Thank you. Good morning. I think we have a very exciting story to share with you today. So without further ado, let's jump into it. For those of you maybe a little bit less familiar with OSI Systems, we have three divisions. We have a Security division, where we tend to be the number 1 or number 2 provider in most of the markets and technologies that we play in. We have a Healthcare division, where we sell into hospitals. And then what ties everything together is our Optoelectronics division, which, unlike security and healthcare, that sell to the end customer, our Opto supplies key components: sensors, detectors, other electronic components to a variety of companies, principally in the Fortune 500, but in addition supplies to both our Security division and to our Healthcare division. And through that vertical integration, we enhance the overall margin of OSI Systems.
We can control the supply chain better, and we can be faster and more responsive to our customer needs. We are a global company. Over half of our sales are outside the United States. We see the international markets currently growing a little bit faster than the domestic markets. We have seen some real fundamental changes at OSI Systems. We think today, as we sit here, we're in the best position that we've ever been in as a company. We are at June 30th fiscal year. We've given guidance that we expect to grow over 19% in sales this year. We expect to leverage that to greater than 29% growth. We're sitting with a $1.8 billion backlog, which is significantly stronger than it was a year ago or even at our fiscal year-end. We have a lot of dynamics taking place right now for growth acceleration.
This is being driven principally by our Security division, which has an outstanding backlog, which gives us really kind of the best visibility we perhaps have ever had in our company's history. Exciting times for us as we finish out fiscal 2024 and move into fiscal 2025. Very exciting times. Go through a couple of financial slides, and then we'll jump into each of the divisions. You can see here, historically, we've been a company that's been very strong at growing our top line. We took a little pause of that during the pandemic. But if you look on the right-hand side, even when we had a pause, we continued to grow our earnings. Our non-GAAP EPS has grown significantly year-over-year. We see a real acceleration of that growth here in our fiscal 2024.
One thing that sometimes is overlooked is how much recurring revenue we have. We believe we have over 40% of our revenues in our Security business are recurring, over a third of our revenues in our Healthcare business are recurring. And when we think about Optoelectronics, although it might not meet that classic definition of recurring revenue, once we get engineered into a product, it tends to be repeat revenue. So over 80% of our revenues on the Opto side tend to be repeat or recurring in nature. The right-hand side shows our backlog growth, which has been significant over the years. We are a strong cash flow generator. Over the past several years, we've generated well north of $1 billion in cash flow over the last six or seven years. Right now, as we're growing so quickly, we've been investing in working capital.
So our receivables and inventory have been growing. So we've seen our operating cash flow a little bit lower in this fiscal year than we've traditionally seen. We expect to be a strong free cash flow generator again in the future. With that cash flow, we tend to take that back and invest in M&A. We've acquired companies that have been complementary in terms of technology, expand our channels, and it's been very successful for us. We've been active in our stock buyback program. And any residual cash we have, we'll use to pay down our debt balances. Speaking of our debt, we have an extremely strong balance sheet. Our net leverage was below 1.5 at the end of our last quarter. So very, very crystal clean balance sheet. We tend to target really attractive markets.
On the security side, unfortunately, it's hard to turn on the media and not see something going on adversely in the world. But it plays well into what we do. We're positioned well at ports and borders and aviation in a number of areas. We see the security markets continuing to grow significantly, both here in the U.S. as well as internationally. We think we're extremely well positioned for that. In Optoelectronics, we really serve a diverse array of industries and businesses across aerospace and defense, medical, industrial, automotive, technology. We continue to have a very diverse customer base as well. We're quite excited about what Opto holds. In healthcare, with an aging population, the demographics are strong for growth in the healthcare sector as well. At the heart of things, we're a technology company.
We invest a significant amount in research and development into new products that we have expected to come out. Most of the R&D investments are focused in both our Security division and in our Healthcare division because much of the R&D in Opto tends to be customer-funded. This has allowed us to introduce a number of new products in our security business, which we think is fundamental to us driving the significant growth that we've seen. We're investing significantly in healthcare. We expect to be coming out with some new patient monitoring platforms in the coming years that we think can be a step function change in our revenues in that division as well. We are a global company. We're headquartered in California, but we have sales offices throughout the world.
We manufacture in a lot of low-cost jurisdictions, such as Malaysia, Indonesia, India. Now Mexico is a new beachhead opportunity for us that we established in December. But we also manufacture in the U.S., the U.K., and Canada as well. Truly a global company. We sell to nearly every country in the world that we're permitted to do so. Let's jump into each of our divisions, starting with our Security division. Our Security division, we primarily go by the brand of Rapiscan, but you'll also see AS&E and S2 Global. It's approaching two-thirds of our revenues now as it's the fastest-growing business that we have. We have well over 100,000 systems installed and growing. And the nice part about having a good installed base is once you sell that equipment, then you then get the revenue, the recurring revenue, from the service.
We have service contracts on many of our customers. This is an area where we tend to be a market leader. We think we're the clear market leader in cargo and solutions. We're quite strong in aviation and strong in many of the other areas as well. What we really provide are integrated solutions. We sell these solutions across a number of advanced screening technologies and cargo and vehicle inspection technologies. We think we have the most diverse product portfolio in the industry. That's been helpful for us because we don't have to push a particular technology on a customer. We can see what is right for them and then sell that to them. It's been quite an advantage for us.
One of the things we challenged ourselves with years ago is we said, "Well, how can we expand our revenue potential, and 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 capital or the money to buy the equipment up front? Or if they do, what if they don't have the operational expertise? What if we do a full-service offering for them, which we call a turnkey?" It's our version of SaaS rather than software as a service and security as a service. And to that end, what we do is, rather than selling the equipment, we manufacture the equipment. We place it at the customer site. We staff it up with our people. And then we charge a fee per scan or a fee per month per site. We enter into long-term contracts.
Our contracts have generally ranged from 6 years to 15 years. With this, we get some great recurring revenue at higher margins than we typically see with our capital equipment sales. It's been a great home run for us. Our most recent win has been in Uruguay. That's a location that we expect to go live with this calendar year as well. Exciting area for us. We're the clear market leader here with very limited competition in the turnkey space. With that, we look at our screening solutions, services overall. From that, we developed some proprietary software. We call that software CertScan. With the CertScan software, we now have two versions of SaaS, not just the security as a service, the turnkey that we talked about, but now we have the true software as a service.
We're in the very early innings of rolling out CertScan . These should get software-like margins. We're quite excited about that. We have a number of early adopters of the technology, and the revenue base continues to increase. A very exciting area for us. One of the prime product areas that we have are Cargo and Vehicle Inspection Systems. We sell these at the ports and borders and critical infrastructure. We have a diverse product line here, the most diverse in the industry. We believe we're number one in the market selling these products. Customers in the United States would be like CBP, U.S. Customs and Border Protection. But we sell this internationally as well. We've been winning a number of deals over time. We've got a tremendous pipeline of opportunities here in Cargo and Vehicle Inspection Systems.
So it's an area for us that we think is going to generate considerable growth, not just this year, but in the coming years as well. And an example of some of the wins, about this time last year, we announced a $200+ million deal to an international customer. We followed that up a few months later with a $500+ million deal in Mexico. We're starting to deliver on these programs, which is delivering some of the strong revenue growth that you see for our security division and OSI Systems overall. The Mexico deal included CertScan for us. The international deal did not. So it represents potentially some upside opportunity as we move forward. But two tremendous wins that we were sole-sourced on. So very, very, very exciting.
Another area for us that has been showing some nice momentum but really has some great future potential is our whole baggage screening, or sometimes more commonly referred to as checked baggage screening. We've been selling this product everywhere in the world except the United States. So we've rolled it out and have had some great wins throughout Europe, in Asia, and Latin America. One of the big opportunities going forward is the U.S. replacement cycle. These machines were put into place not long after 9/11, so pretty old. TSA is talking about going through a multi-year replacement cycle coming up here in a few years. For us, it'll be brand new territory because we didn't have a product back then when these were first rolled out. So it represents tremendous growth potential for many years.
As you roll these products out, you then get the nice service revenue on an annual basis as well. Exciting times for us in the checked baggage arena. Sometimes what we've long been known for when it comes to security screening is the checkpoint machines. You see these machines at airports. These systems are also sold at office buildings, courthouses, schools, sporting events, hotels, you name it. It just keeps expanding. We have two types of technology. We have X-ray technology. We also sell the 920CT, which is a checkpoint CT system as well. Good products for us, long been sort of considered our bread and butter that we continue to do quite well in. Complementing these products are our trace detection products, explosive trace detection that are principally used in aviation and some nuclear facilities and the like.
We tend to be one of the industry leaders in this regard. It's a nice add-on opportunity. We've recently gotten some new certifications and have rolled out some new products in this arena, which is generating sizable growth in bookings and backlog for this product line for us. So again, represents great growth going forward for us. When we tend to look at our customer base, if we start in the United States, we really do have the who's who of customers. Most customers in some shape, manner, or form tend to be government customers. We do have commercial customers as well in the air cargo arena and the sports arena and the like. The majority of our customers tend to be government customers. We sell into the DHS, both with CBP and TSA. We sell into many agencies of the Department of Defense.
But when there tends to be a large tender out there, we tend to be invited to the dance and seem to win our fair share. And similarly, internationally, whether we look at the EU, the Middle East, Asia, Latin America, we tend to be well represented in all locations and have a great representative client base. That takes us to our Opto division. So our Opto division, unlike security, where we sell to the end customer, again, in Opto, we sell principally to third-party OEMs. We go by two brands, OSI Optoelectronics and OSI Electronics. The nice thing here is these tend to be long-term, repeat, recurring customers. Our team has done a fantastic job growing our bookings and our backlog, tremendous track record of performance of revenue growth and operating margin expansion.
A big element of what we do in our Opto business is not just selling to third parties, but it's also the intercompany sales, which, as mentioned earlier, enhance the margin for us overall as a company and make us a little bit more competitive in the security and healthcare space as well. This shows you sort of a representative list of our customers here on the right in aerospace and defense, some of the technology customers that we have, and some of the medical customers we have. These are long-term customers where we've been engineered into many of their products. It's worked out exceedingly well for us. We think there's some great high-growth opportunities in this space. We've been growing this business nicely organically, also by way of acquisition, where we've taken out some competitors, expanded our sales channels, and expanded our overall product profile.
We're really excited about what the future of Optoelectronics holds for us. Finally, in our Healthcare business, our brand is called Spacelabs Healthcare. We sell to hospitals. Principally in the past, we've sold to medium and large hospitals. We're now adding the more rural hospital to our mix as well. This tends to be a replacement market. We think the best customer you have is the customer you have. We have a nice retention rate of our current customers and then go after competitive conversions. We have two principal product families, patient monitoring and cardiology, patient monitoring representing the majority of our sales. Unlike security or Opto, where it's pretty well dispersed worldwide, in healthcare, we tend to be a little bit more focused on the United States, where roughly two-thirds of our revenues take place on the healthcare side. But we do sell globally as well.
Starting out with patient monitoring, what we're really selling here is a fully connected solution. We make the patient monitor, which would be at the bedside of the patient at the hospital, which is then connected to a central station, which we make as well. Patients can then be continuously monitored through our telemetry products as they move throughout the hospital and can be connected to the hospital's electronic medical record system too. So it's a fully connected software and hardware solution. We are working diligently on a next generation of products where we've been investing a disproportionate amount in R&D of late. And we're excited about the new product platforms that will be coming out in the coming years. In cardiology, much of our Cardiology business is software-based. The cardiology margins that we have are the highest in the Healthcare business.
In fact, they're among the highest in all of OSI Systems. Unlike patient monitoring, which is a little bit more U.S.-centric, on cardiology, we tend to be number one in places like Germany, the U.K. We've expanded our sales channel in the United States and think that represents a great opportunity for us. We've been growing our Cardiology business and expect to continue to be able to do so. So really, in summary, it's a real exciting time at the company right now. We're sitting with an extremely strong backlog, incredible visibility as we look forward, a lot of catalysts in place, a lot of strong market dynamics, particularly in our Security business. We've got a great outlook for our growth here for fiscal 2024. As we move into fiscal 2025, we'll be extremely excited as well. So it's a real nice time for OSI Systems.
And with that, happy to take any questions. Great. Thanks, Alan. Congrats again on a strong outlook and strong quarter.
Thank you.
I've got a question to kick us off, and we'll pass it off to see if anyone in the audience does. Can you talk a little bit more about the strength of the Security business and maybe if you could touch on a few of the pipeline opportunities that you have coming up in the next year or so? That'd be great.
Sure. Yeah. So the strength of the Security business, I'd say the strength has really been broad-based. In cargo and solutions, we've been effectively dominating in this area. With the recent wins that we had in Mexico and the other large international contract, some other contracts that we've announced over the past six months, it's really been a great time for us. And we've seen that strength here in the United States with CBP. But we've seen that strength throughout the Middle East. We've seen it in Latin America, Asia, and other parts of Europe as well. So I think those are some of the dynamics that have led to incredibly strong performance in security. But we're also seeing it in our Aviation business. We've had some recent announcements of some nice wins in aviation.
We're seeing continued momentum in our checked baggage products, in our checkpoint products, in our instruments, which includes our trace products. So the Security business really looks strong. When we talk about the funnel of opportunities, it's exciting when we talk to our sales team. We think we have one of the strongest funnels that we've seen in some time. So we think the momentum is definitely going to continue.
John, I've got one more thing. Talk a little bit about your view towards M&A. You mentioned it's one of the strategies for capital deployment.
Yeah. The view towards M&A. So M&A has always been a part of our strategy. It's in our DNA. A lot of the growth that we've had over the years has not just been organic growth, but it's been bolstered by strong acquisitions. We look at acquisitions across our portfolio of security, Opto, and healthcare. We probably tend to focus a little bit more on the security and the Opto side, though we have executed healthcare acquisitions as well. We look to do deals that will fill a channel need for us or a technology need, perhaps take out a customer, a competitor as well. So these have all been quite successful for us. We're a disciplined buyer. We go through tough metrics as we go through the process.
Most of the deals that we've done have been accretive for us generally right out of the gate or very nearly thereafter unless a pure technology acquisition. We have a strong balance sheet with Net Leverage below 1.5. We're aggressively looking at deals today and into the future. We would expect M&A to continue to be an important part of our overall growth strategy.
Can you talk a little bit about?
Supply chain and what?
Workforce.
Oh, workforce retention. Oh, sure. So the question was, can we talk a little bit about supply chain and workforce retention? On the supply chain side, the good news from our perspective, at least, is that we've seen the supply chain get a lot stronger. Not saying it's easy. Our folks still have to work hard, but it's in a much better shape than it was, let's say, a couple of years ago. So as we look out, we don't really look at supply chain as a limiting factor for us whatsoever. In terms of workforce retention, I think we're fortunate as well that we haven't seen any type of turnover rates that have been higher than average or normal. So our workforce retention rates have been quite strong. Yes.
In the TSA replacement cycle, for reference.
Sure. Talk about the TSA replacement cycle and the order of magnitude for that. So the TSA replacement cycle for checked baggage is what I believe you're referring to. We understand there's between 1,500-2,000 machines that would be replaced over time. Average selling prices have been in the million-dollar plus or minus neighborhood. So you're talking about a $1.5 billion-$2 billion market opportunity, probably over a 5-year time period. For us, it would all be new opportunities for us because we didn't participate in the initial rollout when we didn't have a product. So quite exciting for us. It can stimulate some significant growth both for the initial orders that we sell and then the recurring service revenue that comes with that thereafter.