OSIシステムズ（OSIS）2026年度第4四半期決算説明会：5000万ドルの納入遅延と2027年度ガイダンス

主要なポイント

• 2026年会計年度第4四半期の売上高は、中東における紛争関連の遅延や現地への立ち入り制限により、セキュリティ部門の計画納入分のうち約5000万ドルが6月30日以降に延期されたことが主な要因となり、前年同期比約4%減の4億8400万ドルとなりました。同社によると、これらの納入分は受注残に留まっており、失われてはいないとのことです。
• 通期の売上高は4%増の過去最高となる17億9000万ドルに達し、Non-GAAP希薄化後EPSは11%増の過去最高となる10.35ドルとなりました。第4四半期のNon-GAAP EPSは17%増の3.78ドルとなりました。
• 第4四半期の調整後営業利益率は200ベーシスポイント拡大して17.7%となりました。ヘルスケア部門の調整後営業利益率が1%から10%に上昇したことを含め、全3部門で改善が見られました。
• OSI Systemsの2026年会計年度末における受注残は、過去最高となる約19億ドルに達しました。通期のブック・ツー・ビル比率は1をわずかに上回り、第4四半期のブック・ツー・ビル比率は1をわずかに下回りました。
• 経営陣は、2027年会計年度の売上高見通しを18億7500万〜19億3000万ドル、調整後EPSを11.13〜11.49ドルと発表しました。成長は下半期に最も顕著になると予想されています。
• 営業キャッシュフローは、第4四半期に過去最高の1億8200万ドル、通期で2億7600万ドルに達しました。経営陣は2027年会計年度のフリーキャッシュフローが純利益の100%を超えると予想しています。

主要財務データ

OSI Systemsは第4四半期中にメキシコの最大顧客から1億5900万ドルを回収しました。同顧客の売掛金残高は第3四半期末の3億4500万ドル（売掛金総額の40%）から、会計年度末には1億9000万ドル（同25%）に減少しました。経営陣は2027年会計年度中にこの残高が大幅に減少すると見込んでいます。

同社は第4四半期に平均価格約219ドルで約56万5000株の自社株買いを行い、総額は1億2360万ドルとなりました。2026年会計年度中に110万株を買い戻して消却しました。新たな授権枠に基づき、約110万株が引き続き取得可能となっています。

事業および業績の動向

セキュリティ部門

第4四半期のセキュリティ部門の売上高は7%減少しました。この減少は、中東での納入遅延や、前年同期のメキシコ向けプログラム売上高が高水準であったことによる反動減を反映しています。2026年会計年度におけるメキシコでのセキュリティ契約関連売上高は前年比で1億5000万ドル近く減少しており、これには第4四半期の約2000万ドルの逆風が含まれます。

同社は、メキシコ関連の売上減退要因が2027年会計年度には2500万ドル未満に和らぎ、その影響は主に上半期に集中すると予想しています。前年のメキシコでの設置売上高を除くと、第4四半期のセキュリティサービス売上高は前年同期比9%増加しました。経営陣は2027年会計年度のサービス売上高全体で力強い2桁成長を予想しています。

4月に米国国土安全保障省の業務が再開されたことを受け、調達活動が加速しました。米税関・国境警備局（CBP）は、OSI Systemsに対し5年間の単独案件となる不確定数量契約（IDIQ）を2件交付しました。1件は可搬型急速スキャン乗用車検査システムに関する上限約2億ドルの契約、もう1件はバン搭載型移動式X線システムに関する上限約8500万ドルの契約です。

同社は両方の契約に基づき納入注文を受注しており、これには約2100万ドル規模のタスク注文が含まれます。経営陣は、2027年会計年度における貢献は限定的であり、売上高の大部分は2028年会計年度以降に計上されると見込んでいます。IDIQ契約の上限金額は受注残として計上されず、確定した納入注文やタスク注文が授与された時点で受注残に追加されます。

OSI Systemsは、RapiscanをチームUSAの公式サポーターとし、2028年ロサンゼルスオリンピック・パラリンピック競技大会におけるスクリーニングおよびセキュリティ技術のハードウェアおよびソフトウェアプロバイダーとする協定を締結しました。

高周波（RF）および防衛プログラム

経営陣は、RFポートフォリオにおける顧客のエンゲージメントが本製品群として過去最高レベルにあると述べました。2026年会計年度中、OSI Systemsは国土防衛用超水平線レーダー送信サブシステムに関して上限約2億3500万ドルの未確定契約手続（UCA）を受注しました。このうち約80%が第3四半期に受注残に計上され、大部分は今後数年間にわたって納入される予定です。

同社はアイアンドーム関連の取り組みを支援するSHIELD IDIQ契約にも参加しています。経営陣は、2027年会計年度における高周波事業の力強い成長と、2028年会計年度における継続的な成長を予想しています。

オプトエレクトロニクス・製造部門

オプトエレクトロニクス・製造部門の通期売上高は9%増の4億5100万ドルとなりました。第4四半期の調整後営業利益率は、スケールメリットと収益ミックスの改善に支えられ、前年同期の13.6%から14.7%に上昇しました。

経営陣は、顧客や製品のミックスにより四半期ごとの業績に変動があるものの、2027年会計年度は売上拡大に伴いさらなる営業利益率の向上を見込んでいます。

ヘルスケア部門

第4四半期のヘルスケア部門の売上高は前年同期比で約5%増加しました。調整後営業利益率は、販売量の増加、営業レバレッジ、年間を通じて実施した業務改善を反映し、前年同期の1%から10%へと改善しました。ただし経営陣は、単一四半期の利益率実績を過度に一般化して先行きを予想することには注意を促しました。

業績予想・ガイダンス

経営陣は、今回の見通しが中東での納入時期および同地域での今後の受注に対して保守的なアプローチをとっていると述べました。延期された約5000万ドルの納入分のうち、大部分は2027年会計年度下半期に見込まれていますが、全額ではありません。

業績見通しには、合計2億8500万ドルのIDIQ契約上限額全額ではなく、すでに受注したCBPの納入注文の一部のみが含まれています。経営陣は、近年の米国での受注からのより大きな貢献は2028年会計年度、2029年会計年度以降になると見込んでいます。

OSI Systemsはインフラストラクチャーと製品革新において特定の事業投資を拡大する計画です。長期的目標は、高粗利益なサービス売上高のより迅速な成長に一部支えられ、売上高の成長と営業利益率の拡大を両立させることです。

リスクと注目点

• 中東における紛争と現地への立ち入り制限により、納入や足元の受注が遅延しています。さらなる時期の変更は、受注残の売上転換や売上計上の時期に影響を与える可能性があります。
• 2027年会計年度の成長は下半期に偏ると予想されており、納入スケジュールに対する感度が高まっています。
• 大型のIDIQ契約上限額は自動的に受注残や売上高に計上されるわけではありません。売上転換は今後のタスク注文や納入注文に依存します。
• 経営陣は、関税、サプライチェーンの混乱、為替変動、製品およびサービスの組み合わせ（ミックス）、現金回収のタイミング、地域紛争を不確実性の要因として挙げています。
• 2027年会計年度のEPS見通しには、潜在的な減損損失、構造改革費用などのコスト、取得した無形資産の償却費、関連する税金効果、および一時的ないし非恒常的な項目は含まれていません。

アナリスト質疑応答の要点

• キャッシュコンバージョン：経営陣は2027年会計年度における力強いキャッシュ創出を見込んでおり、フリーキャッシュフローが純利益の100%を超える可能性があると述べました。回収は年間を通じて行われる見込みですが、より前倒しのパターンが好ましいとしています。
• 中東の納入時期：遅延した納入の大部分は中東の顧客向けでした。経営陣は保守的な前提を維持しつつ、2027年会計年度の下半期に相当部分が完了すると見込んでいます。
• 受注残の計上方法：2億3500万ドルのRF受注のうち約80%が第3四半期に受注残に計上されました。CBPのIDIQ契約については、上限額全額ではなく、確定したタスク注文または納入注文のみが受注残に追加されます。
• サービス売上高：メキシコ製品の保証期間終了、貨物・車両・検問所製品の稼働ベース拡大、RFサポート、Security-as-a-Service製品、およびTruSaaSソフトウェアサービスにより成長が見込まれています。
• セキュリティ部門の利益率：経営陣は、長期的にサービス売上高が製品売上高よりも高いペースで成長すると予想しています。サービス売上高は利益率が高いため、サービス構成比の上昇は2027年会計年度以降のセキュリティ部門の利益率拡大を後押しする可能性があります。
• TSAでの商機：経営陣は、米運輸保安庁（TSA）が手荷物検査システムを優先しているため、預け入れ荷物用スキャナーの商機はまだ数年先になると述べましたが、最終的なプログラムは複数年に及ぶ可能性があるとしています。

決算説明会 全文文字起こし

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Thank you for standing by and welcome to the OSI Systems, Inc.'s fourth quarter 2026 conference call. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Alan Edrick, Chief Financial Officer. Please go ahead, sir.

Alan Edrick

Thank you. Good afternoon and thank you for joining us. I'm Alan Edrick, Executive Vice President and CFO of OSI Systems, and I'm here today with Ajay Mehra, OSI's President of Security. Welcome to the OSI Systems Fiscal 2026 Fourth Quarter and Year-End Conference Call. We're pleased that you can join us as we review our financial and our operational results.

I'd like to remind everyone that today's discussion will include forward-looking statements, and the company wishes to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 with respect to such forward-looking statements. Forward-looking statements made in this call are based on currently available information, and the company undertakes no obligation to update any forward-looking statement based on subsequent events, new information, or otherwise. We will also reference both GAAP and non-GAAP financial measures. Applicable reconciliations are available in today's earnings release.

I will begin with a high-level summary of our financial performance for the fourth quarter and the full fiscal year, and then turn the call over to Ajay for a discussion of our business and operational performance. We will then finish with more detail regarding our financial results and our outlook for fiscal '27. Before I discuss our fourth quarter records, let me address the revenue results. Full-year revenues of $1.79 billion finished below our guidance range, and fourth quarter revenues of $484 million were down approximately 4% year-over-year.

Importantly, these results were affected by the timing of approximately $50 million of planned security deliveries that moved beyond our June 30th fiscal year-end because of conflict-related delays and site access constraints in the Middle East. I want to emphasize that these expected revenues are deferred, not orders lost. They remain firmly in our backlog and are expected to be delivered on a later schedule.

Setting this aside, we were really pleased with the overall performance as multiple key performance metrics for Q4 and the full fiscal year were extremely strong. We closed fiscal '26 with exceptional cash generation and strong profitability driven by solid adjusted operating margin expansion. We delivered record fourth quarter operating cash flow of $182 million. We grew fourth quarter non-GAAP earnings per share by 17% to a record $3.78. And we ended the year with a record backlog of approximately $1.9 billion.

For the full year, revenues reached a record $1.79 billion, up 4% year-over-year, and adjusted earnings per share grew to a record $10.35, up 11% year-over-year. Bookings were solid across the three divisions, and we finished the year with a record backlog and solid visibility as we enter fiscal '27. We also have a significant opportunity pipeline, and we have recently secured several important program wins.

Our cash conversion was outstanding, allowing us to strengthen the balance sheet while continuing to return capital to shareholders. In the fourth quarter, we repurchased approximately 565,000 shares at an average price of about $219 per share for a total of $123.6 million. Our board recently authorized an additional 1 million shares, leaving approximately 1.1 million shares available under our stock buyback program. Before diving more deeply into our financial results and discussing our outlook for fiscal '27, I'll turn the call over to Ajay.

Ajay Mehra

Thank you, Alan, and thank you to everyone for joining us today. I am pleased to be here to discuss our fourth quarter and full fiscal year 2026 results. Fiscal 2026 was a strong year for OSI Systems, capped by record annual revenues of $1.79 billion, record Q4 and annual non-GAAP earnings per share, and record Q4 and annual operating cash flow. That said, as Alan pointed out as well, we finished 2026 with revenues below expectations, mostly due to delays with the situation in the Middle East.

Overall, I am proud of how our team has performed across the portfolio, delivering solid bookings that translated into a record backlog of approximately $1.9 billion, which gives us good visibility as we enter fiscal 2027. While the Security division faced revenue headwinds in the quarter from the Middle East conflicts that have shifted the timing of certain deliveries, Optoelectronics delivered strong growth on broad-based demand, and Healthcare posted an improved quarter. The security-related deliveries that were pushed out remain in backlog and are expected to be completed in future orders.

So let's discuss our business in more detail, beginning with Security. With DHS reopening in April, following the shutdown, we have seen procurement activity accelerate. Since the close of our fiscal year, CBP has awarded us two 5-year IDIQ contracts, one with a ceiling of approximately $200 million for relocatable rapid scan passenger vehicle inspection systems, and a second with a ceiling of roughly $85 million for van-mounted mobile X-ray inspection systems.

We have already received delivery orders under both these IDIQs, including a task order valued at about $21 million. These IDIQs represent continued funding provided under the omnibus bill. We expect to see some revenue contribution from these awards later in fiscal 2027, but significant contributions are expected in fiscal 2028 and beyond as well. We have also made growing recurring revenue a priority across the Security division, and with the size of our installed base today, we expect that effort to translate into substantial service revenue growth in fiscal 2027.

Recently, we entered into an agreement with LA28 to establish Rapiscan as an official supporter of Team USA and the official physical screening and security technology hardware and software solutions provider of the LA28 Olympic and Paralympic Games. This strategic partnership builds upon our security efforts at major recent events such as the FIFA World Cup, the Paris Olympics, and the Milan Winter Games. Few companies have a comparable track record at this scale, and our experience is a real advantage as we pursue future large venue and event security opportunities.

We continue to see strong momentum in our radio frequency, also known as RF business, and Homeland Security Defense business. Our over-the-horizon radar programs and involvement in multiple Iron Dome initiatives position us at the forefront of some of the nation's most significant defense priorities. Fiscal 2026 was an outstanding year for the RF business. During fiscal '26, we were awarded an undefinitized contract action with a not-to-exceed value of approximately $235 million for the production and integration of a homeland defense over-the-horizon radar transmit subsystems.

RF award today, and we continue to see follow-on opportunities related to this program. We are also a participant in the SHIELD IDIQ, which supports much of the Iron Dome-related initiatives and gives us a vehicle to pursue additional programs as they're defined over the next few years. All that said, the current level of customer engagement across our RF portfolio is the highest we have seen for this product line.

Turning to Optoelectronics and Manufacturing, which delivered another strong performance in fiscal 2026 as full-year revenues grew 9% to $451 million with strong margins. The bookings in Q4 reflected the strength and breadth of our entities' markets, and we expect these underlying trends to continue in fiscal 2027. Our ability to support customers with our highly engineered products, precision manufacturing, and global reach continues to differentiate us across the aerospace, defense, healthcare, and industrial customer base.

Our vertically integrated model and global manufacturing footprint helps us continue to capture business as customers diversify supply chains, and our backlog gives us strong visibility heading into fiscal 2027. Finally, our Healthcare division delivered an improved fourth quarter as revenues grew approximately 5% year-over-year and operating margin expanded to 10% from 1% compared to last year's Q4. These results reflected the operational improvements we've been implementing throughout the year.

We remain focused on expanding our installed base, supporting providers with innovative clinical solutions, and advancing the product development initiatives behind our next-generation patient monitoring platform. We are encouraged by the opportunities ahead. As we enter fiscal 2027, our record backlog, robust pipeline, and disciplined execution give us confidence for the coming years. As always, I would like to thank our employees, customers, and stockholders for their continued support and dedication. With that, I will turn the call over to Alan to discuss our financial results and our fiscal 2027 guidance in more detail before we open the call for questions. Thank you.

Alan Edrick

Thank you, Ajay. Let's begin with our revenue performance by division. Revenues in each of our Opto and Healthcare divisions increased 5% year-over-year. In Security, revenues declined 7%, reflecting the impact of the conflict in the Middle East, which delayed certain deliveries beyond our fiscal year-end, along with a difficult comparison against higher Mexico program revenues in the prior year quarter. We closed the year with approximately $1.9 billion in backlog. Deliveries that shifted out of the quarter remained in backlog, while certain expected bookings in the affected region were deferred.

As expected, we reported nearly $150 million lower fiscal '26 revenues related to the Mexico security contracts compared to the prior year, which included about a $20 million adverse impact in Q4. As we move into fiscal '27, we expect this headwind to moderate to less than $25 million for the full year, which is expected to be concentrated in the first half. Turning to services. For the full year, service revenues grew 13% to $441 million, though were fairly flat in Q4. Similar to Q3, fourth quarter service revenues in the prior year benefited from significant installation activity related to the Mexico contracts.

Excluding those installation revenues, security service revenues increased 9% year-over-year in Q4. Looking forward, in fiscal '27, we expect strong double-digit growth in service revenues for the full year. Our Q4 fiscal '26 gross margin expanded to 34.7% from 33.3% in the same quarter in the prior year, as a more favorable revenue mix on product sales more than offset the benefit in Q4 of the prior year received from higher installation-related service revenue. Our margins can fluctuate based on product and service mix and volume, supply chain costs, foreign exchange, tariffs, and other factors.

Moving on to operating expenses. We continue to work diligently across all divisions to manage our SG&A cost structure efficiently. SG&A expenses in the 2026 Q4 were $70 million, down 7% from the prior year Q4, representing 14.4% of sales compared to 14.8% of sales in the prior year. R&D expenses in Q4 were $19.5 million, or 4% of revenues, up from $18.8 million, or 3.7% of revenues in the same quarter last year. This increase stems from our commitment to investing in innovation, resulting in market-leading offerings, and positioning OSI well for the future.

We expect to continue our heightened R&D efforts to advance key initiatives. Even with these R&D investments, our combined SG&A and R&D expenses as a percentage of sales have decreased annually for each of the past 8 years, underscoring our ability to drive operating efficiencies while still funding growth initiatives. Now let's move below the operating line. Net interest and other expenses in Q4 were $4.1 million, down from $7.2 million in the same quarter of the prior year, primarily due to reduced borrowing costs coupled with increased interest income on higher cash balances.

Our effective tax rate under GAAP was 20.8% in Q4 of '26 versus 19.8% in Q4 last year. Excluding discrete tax items, our normalized effective tax rate, which is the one used in calculating non-GAAP EPS, was 21.5% in Q4 compared to 21.9% in the same prior year quarter. On a non-GAAP basis, our Q4 '26 adjusted operating margin was 17.7%, up 200 basis points from the 15.7% reported in the prior year fourth fiscal quarter, with each of the three divisions reporting growth.

The Security division's adjusted operating margin expanded from 20.4% to 20.8% in Q4 this year, driven by a stronger gross margin combined with reduced operating expenses. The Opto adjusted operating margin increased to 14.7% in Q4 of '26 from 13.6% in last year's fiscal Q4, primarily from the benefits of economies of scale and a more favorable mix of revenues. And on the heels of stronger revenues, the adjusted operating margin of our Healthcare division, as Ajay said, increased to 10% in Q4 this year, from 1% in Q4 of the last fiscal year, reflecting the operating leverage. And while we would not extrapolate one quarter, it shows what this division can do as volume grows.

Moving to cash flow and the balance sheet. We generated a record $182 million of operating cash flow in Q4 and $276 million for the full fiscal year driven by strong collections across the businesses. This included collecting $159 million from our largest customer in Mexico in Q4. On that customer specifically, the balance stood at $345 million at the end of Q3, representing 40% of the company's total accounts receivable, and declined to $190 million, or 25% of the company's total AR, as of the end of Q4.

This balance should significantly decrease further throughout fiscal '27 as substantial payments are expected to be received, contributing to the strength in the anticipated fiscal '27 operating cash flow and free cash flow conversion. DSO in Q4 decreased 18% from third quarter DSO. CapEx in Q4 was $9.3 million, while depreciation and amortization expense in the quarter was $13.3 million. Our balance sheet remains solid, providing us great flexibility. We ended the year with $360 million in cash, up from $106 million a year ago, and with no amounts drawn under our lines of credit.

During the year, we refinanced our credit facility and extended its maturity while adding low-cost long-term debt. Gross debt increased with these moves, and with the capital we returned to shareholders, our net leverage at the end of Q4 of fiscal '26 was approximately 2.1x as calculated under our credit agreement. This leaves us ample capacity for both organic investment and acquisitions. During the fiscal year, we repurchased and retired 1.1 million shares, reflecting our conviction in the intrinsic value of our business. Our board recently authorized an additional 1 million shares for repurchase with no expiration on this authorization.

Now, turning to our guidance. We are introducing our fiscal '27 guidance for revenues and non-GAAP earnings per share. We currently expect revenues of $1.875 billion to $1.93 billion, or 5% to 8.1% year-over-year growth, and adjusted earnings per share of $11.13 to $11.49, or 7.5% to 11% year-over-year growth. This guidance factors in the expected impact from the conflicts in the Middle East, which have affected near-term bookings, though over a longer horizon the resolution of these matters could represent future opportunities for the company.

Although we are pleased with some notable wins with the Department of Homeland Security over the past few months and expect more, we believe a substantial amount of such bookings will lead to revenue in fiscal '28 and beyond. Thus, we have included a portion of the delivery orders from CBP already in hand rather than the full ceiling value of those programs and assumed a later delivery schedule in the Middle East. Given the timing of each of these items, we currently expect fiscal '27 growth to be strongest in the second half.

We note that our fiscal '27 non-GAAP diluted EPS guidance excludes any impact of potential impairment, restructuring and other costs, amortization of acquired intangible assets and their associated tax effects, and discrete tax and other non-recurring items. We currently believe this guidance reflects reasonable estimates. The actual impact on the company's financial results of timing changes on the expected conversion of backlogged revenues, new bookings, timing of cash collections, tariffs, the conflicts in the Middle East, and supply chain disruptions, among other factors, is difficult to predict and could vary significantly from the anticipated impact currently reflected in our guidance.

Actual revenues and non-GAAP earnings per diluted share could also vary from the guidance indicated above due to other risks and uncertainties discussed in our SEC filings. In summary, fiscal '26 was a year of record cash generation, record backlog, and strong earnings quality. We strengthened our liquidity, and we returned capital to shareholders. We are committed to operational excellence as we continue to grow our businesses and provide innovative products and solutions to our customers. We aim to invest in key strategic areas with the goal of driving long-term value for our shareholders. Once again, we thank the entire global OSI team for their dedication to supporting our customers and our partners. Their efforts are what makes these results possible. And at this time, we'd like to open the call to questions.

Operator

Our first question for today comes from the line of Josh Nichols from B. Riley Securities. Your question, please.

質疑応答

Josh Nichols

Understand the pushout, not lost orders regarding the Middle East, but I was curious on that. Do you expect that free cash flow generation in fiscal year '27 could similarly exceed net income generally, and how you think about the pace of collections is going to drive that this year?

Alan Edrick

Josh, thank you. This is Alan. Good question. We are anticipating a strong cash flow year in fiscal '27, strong free cash flow, and we do anticipate that our free cash flow could exceed 100% of net income and fully expect that to occur. With respect to the pace of collections, we expect to be collecting nicely over the course of the fiscal year, hoping it's more front-loaded than back-loaded, but we do anticipate a good, strong overall year.

Josh Nichols

I think the timing, it's understandable for some of the orders in the Middle East, but there's been a flurry of award activity just over the last couple weeks. I'm curious, how much of that, are you being conservative when you think about how much of that gets factored into the guidance for this fiscal year, given the ongoing conflict? And are you assuming most of that gets pushed out to fiscal year '28 and beyond? I'm just trying to get a little bit better grasp on how you're thinking about these newer awards and IDIQs and the timing in your guidance for this year.

Ajay Mehra

So, this is Ajay. You know, like we pointed out, there's a portion in '27, but the vast majority is in '28 and beyond. You know, these are multiple-year IDIQs. I do want to point out both the $200 million and the $85 million IDIQ with CBP, we're the only awardee on there. So, it gives us a very good confidence that as we look at not just '27, but '28, '29, and beyond, the visibility really is there for us.

Josh Nichols

Thanks for clarifying. I'll hop back into queue.

Operator

Our next question comes from the line of [ Don Gooden ] from Citigroup. Your question, please.

Unknown Analyst

You know, obviously it's a complex situation in the Middle East. I was hoping to revisit, just maybe offer a little more detail on kind of what's going on there from your perspective on the ground, just to kind of give us a better feel for things. And in the release, you used the phrase that demand for products and services remains encouraging. In the prepared remarks, I felt like you used the word strong a few different times when talking about the shape of the business. I'm not trying to wordsmith this, but maybe just revisiting the Middle East and exactly how you see the demand today, a bit of a temperature check would be helpful.

Ajay Mehra

Sure. I think when we talk about strong demand, you've got to look at the overall business, the Security, the Opto, and even the improvements we've had on the Healthcare side. But specifically on Security, we have a lot of strong demand. Finally, like I pointed out, DHS, it's time to release orders. It's been a flurry of activity. We've also had some strong orders, like we pointed out, on the RF side. And international orders continue to be strong.

Now, specifically on the Middle East, yes, I think there's been a delay, deferment of some orders. You know, they're more interested in making sure they protect their people with incoming missiles, et cetera. And we are a partner, we work with them, make sure that whatever they need in the short run, we provide. But we believe in the long run, it's actually an opportunity for us, not just for the Middle East, but really with the DOD and other places where force protection is going to get more and more important, not just our overall security business and perhaps even including RF. So it's a complicated situation, but you know we've got to look at it as an overall business in the entire world, and we remain very confident there.

Unknown Analyst

Got it. That's helpful. And for the RF product line, I think you used the phrase that customer engagement was the highest you've ever seen, and certainly understandable given everything we're seeing in the defense complex and Iron Dome, et cetera. But I was hoping you could talk a little bit more about that and how are you kind of baking in the outlook for RF in the guidance for '27 and might it continue to grow in '28 as well?

Ajay Mehra

So, you know, we don't really break it down, but I will say on the RF side, we see very strong growth, and we see that growth continue into '28. And I think, you know, you talk about the conflict in the Middle East. If anything, what's been going on there, when you talk about the Iron Dome, it only further strengthens the idea of why we need an Iron Dome going forward.

Unknown Analyst

Got it. Appreciate the color.

Operator

Our next question comes from the line of Jeff Martin from Roth Capital Partners. Your question, please.

Jeff Martin

Just was curious if you could clarify whether these were deliveries to customers in the Middle East or whether there were shipments going through the strait that perhaps were intended for non-Middle Eastern customers of other nations that were also impacted.

Alan Edrick

These were mostly, if not all, customers in the Middle East.

Jeff Martin

Okay. And then in terms of what you were assuming in your updated fiscal '26 guidance after the third quarter, were you assuming that all of these orders would be delivered in Q4 or was the assumption that some of them would be and some of them would be pushed out further?

Alan Edrick

Jeff, this is Alan. So following the Q3 release, we assumed a significant portion of these Middle East orders would be delivered in Q4. Not all of them, but a significant portion.

Jeff Martin

Okay. And it sounds like your assumption is that a good portion of these will be delivered in the second half of fiscal '27. Is that fair to say?

Alan Edrick

That is fair to say. Not all of it, but a substantial portion in the second half of fiscal '27.

Jeff Martin

Okay. And then my other question is on the bookings. Could you speak to book-to-bill for the full year and then also kind of give us a sense on Q4? I know there were delays that impacted bookings in the second half in general, but just some contextual reference would be helpful.

Alan Edrick

Sure, Jeff. So for Q4, our book-to-bill was just shy of 1. It was very strong in our Opto division, solid in our Security division as well, and Healthcare. So giving us a very good book-to-bill in our highest revenue quarter. And for the full year, our bookings were quite solid as well. So the book-to-bill was a little bit north of 1 for the full year, which led to our highest overall backlog at the end of June.

Operator

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

Christopher Glynn

Just want to talk a little bit about the mechanics of phasing from large project awards, IDIQ and RF into backlog. You know, it was clear that the recent $285 million were subsequent to the quarter end. And I think you talked about $21 million firm order plus others. Should we think about the delivery orders as what goes into backlog and then also, using that framework for the $235 million RF, I think most of that did go in backlog in the prior quarter. So, I guess the implication would be those delivery orders were more coincident with the award, if you could clarify those points.

Alan Edrick

Sure, Chris. Happy to do so. With respect to the RF order, the $235 million that you referred to that we won in Q3, roughly 80% of that was booked into backlog in the third quarter, meaning we have it and a substantial portion of that is going to get delivered over the next couple of years. With respect to the two large IDIQs that we just won with CBP, the $285 million that you referred to, those are ceiling values where we're the sole awardee, as Ajay mentioned. What goes into our backlog is not the IDIQ value, it would be the firm fixed order, the delivery order or the task order at $21 million that Ajay referred to. So over the course of time, we expect that to significantly increase and move into our backlog and then convert into revenue.

Christopher Glynn

Okay, great. And my understanding is historically that those ceilings have essentially been realized and well within the IDIQ timeframe. And in particular, the context here is there's a much bigger funding than these amounts. So they've got to get through executing these portions in order to further exercise through the overall funding, which I think approximates a billion. Is that about the right understanding?

Ajay Mehra

Yes, that's the right understanding. I mean, keep in mind, these are orders that are being released. There are more orders that will be released in different products as we move along as part of the billion-dollar funding. So these are specifically for the two types of systems that I pointed out in my prepared remarks.

Christopher Glynn

Okay, great. And last one was, wanted to ask about the Opto segment profitability approaching 15%. I know you've brought on some new capacity. You're continuously expanding that business given the share opportunity with customers securing their supply chains. So as you utilize new capacity, are we talking about consistently higher margin opportunities for the O&M than over the past few years?

Alan Edrick

Yes, Chris, this is Alan. Really good question. The Opto business has been bringing on a stronger customer profile that is leading to improved margins. Our plan for fiscal '27 is to continue to pair revenue growth with operating margin expansion. It will vary from quarter to quarter based upon the revenue mix that we see and what products and which customers we happen to be selling to in that quarter. But we do believe that we'll see further operating margin expansion through the course of fiscal '27.

Operator

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

Lawrence Solow

I guess the first question, just better frame the outlook for revenue guidance. So it sounds like you are including most of that 50 to come in, but just how about qualitatively from the Middle East? Are you assuming that there's still impacts obviously going on there? So what are your high-level expectations for the Middle East and also what's incorporated in the growth outlook from the United States? Not specifically, but is there some delays? Bookings obviously were delayed a lot. It sounds like most of the benefits from the omnibus bill and the acceleration in the U.S. that everybody's looking for, you're not building most of that in until '28. Is that all fair to say?

Alan Edrick

Larry, I should probably flip-flop and call you Chris for the moment. Good questions, Larry. You know, so with respect to the Middle East, we've taken a conservative approach in our guidance for fiscal '27, both with the planned deliveries that got deferred out of Q4, as well as for future orders, for obvious reasons, while the conflict is taking place. With respect to the United States, the really exciting part for us is, yes, we're getting nice bookings. We expect to get significantly more bookings. And you're exactly right. There's a portion built into fiscal '27, but a smaller portion. The much, much larger portion is in fiscal '28, '29, and even beyond that. So it really gives us some excellent visibility into real nice growth beyond this fiscal year. So, quite exciting for us. Was there a third element to it, or did I capture that?

Lawrence Solow

I think you got it. I just, the question that, a couple of thoughts just on the omnibus bill, I think it was a well over $6 billion authorization. And obviously I think a billion of that was kind of in the heart of your non-intrusive equipment. But I know that the Secure America Act came out. I think there was another like $3 billion or a little more than that, maybe north of that. Any clarity on how much of that could be funneled down into your kind of sweet spots?

Ajay Mehra

So, you know, it's a great question. We're aware of it. We're working with the customer very closely. Obviously, they're trying to make sure that they award, with all the delays, they award the billion dollars at the fastest pace possible. I think there is still some clarity to be had with what the next 2 or 3 billion would be. And I would add on the omnibus bill, we talk about customs, but there's substantial funding for the RF side as well, which is obviously helping us as well.

Lawrence Solow

Okay, if I can just squeeze one more, just on the margins, you're forecasting 5% to 8.1% revenue growth and a little bit higher on the earnings, 7.5% to 11%, not much, but you're also getting a pretty good benefit from your repurchases, right? You cut down your share count by like 3%. So you're actually building in, adjusted-wise, a little bit less earnings growth versus sales growth. Am I missing something, any reason for that?

Alan Edrick

Yes, Larry, we're just being a little bit modest and conservative coming out of the gate here, doing a little bit more investments in some OpEx and positioning ourselves for the future as well and some of the new innovative products that are coming out and the associated infrastructure sort of associated with it. But that's the general tone of it.

Lawrence Solow

Okay. So there's no structural change or anything. I mean, Healthcare, which we've talked about, much smaller, and Opto, moderate size, but those, we've talked about margins going up in those segments over the next few years. Any reason to believe that Security shouldn't have upward trends in the margins as well, maybe not so much this year, but just in general?

Alan Edrick

Yes, that's our plan. Our plan is to pair the top-line growth with operating margin expansion. From a contract-to-contract basis that may change a little bit. So it may change things from a quarter to quarter, but over the long term structurally, our goal is to continue to improve our margins. We expect our service revenues to be growing at a faster clip than our product revenues, and our service revenues inherently carry a higher margin. So as we start to look out beyond '27, '28, '29, and '30, as service revenues become a bigger and bigger proportion of our overall revenues, that can really drive some nice operating margin expansion in Security as well.

Operator

As a reminder, ladies and gentlemen, if you do have a question at this time, please press star 11 on your telephone. Our next question comes from the line of Seth Seifman from J.P. Morgan. Your question, please.

Seth Seifman

This is Rocco on for Seth. On the prior comment on the services revenue growth, should we think about a driver of that growth being the transition of the work in Mexico towards services? And does the services revenue in Mexico carry a stronger margin relative to OSI's typical services revenue, kind of similar to the product revenue being a pretty strong margin?

Alan Edrick

Yes, Rocco, so nice questions. So our service revenues, the Mexico service revenues are more or less in line with overall service revenue margins, which are quite strong to begin with. So we're encouraged by that. In terms of the service revenue growth, what's driving it, it's kind of multifold. Part of it is the Mexico product revenue rolling off of warranty and more and more of that moving into service revenues. That helps. The larger installed base, though, that we have throughout our cargo and vehicle inspection products, throughout our aviation and checkpoint products, and even some of the RF products will all drive more service revenues with strong margins.

We're also looking at some of the SaaS-type work that we do for our security as a service, our turnkey products, and we think there's some good opportunities going forward there. And also our software as a service, our TruSaaS, for CertScan and otherwise, which carry substantial margins, and we see some nice growth opportunities there as well. So the top-line growth of service could be quite substantial for us at a much higher margin.

Seth Seifman

Great. That makes sense. And then kind of looking ahead, are there any updates on the TSA checked bag scanner contract that's expected in '27, and when should we start thinking about that kind of coming into focus?

Ajay Mehra

I think we're looking at it and TSA basically is trying to get their checkpoint taken care of first and we think it's still a few years away, but it'll go on for several years, so the opportunity definitely is still there.

Operator

This does conclude the question and answer session of today's program. I'd like to hand the program back to management for any further remarks.

Alan Edrick

Once again, thank you all for attending our conference call. We look forward to speaking with you during our next earnings call following the completion of our first fiscal quarter.

Operator

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.