SOURCE: FLIR Systems, Inc.

FLIR Systems, Inc.

February 11, 2016 07:30 ET

FLIR Systems Announces Fourth Quarter and Full Year 2015 Financial Results

Fourth Quarter and Full Year Constant Currency Revenue Growth of 3% and 6%, Respectively; Fourth Quarter and Full Year Operating Income Growth of 7% and 18%, Respectively; Fourth Quarter and Full Year Operating Cash Flow Growth of 25% and 22%, Respectively

WILSONVILLE, OR--(Marketwired - Feb 11, 2016) - FLIR Systems, Inc. (NASDAQ: FLIR) today announced financial results for the fourth quarter and full year ended December 31, 2015. Fourth quarter 2015 revenue was $437.6 million, up 1% compared to fourth quarter 2014 revenue of $434.4 million. On a constant currency basis, fourth quarter 2015 revenue was up 3% versus the prior year. Operating income in the fourth quarter was $93.5 million, compared to $87.4 million in the fourth quarter of 2014. Operating income was impacted by pretax charges related to previously-announced restructuring initiatives of $0.3 million in the fourth quarter of 2015 and $1.0 million in the fourth quarter of 2014.

Fourth quarter 2015 net income was $70.2 million, or $0.51 per diluted share, compared with net income of $72.8 million, or $0.51 per diluted share in the fourth quarter a year ago. Net income in the fourth quarter of 2015 was impacted by an after-tax gain on the sale of an investment of $12.7 million, offset by after-tax restructuring charges of $0.2 million and discrete tax charges of $7.4 million, netting to a $0.04 benefit to earnings per diluted share. Net income in the fourth quarter of 2014 was impacted by after-tax restructuring charges of $0.7 million and a discrete tax benefit of $9.4 million, netting to a $0.06 benefit to earnings per diluted share. Cash provided by operations in the fourth quarter reached $78.3 million, increasing 25% over the fourth quarter of 2014.

Revenue from the Surveillance segment was $150.7 million, a decrease of 5% from the fourth quarter results last year. The Instruments segment contributed $98.6 million of revenue during the fourth quarter, down 5% from the prior year but flat on a constant currency basis. The Security segment recorded revenue of $68.4 million in the fourth quarter, up 21% from the prior year. FLIR's OEM & Emerging Markets segment had $49.2 million of revenue, a decrease of 2% from the prior year. Revenue from the Maritime segment was $36.0 million, and was down 10% from the fourth quarter of 2014 and down 4% on a constant currency basis. The Detection segment contributed $34.7 million of revenue, an increase of 32% from the prior year.

For the full year, revenue was $1,557.1 million, up 2% compared to $1,530.7 million for the year ended December 31, 2014. On a constant currency basis, full year 2015 revenue grew 6% over 2014. Operating income for 2015 was $305.8 million compared to $259.2 million in 2014, an increase of 18% for the year. Net income for 2015 was $241.7 million, or $1.72 per diluted share, compared with 2014 net income of $200.3 million, or $1.39 per diluted share. Cash provided by operations during 2015 was $275.8 million, which compares to $226.2 million in the prior year and represents a 22% increase.

FLIR's backlog of firm orders for delivery within the next twelve months was approximately $604 million as of December 31, 2015, an increase of $36 million, or 6%, during the quarter and an increase of $56 million, or 10%, compared to $547 million at the end of 2014.

"The fourth quarter was in-line with our expectations. While revenues were up only slightly year over year given the strong dollar, our operating profitability improved due to strong execution and focus on costs. Cash flow from operations grew considerably compared to the fourth quarter of 2014 as we improve our working capital utilization. Additionally, sales bookings growth of over 20% during the fourth quarter resulted in the highest ending backlog balance since 2008," said Andy Teich, President and CEO of FLIR. "We were pleased with the financial performance over the full year 2015, with operating income growing 18% and earnings per share up 24%. As we look forward to 2016, we intend to grow in our existing and new markets through continued product innovation, operational discipline, strategic marketing, and opportunistic use of our capital."

Revenue and Earnings Outlook for 2016

FLIR also announced today that it currently expects 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 assumes a full year 2016 effective tax rate of 26%, excluding the impact of any future discrete items.

Dividend Increase and Declaration

FLIR's Board of Directors has approved a quarterly cash dividend of $0.12 per share on FLIR common stock, an increase of 9% over the previous paid quarterly dividend of $0.11 per share. The Board of Directors has declared the dividend payable on March 4, 2016, to shareholders of record as of close of business on February 19, 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 fourth 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     Twelve Months Ended  
    December 31,     December 31,  
    2015     2014     2015     2014  
Revenue   $ 437,647     $ 434,366     $ 1,557,067     $ 1,530,654  
Cost of goods sold     230,337       219,629       803,506       780,281  
  Gross profit     207,310       214,737       753,561       750,373  
Operating expenses:                                
  Research and development     31,994       36,096       132,892       142,751  
  Selling, general and administrative     81,553       90,258       313,544       331,995  
  Restructuring expenses     266       963       1,361       16,383  
    Total operating expenses     113,813       127,317       447,797       491,129  
    Earnings from operations     93,497       87,420       305,764       259,244  
Interest expense     3,397       3,593       14,086       14,593  
Interest income     (306 )     (471 )     (1,167 )     (1,405 )
Other (income) expense, net     (14,376 )     1,514       (12,601 )     (3,473 )
    Earnings before income taxes     104,782       82,784       305,446       249,529  
                                 
Income tax provision     34,578       10,032       63,760       49,268  
                                 
    Net earnings   $ 70,204     $ 72,752     $ 241,686     $ 200,261  
Earnings per share:                                
  Basic   $ 0.51     $ 0.52     $ 1.73     $ 1.42  
  Diluted   $ 0.51     $ 0.51     $ 1.72     $ 1.39  
Weighted average shares outstanding:                                
  Basic     138,000       140,634       139,353       141,143  
  Diluted     138,970       142,520       140,774       143,569  
                                   
                                   
 
 
FLIR SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)(Unaudited)
         
    December 31,   December 31,
    2015   2014
ASSETS            
             
Current assets:            
  Cash and cash equivalents   $ 472,785   $ 531,374
  Accounts receivable, net     326,098     354,658
  Inventories     393,092     320,605
  Prepaid expenses and other current assets     95,539     93,691
    Total current assets     1,287,514     1,300,328
             
Property and equipment, net     272,629     247,094
Deferred income taxes, net     55,429     54,102
Goodwill     596,316     553,335
Intangible assets, net     141,302     133,212
Other assets     53,210     61,240
    $ 2,406,400   $ 2,349,311
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
             
Current liabilities:            
  Accounts payable   $ 139,540   $ 98,173
  Deferred revenue     31,933     27,878
  Accrued payroll and related liabilities     54,806     62,065
  Accrued expenses     40,930     51,810
  Accrued income taxes     201     4,586
  Other current liabilities     53,241     50,045
  Current portion long-term debt     264,694     15,000
    Total current liabilities     585,345     309,557
             
Long-term debt     93,750     357,986
Deferred income taxes     3,623     9,193
Accrued income taxes     10,457     11,096
Other long-term liabilities     63,710     51,706
             
Commitments and contingencies            
             
Shareholders' equity     1,649,515     1,609,773
    $ 2,406,400   $ 2,349,311
             
             
   
   
FLIR SYSTEMS, INC.  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(In thousands)(Unaudited)  
                         
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2015     2014     2015     2014  
                                 
Cash flows from operating activities:                                
  Net earnings   $ 70,204     $ 72,752     $ 241,686     $ 200,261  
  Income items not affecting cash:                                
    Depreciation and amortization     13,069       12,967       49,534       57,245  
    Deferred income taxes     3,426       (2,214 )     (13,812 )     (1,242 )
    Stock-based compensation arrangements    
6,299
     
6,782
     
25,748
     
30,788
 
  Gain on sale of certain assets, net     (20,211 )     -       (19,166 )     (4,129 )
  Other non-cash items     3,376       (4,032 )     7,722       (791 )
  Changes in operating assets and liabilities, net of acquisitions    
2,172
     
(23,411
)    
(15,898
)    
(55,888
)
Cash provided by operating activities     78,335       62,844       275,814       226,244  
                                 
Cash flows from investing activities:                                
  Additions to property and equipment, net     (18,118 )     (20,333 )     (68,234 )     (61,262 )
  Business acquisitions, net of cash acquired    
(92,260
)    
-
     
(92,260
)    
-
 
  Proceeds from sale of certain assets     25,649       -       25,649       12,000  
Cash used by investing activities     (84,729 )     (20,333 )     (134,845 )     (49,262 )
                                 
Cash flows from financing activities:                                
  Repayments of long term debt     (3,750 )     (3,750 )     (15,000 )     (15,000 )
  Repurchase of common stock     (29,812 )     (62,614 )     (123,193 )     (139,238 )
  Dividends paid     (15,206 )     (14,102 )     (61,399 )     (56,513 )
  Proceeds from shares issued pursuant to stock-based compensation plans    
3,647
     
13,413
     
24,835
     
47,581
 
  Excess tax benefit of stock options exercised    
4,027
     
3,456
     
8,243
     
11,161
 
  Other financing activities     (14 )     15       (24 )     (18 )
Cash used by financing activities     (41,108 )     (63,582 )     (166,538 )     (152,027 )
                                 
Effect of exchange rate changes on cash    
(5,089
)    
(12,928
)    
(33,020
)    
(36,057
)
                                 
Net decrease in cash and cash equivalents    
(52,591
)    
(33,999
)    
(58,589
)    
(11,102
)
Cash and cash equivalents:                                
  Beginning of period     525,376       565,373       531,374       542,476  
  End of period   $ 472,785     $ 531,374     $ 472,785     $ 531,374  
                                   
                                   
   
   
FLIR SYSTEMS, INC.  
REVENUE AND EARNINGS FROM OPERATIONS BY SEGMENT  
(In thousands)(Unaudited)  
                 
  Three Months Ended   Twelve Months Ended  
  December 31,   December 31,  
  2015   2014   2015   2014  
REVENUE                        
  Surveillance $ 150,733   $ 157,911   $ 503,045   $ 519,983  
  Instruments   98,599     103,540     347,476     354,124  
  Security   68,390     56,398     226,575     179,090  
  OEM & Emerging Markets   49,154     50,168     186,722     199,095  
  Maritime   36,026     40,103     177,948     192,636  
  Detection   34,745     26,246     115,301     85,726  
  $ 437,647   $ 434,366   $ 1,557,067   $ 1,530,654  
                         
EARNINGS (LOSS) FROM OPERATIONS                    
  Surveillance $ 49,173   $ 47,929   $ 145,637   $ 127,221  
  Instruments   34,394     34,277     112,353     98,954  
  Security   9,229     10,310     28,140     24,871  
  OEM & Emerging Markets   7,558     14,732     41,065     50,250  
  Maritime   553     1,335     13,611     24,494  
  Detection   9,555     5,438     26,904     10,958  
  Other   (16,965 )   (26,601 )   (61,946 )   (77,504 )
  $ 93,497   $ 87,420   $ 305,764   $ 259,244  
                         
                         

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