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  "docId": "019dd923-622c-750b-8b96-9b2e1370023c",
  "docSlug": "3471d675fd68",
  "documentTitle": "OSI Systems, Inc. (OSIS)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson C. Block",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2017-12-06 00:00:00",
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  "notes": "The slide uses a deductive approach to estimate profitability metrics for a specific business unit (Mexico) by isolating it from the broader Security division data.",
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      "text": "The outsize profitability of the Mexico turnkey contract supports our assessment that contract pricing is greatly inflated.",
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      "text": "Security Division D&A increased by $32.8 million between FY2012 and FY2014...\nIf we assume that YoY changes in Mexico long lived assets beginning in FY2015 are due to depreciation...\nMexico turnkey capex appears to total approximately $225 million...",
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      "kind": "metric",
      "text": "operating profit margin: 30.1%",
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      "text": "Applying a 30.0% operating profit margin to FY2017 Mexico revenue of $119.9 million yields an estimated operating profit of $36.0 million... We believe a depreciation and amortization estimate of $30.0 million to $35.0 million per year is reasonable for Mexico...",
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      "kind": "paragraph",
      "text": "The same methodology in FY2014 produces an operating profit margin of 27.9%:",
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      "kind": "paragraph",
      "text": "Comparing the change between FY2012 and FY2014, we estimate a Mexico operating profit margin of 30.1%:",
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      "kind": "paragraph",
      "text": "The outsize profitability of the Mexico turnkey contract supports our assessment that contract pricing is greatly inflated. It seems SAT could have saved a great deal of money by purchasing only the machines.",
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      "kind": "paragraph",
      "text": "In this way, we estimate that FY2017 EBITDA from Mexico was approximately $66 million to $71 million. We use an EBITDA denominator of $128.4 million... produces a range of contribution to FY2017 overall company EBITDA of 51.4% to 55.3%.",
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      "text": "Security FY2014 Oper Profit 59,501\n- Security FY2012 Oper Profit 30,552\n- OP from Δ Security Rev @8.0% OPM (5,187)\n= Δ FY2014-2012 OP from Mexico 34,136\nΔ FY2014-2012 Mexico Revenue 113,464\nOP Margin 30.1%",
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      "text": "Security FY2014 Oper Profit 59,501\n- Security FY2013 Oper Profit 43,748\n- OP from Δ Security Rev @8.0% OPM 1,331\n= Δ FY2014-2013 OP from Mexico 14,422\nΔ FY2014-2013 Mexico Revenue 51,635\nOP Margin 27.9%",
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