SOURCE: FLIR Systems, Inc.

FLIR Systems, Inc.

October 24, 2013 07:30 ET

FLIR Systems Announces Third Quarter 2013 Financial Results

Revenue and EPS Consistent With Preliminary Results; Third Quarter Revenue Increases 8%

WILSONVILLE, OR--(Marketwired - Oct 24, 2013) - FLIR Systems, Inc. (NASDAQ: FLIR) today announced financial results for the third quarter ended September 30, 2013. Revenue was $358.1 million, up 8% compared to third quarter 2012 revenue of $332.2 million. Operating income in the third quarter decreased by 14% to $63.5 million and net income decreased 17% to $46.5 million. Third quarter earnings per diluted share were $0.32, compared to $0.37 during the third quarter a year ago. Cash provided by operations in the third quarter was $52.5 million, compared to $46.4 million in the third quarter of 2012.

Revenue from FLIR's Commercial Systems division increased 17% from the third quarter of 2012, to $212.9 million. Within the Commercial Systems division, revenue from the Thermal Vision and Measurement segment was $177.1 million, an increase of 18% from the third quarter results last year, due to the addition of the Lorex and Traficon businesses. The Raymarine segment contributed $35.8 million of revenue during the third quarter, up 13% from the prior year, driven by successful new product introductions.

Revenue from FLIR's Government Systems division decreased 4% from the third quarter of 2012, to $145.2 million. Within the Government Systems division, revenue from the Surveillance segment was $103 million, a decrease of 11% from the third quarter of 2012, impacted negatively by weak book-and-ship order flow from the U.S. Government. Revenue from the Detection segment was $13.1 million, a decrease of 15% compared to the third quarter of 2012 as the business continues its strategy to reduce contract R&D activity. The Integrated Systems segment contributed $29.2 million of revenue during the third quarter, an increase of 48% from the prior year, due to deliveries under the MSC contract during the third quarter of 2013.

The Company's backlog of firm orders for delivery within the next twelve months was approximately $523 million as of September 30, 2013, a decrease of $5 million during the quarter and $42 million from a year ago. Backlog in the Government Systems division was $334 million, decreasing $5 million during the quarter and $58 million from the prior year. Backlog in the Commercial Systems division was $189 million, a decrease of $1 million during the quarter but an increase of $16 million over the prior year.

"Results for the third quarter were disappointing; however, with the exception of our OEM cores business, our Commercial Systems business grew mid-single digits with each of the major geographic regions showing growth for the first time in two years. We were also pleased with the performance of our recently acquired businesses, which delivered good growth and profitability for the quarter," noted Andy Teich, President and CEO of FLIR. "The weakness in order flow from U.S. Government-funded customers affected our book-and-ship business in the third quarter and, more importantly, the outlook for the fourth quarter. In addition to our strategic realignment plan, we have initiated changes to our cost structure to better operate under the assumption of a challenging domestic government procurement environment. We expect to see significant productivity and profitability gains from these actions in 2014 and beyond."

Revenue and Earnings Outlook for 2013
Based on financial results for the first nine months of 2013 and the outlook for the remainder of the year, FLIR now expects 2013 revenue to be in the range of $1.45 billion to $1.5 billion and net income, excluding restructuring charges associated with business realignment and cost reduction initiatives as well as executive retirement charges, to be in the range of $1.38 to $1.43 per diluted share. These estimates compare with management's prior outlook of revenue of $1.5 billion to $1.6 billion and net income of $1.56 to $1.66 per diluted share.

Dividend Declaration
FLIR's Board of Directors has declared a quarterly cash dividend of $0.09 per share on FLIR common stock, payable December 6, 2013, to shareholders of record as of close of business on November 18, 2013.

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 Events & Presentations section at 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 third quarter and historical financial data can be accessed online soon after the release of the third 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 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 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 2013" 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 ability to develop new products in an efficient and timely manner, 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     Nine Months Ended  
    September 30,     September 30,  
    2013     2012     2013     2012  
                                 
Revenue   $ 358,141     $ 332,230     $ 1,096,053     $ 1,018,973  
Cost of goods sold     185,251       158,877       549,134       492,865  
    Gross profit     172,890       173,353       546,919       526,108  
                                 
Operating expenses:                                
  Research and development     32,986       29,593       109,271       103,674  
  Selling, general and administrative     76,365       69,523       234,706       219,181  
    Total operating expenses     109,351       99,116       343,977       322,855  
                                 
    Earnings from operations     63,539       74,237       202,942       203,253  
                                 
Interest expense     3,696       3,096       10,361       8,930  
Interest income     (256 )     (268 )     (721 )     (1,073 )
Other expense (income), net     53       2,175       (536 )     1,190  
                                 
    Earnings from continuing operations before income taxes    
60,046
     
69,234
     
193,838
     
194,206
 
                                 
Income tax provision     13,560       13,285       45,558       47,027  
                                 
    Earnings from continuing operations     46,486       55,949       148,280       147,179  
                                 
Loss from discontinued operations, net of tax     -       (44 )     -       (2,042 )
                                 
    Net earnings   $ 46,486     $ 55,905     $ 148,280     $ 145,137  
                                 
Basic earnings per share:                                
  Earnings from continuing operations   $ 0.33     $ 0.37     $ 1.04     $ 0.96  
  Discontinued operations     -       (0.00 )     -       (0.01 )
    Basic earnings per share   $ 0.33     $ 0.37     $ 1.04     $ 0.95  
                                 
Diluted earnings per share:                                
  Earnings from continuing operations   $ 0.32     $ 0.37     $ 1.02     $ 0.95  
  Discontinued operations     -       (0.00 )     -       (0.01 )
    Diluted earnings per share   $ 0.32     $ 0.37     $ 1.02     $ 0.94  
                                 
Weighted average shares outstanding:                                
  Basic     141,863       150,878       142,849       152,820  
  Diluted     144,231       152,327       144,831       154,758  
 
 
FLIR SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)(Unaudited)
         
    September 30,   December 31,
    2013   2012
ASSETS       As Adjusted(1)
             
Current assets:            
  Cash and cash equivalents   $ 492,199   $ 321,739
  Accounts receivable, net     281,611     335,163
  Inventories     376,033     381,378
  Prepaid expenses and other current assets     98,001     96,006
  Deferred income taxes, net     31,659     30,960
    Total current assets     1,279,503     1,165,246
             
Property and equipment, net     229,844     211,615
Deferred income taxes, net     32,235     32,223
Goodwill     567,611     562,586
Intangible assets, net     157,489     175,823
Other assets     59,194     41,442
    $ 2,325,876   $ 2,188,935
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
             
Current liabilities:            
  Accounts payable   $ 93,861   $ 94,156
  Deferred revenue     30,308     29,465
  Accrued payroll and related liabilities     39,139     41,506
  Accrued expenses     41,977     32,772
  Other current liabilities     31,528     31,725
  Accrued income taxes     -     11,943
  Current portion long-term debt     15,000     -
    Total current liabilities     251,813     241,567
             
Long-term debt     376,163     248,319
Deferred income taxes     18,828     17,351
Accrued income taxes     22,410     22,812
Pension and other long-term liabilities     50,151     58,985
             
Commitments and contingencies            
             
Shareholders' equity     1,606,511     1,599,901
    $ 2,325,876   $ 2,188,935
 
(1) Amounts have been adjusted for the reclassification of goodwill and intangible assets related to business acquisitions made in December 2012.
 
   
FLIR SYSTEMS, INC.  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(In thousands)(Unaudited)  
                         
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2013     2012     2013     2012  
          As Adjusted(1)           As Adjusted(1)  
Cash flows from operating activities:                                
  Net earnings   $ 46,486     $ 55,905     $ 148,280     $ 145,137  
  Income items not affecting cash:                                
    Depreciation and amortization     14,876       14,843       44,978       44,859  
    Deferred income taxes     (64 )     504       (38 )     599  
    Stock-based compensation arrangements     7,347       6,598       20,673       19,997  
  Other non-cash items     2,061       507       1,485       (1,864 )
  Changes in operating assets and liabilities, net of acquisitions    
(18,178
)    
(31,917
)    
34,413
     
(36,057
)
Cash provided by operating activities     52,528       46,440       249,791       172,671  
                                 
Cash flows from investing activities:                                
  Additions to property and equipment, net     (13,706 )     (12,759 )     (36,997 )     (39,188 )
  Business acquisitions, net of cash acquired     (14,908 )     -       (20,073 )     -  
  Other investments     -       -       -       (3,000 )
Cash used by investing activities     (28,614 )     (12,759 )     (57,070 )     (42,188 )
                                 
Cash flows from financing activities:                                
  Proceeds from long term debt     -       -       150,000       -  
  Repayments of long term debt     (3,750 )     -       (7,500 )     -  
  Repurchase of common stock     (16,219 )     (38,809 )     (133,049 )     (129,010 )
  Dividends paid     (12,786 )     (10,537 )     (38,695 )     (32,020 )
  Proceeds from shares issued pursuant to stock- based compensation plans    
2,067
     
1,462
     
5,953
     
7,117
 
  Excess tax benefit of stock options exercised     459       679       928       1,231  
  Other financing activities     (306 )     2       (1,273 )     (139 )
Cash provided (used) by financing activities     (30,535 )     (47,203 )     (23,636 )     (152,821 )
                                 
Effect of exchange rate changes on cash     6,387       8,240       1,375       5,981  
                                 
Net increase (decrease) in cash and cash equivalents     (234 )     (5,282 )     170,460       (16,357 )
Cash and cash equivalents, beginning of period     492,433       429,771       321,739       440,846  
Cash and cash equivalents, end of period   $ 492,199     $ 424,489     $ 492,199     $ 424,489  
 
(1) Amounts have been adjusted to conform to the presentation as of September 30, 2013.
                         
                         
FLIR SYSTEMS, INC.  
REVENUE AND EARNINGS FROM OPERATIONS BY SEGMENT  
(In thousands)(Unaudited)  
                         
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2013     2012     2013     2012  
REVENUE - EXTERNAL CUSTOMERS                                
Thermal Vision and Measurement   $ 177,101     $ 149,540     $ 519,452     $ 447,922  
Raymarine     35,800       31,659       127,087       125,443  
Surveillance     102,966       115,915       331,824       350,005  
Detection     13,103       15,401       40,016       50,467  
Integrated Systems     29,171       19,715       77,674       45,136  
    $ 358,141     $ 332,230     $ 1,096,053     $ 1,018,973  
                                 
EARNINGS (LOSS) FROM OPERATIONS                                
Thermal Vision and Measurement   $ 43,744     $ 42,916     $ 125,509     $ 109,651  
Raymarine     2,050       374       14,345       9,944  
Surveillance     30,535       39,243       100,835       114,965  
Detection     1,354       1,131       3,265       801  
Integrated Systems     (97 )     1,333       112       1,267  
Other     (14,047 )     (10,760 )     (41,124 )     (33,375 )
    $ 63,539     $ 74,237     $ 202,942     $ 203,253  

Contact Information

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