone from the audience has one. The margins on the aviation part of the business, I guess if that does start to ramp up, is there any reason to expect those would be any different from the course of the port and border stuff, maybe because it’s newer newer products? Is it know, are you not as far down the learning curve? Or just any kind of mixed thing to think about there?

Alan Edrick, CFO, OSI Systems: Yeah. The so the margins, you know, vary so much, you know, whether it’s between aviation and and cargo or ports and borders, whether it’s US or a particular country abroad, you know, there’s such a a wide variety of of margins. But as we ramp up our aviation revenues, we don’t anticipate it to have any material negative impact on our business. And with those economies of scale and the like, we believe it should have a positive impact and help our operating margins because incrementally, it’ll add to our overall operating and EBITDA margins.

Unidentified speaker, Interviewer: Yes. Got it. Got it. Okay.

Unidentified speaker, Interviewer: Anything from the audience? Cool. Alright. Well, yeah, maybe we’ll wrap it up there. But, Alan, thanks

Alan Edrick, CFO, OSI Systems: a lot for joining us. Thank you very much. Thanks. Cool. Good job, sir.

Yeah. Thank you.

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