SOURCE: FLIR Systems, Inc.

FLIR Systems, Inc.

October 25, 2012 07:30 ET

FLIR Systems Announces Third Quarter 2012 Financial Results

Backlog Reaches Highest Level in Three Years; Announces Agreement to Acquire Lorex Technology

PORTLAND, OR--(Marketwire - Oct 25, 2012) - FLIR Systems, Inc. (NASDAQ: FLIR) today announced financial results for the third quarter ended September 30, 2012. Revenue was $332.2 million, down 11% compared to third quarter 2011 revenue of $371.3 million. Operating income in the third quarter was $74.2 million, compared to $85.4 million in the third quarter of 2011. Third quarter 2012 net income was $55.9 million, or $0.37 per diluted share, compared with net income of $64.7 million, or $0.40 per diluted share in the third quarter a year ago. Cash provided by operations in the third quarter was $46.4 million. During the quarter, the Company repurchased 1.9 million shares of its common stock at an average price of $19.96 per share.

Revenue from the Company's Commercial Systems division decreased 8% from the third quarter of 2011, to $181.2 million. Within the Commercial Systems division, revenue from the Thermal Vision and Measurement segment was $149.5 million, a decrease of 7% from the third quarter results last year. The Raymarine segment contributed $31.7 million of revenue during the third quarter, down 11% from the prior year.

Revenue from the Company's Government Systems division decreased 14% from the third quarter of 2011, to $151.0 million. Within the Government Systems division, revenue from the Surveillance segment was $115.9 million, a decrease of 17% from the third quarter of 2011. Revenue from the Detection segment was $15.4 million, a decrease of 27% compared to the third quarter of 2011, and the Integrated Systems segment contributed $19.7 million of revenue during the third quarter, an increase of 42% from the prior year.

The Company's backlog of firm orders for delivery within the next twelve months was approximately $565 million as of September 30, 2012, an increase of $67 million during the quarter. Backlog in the Government Systems division was $392 million, increasing $58 million during the quarter. Backlog in the Commercial Systems division was $173 million, up $9 million during the quarter.

Acquisition of Lorex Technology
FLIR today also announced that it has entered into an agreement pursuant to which it has agreed to acquire Lorex Technology Inc., a leading provider of consumer oriented and professional grade video surveillance systems, for CAD$1.30 per share, or a total cash purchase price of CAD$59 million. Lorex, based in Markham, Ontario, is a pioneer in home security video surveillance systems that can be installed by the user as well as a provider of video surveillance products to security system integrators. Lorex provides homes and businesses bundled video surveillance systems and equipment that includes connected visible light video cameras, illuminated infrared cameras, digital video recorders, video monitors, baby monitors, and wearable action sports cameras. The company sells its solutions through retailers such as Costco, BJ's Wholesale, Amazon.com, and BestBuy.com, as well as through distributors of large-scale security solutions. The acquisition is expected to close by the end of 2012.

"Our third quarter results were as planned. In addition, we were encouraged by the order flow during the quarter and the corresponding increase in our ending backlog," noted Earl Lewis, President and CEO of FLIR. "We were pleased to see both divisions increase margins over last quarter despite headwinds in many of our markets. Additionally, the anticipated acquisition of Lorex is highly complementary to our long-term commercial strategy and is expected to be accretive to 2013 net earnings."

Revenue and Earnings Outlook for 2012
Based on financial results for the first nine months of 2012 and the outlook for the remainder of the year, FLIR has modified its outlook for revenue and earnings per share for the full year 2012. Management currently expects revenue for 2012 to be in the range of $1.40 billion to $1.45 billion and net earnings to be in the range of $1.42 to $1.47 per diluted share. This compares to the prior outlook of $1.4 billion to $1.5 billion in revenue and $1.40 to $1.50 in earnings per diluted share for the full year 2012.

Dividend Declaration
FLIR's Board of Directors has declared a quarterly cash dividend of $0.07 per share on FLIR common stock, payable December 7, 2012, to shareholders of record as of close of business on November 19, 2012.

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 may be accessed online from the Upcoming Events link at the Investor Relations page of www.FLIR.com. A replay will be available after 11:00 a.m. ET (8:00 a.m. PT) at this same Internet address. Summary third quarter and historical financial data, including segment details, may be accessed online from the Summary Financial Data section of 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. The Company's advanced thermal imaging and threat detection systems are used for a wide variety of imaging, thermography, and security applications, including airborne and ground-based surveillance, condition monitoring, research and development, manufacturing process control, search and rescue, drug interdiction, navigation, transportation safety, border and maritime patrol, environmental monitoring, and chemical, biological, radiological, nuclear, and explosives (CBRNE) detection. Visit the Company's web site at www.FLIR.com.

Forward-Looking Statements
The statements in this release by Earl Lewis and the statements in the section captioned "Revenue and Earnings Outlook for 2012" 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 the Company'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 the Company's products, product mix, the timing of customer orders and deliveries, the impact of competitive products and pricing, the Company'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 the Company to act as a federal contractor, the amount and availability of appropriated government procurement funds and other risks discussed from time to time in the Company'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 the Company 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     Nine Months Ended  
    September 30,     September 30,  
    2012     2011     2012     2011  
                                 
Revenue   $ 332,230     $ 371,327     $ 1,018,973     $ 1,138,850  
Cost of goods sold     158,877       169,430       492,865       535,030  
    Gross profit     173,353       201,897       526,108       603,820  
                                 
Operating expenses:                                
  Research and development     29,593       35,188       103,674       112,257  
  Selling, general and administrative     69,523       81,300       219,181       288,036  
    Total operating expenses     99,116       116,488       322,855       400,293  
                                 
    Earnings from operations     74,237       85,409       203,253       203,527  
                                 
Interest expense     3,096       1,526       8,930       2,311  
Interest income     (268 )     (155 )     (1,073 )     (505 )
Other expense (income), net     2,175       66       1,190       (1,206 )
                                 
    Earnings from continuing operations before income taxes    
69,234
     
83,972
     
194,206
     
202,927
 
                                 
Income tax provision     13,285       19,582       47,027       57,109  
                                 
    Earnings from continuing operations     55,949       64,390       147,179       145,818  
                                 
(Loss) earnings from discontinued operations, net of tax    
(44

)
   
329
     
(2,042

)
   
(475

)
                                 
    Net earnings   $ 55,905     $ 64,719     $ 145,137     $ 145,343  
                                 
Basic earnings per share:                                
  Earnings from continuing operations   $ 0.37     $ 0.41     $ 0.96     $ 0.92  
  Discontinued operations     (0.00 )     0.00       (0.01 )     (0.00 )
    Basic earnings per share   $ 0.37     $ 0.41     $ 0.95     $ 0.91  
                                 
Diluted earnings per share:                                
  Earnings from continuing operations   $ 0.37     $ 0.40     $ 0.95     $ 0.90  
  Discontinued operations     (0.00 )     0.00       (0.01 )     (0.00 )
    Diluted earnings per share   $ 0.37     $ 0.40     $ 0.94     $ 0.90  
                                 
Weighted average shares outstanding:                                
  Basic     150,878       158,665       152,820       159,225  
  Diluted     152,327       160,798       154,758       161,811  
                                 
 
FLIR SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)(Unaudited)
         
    September 30,   December 31,
    2012   2011
ASSETS        
             
Current assets:            
  Cash and cash equivalents   $ 424,489   $ 440,846
  Accounts receivable, net     283,669     325,370
  Inventories     360,767     336,051
  Prepaid expenses and other current assets     130,244     104,285
  Deferred income taxes, net     27,013     27,443
    Total current assets     1,226,182     1,233,995
             
Property and equipment, net     200,850     186,269
Deferred income taxes, net     31,832     31,644
Goodwill     502,401     498,343
Intangible assets, net     145,511     164,440
Other assets     39,238     32,338
    $ 2,146,014   $ 2,147,029
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
             
Current liabilities:            
  Accounts payable   $ 77,693   $ 84,190
  Deferred revenue     19,741     24,046
  Accrued payroll and related liabilities     39,717     49,475
  Accrued product warranties     13,094     13,370
  Advance payments from customers     13,681     13,219
  Accrued expenses     33,249     41,183
  Other current liabilities     4,162     3,886
  Accrued income taxes     -     2,161
    Total current liabilities     201,337     231,530
             
Long-term debt     248,205     247,861
Deferred income taxes     17,358     17,237
Accrued income taxes     17,052     17,537
Pension and other long-term liabilities     59,639     53,835
             
Commitments and contingencies            
             
Shareholders' equity     1,602,423     1,579,029
    $ 2,146,014   $ 2,147,029
             
   
FLIR SYSTEMS, INC.  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(In thousands)(Unaudited)  
                         
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2012     2011     2012     2011  
                                 
Cash flows from operating activities:                                
  Net earnings   $ 55,905     $ 64,719     $ 145,137     $ 145,343  
  Income items not affecting cash:                                
    Depreciation and amortization     14,843       17,577       44,859       61,208  
    Deferred income taxes     504       (580 )     599       (1,904 )
    Stock-based compensation arrangements     6,598       5,437       19,997       19,313  
  Other non-cash items     (4,982 )     3,373       (6,332 )     3,007  
  Changes in operating assets and liabilities, net of acquisitions    
(26,428
)    
(44,622
)    
(31,589
)    
(99,272
)
Cash provided by operating activities     46,440       45,904       172,671       127,695  
                                 
Cash flows from investing activities:                                
  Additions to property and equipment, net     (12,759 )     (12,366 )     (39,188 )     (31,096 )
  Business acquisitions, net of cash acquired     -       (24,831 )     -       (27,182 )
  Other investments     -       -       (3,000 )     -  
Cash used by investing activities     (12,759 )     (37,197 )     (42,188 )     (58,278 )
                                 
Cash flows from financing activities:                                
  Proceeds from long term debt, net     -       247,708       -       247,708  
  Repurchase of common stock     (38,809 )     (100,583 )     (129,010 )     (124,384 )
  Dividends paid     (10,537 )     (9,518 )     (32,021 )     (28,686 )
  Proceeds from shares issued pursuant to stock-based compensation plans    
1,462
     
804
     
7,117
     
15,085
 
  Excess tax benefit of stock options exercised     679       2,142       1,231       4,468  
  Other financing activities     2       (290 )     (138 )     (317 )
Cash (used) provided by financing activities     (47,203 )     140,263       (152,821 )     113,874  
                                 
Effect of exchange rate changes on cash     8,240       (10,093 )     5,981       (1,929 )
                                 
Net (decrease) increase in cash and cash equivalents     (5,282 )     138,877       (16,357 )     181,362  
Cash and cash equivalents, beginning of period     429,771       235,622       440,846       193,137  
Cash and cash equivalents, end of period   $ 424,489     $ 374,499     $ 424,489     $ 374,499  
                                 

Contact Information

  • Company Contact:
    Shane Harrison
    +1 503.498.3547
    www.flir.com