SOURCE: FLIR Systems, Inc.

FLIR Systems, Inc.

February 07, 2014 07:30 ET

FLIR Systems Announces Fourth Quarter and Full Year 2013 Financial Results

Record Annual Cash Flow From Operations; Announces 11% Increase in Dividend

WILSONVILLE, OR--(Marketwired - Feb 7, 2014) - FLIR Systems, Inc. (NASDAQ: FLIR) today announced financial results for the fourth quarter ended December 31, 2013. Revenue was $400.3 million, up 4% compared to fourth quarter 2012 revenue of $386.4 million. Operating income in the fourth quarter was $37.8 million, compared to $100.1 million in the fourth quarter of 2012, and was impacted by $31 million in pretax charges related to previously announced restructuring initiatives and the settlement of executive retirement benefits. Fourth quarter 2013 net income was $28.7 million, or $0.20 per diluted share, compared with net income of $77.3 million, or $0.52 per diluted share in the fourth quarter a year ago. The net after tax impact of the restructuring and retirement benefits charges in the fourth quarter was approximately $21 million, or $0.15 per diluted share.

Cash provided by operations in the fourth quarter was $105.2 million, a decrease of 7% compared to the fourth quarter of 2012. During the quarter, FLIR repurchased one million shares of its common stock at an average price of $28.95 per share.

Revenue from FLIR's Commercial Systems division increased 15% from the fourth quarter of 2012, to $244.6 million. Within the Commercial Systems division, revenue from the Thermal Vision and Measurement segment was $208.5 million, an increase of 16% from the fourth quarter results last year. The Raymarine segment contributed $36.1 million of revenue during the fourth quarter, up 10% from the prior year.

Revenue from FLIR's Government Systems division decreased 10% from the fourth quarter of 2012, to $155.7 million. Within the Government Systems division, revenue from the Surveillance segment was $124.7 million, a decrease of 9% from the fourth quarter of 2012. Revenue from the Detection segment was $13.2 million, an increase of 3% compared to the fourth quarter of 2012, and the Integrated Systems segment contributed $17.9 million of revenue during the fourth quarter, compared with revenue of $24.4 million in the prior year.

For the full year, revenue was $1,496.4 million, up 6% compared to $1,405.4 million for the year ended December 31, 2012. Operating income for 2013 was $240.7 million compared to $303.3 million in 2012. Net income for 2013 was $177 million, or $1.22 per diluted share, compared with 2012 net income of $222.4 million, or $1.45 per diluted share. Cash provided by operations reached a record high $355 million during the year, growing 24% over 2012.

FLIR's backlog of firm orders for delivery within the next twelve months was approximately $490 million as of December 31, 2013, a decrease of $33 million during the quarter. Backlog in the Government Systems division was $294 million, decreasing $41 million during the quarter. Backlog in the Commercial Systems division was $196 million, up $8 million during the quarter.

"The new products and core technologies we've recently introduced coupled with the organizational changes we launched in the fourth quarter of 2013 paves the way for FLIR's entrance into several new high volume markets," said Andy Teich, President and CEO of FLIR. "Our financial results were impacted by slowed activity from domestic defense customers and our planned spending and restructuring charges; however, we recorded a record level of cash flow in 2013. Our recent realigning of our operations will create a streamlined organizational structure that focuses on our customers, leverages our vertical integration, employs our CDMQ model for government markets, and furthers our ability to deliver on our goal of 'infrared everywhere.'"

Revenue and Earnings Outlook for 2014
FLIR also announced today that it currently expects revenue in 2014 to be in the range of $1.45 billion to $1.55 billion and net earnings excluding restructuring charges associated with the business realignment to be in the range of $1.40 to $1.50 per diluted share.

Dividend Increase and Declaration
FLIR's Board of Directors has approved a quarterly cash dividend of $0.10 per share on FLIR common stock, an increase of 11% over the previous paid quarterly dividend of $0.09 per share. The Board of Directors has declared the dividend payable March 7, 2014, to shareholders of record as of close of business on February 19, 2014.

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 and the year. A simultaneous webcast of the conference call may be accessed online from a link in the Events & Presentations 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 fourth quarter and historical financial data can be accessed online soon after the release of the fourth quarter results from the Financial Info Database link 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
The statements in this release by Andy Teich and the statements in the section captioned "Revenue and Earnings Outlook for 2014" above are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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, FLIR's continuing compliance with U.S. export control laws and regulations, the timely receipt of any required 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 FLIR's Securities and Exchange Commission filings and reports. 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.

(Tables Below)

   
   
FLIR SYSTEMS, INC.  
CONSOLIDATED STATEMENTS OF INCOME  
(In thousands, except per share amounts)(Unaudited)  
   
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2013     2012     2013     2012  
   
Revenue   $ 400,319     $ 386,385     $ 1,496,372     $ 1,405,358  
Cost of goods sold     210,228       181,010       759,362       670,174  
    Gross profit     190,091       205,375       737,010       735,184  
                                 
Operating expenses:                                
  Research and development     38,425       33,704       147,696       137,354  
  Selling, general and administrative     88,033       70,482       322,739       292,500  
  Restructuring expenses     25,832       1,113       25,832       2,000  
    Total operating expenses     152,290       105,299       496,267       431,854  
                                     
    Earnings from operations     37,801       100,076       240,743       303,330  
                                 
Interest expense     3,731       2,729       14,091       11,659  
Interest income     (337 )     (509 )     (1,058 )     (1,582 )
Other (income) expense, net     (741 )     151       (1,276 )     1,341  
                                 
    Earnings from continuing operations before income taxes     35,148       97,705       228,986       291,912  
Income tax provision     6,413       19,528       51,971       66,556  
    Earnings from continuing operations     28,735       78,177       177,015       225,356  
Loss from discontinued operations, net of tax     -       (916 )     -       (2,958 )
    Net earnings   $ 28,735     $ 77,261     $ 177,015     $ 222,398  
                                     
Basic earnings per share:                                
  Earnings from continuing operations   $ 0.20     $ 0.53     $ 1.24     $ 1.49  
  Discontinued operations     -       (0.01 )     -       (0.02 )
    Basic earnings per share   $ 0.20     $ 0.52     $ 1.24     $ 1.47  
                                     
Diluted earnings per share:                                
  Earnings from continuing operations   $ 0.20     $ 0.52     $ 1.22     $ 1.47  
  Discontinued operations     -       (0.01 )     -       (0.02 )
    Diluted earnings per share   $ 0.20     $ 0.52     $ 1.22     $ 1.45  
                                     
Weighted average shares outstanding:                                
  Basic     141,250       148,103       142,446       151,634  
  Diluted     143,441       149,419       144,595       153,595  
                                   
                                   
 
 
FLIR SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)(Unaudited)
 
    December 31,   December 31,
    2013   2012
ASSETS            
             
Current assets:            
  Cash and cash equivalents   $ 542,476   $ 321,739
  Accounts receivable, net     286,573     335,163
  Inventories     344,719     379,080
  Prepaid expenses and other current assets     97,574     98,304
  Deferred income taxes, net     35,456     30,960
    Total current assets     1,306,798     1,165,246
             
Property and equipment, net     234,041     211,615
Deferred income taxes, net     20,663     32,223
Goodwill     575,701     564,306
Intangible assets, net     154,195     175,823
Other assets     51,808     41,442
    $ 2,343,206   $ 2,190,655
LIABILITIES AND SHAREHOLDERS' EQUITY            
             
Current liabilities:            
  Accounts payable   $ 85,730   $ 94,156
  Deferred revenue     28,844     29,465
  Accrued payroll and related liabilities     62,069     41,506
  Accrued expenses     39,316     32,772
  Other current liabilities     44,893     31,725
  Accrued income taxes     663     11,943
  Current portion long-term debt     15,000     -
    Total current liabilities     276,515     241,567
             
Long-term debt     372,528     248,319
Deferred income taxes     12,101     19,071
Accrued income taxes     19,996     22,812
Pension and other long-term liabilities     48,686     58,985
             
Commitments and contingencies            
             
Shareholders' equity     1,613,380     1,599,901
    $ 2,343,206   $ 2,190,655
             
             
   
   
FLIR SYSTEMS, INC.  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(In thousands)(Unaudited)  
   
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2013     2012     2013     2012  
                                 
Cash flows from operating activities:                                
  Net earnings   $ 28,735     $ 77,261     $ 177,015     $ 222,398  
  Income items not affecting cash:                                
    Depreciation and amortization     17,818       14,857       62,796       59,715  
    Deferred income taxes     (950 )     (9,819 )     (988 )     (9,220 )
    Stock-based compensation arrangements     7,150       6,252       27,823       26,250  
  Other non-cash items     3,080       3,953       4,564       2,088  
  Changes in operating assets and liabilities, net of acquisitions     49,341       20,370       83,755       (15,686 )
Cash provided by operating activities     105,174       112,874       354,965       285,545  
                                 
Cash flows from investing activities:                                
  Additions to property and equipment, net     (15,065 )     (18,901 )     (52,061 )     (58,089 )
  Business acquisitions, net of cash acquired     -       (105,909 )     (20,073 )     (105,909 )
  Other investments     -       (2 )     -       (3,002 )
Cash used by investing activities     (15,065 )     (124,812 )     (72,134 )     (167,000 )
                                 
Cash flows from financing activities:                                
  Proceeds from long term debt     -       -       150,000       -  
  Repayments of long term debt     (3,750 )     -       (11,250 )     -  
  Repurchase of common stock     (29,028 )     (85,185 )     (162,078 )     (214,195 )
  Dividends paid     (12,709 )     (10,428 )     (51,404 )     (42,450 )
  Proceeds from shares issued pursuant to stock-based compensation plans     2,698       4,080       8,650       11,198  
  Excess tax benefit of stock options exercised     141       53       1,069       1,284  
  Other financing activities     172       (28 )     (1,100 )     (166 )
Cash provided (used) by financing activities     (42,476 )     (91,508 )     (66,113 )     (244,329 )
                                 
Effect of exchange rate changes on cash     2,644       696       4,019       6,677  
                                 
Net increase (decrease) in cash and cash equivalents     50,277       (102,750 )     220,737       (119,107 )
Cash and cash equivalents, beginning of period     492,199       424,489       321,739       440,846  
Cash and cash equivalents, end of period   $ 542,476     $ 321,739     $ 542,476     $ 321,739  
                                 
                                 
   
   
FLIR SYSTEMS, INC.  
REVENUE AND EARNINGS FROM OPERATIONS BY SEGMENT  
(In thousands)(Unaudited)  
   
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2013     2012     2013     2012  
REVENUE - EXTERNAL CUSTOMERS                                
Thermal Vision and Measurement   $ 208,486     $ 180,097     $ 727,938     $ 628,019  
Raymarine     36,113       32,740       163,200       158,183  
Surveillance     124,665       136,351       456,490       486,355  
Detection     13,175       12,844       53,191       63,312  
Integrated Systems     17,880       24,353       95,553       69,489  
    $ 400,319     $ 386,385     $ 1,496,372     $ 1,405,358  
                                 
EARNINGS (LOSS) FROM OPERATIONS                                
Thermal Vision and Measurement   $ 35,797     $ 61,629     $ 161,307     $ 171,280  
Raymarine     (160 )     1,230       14,184       11,173  
Surveillance     25,199       45,253       126,034       160,219  
Detection     (3,449 )     289       (184 )     1,089  
Integrated Systems     (2,019 )     3,901       (1,907 )     5,168  
Other     (17,567 )     (12,226 )     (58,691 )     (45,599 )
    $ 37,801     $ 100,076     $ 240,743       303,330  
                                 
                                 

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