Revenue and EPS Consistent With Preliminary Results; Third Quarter Revenue Increases 8%
WILSONVILLE, OR -- (Marketwired - October 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
------------- -------------
As
ASSETS 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 As
Adjusted(1) 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
=========== =========== =========== ===========
Company Contact: Shane Harrison +1 503.498.3547 www.flir.com