SOURCE: FLIR Systems, Inc.

FLIR Systems, Inc.

February 06, 2015 07:30 ET

FLIR Systems Announces Fourth Quarter and Full Year 2014 Financial Results

Fourth Quarter and Full Year EPS Growth of 155% and 14%, Respectively; Announces 10% Increase in Quarterly Dividend and New Share Repurchase Authorization

WILSONVILLE, OR--(Marketwired - Feb 6, 2015) - FLIR Systems, Inc. (NASDAQ: FLIR) today announced financial results for the fourth quarter and full year ended December 31, 2014. Fourth quarter 2014 revenue was $434.4 million, up 9% compared to fourth quarter 2013 revenue of $400.3 million. Operating income in the fourth quarter was $87.4 million, compared to $37.8 million in the fourth quarter of 2013. Operating income was negatively impacted by $1 million in the fourth quarter of 2014 and $31 million in the fourth quarter of 2013 due to pretax charges related to previously-announced restructuring initiatives and the settlement of executive retirement benefits. Fourth quarter 2014 net income was $72.8 million, or $0.51 per diluted share, compared with net income of $28.7 million, or $0.20 per diluted share in the fourth quarter a year ago. Net income was negatively impacted by $0.7 million, or $0.01 per diluted share, in the fourth quarter of 2014 and $21 million, or $0.15 per diluted share, in the fourth quarter of 2013 due to after-tax restructuring and retirement benefits charges. Cash provided by operations in the fourth quarter was $62.8 million.

Revenue from the Surveillance segment was $150.1 million, an increase of 8% from the fourth quarter results last year. The Instruments segment contributed $103.5 million of revenue during the fourth quarter, up 2% from the prior year. The OEM & Emerging Markets segment had $58 million of revenue, an increase of 8% over the prior year. FLIR's Security segment recorded revenue of $56.4 million in the fourth quarter, up 35% from the prior year. Revenue from the Maritime segment was $40.1 million, and was down 6% over the fourth quarter of 2013. The Detection segment contributed $26.2 million of revenue, an increase of 19% from the prior year.

For the full year, revenue was $1,530.7 million, up 2% compared to $1,496.4 million for the year ended December 31, 2013. Operating income for 2014 was $259.2 million compared to $240.7 million in 2013. Net income for 2014 was $200.3 million, or $1.39 per diluted share, compared with 2013 net income of $177 million, or $1.22 per diluted share. Cash provided by operations was $226.2 million during the year.

FLIR's backlog of firm orders for delivery within the next twelve months was approximately $547 million as of December 31, 2014, a decrease of $32 million, or 6%, during the quarter and an increase of $57 million, or 12%, compared to the end of 2013.

"We are pleased with the results of the fourth quarter and full year 2014 as they further demonstrate the progress we have made in reaching our goal of becoming 'the world's sixth sense.' During the year we introduced several new products that revolutionized our industry, opened up large consumer markets, and expanded the accessibility of our advanced sensor technologies to a much broader set of people. We were very successful in realigning our operations to better serve our existing and future customers while also reducing our operating costs. And we deployed our capital efficiently and broadly to best position us for growth and to best serve our shareholders," said Andy Teich, President and CEO of FLIR. "Our innovation engine and initiatives for continuous improvement resulted in increased revenue and meaningful growth in profitability during 2014. There remains more to be accomplished and we look forward to executing our strategies for sustained long term growth."

Revenue and Earnings Outlook for 2015

FLIR also announced today that it currently expects revenue in 2015 to be in the range of $1.55 billion to $1.6 billion and net earnings to be in the range of $1.60 to $1.70 per diluted share.

Dividend Increase and Declaration

FLIR's Board of Directors has approved a quarterly cash dividend of $0.11 per share on FLIR common stock, an increase of 10% over the previous paid quarterly dividend of $0.10 per share. The Board of Directors has declared the dividend payable March 6, 2015, to shareholders of record as of close of business on February 20, 2015.

Share Repurchase Program

Also today, FLIR announced that its Board of Directors approved a new share repurchase program that authorizes the repurchase of up to 15 million shares from time to time over the next two years. This authorization represents approximately 11% of FLIR's outstanding common stock as of December 31, 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. A summary presentation of fourth quarter financial results and operating highlights is also available online from a link in the Events & Presentations section of www.FLIR.com/investor. Summary fourth quarter and historical financial data may be accessed online 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

Statements in this release by Andy Teich and the statements in the section captioned "Revenue and Earnings Outlook for 2015" 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     Twelve Months Ended  
    December 31,     December 31,  
     2014     2013      2014     2013  
                                 
Revenue   $ 434,366     $ 400,319     $ 1,530,654     $ 1,496,372  
Cost of goods sold     219,629       210,228       780,281       759,362  
    Gross profit     214,737       190,091       750,373       737,010  
                                 
Operating expenses:                                
  Research and development     36,096       38,425       142,751       147,696  
  Selling, general and administrative     90,258       88,033       331,995       322,739  
  Restructuring expenses     963       25,832       16,383       25,832  
    Total operating expenses     127,317       152,290       491,129       496,267  
                                 
    Earnings from operations     87,420       37,801       259,244       240,743  
                                 
Interest expense     3,593       3,731       14,593       14,091  
Interest income     (471 )     (337 )     (1,405 )     (1,058 )
Other expense (income), net     1,514       (741 )     (3,473 )     (1,276 )
                                 
    Earnings from continuing operations before income taxes     82,784       35,148       249,529       228,986  
                                 
Income tax provision     10,032       6,413       49,268       51,971  
                                 
    Net earnings   $ 72,752     $ 28,735     $ 200,261     $ 177,015  
                                 
Earnings per share:                                
  Basic   $ 0.52     $ 0.20     $ 1.42     $ 1.24  
  Diluted   $ 0.51     $ 0.20     $ 1.39     $ 1.22  
                                 
Weighted average shares outstanding:                                
  Basic     140,634       141,250       141,143       142,446  
  Diluted     142,520       143,441       143,569       144,595  
                                   
 
FLIR SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)(Unaudited)
         
    December 31,   December 31,
    2014   2013
ASSETS            
             
Current assets:            
  Cash and cash equivalents   $ 531,374   $ 542,476
  Accounts receivable, net     359,397     286,573
  Inventories     320,605     344,719
  Prepaid expenses and other current assets     93,691     97,574
  Deferred income taxes, net     33,232     38,389
    Total current assets     1,338,299     1,309,731
             
Property and equipment, net     247,094     234,041
Deferred income taxes, net     25,745     17,883
Goodwill     553,335     575,701
Intangible assets, net     133,212     154,195
Other assets     61,239     51,808
    $ 2,358,924   $ 2,343,359
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
             
Current liabilities:            
  Accounts payable   $ 98,173   $ 85,730
  Deferred revenue     27,878     28,844
  Accrued payroll and related liabilities     62,065     62,069
  Accrued expenses     51,810     39,316
  Accrued income taxes     4,586     663
  Other current liabilities     54,784     44,893
  Current portion long-term debt     15,000     15,000
    Total current liabilities     314,296     276,515
             
Long-term debt     357,986     372,528
Deferred income taxes     14,067     12,255
Accrued income taxes     11,096     19,996
Other long-term liabilities     51,706     48,685
             
Commitments and contingencies            
             
Shareholders' equity     1,609,773     1,613,380
    $ 2,358,924   $ 2,343,359
             
   
FLIR SYSTEMS, INC.  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(In thousands)(Unaudited)  
                         
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2014     2013     2014     2013  
                                 
Cash flows from operating activities:                                
  Net earnings   $ 72,752     $ 28,735     $ 200,261     $ 177,015  
  Income items not affecting cash:                                
    Depreciation and amortization     12,967       17,818       57,245       62,796  
    Deferred income taxes     (2,214 )     (2,670 )     (1,242 )     (2,709 )
    Stock-based compensation arrangements     6,782       7,150       30,788       27,823  
  Gain on sale of certain optics assets     -       -       (4,129 )     -  
  Other non-cash items     (4,032 )     3,080       (791 )     4,564  
  Changes in operating assets and liabilities     (23,411 )     51,061       (55,888 )     85,476  
Cash provided by operating activities     62,844       105,174       226,244       354,965  
                                 
Cash flows from investing activities:                                
  Additions to property and equipment, net     (20,333 )     (15,065 )     (61,262 )     (52,061 )
  Business acquisitions, net of cash acquired     -       -       -       (20,073 )
  Proceeds from sale of certain optics assets     -       -       12,000       -  
Cash used by investing activities     (20,333 )     (15,065 )     (49,262 )     (72,134 )
                                 
Cash flows from financing activities:                                
  Proceeds from long term debt     -       -       -       150,000  
  Repayments of long term debt     (3,750 )     (3,750 )     (15,000 )     (11,250 )
  Repurchase of common stock     (62,614 )     (29,028 )     (139,238 )     (162,078 )
  Dividends paid     (14,102 )     (12,709 )     (56,513 )     (51,404 )
  Proceeds from shares issued pursuant to stock-based compensation plans     13,413       2,698       47,581       8,650  
  Excess tax benefit of stock options exercised     3,456       141       11,161       1,069  
  Other financing activities     15       172       (18 )     (1,100 )
Cash used by financing activities     (63,582 )     (42,476 )     (152,027 )     (66,113 )
                                 
Effect of exchange rate changes on cash    
(12,928
)    
2,644
     
(36,057
)    
4,019
 
                                 
Net increase (decrease) in cash and cash equivalents     (33,999 )     50,277       (11,102 )     220,737  
Cash and cash equivalents:                                
  Beginning of period     565,373       492,199       542,476       321,739  
  End of period   $ 531,374     $ 542,476     $ 531,374     $ 542,476  
                                 
   
FLIR SYSTEMS, INC.  
REVENUE AND EARNINGS FROM OPERATIONS BY SEGMENT  
(In thousands)(Unaudited)  
                         
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2014     2013     2014     2013  
REVENUE                                
  Surveillance   $ 150,109     $ 138,902     $ 492,213     $ 531,338  
  Instruments     103,540       101,519       354,124       337,531  
  OEM and Emerging Markets     57,970       53,504       226,865       207,204  
  Security     56,398       41,673       179,090       141,005  
  Maritime     40,103       42,638       192,636       189,076  
  Detection     26,246       22,083       85,726       90,218  
    $ 434,366     $ 400,319     $ 1,530,654     $ 1,496,372  
                                 
EARNINGS (LOSS) FROM OPERATIONS                                
  Surveillance   $ 43,683     $ 24,284     $ 113,048     $ 122,094  
  Instruments     34,277       17,692       98,954       81,070  
  OEM and Emerging Markets     18,978       9,271       64,423       52,724  
  Security     10,310       5,244       24,871       17,340  
  Maritime     1,335       1,840       24,494       22,287  
  Detection     5,438       (1,658 )     10,958       8,888  
  Other     (26,601 )     (18,872 )     (77,504 )     (63,660 )
    $ 87,420     $ 37,801     $ 259,244     $ 240,743  
                                 

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