SOURCE: FLIR Systems, Inc.

FLIR Systems, Inc.

October 28, 2015 07:30 ET

FLIR Systems Announces Third Quarter 2015 Financial Results

Constant Currency Revenue Growth of 6% and as Reported EPS Growth of 41% Over the Prior Year

WILSONVILLE, OR--(Marketwired - Oct 28, 2015) - FLIR Systems, Inc. (NASDAQ: FLIR) today announced financial results for the third quarter ended September 30, 2015. Revenue was $381.9 million, up 2% compared to third quarter 2014 revenue of $375.4 million. On a constant-currency basis, revenue for the third quarter was up 6% compared to the prior year, as foreign currency exchange fluctuations negatively impacted revenue by approximately $14 million. Operating income in the third quarter was $76 million, compared to $70 million in the third quarter of 2014. Operating income was impacted by pretax charges related to previously-announced restructuring initiatives of $0.3 million in the third quarter of 2015 and $4.1 million in the third quarter of 2014.

Third quarter 2015 net income was $73.1 million, or $0.52 per diluted share, compared with net income of $52.9 million, or $0.37 per diluted share in the third quarter a year ago. Net income for the third quarter of 2015 included a discrete tax benefit of $17.4 million, or approximately $0.12 per diluted share, related to the release of a previously recorded tax reserve. Cash provided by operations in the third quarter of 2015 was $73.6 million, an increase of 123% compared to the prior year.

The Surveillance segment contributed $131.6 million of revenue during the third quarter, increasing 5% over the prior year. The Instruments segment had $74.8 million of revenue, down 9% from the prior year, and was negatively impacted by foreign currency exchange fluctuations by approximately $6 million, resulting in a 3% decline on a constant currency basis. FLIR's OEM & Emerging Markets segment recorded revenue of $51.4 million in the third quarter, up 3% over the prior year. Revenue from the Maritime segment was $38.9 million, down 13% from the third quarter of 2014, and was negatively impacted by foreign currency exchange fluctuations by approximately $4 million, resulting in a 4% decline on a constant currency basis. Security segment revenue was $59.3 million, an increase of 22% over the third quarter results last year. The Detection segment contributed $25.8 million of revenue, an increase of 7% from the prior year.

FLIR's backlog of firm orders for delivery within the next twelve months was approximately $568 million as of September 30, 2015, an increase of $31 million, or 6%, during the quarter and a decrease of $12 million, or 2%, from the third quarter of 2014.

"In the third quarter we saw constant currency revenue growth of 6%, improved our operating profitability, significantly improved our cash flow, and introduced several new market-defining products, however, the global economic environment created a headwind for our overall performance," said Andy Teich, President and CEO of FLIR. "Our proven ability to advance our sensing technologies, rapidly develop new products, and address new market opportunities enables our mission of being the 'World's Sixth Sense.' We have confidence in our ability to create long-term shareholder value given our focus on innovation, product differentiation, and market positioning."

Revenue and Earnings Outlook for 2015

Based on financial results for the first nine months of 2015 and the outlook for the remainder of the year, FLIR now expects revenue for the full year 2015 to be in the range of $1.52 billion to $1.57 billion and net earnings, excluding restructuring charges and the third quarter discrete tax benefit described above, to be in the range of $1.55 to $1.60 per diluted share. Including the impact of the third quarter discrete tax benefit and an estimated $12 million after-tax gain in the fourth quarter on an investment, net earnings is expected to be in the range of $1.76 to $1.81 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 December 4, 2015, to shareholders of record as of close of business on November 20, 2015.

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 1:00 p.m. ET (10:00 a.m. PT) at this same internet address. Summary third 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

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     Nine Months Ended  
    September 30,     September 30,  
    2015     2014     2015     2014  
                                 
Revenue   $ 381,928     $ 375,366     $ 1,119,420     $ 1,096,288  
Cost of goods sold     201,189       190,980       573,169       560,652  
    Gross profit     180,739       184,386       546,251       535,636  
                                 
Operating expenses:                                
  Research and development     31,050       34,022       100,898       106,655  
  Selling, general and administrative     73,380       76,295       231,991       241,737  
  Restructuring expenses     327       4,060       1,095       15,420  
    Total operating expenses     104,757       114,377       333,984       363,812  
                                 
    Earnings from operations     75,982       70,009       212,267       171,824  
                                 
Interest expense     3,670       3,663       10,689       11,000  
Interest income     (319 )     (398 )     (861 )     (934 )
Other expense (income), net     1,455       (3,719 )     1,775       (4,987 )
                                 
    Earnings before income taxes     71,176       70,463       200,664       166,745  
                                 
Income tax (benefit) provision     (1,896 )     17,606       29,182       39,236  
                                 
    Net earnings   $ 73,072     $ 52,857     $ 171,482     $ 127,509  
                                 
Earnings per share:                                
  Basic   $ 0.52     $ 0.37     $ 1.23     $ 0.90  
  Diluted   $ 0.52     $ 0.37     $ 1.21     $ 0.89  
                                 
Weighted average shares outstanding:                                
  Basic     139,596       141,433       139,808       141,315  
  Diluted     140,525       143,413       141,262       143,756  
                                   
                                   
 
 
FLIR SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)(Unaudited)
         
    September 30,   December 31,
    2015   2014
ASSETS            
             
Current assets:            
  Cash and cash equivalents   $ 525,376   $ 531,374
  Accounts receivable, net     304,270     354,658
  Inventories     387,113     320,605
  Prepaid expenses and other current assets     90,957     93,691
  Deferred income taxes, net     38,484     38,873
    Total current assets     1,346,200     1,339,201
             
Property and equipment, net     269,724     247,094
Deferred income taxes, net     20,521     19,941
Goodwill     541,971     553,335
Intangible assets, net     118,418     133,212
Other assets     57,969     61,240
    $ 2,354,803   $ 2,354,023
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
             
Current liabilities:            
  Accounts payable   $ 125,739   $ 98,173
  Deferred revenue     27,394     27,878
  Accrued payroll and related liabilities     55,713     62,065
  Accrued expenses     38,516     51,810
  Accrued income taxes     -     4,586
  Other current liabilities     51,521     50,045
  Current portion long-term debt     15,000     15,000
    Total current liabilities     313,883     309,557
             
Long-term debt     347,080     357,986
Deferred income taxes     1,012     13,905
Accrued income taxes     11,255     11,096
Other long-term liabilities     56,715     51,706
             
Commitments and contingencies            
             
Shareholders' equity     1,624,858     1,609,773
    $ 2,354,803   $ 2,354,023
             
             
   
FLIR SYSTEMS, INC.  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(In thousands) (Unaudited)  
                         
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2015     2014     2015     2014  
                                 
Cash flows from operating activities:                                
  Net earnings   $ 73,072     $ 52,857     $ 171,482     $ 127,509  
  Income items not affecting cash:                                
    Depreciation and amortization     11,854       13,572       36,465       44,278  
    Deferred income taxes     (17,380 )     56       (17,238 )     971  
    Stock-based compensation arrangements     6,511       6,803       19,449       24,006  
  Gain on sale of certain optics assets     -       (4,129 )     -       (4,129 )
  Other non-cash items     5,169       6,840       4,346       3,241  
  Changes in operating assets and liabilities     (5,606 )     (43,013 )     (17,025 )     (32,476 )
Cash provided by operating activities     73,620       32,986       197,479       163,400  
                                 
Cash flows from investing activities:                                
  Additions to property and equipment, net     (19,363 )     (15,100 )     (50,116 )     (40,928 )
  Proceeds from sale of certain optics assets     -       12,000       -       12,000  
Cash used by investing activities     (19,363 )     (3,100 )     (50,116 )     (28,928 )
                                 
Cash flows from financing activities:                                
  Repayments of long term debt     (3,750 )     (3,750 )     (11,250 )     (11,250 )
  Repurchase of common stock     (61,955 )     (33,621 )     (93,381 )     (76,624 )
  Dividends paid     (15,419 )     (14,166 )     (46,193 )     (42,410 )
  Proceeds from shares issued pursuant to stock-based compensation plans     1,552       5,199       21,188       34,168  
  Excess tax benefit of stock options exercised     175       1,147       4,216       7,705  
  Other financing activities     (2 )     (21 )     (10 )     (36 )
Cash used by financing activities     (79,399 )     (45,212 )     (125,430 )     (88,447 )
                                 
Effect of exchange rate changes on cash     (9,672 )     (21,374 )     (27,931 )     (23,128 )
                                 
Net (decrease) increase in cash and cash equivalents     (34,814 )     (36,700 )     (5,998 )     22,897  
Cash and cash equivalents:                                
  Beginning of period     560,190       602,073       531,374       542,476  
  End of period   $ 525,376     $ 565,373     $ 525,376     $ 565,373  
                                   
                                   
                                   
FLIR SYSTEMS, INC.  
REVENUE AND EARNINGS FROM OPERATIONS BY SEGMENT  
(In thousands) (Unaudited)  
                         
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2015     2014     2015     2014  
REVENUE                                
  Surveillance   $ 131,598     $ 125,343     $ 352,312     $ 362,073  
  Instruments     74,796       82,561       248,877       250,583  
  OEM and Emerging Markets     51,448       49,888       137,568       148,927  
  Maritime     38,920       44,728       141,922       152,533  
  Security     59,331       48,648       158,185       122,692  
  Detection     25,835       24,198       80,556       59,480  
    $ 381,928     $ 375,366     $ 1,119,420     $ 1,096,288  
                                 
EARNINGS (LOSS) FROM OPERATIONS                                
  Surveillance   $ 39,918     $ 33,393     $ 96,464     $ 79,293  
  Instruments     21,555       23,191       77,959       64,678  
  OEM and Emerging Markets     14,233       12,798       33,507       35,518  
  Maritime     1,848       4,614       13,058       23,159  
  Security     7,222       6,988       18,911       14,560  
  Detection     5,290       4,167       17,349       5,519  
  Other     (14,084 )     (15,142 )     (44,981 )     (50,903 )
    $ 75,982     $ 70,009     $ 212,267     $ 171,824  
                                 

Contact Information