SOURCE: FLIR Systems, Inc.

FLIR Systems, Inc.

April 26, 2016 07:30 ET

FLIR Systems Announces First Quarter 2016 Financial Results

First Quarter Revenue Growth of 10%; Firm-Order Backlog Increases to $613 Million

WILSONVILLE, OR--(Marketwired - Apr 26, 2016) - FLIR Systems, Inc. (NASDAQ: FLIR) today announced financial results for the first quarter ended March 31, 2016. First quarter 2016 revenue was $379.5 million, up 10% compared to first quarter 2015 revenue of $344.5 million. On a constant currency basis, first quarter 2016 revenue was up 12% versus the prior year. Operating income in the first quarter was $57.4 million, compared to $65.8 million in the first quarter of 2015. Profitability in comparison to the prior year was negatively impacted by product mix shifts, higher production costs, and unusually low corporate expenses in the prior year.

First quarter 2016 net income was $1.1 million, or $0.01 per diluted share, compared with net income of $47.9 million, or $0.34 per diluted share in the first quarter a year ago. Net income in the first quarter of 2016 was negatively impacted by the recording of $40 million of tax reserves related primarily to the previously disclosed ongoing dispute between the European Commission and the Belgium government over certain tax legislation. Excluding the tax reserve expense, earnings per diluted share were $0.30. Cash provided by operations in the first quarter was $44.9 million.

Revenue from the Surveillance segment was $124.2 million, an increase of 10% from the first quarter results last year. The Instruments segment contributed $79.4 million of revenue during the first quarter, down 5% from the prior year and down 3% on a constant currency basis. The Security segment recorded revenue of $47.1 million in the first quarter, up 21% from the prior year. FLIR's OEM & Emerging Markets segment had $47.8 million of revenue, an increase of 20% over the prior year. Revenue from the Maritime segment was $51.7 million, which was up 1% from the first quarter of 2015 and up 5% on a constant currency basis. The Detection segment contributed $29.3 million of revenue, an increase of 61% from the prior year.

FLIR's backlog of firm orders for delivery within the next twelve months was approximately $613 million as of March 31, 2016, an increase of $9 million during the quarter and an increase of $56 million, or 10%, compared to $557 million at the end of the first quarter of 2015.

"We are pleased with the growth we saw in revenue and backlog in the first quarter. Strength in our government businesses drove our backlog to its highest level since 2008," said Andy Teich, President and CEO of FLIR. "While our profitability was negatively impacted by product mix and increased manufacturing costs, we intend to improve our cost management as we move through the rest of the year. Our product development engine continues to deliver innovative solutions for improving overall safety, security, operational efficiency, and environmental protection. As demonstrated by our recent product introductions, our ability to increase the addressable markets in these areas continues to progress."

Revenue and Earnings Outlook for 2016

Based on financial results for the first three months of 2016 and the outlook for the remainder of the year, FLIR continues to expect revenue in 2016 to be in the range of $1.6 billion to $1.65 billion and net earnings to be in the range of $1.60 to $1.70 per diluted share. This guidance excludes the impact of discrete tax items.

Dividend Declaration

FLIR's Board of Directors has declared a quarterly cash dividend of $0.12 per share on FLIR common stock, payable June 3, 2016, to shareholders of record as of close of business on May 20, 2016.

Conference Call

FLIR has scheduled a conference call at 11:00 a.m. ET (8:00 a.m. PT) today to discuss its results for the quarter. A simultaneous webcast of the conference call and the accompanying summary presentation may be accessed online from a link in the Events section of www.FLIR.com/investor. A replay will be available after 2:00 p.m. ET (11:00 a.m. PT) at this same internet address. Summary first quarter and historical financial data may be accessed online from the Financial Info Database link under the Financials & Filings section at www.FLIR.com/investor.

About FLIR Systems

FLIR Systems, Inc. is a world leader in the design, manufacture, and marketing of sensor systems that enhance perception and awareness. FLIR's advanced systems and components are used for a wide variety of thermal imaging, situational awareness, and security applications, including airborne and ground-based surveillance, condition monitoring, navigation, recreation, research and development, manufacturing process control, search and rescue, drug interdiction, transportation safety, border and maritime patrol, environmental monitoring, and chemical, biological, radiological, nuclear, and explosives (CBRNE) threat detection. For more information, visit FLIR's web site at www.FLIR.com.

Forward-Looking Statements

Statements in this release by Andy Teich and the statements in the section captioned "Revenue and Earnings Outlook for 2016" above are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words "believes," "plans," "anticipates," "expects," "estimates," or similar expressions) should be considered to be forward looking statements. Such statements are based on current expectations, estimates, and projections about FLIR's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including the following: changes in demand for FLIR's products, product mix, the timing of customer orders and deliveries, the impact of competitive products and pricing, the impact of FLIR's continuing compliance with U.S. export control laws and regulations and similar laws and regulations, the timely receipt of any necessary export licenses, constraints on supplies of critical components, excess or shortage of production capacity, the ability to manufacture and ship the products in the time period required, actual purchases under agreements, the continuing eligibility of FLIR to act as a federal contractor, the amount and availability of appropriated government procurement funds and other risks discussed from time to time in filings and reports filed with the Securities and Exchange Commission. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made and FLIR does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release, or for changes made to this document by wire services or internet service providers.

   
FLIR SYSTEMS, INC.  
CONSOLIDATED STATEMENTS OF INCOME  
(In thousands, except per share amounts)(Unaudited)  
                 
    Three Months Ended  
    March 31,  
      2016       2015  
                 
Revenue   $ 379,472     $ 344,517  
Cost of goods sold     201,782       168,620  
  Gross profit     177,690       175,897  
                   
  Operating expenses:                
  Research and development     36,411       34,774  
  Selling, general and administrative     83,902       75,369  
    Total operating expenses     120,313       110,143  
                   
    Earnings from operations     57,377       65,754  
                 
Interest expense     3,447       3,661  
Interest income     (260 )     (247 )
Other income, net     (1,430 )     (700 )
                 
    Earnings before income taxes     55,620       63,040  
                 
Income tax provision     54,495       15,130  
                 
    Net earnings   $ 1,125     $ 47,910  
                 
Earnings per share:                
  Basic   $ 0.01     $ 0.34  
  Diluted   $ 0.01     $ 0.34  
                 
Weighted average shares outstanding:                
  Basic     137,496       139,768  
  Diluted     138,779       141,472  
                 
                 
 
FLIR SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)(Unaudited)
             
  March 31,   December 31,
  2016   2015
ASSETS            
             
Current assets:            
  Cash and cash equivalents   $ 510,613   $ 472,785
  Accounts receivable, net     298,530     326,098
  Inventories     398,870     393,092
  Prepaid expenses and other current assets     82,217     95,539
    Total current assets     1,290,230     1,287,514
             
Property and equipment, net     275,148     272,629
Deferred income taxes, net     55,877     55,429
Goodwill     601,247     596,316
Intangible assets, net     138,639     141,302
Other assets     52,068     53,210
    $ 2,413,209   $ 2,406,400
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
             
Current liabilities:            
  Accounts payable   $ 106,394   $ 139,540
  Deferred revenue     33,360     31,933
  Accrued payroll and related liabilities     52,212     54,806
  Accrued expenses     35,163     40,930
  Accrued income taxes     3,227     201
  Other current liabilities     39,984     53,241
  Current portion long-term debt     264,809     264,694
    Total current liabilities     535,149     585,345
             
Long-term debt     90,000     93,750
Deferred income taxes     3,787     3,623
Accrued income taxes     53,629     10,457
Other long-term liabilities     62,615     63,710
             
Commitments and contingencies            
             
Shareholders' equity     1,668,029     1,649,515
    $ 2,413,209   $ 2,406,400
             
             
   
FLIR SYSTEMS, INC.  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(In thousands)(Unaudited)  
                 
    Three Months Ended  
    March 31,  
    2016     2015  
                 
Cash flows from operating activities:                
  Net earnings   $ 1,125     $ 47,910  
  Income items not affecting cash:                
    Depreciation and amortization     13,939       12,489  
    Deferred income taxes     (227 )     96  
    Stock-based compensation arrangements     6,088       4,757  
  Other non-cash items     5,807       (3,303 )
  Changes in operating assets and liabilities     18,145       12,978  
Cash provided by operating activities     44,877       74,927  
                 
Cash flows from investing activities:                
  Additions to property and equipment     (9,992 )     (13,169 )
  Proceeds from sale of property and equipment.     4,875       30  
Cash used by investing activities     (5,117 )     (13,139 )
                 
Cash flows from financing activities:                
  Repayments of long term debt     (3,750 )     (3,750 )
  Dividends paid     (16,507 )     (15,377 )
  Proceeds from shares issued pursuant                
  to stock-based compensation plans     3,989       4,414  
  Excess tax benefit of stock options exercised     1,041       779  
  Other financing activities     3       (7 )
Cash used by financing activities     (15,224 )     (13,941 )
                 
Effect of exchange rate on cash     13,292       (31,441 )
                 
Net increase in cash and cash equivalents     37,828       16,406  
Cash and cash equivalents:                
  Beginning of period     472,785       531,374  
  End of period   $ 510,613     $ 547,780  
                 
                 
   
FLIR SYSTEMS, INC.  
REVENUE AND EARNINGS FROM OPERATIONS BY SEGMENT  
(In thousands)(Unaudited)  
                 
    Three Months Ended  
    March 31,  
    2016     2015  
REVENUE                
  Surveillance   $ 124,151     $ 112,901  
  Instruments     79,418       83,821  
  Security     47,061       38,806  
  OEM & Emerging Markets     47,845       39,834  
  Maritime     51,720       50,972  
  Detection     29,277       18,183  
      $ 379,472     $ 344,517  
                   
EARNINGS (LOSS) FROM OPERATIONS                
  Surveillance   $ 35,240     $ 30,166  
  Instruments     19,496       28,063  
  Security     (3,645 )     3,816  
  OEM & Emerging Markets     10,032       8,779  
  Maritime     4,998       4,789  
  Detection     7,880       2,680  
  Other     (16,624 )     (12,539 )
    $ 57,377     $ 65,754  
                 
                 

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