SOURCE: FLIR Systems, Inc.

FLIR Systems, Inc.

October 24, 2014 07:30 ET

FLIR Systems Announces Third Quarter 2014 Financial Results

GAAP EPS Increases 16%

WILSONVILLE, OR--(Marketwired - Oct 24, 2014) - FLIR Systems, Inc. (NASDAQ: FLIR) today announced financial results for the third quarter ended September 30, 2014. Revenue was $375.4 million, up 5% compared to third quarter 2013 revenue of $358.1 million. Operating income in the third quarter was $70 million, compared to $63.5 million in the third quarter of 2013, and was impacted by $4.1 million in pretax charges related to previously-announced restructuring initiatives. Third quarter 2014 net income was $52.9 million, or $0.37 per diluted share, compared with net income of $46.5 million, or $0.32 per diluted share in the third quarter a year ago. The net after tax impact of the restructuring charges in the third quarter was approximately $3.1 million, or $0.02 per diluted share. Cash provided by operations in the third quarter was $33 million.

Revenue from the Instruments segment contributed $82.6 million of revenue during the third quarter, up 7% from the prior year. The OEM & Emerging Markets segment had $56.1 million of revenue, an increase of 2% over the prior year. FLIR's Security segment recorded revenue of $48.6 million in the third quarter, up 37% from the prior year. Revenue from the Maritime segment was $44.7 million, and was up 8% over the third quarter of 2013. Surveillance segment revenue was $119.1 million, a decrease of 6% from the third quarter results last year. The Detection segment contributed $24.2 million of revenue, an increase of 6% from the prior year.

FLIR's backlog of firm orders for delivery within the next twelve months was approximately $579 million as of September 30, 2014, an increase of $31 million, or 6%, during the quarter and an increase of $89 million, or 18%, since the beginning of 2014.

"We are pleased with our third quarter results. Our revenue expansion, improved margins, and strong backlog reflect the execution of our growth and cost reduction initiatives," said Andy Teich, President and CEO of FLIR. "The restructuring program we launched a year ago is proving to be successful from both a financial and organizational efficiency standpoint. Recent product introductions have generated interest in our technology at levels never seen before. Our product innovation continued in the third quarter and we are committed to investing in innovation into the future in order to create new and increasingly-affordable advanced sensing solutions."

Revenue and Earnings Outlook for 2014

Based on financial results for the first nine months of 2014 and the outlook for the remainder of the year, FLIR now expects revenue for the full year 2014 to be in the range of $1.48 billion to $1.53 billion and net earnings, excluding restructuring charges associated with the business realignment, to be in the range of $1.43 to $1.48 per diluted share. 

Dividend Declaration

FLIR's Board of Directors has declared a quarterly cash dividend of $0.10 per share on FLIR common stock, payable December 5, 2014, to shareholders of record as of close of business on November 18, 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. 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 third quarter financial results and operating highlights is also available online from a link in the Events & Presentations section of www.FLIR.com/investor. Summary third 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 2014" 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     Nine Months Ended  
    September 30,     September 30,  
    2014     2013     2014     2013  
                                 
Revenue   $ 375,366     $ 358,141     $ 1,096,288     $ 1,096,053  
Cost of goods sold     190,980       185,251       560,652       549,134  
    Gross profit     184,386       172,890       535,636       546,919  
                                 
Operating expenses:                                
  Research and development     34,022       32,986       106,655       109,271  
  Selling, general and administrative     76,295       76,365       241,737       234,706  
  Restructuring expenses     4,060       -       15,420       -  
    Total operating expenses     114,377       109,351       363,812       343,977  
                                 
    Earnings from operations     70,009       63,539       171,824       202,942  
                                 
Interest expense     3,663       3,696       11,000       10,361  
Interest income     (398 )     (256 )     (934 )     (721 )
Other income, net     (3,719 )     53       (4,987 )     (536 )
                                 
    Earnings from continuing operations before income taxes     70,463       60,046       166,745       193,838  
                                 
Income tax provision     17,606       13,560       39,236       45,558  
                                 
    Net earnings   $ 52,857     $ 46,486     $ 127,509     $ 148,280  
                                 
Earnings per share:                                
  Basic   $ 0.37     $ 0.33     $ 0.90     $ 1.04  
  Diluted   $ 0.37     $ 0.32     $ 0.89     $ 1.02  
                                 
Weighted average shares outstanding:                                
  Basic     141,433       141,863       141,315       142,849  
  Diluted     143,413       144,231       143,756       144,831  
                                 
 
FLIR SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)(Unaudited)
         
    September 30,   December 31,
    2014   2013
ASSETS            
             
Current assets:            
  Cash and cash equivalents   $ 565,373   $ 542,476
  Accounts receivable, net     298,559     286,573
  Inventories     343,300     344,719
  Prepaid expenses and other current assets     89,789     97,574
  Deferred income taxes, net     38,154     38,389
    Total current assets     1,335,175     1,309,731
             
Property and equipment, net     237,837     234,041
Deferred income taxes, net     18,666     17,883
Goodwill     560,488     575,701
Intangible assets, net     138,991     154,195
Other assets     63,135     51,808
    $ 2,354,292   $ 2,343,359
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
             
Current liabilities:            
  Accounts payable   $ 90,500   $ 85,730
  Deferred revenue     25,831     28,844
  Accrued payroll and related liabilities     62,959     62,069
  Accrued expenses     38,903     39,316
  Accrued income taxes     2,527     663
  Other current liabilities     52,106     44,893
  Current portion long-term debt     15,000     15,000
    Total current liabilities     287,826     276,515
             
Long-term debt     361,622     372,528
Deferred income taxes     14,001     12,255
Accrued income taxes     19,742     19,996
Other long-term liabilities     49,367     48,685
             
Commitments and contingencies            
             
Shareholders' equity     1,621,734     1,613,380
    $ 2,354,292   $ 2,343,359
             
   
FLIR SYSTEMS, INC.  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(In thousands)(Unaudited)  
                         
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2014     2013     2014     2013  
                                 
Cash flows from operating activities:                                
  Net earnings   $ 52,857     $ 46,486     $ 127,509     $ 148,280  
  Income items not affecting cash:                                
    Depreciation and amortization     13,572       14,876       44,278       44,978  
    Deferred income taxes     56       (64 )     971       (38 )
    Stock-based compensation arrangements     6,803       7,347       24,006       20,673  
  Gain on sale of certain optics assets     (4,129 )     -       (4,129 )     -  
  Other non-cash items     6,840       2,061       3,241       1,485  
  Changes in operating assets and liabilities     (43,013 )     (18,178 )     (32,476 )     34,413  
Cash provided by operating activities     32,986       52,528       163,400       249,791  
                                 
Cash flows from investing activities:                                
  Additions to property and equipment, net     (15,100 )     (13,706 )     (40,928 )     (36,997 )
  Business acquisitions, net of cash acquired     -       (14,908 )     -       (20,073 )
  Proceeds from sale of certain optics assets     12,000       -       12,000       -  
Cash used by investing activities     (3,100 )     (28,614 )     (28,928 )     (57,070 )
                                 
Cash flows from financing activities:                                
  Proceeds from long term debt     -       -       -       150,000  
  Repayments of long term debt     (3,750 )     (3,750 )     (11,250 )     (7,500 )
  Repurchase of common stock     (33,621 )     (16,219 )     (76,624 )     (133,049 )
  Dividends paid     (14,166 )     (12,786 )     (42,410 )     (38,695 )
  Proceeds from shares issued pursuant to stock-based compensation plans    
5,199
     
2,067
     
34,168
     
5,953
 
  Excess tax benefit of stock options exercised     1,147       459       7,705       928  
  Other financing activities     (21 )     (306 )     (36 )     (1,273 )
Cash used by financing activities     (45,212 )     (30,535 )     (88,447 )     (23,636 )
                                 
Effect of exchange rate changes on cash     (21,374 )     6,387       (23,128 )     1,375  
                                 
Net increase (decrease) in cash and cash equivalents     (36,700 )     (234 )     22,897       170,460  
Cash and cash equivalents:                                
  Beginning of period     602,073       492,433       542,476       321,739  
  End of period   $ 565,373     $ 492,199     $ 565,373     $ 492,199  
                                 
   
FLIR SYSTEMS, INC.  
REVENUE AND EARNINGS FROM OPERATIONS BY SEGMENT  
(In thousands)(Unaudited)  
                         
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2014     2013     2014     2013  
REVENUE - EXTERNAL CUSTOMERS                                
  Surveillance   $ 119,127     $ 126,591       342,105       392,439  
  Instruments     82,560       77,199     $ 250,583     $ 236,011  
  OEM and Emerging Markets     56,105       54,782       168,895       153,700  
  Maritime     44,728       41,297       152,533       146,437  
  Security     48,648       35,409       122,692       99,331  
  Detection     24,198       22,863       59,480       68,135  
    $ 375,366     $ 358,141     $ 1,096,288     $ 1,096,053  
                                 
EARNINGS (LOSS) FROM OPERATIONS                                
  Surveillance   $ 30,069     $ 29,836       69,365       97,811  
  Instruments     23,191       20,433     $ 64,678     $ 63,379  
  OEM and Emerging Markets     16,121       16,814       45,445       43,453  
  Maritime     4,614       2,966       23,159       20,447  
  Security     6,988       4,460       14,560       12,096  
  Detection     4,168       4,102       5,520       10,546  
  Other     (15,142 )     (15,072 )     (50,903 )     (44,790 )
    $ 70,009     $ 63,539     $ 171,824     $ 202,942  
                                 

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