SOURCE: FLIR Systems, Inc.

FLIR Systems, Inc.

July 24, 2015 07:30 ET

FLIR Systems Announces Second Quarter 2015 Financial Results

Revenue and EPS Increase 6% and 16% Over the Prior Year, Respectively; Year to Date EPS Increases 35% Over the Prior Year

WILSONVILLE, OR--(Marketwired - Jul 24, 2015) - FLIR Systems, Inc. (NASDAQ: FLIR) today announced financial results for the second quarter ended June 30, 2015. Revenue was $393 million, up 6% compared to second quarter 2014 revenue of $369.4 million. On a constant-currency basis, revenue for the second quarter was up 12% compared to the prior year, as foreign currency exchange fluctuations negatively impacted revenue by approximately $20 million. Operating income in the second quarter was $70.5 million, compared to $59.4 million in the second quarter of 2014. Operating income was impacted by pretax charges related to previously-announced restructuring initiatives of $0.5 million in the second quarter of 2015 and $3.5 million in the second quarter of 2014. Second quarter 2015 net income was $50.5 million, or $0.36 per diluted share, compared with net income of $44.8 million, or $0.31 per diluted share in the second quarter a year ago. Net income was impacted by after-tax restructuring charges of $0.3 million in the second quarter of 2015 and $2.7 million, or $0.02 per diluted share, in the second quarter of 2014. Cash provided by operations in the second quarter of 2015 was $48.9 million.

The Surveillance segment contributed $107.8 million of revenue during the second quarter, down 5% from the prior year. The Instruments segment had $90.3 million of revenue, up 7% versus the prior year, and was negatively impacted by foreign currency exchange fluctuations by approximately $7 million. FLIR's OEM & Emerging Markets segment recorded revenue of $46.3 million in the second quarter, down 9% from the prior year. Revenue from the Maritime segment was $52 million, down 6% from the second quarter of 2014, and was negatively impacted by foreign currency exchange fluctuations by approximately $7 million. Security segment revenue was $60 million, an increase of 34% over the second quarter results last year. The Detection segment contributed $36.5 million of revenue, an increase of 77% from the prior year.

"With currency-neutral revenue growth of approximately 7% and EPS growth of 35%, we have been successful in executing on our strategies in the first half of 2015," said Andy Teich, President and CEO of FLIR. "Innovations in many of our commercial markets have driven broader adoption of our thermal and other sensing technologies. FLIR's commercially-developed, military qualified (CDMQ) model continues to be a positive differentiator in our government and military markets while our restructuring initiatives have proven very beneficial from a profitability standpoint. We look forward to continuing this momentum into the second half of 2015."

FLIR's backlog of firm orders for delivery within the next twelve months was approximately $536 million as of June 30, 2015, a decrease of $21 million, or 4%, during the quarter and a decrease of $12 million, or 2%, from the second quarter of 2014.

Revenue and Earnings Outlook for 2015

Based on financial results for the first half of 2015 and the outlook for the remainder of the year, FLIR continues to expect revenue for the full year 2015 to be in the range of $1.55 billion to $1.6 billion and net earnings, excluding restructuring charges, to be in the range of $1.60 to $1.70 per diluted share. 

Dividend Declaration

FLIR's Board of Directors has declared a quarterly cash dividend of $0.11 per share on FLIR common stock, payable September 4, 2015, to shareholders of record as of close of business on August 21, 2015.

Conference Call

FLIR has scheduled a conference call at 8:00 a.m. ET (5:00 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 & Presentations section of www.FLIR.com/investor. A replay will be available after 11:00 a.m. ET (8:00 a.m. PT) at this same internet address. Summary second 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

The 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. 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.

   
FLIR SYSTEMS, INC.  
CONSOLIDATED STATEMENTS OF INCOME  
(In thousands, except per share amounts)(Unaudited)  
                       
  Three Months Ended     Six Months Ended  
  June 30,     June 30,  
  2015     2014     2015     2014  
                               
Revenue $ 392,975     $ 369,380     $ 737,492     $ 720,923  
Cost of goods sold   203,360       186,662       371,980       369,673  
    Gross profit   189,615       182,718       365,512       351,250  
                               
Operating expenses:                              
Research and development   35,154       36,307       69,848       72,633  
Selling, general and administrative   83,476       83,500       158,611       165,442  
Restructuring expenses   454       3,547       768       11,361  
    Total operating expenses   119,084       123,354       229,227       249,436  
                               
    Earnings from operations   70,531       59,364       136,285       101,814  
                               
Interest expense   3,358       3,629       7,019       7,337  
Interest income   (295 )     (272 )     (542 )     (536 )
Other expense (income), net   1,020       (1,070 )     320       (1,269 )
                               
    Earnings before income taxes   66,448       57,077       129,488       96,282  
                               
Income tax provision   15,948       12,319       31,078       21,630  
                               
    Net earnings $ 50,500     $ 44,758     $ 98,410     $ 74,652  
                               
Earnings per share:                              
Basic $ 0.36     $ 0.32     $ 0.70     $ 0.53  
Diluted $ 0.36     $ 0.31     $ 0.70     $ 0.52  
                               
Weighted average shares outstanding:                              
  Basic   140,063       141,574       139,916       141,255  
  Diluted   141,491       144,120       141,484       143,964  
                               
                               
                               
FLIR SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)(Unaudited)
       
  June 30,   December 31,
  2015   2014
ASSETS          
           
Current assets:          
  Cash and cash equivalents $ 560,190   $ 531,374
  Accounts receivable, net   327,653     354,658
  Inventories   360,571     320,605
  Prepaid expenses and other current assets   86,000     93,691
  Deferred income taxes, net   38,509     38,873
    Total current assets   1,372,923     1,339,201
           
Property and equipment, net   260,763     247,094
Deferred income taxes, net   20,146     19,941
Goodwill   544,501     553,335
Intangible assets, net   122,344     133,212
Other assets   59,039     61,240
  $ 2,379,716   $ 2,354,023
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
           
Current liabilities          
  Accounts payable $ 121,605   $ 98,173
  Deferred revenue   29,989     27,878
  Accrued payroll and related liabilities   53,740     62,065
  Accrued expenses   35,348     51,810
  Accrued income taxes   3,991     4,586
  Other current liabilities   50,634     50,045
  Current portion long-term debt   15,000     15,000
    Total current liabilities   310,307     309,557
           
Long-term debt   350,715     357,986
Deferred income taxes   13,365     13,905
Accrued income taxes   11,513     11,096
Other long-term liabilities   55,341     51,706
           
Commitments and contingencies          
           
Shareholders' equity   1,638,475     1,609,773
  $ 2,379,716   $ 2,354,023
           
           
           
FLIR SYSTEMS, INC.  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(In thousands)(Unaudited)  
   
  Three Months Ended     Six Months Ended  
  June 30,     June 30,  
  2015     2014     2015     2014  
                               
Cash flows from operating activities:                              
  Net earnings $ 50,500     $ 44,758     $ 98,410     $ 74,652  
  Income items not affecting cash:                              
    Depreciation and amortization   12,122       14,236       24,611       30,706  
    Deferred income taxes   46       (591 )     142       915  
    Stock-based compensation arrangements   8,181       8,447       12,938       17,203  
  Other non-cash items   2,480       (2,109 )     (823 )     (3,599 )
  Changes in operating assets and liabilities   (24,397 )     5,848       (11,419 )     10,536  
Cash provided by operating activities   48,932       70,589       123,859       130,413  
                               
Cash flows from investing activities:                              
  Additions to property and equipment, net   (17,614 )     (16,239 )     (30,753 )     (25,828 )
Cash used by investing activities   (17,614 )     (16,239 )     (30,753 )     (25,828 )
                               
Cash flows from financing activities:                              
  Repayments of long term debt   (3,750 )     (3,750 )     (7,500 )     (7,500 )
  Repurchase of common stock   (31,426 )     (41,237 )     (31,426 )     (43,003 )
  Dividends paid   (15,397 )     (14,160 )     (30,774 )     (28,245 )
  Proceeds from shares issued pursuant to stock-based compensation plans   15,222       20,093       19,636       28,969  
  Excess tax benefit of stock options exercised   3,262       3,860       4,041       6,559  
  Other financing activities   (1 )     (264 )     (8 )     (14 )
Cash used by financing activities   (32,090 )     (35,458 )     (46,031 )     (43,234 )
                               
Effect of exchange rate changes on cash   13,182       (914 )     (18,259 )     (1,754 )
                               
Net increase in cash and cash equivalents   12,410       17,978       28,816       59,597  
Cash and cash equivalents:                              
  Beginning of period   547,780       584,095       531,374       542,476  
  End of period $ 560,190     $ 602,073     $ 560,190     $ 602,073  
                                 
                                 
                                 
FLIR SYSTEMS, INC.  
REVENUE AND EARNINGS FROM OPERATIONS BY SEGMENT  
(In thousands)(Unaudited)  
                       
  Three Months Ended     Six Months Ended  
  June 30,     June 30,  
  2015     2014     2015     2014  
REVENUE                              
  Surveillance $ 107,814     $ 113,641     $ 220,715     $ 236,729  
  Instruments   90,260       83,968       174,080       168,023  
  OEM and Emerging Markets   46,285       51,124       86,120       99,039  
  Maritime   52,030       55,230       103,002       107,805  
  Security   60,048       44,735       98,854       74,045  
  Detection   36,538       20,682       54,721       35,282  
  $ 392,975     $ 369,380     $ 737,492     $ 720,923  
                               
EARNINGS (LOSS) FROM OPERATIONS                              
  Surveillance $ 26,378     $ 22,634     $ 56,546     $ 45,900  
  Instruments   28,341       21,037       56,404       41,486  
  OEM and Emerging Markets   10,495       13,914       19,274       22,720  
  Maritime   6,421       9,714       11,210       18,544  
  Security   7,874       5,886       11,689       7,572  
  Detection   9,380       3,152       12,059       1,353  
  Other   (18,358 )     (16,973 )     (30,897 )     (35,761 )
  $ 70,531     $ 59,364     $ 136,285     $ 101,814  
                               

Contact Information